"It's time to gear up for the tremendous opportunities we soon expect from a merged UCSF Stanford Health Care organization, but it was good to take what we believe will be the last detailed critical budget look inside SHS while it's still a separate entity. Given the challenge, I think we did well by meeting our target for OI 8," said Malinda Mitchell, interim president and CEO of SHS.

"We appreciate the active participation of the many physicians who worked throughout the past months finding new program opportunities, as well as helping to find ways that we can safely reduce costs," Mitchell said.

Mitchell noted that the departmental "micro" teams rallied to achieve greater savings than originally budgeted after the "macro" teams ‹ consisting of nine service lines and the ICUs ‹ booked $1.6 million less than the $11 million target set for them. As in OI-7 last year, the 1997 process occurred in two phases. The "macro" teams, completed their process earlier this year. This left the "micro" teams until June to do their work.

The departmental teams were grouped into five general areas ‹ Patient Care A (patient care units, nursing administration, home care), Patient Care B (OR, pharmacy, ATU, cath lab, emergency services, Lifeflight, endoscopy), Environmental and Support Services, Ancillary and Administration.

"We raised the crossbar for the departmental 'micro' teams. They rose to the occasion, and by our final meeting June 26, we found ourselves with $19.4 million in booked savings, $400,000 over the target," Mitchell said.

The Ancillary team, consisting of laboratories, radiology, respiratory therapy, radiation oncology and medical records, achieved $1.03 million in budget improvements, exceeding the group's stretch goal of $900,000.

"In eight years, the OI process has resulted in more than $200 million in savings and enhanced revenues, making this one of the most important, if not the most important, components of the ongoing SHS budget process," Mitchell said. "While this year's target was somewhat less than in recent years, we have to consider the context. Not only were all of us immersed in the merger process, but most of the obvious budget improvement cuts and new sources of revenue have long since been identified and implemented."

"Nevertheless, departments throughout the institution continue to find innovative ways to improve the budget," she said.

The 1996-97 fiscal year budget, which began last September, has been expected to result in $551 million in net revenues.

Mitchell said major ideas approved by the task force for the Ancillary team included increased volume for a variety of tests, including CT scans, and a new gene sequencing test offered by the virology and molecular lab.

"The OI-8 achievement reflects the work of some departments to make up shortfalls that occurred when volume budgets predicted last year weren't achieved," Mitchell said. "In some cases, we made up for some overoptimistic predictions by remaining on the cutting edge of technology and offering new programs."

Other budget improvement items negotiated this year include negotiated reductions in the City of Palo Alto's utility rates for the institution, more efficient use of blood products ‹ including typing and ordering only as needed in appropriate situations ‹ and increases in patient volume in many clinical services, noted Mitchell.

Budget targets were adjusted this year in an effort to keep pace with changes in the organization as it readies for the merger, Mitchell said. Additional savings will be achieved in some areas asa a result of merger consolidations and integrations.

As in past years, Mitchell noted that OI goals are expected to be met without significant workforce reductions. This year, fewer than 50 positions are to be eliminated, and all but five to 10 are expected to be reduced by attrition. At a June 26 management staff meeting, Mitchell praised the staff for meeting the challenge of working in areas where some open positions have been left unfilled to reduce the need for layoffs.

Most provisions of OI-8 are expected to be implemented prior to Sept. 1, the date the merger is expected to become final, Mitchell said.

Chief Medical Officer

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