Regents Move Ahead on Hospital Merger

The UC Board of Regents took a major step Wednesday toward privatizing its network of San Francisco teaching hospitals in a liaison with nearby Stanford University.

That public-private merger is considered the advance guard for what could become a trend in the UC system, as its state-owned medical centers falter under the burden of increased competition from the private managed care industry and decreased Medicare and Medi-Cal payments.

The action Wednesday--a unanimous committee vote to form a corporation to facilitate the San Francisco merger--drew immediate protest from representatives of workers at the university hospitals.

About a dozen protesters shouted “Shame! Shame!” and tried to shove their way to the front of the boardroom. Held back by a phalanx of at least 20 UC police officers, about half the protesters staged an impromptu sit-in. Six were arrested on suspicion of misdemeanors.

“This is our medical center, not theirs,” yelled Libby Sayre, a representative of the university’s technical workers’ union, as the last of the six was dragged out of the meeting room.

The vote by the regents’ health services committee is expected to receive routine approval by the full board Friday. It came after a year of studying the merger, which would combine the staffs and resources of the two medical powerhouses under the umbrella of a private nonprofit corporation.

Among the institutions that would be linked by the agreement, perhaps as early as next summer, would be Moffit and Mt. Zion hospitals in San Francisco and Stanford University Hospital and Children’s Hospital in Palo Alto.

In recommending the approval, UC President Richard C. Atkinson said that despite “tens of millions of dollars” in cuts at UC San Francisco’s medical center, the institution’s profit margin is declining.

“To sustain the enterprise through the next 20 to 30 years, we must decide how we will garner the resources necessary to deal with a health-care system in turmoil,” Atkinson said. “I am convinced that . . . at the present moment [the university] must join with a partner to compete successfully in the health-care marketplace.”

As further evidence that privatization could come to dominate UC medical systems, representatives of UC Irvine told the regents earlier at the meeting that they have narrowed their choices of private health care partners to two hospital management companies: Columbia/HCA Healthcare Corp. and Tenet Health Care Corp.

The Orange County university’s plan is to lease out UC Irvine’s Medical Center, which lost about a third of its patient load in the past five years because of changes in Orange County’s Medi-Cal disbursements.

After the Irvine report, the regents’ health committee also approved a partnership with a biotechnology firm to jointly operate a molecular diagnostic and genetic screening center at UC San Diego. Genetic discoveries made by the center would be jointly owned by UC and the firm.

Many hurdles remain in the complex UC San Francisco/Stanford merger, however, including two legal challenges and a pending review by the state attorney general’s office. Additionally, regents said they would look closely at measures to protect employees’ jobs and pensions, which union leaders fear could be threatened by the merger.

From the beginning, some regents have questioned the basic financial wisdom of linking up with the Stanford medical center, which has had its own financial problems.

But on Wednesday, some of the former skeptics said they were swayed by an outside review of the plan, which found Stanford had made severe cutbacks several years ago and is now operating in the black.

“After our last meeting, I left with the idea that we should put this . . . process on the pause button,” said Regent Roy T. Brophy, a Sacramento-area developer. But after hearing the review in a closed session, he said, “I’ve changed my mind.”