Chancellor Shares Plans for Achieving "Operational Excellence"

UCSF Chancellor Sue Desmond-Hellmann, MD, MPH, Tuesday outlined the ongoing work of the project known as “Operational Excellence,” offering some good news to the UCSF community on budget cuts.

The previously announced goal of achieving financial savings ranging from $28 million to $40 million has been reduced to cutting $18 million from the UCSF operating budget for fiscal year 2010-2011, she said during a town hall meeting in Cole Hall.

Desmond-Hellmann also said that the campuswide reorganization will be phased in over a three-year period, beginning next fiscal year, allowing time for a “thoughtful and paced” transition to implement new systems and service centers that centralize essential functions, such as campus Human Resources, Information Technology, finance and research administration.

By consolidating these services, Desmond-Hellmann said, all departments will have equal access to expert services, tools and systems necessary to do their jobs. Staff will have opportunities to develop professionally, giving them a “chance to prosper and grow” among a community of colleagues.

The cost-cutting goal, brought on in part by expected reductions in state funding and higher costs for employee health care and retirement, is to reduce direct hits to the schools, Desmond-Hellmann said. Most of the cuts will be absorbed by the central administration in areas outlined above. For its part, the medical center will shift its state allocation of approximately $6 million to the campus to help ease the funding shortfall.

Focusing on Priorities

Desmond-Hellmann reiterated that despite the short- and long-term financial challenges ahead, she remains focused on her top five priorities – patients/health, education, discovery, business and people. Indeed, by working toward achieving “Operational Excellence,” UCSF will be better able to fulfill its mission, she said.

The process to evaluate UCSF’s operations began as a way to get ahead of the yearly budget-cutting efforts brought on by the unprecedented state financial crisis. The chancellor reiterated the fact that she has to be confident that “every penny spent is in service to our mission.”

The institutional self-evaluation of operations and finances is necessary given the state’s economic forecast, the expected flattening of the National Institutes of Health (NH) budget and the implementation of national health care reform. UCSF continues to analyze the impact of health care reform on its clinical enterprise and its training programs, the chancellor said.

“I also think that it is a healthy thing to have a culture that continues to ask, ‘Is there a better way?’”

Acknowledging Hard-Working Employees

Responding to feedback she has received over the past few months, the chancellor explained that some members of the UCSF community took to heart the goal to achieve “Operational Excellence” as a sign that UCSF hasn’t achieved success. To the contrary, Desmond-Hellmann commended faculty and staff for their contributions to UCSF, which ranks among the nation’s best universities in several important measures, from research funding awarded to the schools from the NIH to its hospital rankings.

Acknowledging that change is not easy, the chancellor said she is sensitive to the impact on employees and their families.

“There are fantastic people here who work hard every day,” she said.

But UCSF can improve upon how it operates, in part by streamlining some central campus administrative functions in areas mentioned above. UCSF, which has involved its own people to conduct an intensive institutional review similar to those completed by consultants for the UC Office of the President and UC Berkeley, has concluded that it will benefit from realigning and, in some areas, reducing its workforce. For example, data from the Colleges and Universities Professional Association for HR (CUPA) suggests that UCSF has a high ratio of human resources staff to employees.  The ratio at UCSF is 81:1 while CUPA data suggests a ratio of 127:1, Desmond-Hellmann pointed out.

UCSF also will work to improve its inadequate infrastructure and its processes that often are duplicative and inefficient.

John Plotts, senior vice chancellor for Finance and Administration, was part of the overall restructuring efforts at the UC Office of the President that resulted in savings of $55 million. He said that it was hard work, but in the end has improved operations. Plotts said that universities across the country also are engaged in some type of restructuring and he believes that UCSF can accomplish what it needs to do. “I think the road map is very good for UCSF,” he said.

Looking Forward

As for next steps, Desmond-Hellmann said, control points will submit budget plans to the chancellor’s executive cabinet on June 15.

The chancellor said she remains committed to keep listening to feedback from faculty, staff, students and trainees and will communicate frequently to the UCSF community. She said she will continue to advocate for UCSF, seeking additional resources for the campus through ongoing relations with government leaders, the philanthropic community and industry partners. “In the end, it is about making sure we can make investments in our future.”

Among other news, the Chancellor noted that:

• The School of Medicine has formed two committees, the dean’s steering committee and the department managers work group, to review operations and finances.
• The schools of dentistry, nursing and pharmacy are focusing on implementing local efficiencies and will provide input to the School of Medicine and campus committees.
• UC-wide furloughs and associated pay cuts that have affected some UCSF employees will end in August 2010.
• UCSF will update its strategic plan, which was adopted in June 2007, with a particular emphasis on addressing the impact of health care reform.
• The University will begin to work on the next Long-Range Development Plan to guide physical growth over the next decade.

Related Links:

PowerPoint: Budget, Operational Excellence Report to the Campus [PDF]

Operational Excellence Work Group Final Report to the Executive Cabinet Executive Summary [PDF]

UCSF Senior Vice Chancellor Issues Budget Update
Budget website, April 22, 2010