CLINICAL AFFAIRS COMMITTEE
Warren Gold, M.D., Chair

MINUTES
Meeting of March 28, 2001


PRESENT: Chair Warren Gold, Joseph Guglielmo, Susan Janson, Scott Soifer, Joel White

ABSENT: Raymond Braham, Vice Chancellor Haile Debas, Hope Rugo, Jane Weintraub

GUESTS: Mark Laret, Ken Jones


The meeting of the Clinical Affairs Committee was called to order by Chair Gold on March 28, 2001 in M688. A quorum was present.

The minutes from the meeting of January 24, 2001 and February 28, 2001 were approved.


Chair’s Report/Announcements/Discussions

Chair Gold asked for a brief discussion on the proposal for a Drug Free Environment at UCSF. This discussion was brought forth when colleagues at UC Davis (UCD) contacted Chair Gold for a new policy proposed by the administration on that campus. The proposal for Mandatory Drug Testing for employees in the UCD Health System and School of Medicine was brought to the UCD Committees on Faculty Welfare and on Academic Freedom and comments were sought. The UCD proposal requires that a urine test be performed for all new employees, including faculty, and that additional drug tests be performed when there is cause for reasonable suspicion that drug use is occurring. Chair Gold then raised the following question - should drug testing be part of employment criteria at UCSF and should testing be continued periodically?

J. Guglielmo indicated that no such policy has previously existed at UCSF. Chair Gold (also) mentioned that, based on inquiries to Vice Dean Neal Cohen and Senate Chair Larry Pitts, the VA hospital had tried to implement a similar policy of drug testing in the past, but that it was rejected.

S. Soifer commented that the Committee should not automatically oppose the idea but should take a look at the all aspects of Drug Free Environment proposal.

J. Guglielmo commented that the logistics of implementing drug testing for UCSF employees would be enormous and that in all probability attorneys would become involved and that perhaps this issue is beyond the Clinical Affairs Committee’s purview.

Mr. Laret commented that at the Medical Center, they do have a drug testing policy for all new hires but do not test existing employees after their initial hire.

Old Business – Continued Consideration of SFGH Report

The SFGH Report was handed out to all members present and Chair Gold requested members to read it over and submit comments with an eye toward focusing on the Executive Summary and the body of the report, and to comment on whether or not they flow well and/or if the draft needs more work. Comments should be sent to Chair Gold and Senate Analyst, Anna Cho by email acho@senate.ucsf.edu.

New Business:

The Medical Center’s CEO, Mark Laret introduced the Medical Center’s new Chief Financial Officer (CFO), Ken Jones. Mr. Laret pointed out that Ken Jones has exceptional credentials and that he is looking forward to working with him. Mr. Laret and Mr. Jones then made a presentation to the Committee that focused on the status of the Medical Center’s budget. Mr. Jones distributed the Medical Center’s financial update report (see Attachment 1) and reviewed the numbers with Committee members in detail listed below.

Mr. Jones reported that the Medical Center is very busy. The average census (occupancy) is 399 (out of a total of 470 beds), and that the average length of stay is relatively high (6.05 days). The Case Mix Index (calculation for Medicare rate) is the highest in the UC system.

Mr. Jones summarized the Medical Center’s Income Statement for an eight-month period (July 1,2000-February 28, 2001) as follows:

Net Revenue: $479,164,000
Expenses: $499,435,000
Net Loss: $(20,271,000)*

*Net loss includes four problems related to cash flow:

  1. Strategic support (purchase of services from physicians)
  2. Effectiveness of collecting money for physician practice
  3. Cost of collection activities
  4. "Tax to campus" (cost of transfer from accrual system to PSA system)

The following Summary of Cash Flow for the Medical Center for the same eight-month period was provided:

Source of Cash ($ in thousands)

Operations: Net loss $ (20,271)
+ Depreciation 30,539 
10,268
Contributions 3,661**
Other Sources 1,393   
Total 15,322

**Represents settlement from merger and sale of used equipment

Medical Center Use of Cash ($ in thousands)

Capital expenditures 29,280
Transfer to campus 11,200
Increases to capital 7,758
Payment of principal 1,475*** 
49,713

***Includes long-term debt, which increased from $40 million prior to merger to $105 million currently.

Increase (Decrease) to cash (34,391)
Operating Balance at beginning of the year: 54,350  
Ending Balance in saving at end of 2/28/01: $19,957

Budget Projections for the Medical Center for this fiscal year? :

  1. Estimated to lose $25 million in fiscal year 00-01
  2. To lose less than $25 million next year
  3. To save money by cutting costs at the periphery of the operation without affecting bedside care while increasing efficiency.
  4. Increase revenues

Chair Gold raised the question of how the Chief Financial Officer was planning to implement his ideas of finding new revenue opportunities for the Medical Center. Mr. Jones responded that his first step would be to conduct an evaluation for efficiency that involved his staff and the Medical Center’s staff. Mr. Jones also commented that a team from Information Technology Support would assist with this evaluation process.

K. Jones added that Medical Center’s Collection Department only collects 39 cents-on-the dollar on average for all monies owed to the Center. Most of the collections are processed within 90 days of the invoice, but the goal is to reduce this figure to 75 days or better.

Mr. Laret provided the Committee with the following general information on the Medical Center’s budget.

  • Generally, the Medical Center starts each new fiscal year with a zero balance.
  • The Medical Center is a form of business where revenue and expenses run together. (Unlike other departments at UCSF where revenue is generally made available at the beginning of the year through grants and other methods)
  • Paid holidays at the Medical Center have an enormous fiscal impact -- each holiday that the Medial Center observes costs approximately one million dollars per day.
    • With a discussion underway about the campus observing Veteran’s Day and Cesar Chavez Day, additional funds will be needed to cover these unanticipated expenses.
  • Currently, the Medical Center is licensed for 470 patients and is considered to be a "medium size" hospital. One of the questions before the Medical Center at this time is that of the need to expand the Emergency Department and how to balance the number of beds needed for Emergencies versus beds needed for special referrals.

Chair Gold asked about how transfer patients from community hospitals were affecting the Medical Center. Mr. Laret responded that the record of bill payment by transfer patients is high and that the rate of recovery overall is higher than the Medicare rate.

Mr. Jones indicated that more than halves of the patients at the Medical Center are contract HMO patients and that this could work in the hospital’s favor for reliable revenue. The Medical Center should have more power in negotiating with the HMO’s and as the Medical Center’s CFO, he will push to increase the revenue of the Medical Center for the cost-per-day rate paid by HMO’s. Because the Medical Center has a limited number of beds, the only way for revenues to increase is to impose an increased cost rate. Mr. Jones is looking to increase the rate by an average of 3%.

Mr. Laret commented on what he views to be the focal point of a struggle in the healthcare arena. On the Cost side pharmaceutical costs have increased 10% to 15% and labor costs have increased 7-8%. On the revenue side there has been a decline in the Medicare rate that has adversely affected revenue streams, however there is news that Medi-Cal rates may increase. Additionally, additional revenue is anticipated with continued improvement of internal management of the Medical Center – including continued evaluation of cost-effective procedures, use of standardized products, improvement of systems and reduction of unnecessary work.

A major investment has been made in a computer-based physician order entry system called "Last Word". The Committee members suggested that all faculty responsible for patient care be involved early in implementing this system in order to avoid similar problems encountered by other University Medical Centers, such as Stanford who use this same program. Mr. Jones agreed to invite J. Guglielmo.

S. Soifer indicated that he wanted to meet with Bill Arnold, Chief of Operations for the Medical Center, to hear about his plans for the Medical Center. Mr. Jones indicated that he would assist Dr. Soifer with arranging the meeting Dr. Soifer agreed to report back to the Committee on results of the meeting.

At the request of the Committee, Mr. Jones agreed to attend meetings of the Clinical Affairs Committee on a quarterly basis in order to provide the Committee with updated information on the Medical Center’s budget.

The meeting was adjourned at 10:30am.


Senate Staff:
Anna C. Cho
Senate Analyst
514-2696
acho@senate.ucsf.edu

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