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In Sickness and in Wealth 

It's merge or be merged out for teaching hospitals like Stanford's and UCSF's

Wednesday, May 1 1996
Diagnosis: budget atrophy -- a degenerative disorder of the coffers. It often leads to merger fever, which is extremely contagious and has spread through most of the hospitals in the Bay Area.

There is no antidote. Experts say it has to run its course. Only the strong will survive. And none, it seems, are immune. Not even the nation's premier medical facilities. After months of closed-door meetings and top-secret negotiations, plans to merge the medical centers of the University of California at San Francisco and Stanford University are coming to a head. The University of California Board of Regents is set to take a first look at the proposed plan May 15.

The driving force behind the merger is money. Consolidation of hospitals and HMOs has put the squeeze on academic medicine. If approved, the merger could be in place in less than a year and radically restructure the two largest research hospitals in Northern California. In the balance are thousands of jobs, millions in state and federal monies, and the status of UCSF and Stanford as pre-eminent research facilities.

The current proposal goes like this:
The merger would create a new, not-for-profit corporation, directed by a board likely to include top administrators from both universities. This new entity would absorb UCSF's Moffit/Long and Mount Zion hospitals, Stanford University Hospital, Lucille Salter Packard Children's Hospital, and all of the clinics and clinical practices of the doctors of both universities. City-owned San Francisco General Hospital and Veterans Affairs Medical Center, both staffed through agreements with UCSF, would not be affected.

Both universities would retain their separate medical schools, and the new corporation would continue to fund both of these. Doctors would remain employees of either of the schools. The revenues generated from their patient care would go directly into the new corporation, which, in turn, would fund the schools, including paying the doctors.

Administrative functions such as billing, accounting, purchasing, personnel, and capital investments would be combined. Other departments, particularly areas of high-dollar, highly specialized medicine and pediatrics, also are big candidates for consolidation.

Neither Stanford nor UCSF is willing to discuss the details of the plan. However, in a recent internal publication regarding the merger, Stanford Medical School Dean Eugene Bauer said: "Because children tend to be healthy and because there are fewer of them, children's hospitals in particular must draw from a wide geographic base."

How this affects UCSF's dentistry and pharmaceutical programs remains up in the air, as does the biggest question of all -- who's going to be in charge.

That Stanford and UCSF would even consider merging their laboratories of the best and the brightest is testament to the rapid change in health care in America. These aren't just a couple of teaching hospitals contemplating shared office space. This is Stanford and UCSF -- 40 miles apart and light-years ahead of the world. Each is more than 100 years old, and both are ranked among the top 10 teaching hospitals in the country.

Together, they represent a $1 billion budget and more than 10,000 employees. In 1993-94, the two medical facilities admitted 54,000 patients into their hospitals and treated another 678,000 in outpatient visits.

U.S. News & World Report recently ranked UCSF among the top five medical schools for pediatrics, internal medicine, and drug and alcohol abuse treatment. It is No. 1 in AIDS research. UCSF performs more kidney transplants than any other center in the world. Stanford is home to a long list of firsts in the transplant of kidneys, hearts, and lungs. Both institutes are renowned for cancer research -- Stanford with the linear accelerator and later using monoclonal antibodies, and UCSF, where the genes that lead to cancer were first identified.

They've been one-upping each other for years. They have collectively housed at least four Nobel Prize winners. A collaboration arguably could produce some pretty spectacular stuff and create one of the largest academic medical centers in the country, behind only the likes of Harvard's hospitals.

Only 2.7 percent of the UCSF medical center's (not the school's) $464.7 million budget comes from the state. The lion's share comes from patient care payments. Whether or not the state will continue to pay that 2.7 percent is, as of yet, unanswered.

But unlike Stanford, UCSF is a public entity. And that's raising a few eyebrows over what the public might be giving up. The University of California owns the UCSF facilities. Under the proposed plan, the new not-for-profit corporation would own the facilities, and the medical schools would staff them.

"To take a publicly developed and controlled resource, like the crown jewel of UC Med Centers, and sell it off or make it private, even if it's nonprofit, is a big concern," says Allan Brill, executive director of the California Association of Interns and Residents. "Once they become privatized, the concern for accessibility of health care and quality of health care and training takes a major back seat.

"This is like somebody proposing that Yosemite be sold to the private sector for development," says Brill.

For years, the University of California and the physician's association have been embroiled in legal battles that have been waged all the way to the California Supreme Court. The court has ruled that the physicians are public employees and therefore have the same rights to collective bargaining as other public employees. The association is scheduled to have its first election on union representation within the next two months. But a merger into a new, private corporation raises questions about whether or not union contracts will continue to exist. Stanford facilities are non-union.

And, while this is not a replay of the Wells Fargo/First Interstate Bank merger, there are likely to be job realignments at the least and layoffs at the most, something that's got the Coalition of Unions Representing Employees at UCSF up in arms and already planning demonstrations. University officials, meanwhile, are extremely guarded on the subject.

About The Author

Lisa Davis


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