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Stanford Report, January 26, 2000

Stanford and UCSF to separate children's services


Stanford and UCSF failed to reach an agreement on integration of their children's services because of difficulties in finding an appropriate structure for the partnership, Harvey Cohen, MD, PhD, professor and chair of pediatrics told the School of Medicine Faculty Senate Jan. 19.

On Jan. 18, Eugene Bauer, MD, vice president for Stanford University Medical Center and dean of the School of Medicine, and Haile Debas, MD, dean of the UCSF School of Medicine, announced that they had been unable to reach an agreement on an integrated children's venture and had decided to separate their pediatric operations at the same time as other programs of UCSF Stanford Health Care.

The deans and faculty leadership at both schools had met regularly over the last month-and-a-half in the hopes of finding a way to continue this piece of the failed merger, as children's services was one area in which faculty members at both campuses had worked well together.

But a disappointed Cohen said that finding the right governance structure proved to be a major obstacle. If the two facilities had a single operating license, creating a kind of "hospital within a hospital," they would have had to merge assets, he said. But there was too great a difference in assets, with Lucile Packard Children's Hospital merging with a pediatrics ward at UCSF, he said.

If the two were to pursue a joint venture instead, there would also be questions of equity, Cohen said. "Even in terms of clinical activity of both campuses, there was a real dissociation because there is about 1.5 times as much activity on the south campus as there is on the north campus," he said.

Cohen said he went through a "grieving process" when he recognized the venture would not succeed.

"I was clearly disappointed when I realized this wasn't going to happen, but I also think we really have quite a program at Stanford in all of the children's areas. Our children's services are incredibly strong clinically and getting stronger academically. So I think there's a lot we can do, and I'm looking forward to working with my other children's services colleagues, but also trying to integrate our academic programs within the rest of Stanford," he told the Senate.

He said one unfortunate side effect of the failed agreement is that the Children's Health Initiative, which would have provided several hundred million dollars in funding, has been put on hold because the money was designated for the two children's services jointly. The money would have come in the form of a grant from the David and Lucile Packard Foundation and from a public fundraising campaign by the Lucile Packard Foundation for Children's Health. Cohen said Stanford plans to formulate a new proposal to the foundations, which have been receptive to the idea.

In response to a question from another faculty member, Cohen said he did not expect Stanford to benefit economically from the separation, as it will be competing directly with UCSF for pediatric patients, with Northern California being the primary region for patient referrals at both hospitals.

"There will be hardships for both of us," Cohen said. "Clearly, we both will be hurt by the absence of this merger."

He said he will encourage individual clinicians and researchers to continue the collaborations that were fostered by the merger. The schools jointly recruited a specialist in cardiac electrophysiology, and the hope is that this faculty member will continue to work in an integrated program, he said. Cohen was successful in recruiting some top clinicians in rheumatology and genetics, among other specialties, and he said these faculty members may continue to work across both campuses.

Meanwhile, plans for dissolution of the merger are moving forward with a goal of completing the process by March 1, Malinda Mitchell, chief operating officer at Stanford, said at a management meeting Jan. 20. She said it appears that government licensing issues can be resolved by that date, although some UCSF issues, including funding of pension plans and debt refinancing, may not be completed in time. She said it's possible Stanford could exit the merger on March 1 while UCSF would leave the partnership on April 1.

In any event, the two sides are committed to separating their finances by March 1, so that they will no longer equally share profits and losses after that time, Mitchell said. She said Stanford Hospital has reconstituted a full leadership team and has prepared informational letters to staff members on their terms of employment, which are expected to remain unchanged. SR