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Stanford Report, October 22, 1997

Part II - Plan for linking clinical services w/UCSF:10/97

Faculty teams hear plans for integrating clinical services

(continuation of article)

Service lines

Plans for creating service lines in the new enterprise were discussed at the meeting by Goldman, who will chair the Leadership Group's subcommittee on clinical policy. He described the concept of service lines as a "testable hypothesis" with the goal of providing optimal delivery of care from the patient's perspective. As recommended by the faculty team devoted to this topic, he said, the new organization will begin by piloting three adult service lines: cardio, neuro and transplantation (liver, kidney, and kidney/pancreas).

Goldman also described five basic principles articulated by the service line clinical integration team and reinforced by the Leadership Group:

"Ultimately, if all goes as hoped, the Leadership Group envisions that all services will be provided by service lines, whether multidisciplinary or single-specialty," said Wintroub. The object of creating single-specialty service lines would be to integrate services between the campuses and to integrate the institutional and professional aspects of service to patients, he said, while multispecialty service lines will achieve integration across departments in addition to campus and institutional/professional integration.

Each service line will be governed by an executive committee that will function as its board of directors. "In a sense, we are creating a company within a company," Goldman said. This committee would meet quarterly and could consist of chairs or their delegates from "organizing" departments, chairs or delegates from "core services" departments and "at large" representation from key consulting departments. It will approve the service line budget, appoint the service line director (who will chair the committee) and ratify the director's choice of service line administrator, who will also sit on the committee. The executive committees will adjudicate disputes among departments within service lines.

Day-to-day management will fall to the directors and administrators of each service line, who will work with the chief medical officer, the chief operating officer and the site chief operating officers to design and implement the service line programs.

The executive committees for the three pilot service lines will be appointed by the Leadership Group on the basis of recommendations from its clinical policy subcommittee. Service line directors and administrators will organize pilot design teams, which will work with the executive committees to develop specific design proposals for their service lines.

Funds flow

Although clear goals and principles for funds flow have been articulated, said Furnstahl, a great deal of work remains to be done in actually modeling the effects of different sets of assumptions. For the first year of operation, funds flow will remain at the status quo and efforts will focus on designing the funds flow for year three. Once year three is decided upon, planners will work backwards to figure out a transition funds flow for year two.

In modeling funds flow scenarios, the task will be to balance the internal tensions among various goals, including the following:

Much of what remains to be tested in the funds flow concerns the service lines, Furnstahl noted. Service line revenues will consist of professional revenues, institutional revenues and budgeted strategic support. Service line costs will include only the manageable costs of treating patients, such as physician costs and professional practice costs, and those institutional costs that can be managed by the service line. Service lines will pay departments for clinical work using a relative value unit (RVU) system. Departments will receive a contribution margin incentive (or partnership equity share) based on service line revenues minus service line managed costs, and will also receive a service and quality performance incentive based on specific measures. Using all of these funds, departments will implement faculty compensation plans.

The total of service line contribution margins minus the total enterprise-managed costs will result in the enterprise-wide bottom line, which will be shared with the medical schools.

Furnstahl concluded by saying that his goal in funds flow is not to design the perfect, untouchable Swiss-watch mechanism but rather to design a system that is logical, with assumptions visible, and that can be modified as needed. SR

Article adapted and expanded from Faculty Focus, a newsletter of UCSF Stanford Health Care. Faculty members wishing to subscribe to the online newsletter may send an e-mail request to