The doctors and researchers at USHC's hospitals could probably build you a new brain, send your cancer into remission, or bring you back from the near-dead. But their bosses clearly don't know squat about politics. In fact, USHC has almost as many political problems as financial woes.
Again, these go back to the merger's birth.
From the very beginning, Stanford refused to be a party to any deal that was not absolutely private. So, the merger's architects, including USHC board president Isaac Stein, CEO Peter Van Etten, and COO Bill Kerr, argued with regents and legislators that the newly merged organization must be allowed to function as a fully private concern, or the deal would fall apart and UCSF would be doomed. State Sen. John Burton even wrote a new law just for the merger, which basically closed USHC's doors to public scrutiny.
Assemblywoman Carole Migden authored a bill that would have allowed the state to regularly audit the new entity, since it was half-formed with state assets. But that bill was vetoed by then-Gov. Pete Wilson, who is politically connected to most of the regents involved with the deal, and members of the USHC board.
After all the favors USHC was granted when it was formed, Sacramento lawmakers are not reacting well to news that the merger has ended in financial meltdown. Migden, Burton, and the rest of the San Francisco legislative contingent, including state Sen. Jackie Speier, have banded together to demand an accounting of what USHC has been doing.
Burton is now president pro tem of the Senate, Speier is head of the Senate's government oversight committee, and Migden is head of appropriations in the Assembly. In other words, the Bay Area lawmakers now have more influence over state funding than ever before. And it would seem to be a move of room-temperature political IQ to actively piss them off at a time when USHC needs them most.
But that's exactly what USHC did.
A few months ago, after the deficit and the layoffs were announced, Speier, Migden, and other lawmakers successfully secured a vote to send in the state auditor to take a look at USHC's books. The corporation responded by denying the auditor access to its records, citing its legal status as a private corporation.
The shit hit the fan during several loud meetings in Sacramento. Among others, F. Warren Hellman, the original deal-maker, went into combat. At the end of the day, the state got its audit. Sources close to the audit say that the Attorney General's Office is also involved in the investigation.
Meanwhile, Migden -- a take-no-prisoners politician from blue-collar New York roots -- isn't fond of being bullied by wealthy businessmen. She introduced a bill in July that would make USHC a "public agency" and force it to comply with public records and open meetings laws.
Because Stanford refuses to be party to a public entity, Migden's bill would effectively undo the merger. The bill is pending, while Migden watches what happens with the audit, and Mount Zion.
Meanwhile, Speier, who was elected to the Senate in November after a decade in the Assembly, seems to be leading the charge to examine the books. "I don't think there's going to be any question after the audit that there has been substantial mismanagement," Speier says. "When you merge and don't merge a single specialty other than pediatrics, is that really a merger? When you merge and hire some 900 people is that sound management policy?"
It is the threats to close Mount Zion that have sent many to the anti-merger camp, including a large contingent of Jewish benefactors who'd trusted UCSF with their hospital. San Francisco city leaders also have to be on guard, because Mount Zion's closure would likely send more people into public services. Even Mayor Willie Brown, who has remained silent on the entire USHC merger, finally dispatched representatives to publicly oppose the closure at the July meeting of the UC Regents' Health Committee.
Finally, last week, the presidents of the two institutions that gave birth to USHC spoke, calling for their "reassessment" of the merger. Stanford President Gerhard Casper and UC President Richard Atkinson say they want to know by Oct. 1 what should be done about USHC's dismal performance.
But even in the face of financial crisis, USHC continues to cling to an institutional arrogance. In a letter to the editor of the San Francisco Examiner published Aug. 1 -- before he resigned -- Van Etten argued again that the financial chaos is not his -- or USHC's -- fault. In fact, Van Etten seemed to be saying that USHC should be lauded for looking at closing Mount Zion.
"One of the reasons for the shortfall is indeed that the task of merging two large, complex organizations was more difficult and costly than we predicted. Another reason is that payments from federal, state and private payers have not kept up with rising expenses due to skyrocketing drug and supply costs and increased wages," Van Etten wrote.
"But the most important reason is that we did not aggressively reduce our costs in the first 18 months of the merger as originally planned and as encouraged by external reviewers such as the State Auditor. It is ironic that in now reducing our costs and consolidating services we are accused of 'mismanagement'.
