Regents discuss ill health of UC med system

Regents discuss ill health of UC med system

Young announces purchase of Santa Monica Hospital

By Phillip Carter

Daily Bruin Senior Staff

SAN FRANCISCO — Expert after expert on health care came before
the UC Board of Regents yesterday to give a grave diagnosis for the
five-hospital UC medical system, including the UCLA Medical
Center.

UC President Jack Peltason opened the special meeting by saying
that the system’s hospitals must either change their practices
radically or not be able to do business in the new climate of
medicine. Peltason added that the university must balance its
educational obligations with its financial health in order to
compete with other hospitals.

"For the immediate future, we will need to continue to operate
these teaching hospitals if we are to sustain our academic teaching
and research commitments," he said. "The time has long gone when we
can just open the doors and hope patients will show up ­ we
must go out and get them."

Soliciting more patients is exactly what the UCLA Medical Center
is trying to do, according to statements made by Chancellor Charles
Young in an interview after the meeting. He said UCLA has reached
an agreement to acquire Santa Monica Hospital under confidential
"terms that we think are advantageous to all three parties.

"We’re in the final stages of the acquisition," Young said. "At
the present time, an agreement has been reached; we’re in the ‘due
diligence’ period," during which UCLA is investigating the hospital
to make sure that it’s getting what it had bargained for.

He added that UCLA is buying the hospital "to have a broader
network, have a larger primary-care base and balance our tertiary
care with the primary care of Santa Monica Hospital."

During the meeting, the financial, legal and medical experts who
spoke before the regents prescribed various methods for dealing
with the new climate of health care in California, ranging from
employee layoffs to separating the hospitals from the UC
system.

The regents finally adopted a recommendation to create a new UC
vice presidency, specifically for dealing with the UC medical
system.

One financial expert said that because of the high cost of
teaching and doing research, the UC medical system would have to
lay off 2,500 employees in the next three years just to compete in
California.

"Each of your medical centers starts out with a competitive cost
disadvantage due to … your core teaching and research," said
Charles Townsend, partner with a consulting accounting firm.

"The (UC) medical centers currently employ nearly 19,000
full-time employees, by 1999 its systemwide staff will need to be
reduced to nearly 16,000 full-time employees."

The situation will not get better soon, Townsend concluded.
Building projects ­ such as the seismic reconstruction of the
UCLA Medical Center ­ will not be able to be paid for by the
hospitals themselves.

"The medical centers’ operations will be inadequate to meet the
capital (building) needs of the centers over the next five years."
He added that the UCLA project in particular could draw down the UC
system’s budget by nearly $300 million, depending on how much
funding the federal government grants California.

Earlier in the meeting, another expert put these financial
problems into the political context of President Bill Clinton’s
failed health care reform proposals in Congress during 1994.

"Absent legislative reform, academic medicine has been left
naked in the face of market forces ­ there is no white knight
coming out of Washington that is going to provide safety for
academic medicine," said Dr. Jordan Cohen, president of the
Association of American Medical Colleges.

Another medical-industry expert reaffirmed what Cohen said, but
added that the newly elected Republican Congress’ agenda could
spell further problems for the UC medical system.

"With (the Republicans’) balanced-budget amendment and middle
class tax cuts, you are going to feel it here in California, and
you are going to feel it in the revenues for higher education,"
said Leonard Schaeffer, president of Blue Cross of California.

One regent said that education and public service missions of
the UC system were becoming endangered, after hearing the reports
of decreasing federal funding for medical care.

"I’m afraid that medical education and medical research are
going to become orphans," said Arnold Leiman, faculty
representative and professor of psychology at UC Berkeley. "Who’s
going to support (research)? ­ government isn’t going to do
it."

After hearing the testimonies, several regents objected
strenuously to the absolute terms in which the UC medical system’s
problems were phrased.

"I would like to caution us from looking at the situation in
black and white," UC Regent Peter Preuss said. "This is a complex,
multi-faced system."

The complex nature of the UC system caused another regent to
emphasize the legal responsibilities of the university to the state
over possible financial restructuring.

"We have fiduciary duties and obligations to the public of
California," Regent Frank Clark said. "Whether we could even
consider walking away from our obligation to the public of
California is a very serious problem that we must face, because
that’s a Constitutional obligation for which we were set up."

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