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6/11/96

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Freidenrich is confident medical center merger will happen

STANFORD -- Questions by some University of California regents about merging a public and private institution have slowed, but not derailed, Stanford's plans to move ahead with the proposed merger between Stanford Health Services and the UC-San Francisco medical center.

Medical center administrators from both universities had hoped the governing boards of each school would approve the merger in concept by June, leaving the details to be hammered out over the next six months.

But members of a key UC Board of Regents committee slowed the pace of the proposed merger last month, saying they needed time to address labor concerns and legal questions about the ambitious plan to combine the public university's medical center with the private, non-profit hospital and clinics at Stanford.

On June 6, a coalition of labor unions representing workers at UCSF filed a suit in San Francisco Superior Court against the UC Board of Regents on grounds that closed-door discussions between Stanford, the regents and UC's president violate the state's open meetings law.

Despite the turmoil, John Freidenrich, chair of Stanford's Board of Trustees, is confident the merger will become a reality.

"I think there is still every reason to believe that this is going to happen," said Freidenrich, who sees the merger as an opportunity, among other things, for both hospitals to save money.

"If they have a $5 million whizmo, do we have to have a $5 million whizmo? Maybe, maybe not. But [the merger] would give us an opportunity to reduce a lot of those expenses and duplications of services and costs," he said during an interview on June 10.

The board is scheduled to hear a status report on the merger at its June 13-14 meeting. Freidenrich said an ad hoc committee of the board probably will be appointed to continue the negotiations during the summer, when the board is in recess. But he stressed that no final decision would be made until the plan is brought back to the full board. The governing board of Stanford Health Services also must approve the plan, he said.

Some Stanford faculty and staff also have criticized the plan, calling on administrators to slow down the negotiations and open them up to the public.

"That is an academic response and concern and I understand it," Freidenrich said. "Academics will debate and take two or three years to move ahead on something. Unfortunately, this is not just simply an academic matter. It is a very large business that both Stanford and UCSF are running and you can't have these kinds of discussions and debates in public about all the issues related to business arrangements and possible mergers and consolidations."

As a public institution, however, UCSF has a different set of circumstances to take into account when determining the appropriate level of public input that should go into its side of the plan, Freidenrich said. The UC regents have scheduled an all-day session to discuss the merger proposal on June 20.

While he views the merger as a positive move that will benefit both entities in the long run, Freidenrich does not think the fates of the medical centers depend on it.

"In one sense, I think it would be a great shame if we are not able to pull this off, because both institutions will lose the opportunity to save a lot of money on what might be viewed as duplications," he said. "But I don't think either institution [will fail] to survive if we don't put both of them together."

On a related matter, the Board of Trustees will consider approving the merger of the management and operations of Lucile Salter Packard Children's Hospital with Stanford Health Services.

The consolidation is expected to have little effect on operations at Packard. But Stanford officials hope it will strengthen Stanford Health Services' ability to develop alliances with other health care systems. A combined focus on children's services, for example, is expected to be a part of the Stanford-UCSF merger if it goes forward.

"I think we have substantially reached an agreement on this," Freidenrich said. "It is just a matter now of getting all the details worked out with the Packard people."

The board probably will approve the children's hospital merger in concept at this week's meeting and appoint an ad hoc committee to work out the details during the summer, Freidenrich said.

Board members also will consider approving a spate of construction projects, and they will be briefed on new initiatives being undertaken by the alumni association and the university to strengthen the ties between Stanford graduates and their alma mater.

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