Stanford University Medical Center Faces ‘Restructuring’ Due to Mounting Losses

Facing "huge financial losses" since its merger with UCSF Medical Center was dismantled last year, Stanford University Medical Center will have to make some "difficult decisions" in the next few months, including cutting some services, laying off employees and even selling its hospitals, according to Dr. Eugene Bauer, vice president of the medical center, the San Francisco Chronicle reports. For the fiscal year ending Aug. 31, the medical center is predicting losses of $40 million. The annual loss is expected to reach $70 million in FY 2002. As part of its "belt-tightening" efforts, the medical center may curtail some services, forcing some patients to change doctors or find health services elsewhere. The Chronicle reports that the medical center's financial problems partly stem from "increasingly contentious" negotiations with health plans, which Stanford says are paying "as little as" 23 cents on the dollar for services provided. In addition, reductions in government reimbursements also have "pinch[ed]" the medical center. Bauer said that since the Balanced Budget Act of 1997, the medical center's revenue has been cut by $80 million. Bauer said, "The real problem here is that the health care reimbursement system is broken. Our hospitals are full. We are just not being reimbursed enough for the care we are giving." He added that while the medical center may have to sell Stanford Hospital, it is not the "desired" alternative. He "downplayed" the possibility of layoffs, saying that the medical center's "restructuring" plan would focus on renegotiating contracts with health plans (Russell, San Francisco Chronicle, 3/30).