September 16, 2010

UCSF Medical Center CEO Calls Regents Vote 'Important Milestone'

Mark Laret

CEO Mark Laret today issued a letter to the UCSF community characterizing the unanimous vote by UC Regents that cleared the way for construction of a hospital complex at Mission Bay “one of the most important milestones in the history of UCSF and UCSF Medical Center.”

Laret thanked the scores of people involved in the project after receiving unanimous approval from UC Regents on the budget and financing for the $1.5 billion hospital complex to serve women, children and cancer patients at Mission Bay.

Here is Laret’s entire letter.

Dear Colleagues:

Today, the University of California Board of Regents gave final approval to the budget and funding plan for the new 289-bed children’s, women’s and cancer hospital project at Mission Bay. This means construction will begin this fall and we will care for our first patients in this new facility by the end of 2014.

Today’s action, the culmination of a decade of work, is one of the most important milestones in the history of UCSF and UCSF Medical Center. With the approval to begin constructing these new facilities, we will address clinical capacity problems at all our sites, we will create modern facilities to better meet the needs of our patients, we will meet the requirements of the state seismic law that limits our use of Mount Zion, and we will help fulfill the promise of the Mission Bay campus to facilitate the translation of research into clinical care.

The project will cost over $1.5 billion to complete, and the Regents were appropriately cautious about ensuring that we can pay for the project as well as manage it carefully to avoid the cost overruns that have plagued other UC hospital projects.

This project, led by Cindy Lima and Stuart Eckblad, uses an approach in which the architects, general contractors and subcontractors not only designed, but have virtually constructed the hospital using “building information modeling” software. This facilitates full coordination among trades and opportunities for prefabrication, and avoids the costly delays that occur when problems are identified in the field. We have also developed incentive programs that align our incentives with those building the project—to complete the project on time, on or below budget, within safety requirements and at our required level of quality.

The project will be paid for by $700 million of medical center debt, $600 million of philanthropy, $69 million of children’s hospital bonds approved by California voters in the past several years, and $140 million in hospital funds—cash we earn from our operations. The strength of our financial performance makes it possible for us to borrow and contribute these funds to the Mission Bay hospital project, while maintaining a robust capital expenditure program to invest in the renewal of Parnassus and Mount Zion clinical facilities, purchase needed equipment and implement our electronic health record system.

In the written materials we submitted to the Regents last month, I noted that we had raised more than $320 million towards this project from incredibly generous, visionary donors—like Lynne and Marc Benioff, who made a $100 million private donation to the newly renamed UCSF Benioff Children’s Hospital. We noted that this was the first project in the history of the University of California to have attracted two gifts of $100 million or more; the other by Chuck Feeney and Atlantic Philanthropies.

In addition, in the past week, we received two pledges of about $25 million each, bringing our total to more than $375 million—almost two thirds of the way toward our $600 million goal, even before we formally break ground.

Just 10 years ago, coming out of the UCSF Stanford merger, we were losing money at the rate of $60 million a year, our patient volume was low, our patient satisfaction scores were in the bottom quartile in the nation, and we were raising no more than $3 million in gifts a year. At that time, it was simply unimaginable that we would be where we are today—with patient demand at an all time high, our quality and safety metrics among the best in the country, our patient satisfaction last year the highest in our history, and having earned the confidence and respect of our entire community, including the donor community.

I want to thank the people who made all of this possible—all of you. It started with the commitment and unbelievably hard work of the 7,000 UCSF Medical Center employees, and our incredibly strong and productive UCSF School of Medicine department chairs, division chiefs and faculty. Former School of Medicine Dean Haile Debas first had the vision for a Mission Bay hospital. It was supported by former Chancellor Mike Bishop, and we now have the tremendous leadership of Chancellor Sue Desmond-Hellmann and School of Medicine Dean Sam Hawgood, both who are spending an exceptional amount of time and energy to make this project a reality.

Of course, our work isn’t over. In many ways, it’s just beginning. But today, we passed a major milestone that we could not have reached without your efforts. I’m now thinking ahead to the next milestone—caring and healing our first patients in the new hospital complex, just four short years away.

Thank you for your continuing commitment to UCSF Medical Center and the patients we serve.

Sincerely,

Mark R. Laret
CEO
UCSF Medical Center

To follow the progress at Mission Bay, see our webcam.

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