UC DAVIS: New CEO Talks Budget Cuts
University of California-Davis Health System's new CEO Martha Marsh is proposing staffing cuts in addition to budgetary cuts over the next year to keep UC Davis profitable. Even though UC Davis reported a net income of $29.3 million for FY1999 (a 23% slip since FY1998), the health system experienced a $21.5 million drop in cash reserves during the first two months of the new fiscal year, making "everybody nervous." While UC Davis "is in the black" partly because of former CEO Frank Loge's management skills and $60 million in budget cuts over four years, the system still faces a yearly $7 million cut in Medicare reimbursements, more HMO contracts, rising costs of prescription drugs, a disproportionate share of charity cases, a $100 million price tag to upgrade buildings to earthquake standards and the fact that $350 million in interest income had to be used to pay for the hospital's new tower. Marsh sent a memo to staff last week alerting them to future budget cuts. She said, "We need to be more efficient and get more dollars in the door." Although Marsh said she will not cut any positions that directly affect patient care, "all departments are being asked to come up with a plan that either trims staff or generates more income." Marsh said, "What we don't want to do is point to two people who do the same job, cut one and see the other one go crazy. The question is: how can we do it another way?" Other budget crunching comes at the expense of UC Davis plans for a new ancillary tower, which preliminarily has been scaled back from $180 million to $116 million. While in the midst of budget adjustment, the hospital also is finalizing a new strategic plan where the goal "is to do what the academic health system does best rather than try to do it all." Marsh said, "It's not just be bigger and have more money. Those are stupid goals and I don't think they do any good." Instead, the hospital will place new emphasis on programs with regional focus, such as trauma, organ transplants, oncology and telemedicine. New cancer centers built in Marysville and Merced will link with UC Davis Medical Center in Sacramento. Additionally, the hospital is trying to obtain "comprehensive cancer center designation" from the National Cancer Institute. UC Davis also is tinkering with its primary-care network and plans to add specialists to clinics in Elk Grove, Davis, Rancho Cordova, Carmichael, Roseville and Sacramento. Marsh said, "This is not a one-time cut this year and we'll be O.K. We'll always be pushing to see how we can do more with less... I'm interested in the important business of business -- not the B.S. of business" (Robertson, Sacramento Business Journal, 10/18).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.