Failed UCSF/Stanford Merger Led to $176M Loss
The "disastrous" 29-month partnership between hospitals at Stanford University and the University of California-San Francisco resulted in a combined loss of $176 million for the two institutions, according to a final audit released yesterday. Administrators from both hospital systems said that total losses will be split roughly 50-50, the San Francisco Chronicle reports. UCSF Stanford Health Care commenced operations on Nov. 1, 1997, in a merger that was then "deemed essential to the survival of each medical school's teaching hospitals," according to the Chronicle. After ending its first fiscal year with a $20 million surplus, UCSF Stanford Health Care's financial outlook darkened, in part because it underestimated cuts in Medicare reimbursements, overestimated the market share it would capture for "complex surgeries" and invested "too much" in Y2K computer upgrades, the Chronicle reports. After losing $127 million in its final seven months, UCSF Stanford Health Care ceased operations on March 31. UCSF Medical Center suffered a $15 million loss from April through June, while Stanford Medical Center -- "racked" by a 51-day nurses strike this summer -- lost $48 million in the "truncated" fiscal year beginning April 1 and ending Aug. 31. Mark Laret, who became CEO of UCSF Medical Center after the merger failed, said, "It was a bold experiment, and it is clearly too bad that it failed. Now that it's done, this chapter in our organization's history is over. It's time to look to the future." Stanford Medical Center Vice President Dr. Eugene Bauer attributed the failed merger, in part, to "cultura[l] differen[ces]" between UCSF, a public institution, and Stanford, a private institution (Russell, San Francisco Chronicle, 12/14).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.