Consultants Will Help Run UCLA Hospitals

UCLA plans to hire outside financial consultants to help run its cash-poor medical system as it restructures its management and considers major changes recommended by the advisors, campus officials said Friday.

The officials said consultants from the Hunter Group are expected to temporarily fill the new posts of chief financial officer for the health system and director of its faculty group practice.

UCLA also wants the Hunter Group to extend its consulting role beyond the hospital and clinic system to include the medical school’s operations. The campus has already paid the Hunter Group $1.9 million for the 99-page report formally released this week.

In that document, the consultants criticized the health system’s management structure, citing overlapping authority among senior executives and the lack of a position focusing on overall financial performance.

“There are no well-defined job descriptions or definitions of the administrative services that are required,” the report said. “There is no performance review or evaluation of the expected outcome of the services provided.”

Terms of the Hunter Group’s extended engagement have not been worked out, said Steven A. Olsen, UCLA’s vice chancellor of finance and budget. Olsen said the consultant’s management role would be temporary -- about six months -- as the school searches for executives to fill the positions.

“The key to the success of an endeavor like this is momentum,” Olsen said. “We need to be able to demonstrate to the community that we’re taking these recommendations seriously.”

Olsen would not say if Dr. Michael Karpf, UCLA’s vice provost for hospital systems, would remain in his position. Karpf also declined to comment Friday.

UCLA Healthcare’s financial situation is shaky. As of Dec. 31, the system had only $20,000 cash in the bank and officials were forced to borrow $7 million from the UCLA chancellor’s office to help pay bills. The system is the largest in the University of California chain.

The consultants found fault with many financial practices at UCLA’s three hospitals in Westwood and Santa Monica and its network of 18 primary-care clinics on the Westside. They did not evaluate the quality of care for patients.

At a faculty meeting last month, the Hunter Group said the medical system needs to substantially overhaul its unprofitable clinics and cut its staff by 475 positions. UCLA officials say many of those cuts would come through attrition, not layoffs.

The firm said the university needs to revamp billing practices, negotiate more lucrative insurance contracts, cut supply costs and reduce reliance on temporary nurses.

The final Hunter Group report released this week faults the hospital system for inadequately funding the David Geffen School of Medicine. UCLA’s medical system provided only $30 million to the medical school in the last fiscal year, down from $70 million two years earlier.

Officials say the cash was needed to help pay to build hospitals to replace facilities in Westwood and Santa Monica. UCLA is still $305 million short of the $1.3 billion needed to build and equip the hospitals, which are slated to open in late 2005.

“One of the primary purposes of operating a teaching hospital is to provide support to the academic departments in order to support clinical initiatives and research programs,” Olsen said. “We’ve had a shortage of cash in the hospitals.... This has really put a squeeze on the [medical school] departments.”

Olsen said UCLA will move quickly to improve its billing systems and managed-care contracts. But it will proceed more slowly in other areas, particularly with respect to its primary-care clinics. The Hunter Group determined that UCLA has been overpaying many of its 105 primary-care physicians and that those physicians’ productivity falls below national benchmarks.

Doctors have said they fear UCLA will use the report as an excuse to sell or spin off the clinics. Some of the health system’s employee groups said they are monitoring changes very closely. Although the Hunter Group recommends cutting 207 full-time positions from the nursing services staff, the California Nurses Assn. said it has been assured that no registered nurses will lose their jobs. The union represents nearly 2,000 RNs with UCLA.