MERGERS: DOUBTS SURFACE ABOUT UC- STANFORD HOSPITAL DEAL
Less than four days before they are scheduled to consider aThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
proposed merger between University of California San Francisco
(UCSF) Hospital and Stanford University Hospital, regents from
the University of California (UC) system "are raising serious
questions" about whether the deal makes fiscal sense, SAN
FRANCISCO CHRONICLE reports. The deal would group Stanford
Hospital and Packard Children's Hospital with UCSF and Mount Zion
NO DEAL: In a memo obtained by the CHRONICLE, Regent Frank
Clark told UC President Richard Atkinson that the merger has
become "increasingly questionable," in light of financial figures
showing that Stanford Hospital has a "history of extremely large
operating losses." Clark said that the merger is "inexplicable,"
considering Stanford Hospital's losses and UCSF Hospital's gains.
He noted that UCSF had an operating profit of $15.4 million for
FY '95, up from a predicted $7.1 million. Regent Clair Burgener
backed Clark and called on the other regents to "proceed with
HEED THE WARNING: However, administrators at UC and
Stanford contend that the merger would help both sides survive
the "fierce cost-cutting" demands of the private sector and
expected cuts in Medicare and Medicaid. Regent Ward Connerly
warned, "The health care industry's changing. For us to ignore
this deal and not to consider it very, very seriously is putting
UCSF at risk."
GAME ON: Stanford Hospital President Peter Van Etten said
that his hospital only incurred an operating loss in 1994, but
that it has "substantially improved" its financial performance
since. He said that the "best measure of the hospital's
financial health is its A-plus bond rating." Stanford would
bring $400 million in assets to the deal and $200 million in cash
and securities, according to Van Etten. "We think there is
strong support for this merger, but we'll have to see what the
regents do next week," he said (Russell/Burdman, 7/13).