‘WE TOOK ON TOO MUCH’: Stanford-UCSF System Breaks Up
Stanford University President Gerhard Casper yesterday announced that the Palo Alto-based academic medical center will pull out of its floundering merger with UC-San Francisco. In a letter to University of California President Richard Atkinson, Casper stated that the two hospitals would have to "begin a process of unwinding the current venture." Although the UC board of regents must ratify the dissolution, the San Francisco Chronicle reports that "little, if any, dissent" is expected, and the two hospitals will likely be formally divorced within three or four months. "We took on too much," Casper said.
Post-mortem: What went wrong?
Formed in 1997 to help the two prestigious AMCs survive managed care and Medicare cuts, UCSF Stanford has instead found itself coping with a flow of red ink, losing $86 million in the last fiscal year alone. In an interview with the media yesterday, Casper said the partners had been too ambitious in their efforts to fully merge the two medical institutions. He said, "I knew (the merger) was bold and risky and faced many obstacles. I still don't know if asking for dissolution was the right thing. I only know I had no alternative but to do so" (Russell/Schevitz/Fagan, 10/29). One of the largest problems, Casper conceded, was administrators' failure to achieve physician buy-in. Faculty members at both institutions resisted the merger from the beginning, refusing to combine their practices and share financial risk. For their part, doctors yesterday also said the merger "was a bad idea from the start," adding that the 40-mile stretch between Palo Alto and San Francisco made clinical consolidation a near-impossibility (Krieger/Feder, San Jose Mercury News, 10/29).
New Hope on the Mountain?
Also contributing to the system's financial woes was money-losing Mt. Zion Hospital, "which serves many low-income people in the Western Addition" of San Francisco and which is blamed for nearly $60 million of UCSF-Stanford system's losses last year. Administrators said yesterday that they will continue with plans to downgrade the 113-year-old hospital to an outpatient-only facility despite the merger dissolution. UCSF Chancellor Michael Bishop said, We are not going to keep Mt. Zion open. There is no looking back on that." But staff are "keeping their hopes up." Mt. Zion ER nurse Tomas Shuster said, "If we're not aligned with a private university any more, maybe that means we're public again and we can get public funds." Like many others, Shuster wears a "Keep Mount Zion Open" sticker on his ID badge. Mt. Zion supporter and Assemblywoman Carole Migden (D-San Francisco) said, "We'll have to see what's left of the ruin and rubble of this merger before we can see what can be resurrected" (Howe/Ruberstein, San Francisco Chronicle, 10/29).
In his letter to Atkinson, Casper said that Stanford officials would be willing to consider an "alternative service corporation" that might continue some of the few benefits the merger achieved, including joint contracting and consolidated pediatric services (Stanford release, 10/28). The Chronicle notes, however, that such an approach might be subject to antitrust concerns (Russell/Schevits/Fagan, 10/29). The universities are also likely to face a challenge on the staff front: It is unclear how the merger's dismantling will affect "ongoing and contentious" contract negotiations with unionized UCSF Stanford workers, and Stanford Medical School Dean Eugene Bauer warned yesterday that the university also might need to consider staff cutbacks in order to cope with Stanford's share of the system losses (Mercury News, 10/29). On the other hand, many employees seemed pleased overall with the dissolution announcement -- the Chronicle reports that the "surprise decision ... caused spontaneous dances of jubilation in the hallways of UC-San Francisco hospitals" (Russell/Schevitz/Fagan, Chronicle, 10/29).