Under pressure from state legislators to open its books, financially stressed UCSF Stanford Health Care reluctantly agreed in mid-July to a review of its finances by the California auditor, Kurt Sjoberg.
Northern California's largest academic medical center, which is losing money rapidly, initially refused to provide its financial records to state regulators. That prompted the auditor's office to threaten system executives with subpoenas and possible criminal charges. Legislators then intervened, paving the way for the July 16 compromise.
UCSF Stanford was created through the 1997 merger of four facilities: Lucile Salter Packard Children's Hospital at Stanford, in Palo Alto, Calif.; Stanford (Calif.) Hospital and Clinics; UCSF/Mount Zion Medical Center, in San Francisco; and the University of California San Francisco Medical Center. The merger involved the transfer of the public assets of the UCSF facilities into a private venture.
Officials at UCSF Stanford had argued that the system is private and not subject to auditor review.
But system officials relented after four state legislators told them that without an audit, they would oppose UCSF Stanford's requests for financial aid from the state.
The system wasn't in much of a position to fight. For the first nine months of the fiscal year ending Aug. 31, UCSF Stanford posted an operating loss of $51.5 million on revenues of $1.15 billion, and it expects to lose $60 million by the end of the fiscal year. UCSF/Mount Zion Medical Center alone will account for $56 million of the projected loss, officials said.
Officials said that without layoffs and other drastic cuts, the deficit would approach $185 million over the next two years.
At deadline, the system's board of directors was scheduled to convene an executive session focusing on Mount Zion. But pressure from elected officials may give the facility a reprieve, at least until the state's audit is completed.
The two Stanford facilities entered the merger only after being assured that the system would be run by a private, not-for-profit corporation subject to limited public scrutiny and control by the University of California. But the auditor's office determined that because the University of California is under state control, the state has the right to review the system's records.
State officials are meeting with UCSF Stanford executives to determine the scope of the audit, according to the state auditor.