Cothran

So, UCSF Stanford Health Care, the offspring of an illegal merger between UCSF and Stanford hospitals in 1997, is bleeding to death.

Strange turn of events, that. Didn't the rich folk who supported the merger of the two private Stanford and two public UCSF hospitals -- a move experts have convincingly termed an unconstitutional privatization of a public asset worth $400 million -- tell us the merger was all about saving money and making the combined hospitals more cost effective? Didn't they forecast an improved bottom line, improved by more than $250 million, over three years?

And now this: A little more than one year in we get the ever-growing, surprise-to-everyone, health-care-service-eating deficit.

In March, it was $11 million. Now we hear UCSF Stanford Health Care will be $60 million in the red before the end of the fiscal year in August. And if nothing is done, next year the hemophiliac nonprofit health-care operation will lose at least $135 million.

The year after that, another $100 million will go bye-bye.
I assure you, more bad news and larger numbers are on the way.
In vain attempts to stanch the bleeding, UCSF Stanford Health Care is planning on eliminating several thousand positions, which will necessitate -- and again, this is an initial figure -- more than 700 layoffs just this year.

"Everything is on the table right now," says UCSF Stanford Health Care spokesman Michael Lassiter about the possible cuts and closures needed to slash the deficit that no one saw coming.

Everything, according to Mr. Lassiter, includes closing UCSF's Mount Zion Hospital in 2001. Pharmacies have already closed.

That's right: The incompetents at UCSF Stanford Health Care aren't fully into their second year of operation, and they are talking about closing an entire hospital to balance a budget. And worst of all, they can't even come up with a convincing explanation as to why.

They say the reason for the sudden deficit is the recent cutbacks in payments to hospitals by private HMOs and federal and state governments. But shrinking treatment reimbursement rates had been a trend for several years before the merger. In fact, the decline in government reimbursement for medical care was one of the reasons given for the merger. The two institutions combined could eliminate overhead and other duplicate costs and better absorb the cutbacks.

So one of two things has happened here: Either the architects of the merger did not prepare for the inevitability of funding cutbacks they knew better than anyone else were coming; or there are a lot of reasons for massive deficits that we aren't being told. Lots of very embarrassing reasons.

And those potentially embarrassing reasons bring us around to the most insuperably arrogant and foolish part of the merger: the demand by the administrations of UCSF and Stanford that they be allowed to operate their ill-gotten, jointly held prize in complete privacy, without a single taxpayer or government official watching out for the public's investment.

The pro-merger forces -- aptly represented by the tweedles of big-time investment banking Isaac Stein and F. Warren Hellman -- looked down their noses at critics; they scoffed, tut-tutted, and dismissed concerns about taking UCSF hospitals private.

And when they said private, they meant it, baby.
Once UCSF and Stanford hospitals merged, no effective protections against insider corruption existed. There were no mechanisms to provide the public with information about the doings and goings-on of what was once a taxpayer-owned and -run institution. The state's public records law no longer applied to the new, private, merged entity.

The forces behind the merger scoffed and tut-tutted at critics who said lack of public oversight might lead to waste -- or worse. When San Francisco politicians John Burton, Quentin Kopp, and Carole Migden tried to institute government oversight protections and impose public records and open meeting laws on the merged hospital combine, the people behind the merger howled and bullied and pulled strings and made sure those proposed protections were defeated. The governor at the time, Pete Wilson, gladly helped.

In the end, the Public Records Act would not apply to the new health-care entity. The Open Meetings Law would not apply. Even conflict-of-interest laws -- hospital directors voting, for example, to buy equipment from or steer drug trials to companies in which they were invested in or owned -- would not apply. All of these reasonable rules, which apply to public hospitals and don't seem to harm them at all, would be lifted for UCSF Stanford Health Care.

When Sens. Burton and Kopp (Kopp is now a San Mateo County judge) tried to make UCSF Stanford Health Care's financial records public and its meetings open, the pro-merger folks got Wilson to beat the crap out of two lawmakers. Eventually, as they compromised to avoid a Wilson veto, those lawmakers turned their bill from a law that would open the records and meetings of the new health-care entity into a privacy law that prohibited any meaningful disclosure of information.

Migden went the distance. She dared Wilson to veto her bill mandating that the state Senate and Assembly budget committees and the legislative analyst have oversight powers over the merged hospitals.

Veto he did. The forces behind the merger won. They could now run the hospitals in utter privacy -- and, as it has turned out, into the ground.

Burton and Kopp had a ready-made excuse regarding the strange transformation of their bill from one mandating public disclosure of information to one assuring total secrecy: Gov. Wilson. If they didn't compromise with him, he would veto their openness bill.

And Migden proved them correct; her bill was vetoed.
These three San Francisco pols had attained that safest and most comfortable of all political roles: They were defeated champions. They had scored points for standing up to power, without actually having to risk pissing off powerful people by passing legislation those people didn't like.

Now, a couple of years later, Burton and Migden seem so content in this defeated-champion role that they don't want to give it up -- even though we have a new governor, Gray Davis, who supposedly is a Democrat, just like the defeated lawmakers.

I pointed out this change of administration to both Burton and Migden. Although I think they were already aware Davis had become governor, I asked whether they would be willing to rejoin the fight for openness at UCSF Stanford Health Care, now that one of their own was governor.

(The UC Board of Regents is the only body able to actually dissolve the merger, and they are being urged to do so.)

Migden said she'd consider pushing again to get legislation allowing public oversight of the entity now sometimes known as USHC.

Burton, on the other hand, was profane and petulant.
"I'm going to a meeting on the budget," he said, trying to avoid answering the question.

So I asked again: Would he push to open USHC's records and meetings to the public?

"I would first want to look at what the hell it is people want to see," he said.

Finally, he said, "If somebody tells me, 'We want something, and we can't get it,' I will look at it, and if I decide it should be in public, then I would look at it. But I'd have to have someone complain first, before I put another fucking potato on my plate."

All right, John. I'm complaining. I have read your bill, compared it with other open government legislation, and interviewed experts, and I have come to the conclusion that your bill does not allow anything at all into the public domain that is of any use to those who wonder whether public resources are being squandered by UCSF Stanford Health Care.

Who's to say -- and who's to see -- whether the people running USHC aren't self-dealing themselves into a froth? Who's to know whether those excesses have something to do with the budget mess?

The only financial documents you've allowed into the open are so tremendously general in nature that no one could tell if hospital directors had taken a retreat in Tahiti at a five-star resort, or steered lucrative contracts to companies they owned, or had USHC buy or lease property from them at above-market rates, or hired thousands of consultants with whom they had financial relationships at hourly rates far exceeding industry standards.

Even you, John, told me that UCSF Stanford Health Care went on a "hiring binge" after the merger, and that you thought the binge, rather than cuts in government reimbursement for health care, was causing the budget problems.

At first it surprised me that Burton and Migden hadn't reintroduced their bills on openness at USHC. Opportunities for grandstanding on this order rarely come along more than once in a political lifetime.

Hell, I might even leave journalism, just to script their press conference, which might go this way:

First, Migden and Burton excoriate Pete Wilson.
They point out that they tried their hardest in 1997 to institute oversight of the new UCSF-Stanford entity, and failed under insurmountable opposition.

Then they insist, with rising indignation, that they cannot stand by any longer and watch a prized public institution be drained of its lifeblood by an ill-advised partnership.

The two lawmakers urge UC regents to cancel the merger.
And then the legislators say, with cresting fury, that they will now do what they should have done two years ago.

Migden reintroduces her legislative oversight bill. Burton introduces a package mandating that the merged UCSF and Stanford hospitals be considered a governmental agency for the purposes of abiding by the Public Records Act, the Open Meetings Law, and the Political Reform Act.

To hell with all the mother-humping exemptions, Burton curses.
Eventually, both lawmakers call upon their fellow Democrat, Gray Davis, to heed their call for openness.

And in closing the two lawmakers could issue a threat: If these bills fail, or if the governor vetoes them, we will continue to reintroduce them again and again.

The political rationale for the bills is not going away anytime soon. Until the close of 2001, UCSF Stanford Health Care promises to be a losing proposition. Burton and Migden could earn all sorts of street-fighting points without really trying -- and, it seems, without any political liability.

Where could the flaw in the plan be?

God bless Carole Migden. She is without fear. Yes, she's as political as they come. But more than any other politician I know, she is willing to speak the truth about politics.

After calling blustering Burton, I rang Migden.
So, I asked her, why don't you reintroduce your oversight bill?
"I could," she said. "And I may. But the truth is it would probably be vetoed."

But isn't Gray Davis more likely to listen? He's a Dem like you, I posited, foolishly.

Then Assemblywoman Migden educated me in the nitty-gritty.
"Look, honey, I got 14 out of 20 bills from Wilson. Maybe I will get 15 from Davis."

She was saying that when the rich and powerful want something, the differences between political parties evaporate.

She started listing off all the rich people who pushed for the UCSF-Stanford merger back in 1997.

"Don Fisher is in this," she said referring to the Gap owner and major pro-merger advocate. She rattled off other names as she warmed to her subject: "It's billionaires. All of them. We are fighting billionaires with our little spindly handmade swords."

Then I remembered: When Gray Davis was just lieutenant governor (and therefore, by workings of law, a UC regent), he told SF Weekly why he voted for the merger.

"My thinking on the whole issue was greatly influenced by Warren Hellman's report."

Hellman, one of the richest and most powerful men in California, had written a misleading financial review of the merger, making the argument that UCSF was losing money and needed to merge, when just the opposite was true. And Gray Davis, apparently because it was Hellman, went along without question.

Migden is right. In this regard, Davis is no different than Wilson. In my view, they are both owned (in an arrangement probably very similar to time shares on Hawaiian condos) by guys like Hellman and Fisher and Stein.

As UCSF is run into debt and patient care put at risk, what's at stake is more than just the possible destruction of a public institution. Though that should be enough to make anyone care.

What's most important to focus on is this: The rich and powerful people behind the merger yanked the chain of a sitting governor, and then they yanked on a gubernatorial candidate. Because both men needed the money and support of the rich and powerful they willingly did the bidding of unelected and largely invisible people. And, in the process, did an immensely foolish thing that harmed the public interest.

Now one of these men is governor and lawmakers like Migden and Burton are reluctant to try to correct the mistake, because they know, more than most, that he is owned by a de facto government of "billionaires," to use Migden's term.

Makes you wonder why we have elected government at all.

I know it seems an overly obvious point: The rich and powerful own the government. They are, as a friend of mine says, the permanent government. Elected officials are merely transient functionaries of their will.

So fine, call me naive; the perfectly obvious upsets me. And here's my foolish response: I am hopeful.

This merger is quite the stunning failure. The numbers are as nasty as they get: about $60 million in the red this year; $135 million next year; $100 million the year after that. Entire hospitals, which serve many elderly and indigent patients, might close.

The failed merger is so big it might just overwhelm the structural evils of our political system.

I know for a fact that politicians are meeting on a regular basis trying to figure out what the hell to do. They know if they don't do something, and Mount Zion closes, or worse, they will be flayed by the voters. Doubtless they are still looking for the right thing to do.

I have some advice: Turn on your masters.
Who knows? You might enjoy it.

George Cothran (gcothran@sfweekly.com) can be reached at SF Weekly, 185 Berry, Suite 3800, San Francisco,

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