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What the Hellman Is Going on Here? 

UCSF Stanford finances hit the rocks

Wednesday, Mar 17 1999
While UCSF Stanford Health Care officials are supposedly paring costs and preparing to lay off employees in the wake of a mysterious $10.7 million budget deficit, some aspects of the health care giant's financial workings have turned downright bizarre.

Even as it bleeds money, the hospitals wracked up more than $20,000 in penalties for failing to file mandatory financial reports with the state.

In the midst of the financial crisis, investment banker Warren Hellman -- a key architect of the merger that created the medical behemoth -- resigned, then un-resigned, from its board of directors.

And, many staff members are questioning why private hospital consultants are riding to and from their offices in limousines, while as many as 15 percent of the system's workers are about to lose their jobs.

The academic health care provider earlier this month announced budget cuts and layoffs, following a $10.7 million loss in the last quarter of 1998. At the time, top officials at UCSF Stanford said the deficit took them by surprise.

The largest employer in San Francisco, other than the city itself, UCSF Stanford was formed in November 1997 when the University of California, San Francisco medical centers merged with those of Stanford University to form a private, nonprofit health care corporation that funds both universities' medical schools. The system includes the UCSF, Mount Zion, Stanford, and Lucille Packard Children's hospitals.

The merged entity had reported glowing financial results, until the multimillion-dollar losses came in.

UCSF Stanford officials blame the deficit on severe cuts in government funding from Medicare and Medi-Cal to academic medical centers, something that is set to continue through 2002. But, perhaps adding insult to injury, all of the Univer-sity of California's other hospitals -- in Los Angeles, San Diego, Irvine, and Davis -- reported a profit despite the government cuts.

Meanwhile, the UCSF Stanford hospitals fell grossly behind in filing routine reports with the state. Under California law, all hospitals must file quarterly and annual reports with the Office of Statewide Health Planning and Development, an agency charged with collecting and keeping health care data. The reports include financial data, like Medicare and Medi-Cal reimbursement, along with staffing and patient numbers.

Following SF Weekly's inquiries about the matter, UCSF and Mount Zion hospitals filed reports last Friday for the third quarter of 1998. The reports were originally due Nov. 14, 1998. The hospitals were granted an extension to Dec. 20, 1998. Meanwhile, they accumulated fines of $100 per hospital per day, plus a $600 fine for not requesting an extension early enough. OSHPD spokesperson Darlene Shell says the agency had referred the UCSF matter to its legal department for possible action. It's unclear what that action would have been, however, since the law doesn't provide OSHPD with any muscle other than fines.

Prior to Friday, none of the four hospitals in the system had filed their fourth-quarter reports with the agency; the reports were originally due Feb. 14. The hospitals were granted an extension to March 16 to file those reports.

UCSF's and Mount Zion's annual reports for 1998, which were due March 1, have not yet been filed, nor have the hospitals requested an extension of that deadline. Again, fines are accruing at a rate of $100 per hospital per day.

In total, the penalties add up to more than $20,000 and will continue to accumulate until the annual reports are filed.

UCSF Stanford Health Care spokesman Daniel Berman says the delinquency stems from a yet-unfinished $100 million project to get the computer systems at all four hospitals merged, and free of Y2K problems.

"What can I say? We're behind," Ber-man says.
Meanwhile, Hellman, the man whose business acumen helped convince the University of California Board of Regents to agree to the merger, quit the system's board in January, only to immediately change his mind. Hellman says he resigned from the board knowing nothing of the deficit, and now would like return.

"I had no idea that they were going to report a loss for the first quarter," Hellman says. "However, I feel having been involved that I should try to become part of the solution to the problem." Hellman says he has asked UCSF Stanford Chief Executive Peter Van Etten and board Chairman Isaac Stein to help him win re-election to the board.

"I felt that my job is done," he says. "I now feel that it is not."
Then there are the limousines, which have rankled staff members facing the loss of their jobs.

Spokesman Berman explains that the corporation hired consultants from outside of Northern California to work on a new billing system at the UCSF Stanford offices near 14th and Folsom streets. Those consultants fly home to other cities on the weekends. After having trouble getting taxis to the airport during peak traffic hours on Friday evenings, the consultants hired a car service -- on the UCSF Stanford tab -- which often sends limousines.

"For things like billing systems, there's so much at stake that we look for the best people [regardless of geography], and hire them on contract," Berman says, adding, "From now on, they're just going to take taxis.

About The Author

Lisa Davis


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