UC medical centers to collaborate, reduce costs
By Daily Bruin
March 20, 2014 1:45 p.m.
SAN FRANCISCO — The University of California Board of Regents announced a project Thursday to cut costs at the UC’s five medical centers in the face of declining revenues.
The “Leveraging Scale for Value” plan, presented to the board at UC San Francisco’s Mission Bay Conference Center during the second day of its bimonthly meeting, aims to save the UC medical centers between $100 million to $150 million a year in order to offset growing costs.
The UC’s medical centers, in total, currently generate about $7.5 billion in annual revenue without significant state funding. Declining reimbursement from government sources like Medicare and Medi-Cal, as well as the nearing expiration of certain commercial contracts, will likely cause costs to exceed revenues by 2017 if no preventive measures are taken.
John Stobo, UC senior vice president for health sciences and services, said at the meeting that each year, the UC medical centers usually experience an approximately 10 percent increase in clinical service revenue through commercial contracts, but the number is expected to drop as low as 4 percent in coming years.
“Acting individually, we cannot get where we need to be,” Stobo said at the meeting. “We must take advantage of the size and scale of the UC.”
Alec Rosenberg, UC Office of the President coordinator for health communications, said the two main sources of revenue for UC Health are commercial contracts with insurers like Anthem Blue Cross and patients who are covered by Medicare or Medi-Cal.
The plan for the new cost-cutting measure is to “leverage” the combined power of the five medical centers, rather than having each individual medical center try to mitigate its own issues.
Rosenberg compared the plan to an office in which everyone buys writing utensils separately. He said changing to one store – or in this case, one provider for UC Health – would save time and money.
UC Health also provides about $500 million each year for programming support at its health professional schools, which takes away from overall revenue.
The project will focus on supply chain, revenue cycle and clinical laboratories as the three major areas from which to cut costs.
The regents also wrapped up their board meeting with a few other discussions.
- Glenn Mara, vice president of laboratory management for the UC, gave an update on the three UC-affiliated Department of Energy laboratories, including the Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory and Los Alamos National Laboratory. Mara said the labs have paid approximately $70 million of $80 million in due payments for pension contributions. He also gave updates in the job search for a new lab director and discussed the Los Alamos National Laboratory’s “pause” in nuclear materials handling operations until a complete review of handling and safety procedures.
- The regents approved several compensation packages for administrative positions, such as an interim secretary and chief of staff to the board, that were discussed in closed session.
The regents will next meet in Sacramento in May.
Compiled by Katherine Hafner, Bruin senior staff.
