Daring Daylght Merger

Over the past many months, I've enjoyed watching University of California regents and administrators make up reasons for giving away a world-class, $380 million, publicly owned medical center. It's been like watching Bill Clinton explain Whitewater, lies constantly evolving one into another as new and unfortunate facts arise -- with one major difference.

You don't need the hassle of impeachment proceedings to get rid of regents or administrators. They can just be indicted.

The pending merger of the UCSF and Stanford University medical centers is, indeed, a scandal. If you've been following the run-up to the merger through your daily newspaper, of course, you might believe there is nothing at all scandalous about the proposal. The placid, navel-gazing dailies of San Francisco have presented the merger as just another item of business on the UC agenda, a worthy proposal beset by irritating controversies that will go away, sooner or later, if everyone just keeps focused on Di and Dodi and the other important stories of the day.

This view is -- and how can I put it politely? -- incomplete. The merger of the UCSF and Stanford medical centers constitutes an amazing, daring daylight theft of $380 million in public assets.

Obviously, UC and Stanford officials never publicly announced that they were planning to steal $380 million from the rest of us. That is not how these complicated, white-collar swindles are conducted. No, starting nearly two years ago, UC and Stanford put out a cover story for the merger, a superficially reasonable justification that could be absorbed easily by San Francisco Chronicle reporters and other simple people.

The cover story went something like this:
The medical centers at UCSF and Stanford are in desperate straits; they just can't compete in the cutthroat world of private corporate medicine. Not too far down the line, these public hospitals and clinics will become money sinkholes, draining funds from their respective institutions and causing cutbacks in educational programs and health care services. A merger that joins these two research and treatment centers into one giant of high-end health care would solve the coming fiscal emergency. That new entity would be a nonprofit corporation known as UCSF-Stanford Health Care, or USHC.

USHC will save our universities, our hospitals, our lives -- and make San Francisco a great, can-do city again!

The UC regents are scheduled to take a final vote on this can-do merger Friday. The smart money is betting the merger will be approved; vast amounts of political grease have been spread to make things slide in that direction.

And, frankly, I hope the regents do approve the merger. Before they vote, I hope they spend a lot of time elaborating on their reasons. Afterward, I hope to receive UC system press releases touting the merger as a great leap forward for UCSF and San Francisco.

I hope to see these things happen, because they will provide ironic background detail for the stories SF Weekly staffers will write if and when a grand jury begins to investigate the merger. And the preceding sentence is not just wishful fantasy.

A grand jury will have plenty of reasons to start drafting subpoenas the minute the regents officially approve this merger, because even when viewed in the rosiest of lights, the union of the UCSF and Stanford medical centers is clearly illegal.

Let us look at a few of the possible, probable, and almost certain crimes of the UCSF-Stanford merger:

1) The University of California, San Francisco is a governmental entity. Its assets belong to the public. The state constitution forbids the government from giving gifts of public assets to private citizens or business entities. The merger will give two UCSF hospitals and other facilities -- some $380 million in assets -- to a private corporation. UCSF will get nothing certain in return. (That private nonprofit corporation will decide how much money it will return to the UCSF medical school each year; after the first year, there is nothing to stop the private business from returning nothing.)

If the UC regents approve the merger, they will almost certainly be violating their fiduciary duties to protect public as-sets. Because the regents have failed to ask the state attorney general for an opinion on the merger, those fiduciary failures probably constitute crimes.

2) In an attempt to "cure" the unconstitutionality of the proposed merger, the university system went Clintonian; that is, it morphed the cover story. In the sub-cover story, UC claims that the new merged entity, USHC, would provide all the public interest services -- the charity medical care, the public health research, and so on -- that the old UCSF Medical Center offers (plus that unspecified amount of income for UCSF).

According to this sub-cover argument, the merger represents nothing but a technical change in the way the UCSF Medical Center is organized. Its fundamental functions remain unchanged, so the merger does not represent an asset transfer, unconstitutional or otherwise, to the private sector.

This derivative cover story -- the second attempt to put a legal fig leaf on the naked theft of UCSF resources that the merger represents -- is not terribly persuasive. It would probably be laughed out of court, if things ever go that far.

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