UC Medical Schools Aim To Cut Up to $150M From Budgets

On Thursday, the University of California Regents approved a plan to cut up to $150 million from the collective annual budgets of five medical centers within the university system, the San Francisco Business Times' "Bay Area BizTalk" reports.

Reasons for Cost Cutting

According to UC officials, the university system spends about $500 million on its medical and health professional schools with "essentially no support from state general funds."

UC said it must cut costs by 2017, when reimbursement rates for Medicare, Medi-Cal and private insurance likely will be reduced. Medi-Cal is California's Medicaid program.

Details of Plan

The "Leveraging Scale for Value" initiative is a segment of a plan by UC President Janet Napolitano to slash costs and improve efficiency systemwide.

It will focus on cutting costs at five UC medical centers in:

• Davis;
• Irvine;
• Los Angeles;
• San Diego; and
• San Francisco.

The project aims to cut costs in three areas:

• Clinical laboratories;
• Revenue cycle; and
• Supply chain. 

To reach that goal, UC will improve billing and collection processes and stop sending lab tests to third-party vendors (Rauber, "Bay Area BizTalk," San Francisco Business Times, 3/20). 

John Stobo, senior vice president for health sciences and services at UC, said that the project does not "replace what each medical center must do on its own to contain costs," adding, "The systemwide efforts focus on what individual medical centers are unable to do on their own" (UC release, 3/20).