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Wednesday, Jun 9 1999
So, UCSF Stanford Health Care, the offspring of an illegal merger between UCSF and Stanford hospitals in 1997, is bleeding to death.

Strange turn of events, that. Didn't the rich folk who supported the merger of the two private Stanford and two public UCSF hospitals -- a move experts have convincingly termed an unconstitutional privatization of a public asset worth $400 million -- tell us the merger was all about saving money and making the combined hospitals more cost effective? Didn't they forecast an improved bottom line, improved by more than $250 million, over three years?

And now this: A little more than one year in we get the ever-growing, surprise-to-everyone, health-care-service-eating deficit.

In March, it was $11 million. Now we hear UCSF Stanford Health Care will be $60 million in the red before the end of the fiscal year in August. And if nothing is done, next year the hemophiliac nonprofit health-care operation will lose at least $135 million.

The year after that, another $100 million will go bye-bye.
I assure you, more bad news and larger numbers are on the way.
In vain attempts to stanch the bleeding, UCSF Stanford Health Care is planning on eliminating several thousand positions, which will necessitate -- and again, this is an initial figure -- more than 700 layoffs just this year.

"Everything is on the table right now," says UCSF Stanford Health Care spokesman Michael Lassiter about the possible cuts and closures needed to slash the deficit that no one saw coming.

Everything, according to Mr. Lassiter, includes closing UCSF's Mount Zion Hospital in 2001. Pharmacies have already closed.

That's right: The incompetents at UCSF Stanford Health Care aren't fully into their second year of operation, and they are talking about closing an entire hospital to balance a budget. And worst of all, they can't even come up with a convincing explanation as to why.

They say the reason for the sudden deficit is the recent cutbacks in payments to hospitals by private HMOs and federal and state governments. But shrinking treatment reimbursement rates had been a trend for several years before the merger. In fact, the decline in government reimbursement for medical care was one of the reasons given for the merger. The two institutions combined could eliminate overhead and other duplicate costs and better absorb the cutbacks.

So one of two things has happened here: Either the architects of the merger did not prepare for the inevitability of funding cutbacks they knew better than anyone else were coming; or there are a lot of reasons for massive deficits that we aren't being told. Lots of very embarrassing reasons.

And those potentially embarrassing reasons bring us around to the most insuperably arrogant and foolish part of the merger: the demand by the administrations of UCSF and Stanford that they be allowed to operate their ill-gotten, jointly held prize in complete privacy, without a single taxpayer or government official watching out for the public's investment.

The pro-merger forces -- aptly represented by the tweedles of big-time investment banking Isaac Stein and F. Warren Hellman -- looked down their noses at critics; they scoffed, tut-tutted, and dismissed concerns about taking UCSF hospitals private.

And when they said private, they meant it, baby.
Once UCSF and Stanford hospitals merged, no effective protections against insider corruption existed. There were no mechanisms to provide the public with information about the doings and goings-on of what was once a taxpayer-owned and -run institution. The state's public records law no longer applied to the new, private, merged entity.

The forces behind the merger scoffed and tut-tutted at critics who said lack of public oversight might lead to waste -- or worse. When San Francisco politicians John Burton, Quentin Kopp, and Carole Migden tried to institute government oversight protections and impose public records and open meeting laws on the merged hospital combine, the people behind the merger howled and bullied and pulled strings and made sure those proposed protections were defeated. The governor at the time, Pete Wilson, gladly helped.

In the end, the Public Records Act would not apply to the new health-care entity. The Open Meetings Law would not apply. Even conflict-of-interest laws -- hospital directors voting, for example, to buy equipment from or steer drug trials to companies in which they were invested in or owned -- would not apply. All of these reasonable rules, which apply to public hospitals and don't seem to harm them at all, would be lifted for UCSF Stanford Health Care.

When Sens. Burton and Kopp (Kopp is now a San Mateo County judge) tried to make UCSF Stanford Health Care's financial records public and its meetings open, the pro-merger folks got Wilson to beat the crap out of two lawmakers. Eventually, as they compromised to avoid a Wilson veto, those lawmakers turned their bill from a law that would open the records and meetings of the new health-care entity into a privacy law that prohibited any meaningful disclosure of information.

Migden went the distance. She dared Wilson to veto her bill mandating that the state Senate and Assembly budget committees and the legislative analyst have oversight powers over the merged hospitals.

Veto he did. The forces behind the merger won. They could now run the hospitals in utter privacy -- and, as it has turned out, into the ground.

Burton and Kopp had a ready-made excuse regarding the strange transformation of their bill from one mandating public disclosure of information to one assuring total secrecy: Gov. Wilson. If they didn't compromise with him, he would veto their openness bill.

And Migden proved them correct; her bill was vetoed.
These three San Francisco pols had attained that safest and most comfortable of all political roles: They were defeated champions. They had scored points for standing up to power, without actually having to risk pissing off powerful people by passing legislation those people didn't like.

About The Author

George Cothran


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