The senior executives who guided the troubled UCSF Stanford Health Care system through its first two years of existence resigned last week, creating uncertainty for the future of the system.
Peter Van Etten, president and chief executive officer of the four-hospital system, and William Kerr, its executive vice president and chief operating officer, resigned effective Aug. 16.
The abrupt move came just days after senior officials at the University of California system and Stanford University decided to "reassess" the structure of the merged organization.
The departure also comes on the heels of another abrupt resignation in the ranks of high-profile California hospital executives, that of long-time Catholic Healthcare West CEO Richard Kramer (Aug. 2, p. 2).
Isaac Stein, chairman of UCSF Stanford's board of directors, said the resignations were intended to "facilitate any organizational changes" resulting from the restructuring of the 1,350-bed, San Francisco-based system, the largest academic medical center in Northern California.
"We felt it was appropriate to accept their resignations," Stein said in a written statement.
Neither Van Etten, 53, nor Kerr, 56, was available for comment.
The board asked David Hunter, founder of the Hunter Group, the St. Petersburg, Fla.-based hospital turnaround firm, to serve as the system's interim administrator. UCSF Stanford has retained the Hunter Group since December to help turn around its financial fortunes.
Four hospitals-two UCSF hospitals and two Stanford University hospitals-merged in November 1997 to form the system. The facilities are Lucile Salter Packard Children's Hospital at Stanford in Palo Alto, Calif.; Stanford (Calif.) University Hospital; and the University of California San Francisco Medical Center and UCSF/Mount Zion Medical Center, both in San Francisco.
For the fiscal year ending Aug. 31, the system is expected to lose $60 million on revenues of about $1.5 billion.
Few of the "synergies" anticipated by merger proponents have materialized. Administrators added more than 950 full-time-equivalent jobs after the merger, only to switch strategies and announce plans to slash 2,000 FTEs from its 12,500-member work force (April 5, p. 22).
In addition, system executives said in May that they may have to close or convert UCSF/Mount Zion Medical Center to get the system's house in order. They've said the facility accounted for 93% of the system's losses in the current fiscal year.
Critics, including labor unions and local politicians, contend the merger was a mistake and should be unraveled.
Many believe the systemwide re-evaluation now under way will result in a parting of ways by the merger partners. But in an Aug. 5 press conference, William Gurtner, a University of California vice president, insisted the review was not "a precursor" to a dissolution of the merger, according to media accounts. A decision is expected by Oct. 1.
Before becoming the system's president and CEO, Van Etten was president and CEO of Stanford Health Services. Kerr had been COO at UCSF Medical Center and UCSF/Mount Zion.