UC Regents Discuss UC Health and Fossil Fuels at Day 2 of May Meeting


Giuseppe Ricapito
IV Beat Reporter

Day Two of the University of California Regents meeting, on Thursday, May 15, opened with less activist aplomb than the day prior, but with issues such as the future of the UC Health system and financial budgeting on the table, there was still quite a bit to be mulled over at the Sacramento Convention Center.The Public Comment session of Day Two had significantly fewer speakers than that of Day One, with the primary commentary coming from a trio of speakers condemning UC Los Angeles campus organization Students for Justice in Palestine (SJP) for an alleged anti-Semitic slant in their activism.

UC Santa Cruz lecturer Tammi Rossman-Benjamin claimed that the SJP had targeted Jewish students for harassment and even conducted investigations of student government members that had taken trips to Israel sponsored by Jewish organizations.

“This is an outrageous and impermissible violation of students’ rights to freedom of expression, their rights of free association, and their freedom of conscience,” she said. “SJP is the only university funded student organization at UCLA or at any UC campus whose very mission targets an ethnic minority for hatred and vilification, and whose activities routinely harass intimidate threaten and silence members of that ethnic minority on campus.”

Speakers also addressed budgetary concerns across multiple strata of the UC system, with one speaker pointing out rising class sizes and an increase in student responsibility for teaching assistants, and another student proposing an internship tax credit for businesses, so student employment could be partially subsidized by the University.

The sternest presentation of the day came from UC Health Senior Vice President Dr. John Stobo, who cited rising healthcare expenses as the dire catalyst for a re-envisioning of the UC Health system.

UC Health—a nearly $7.5 billion enterprise—comprises nearly 50 percent of the UC budget with 17 professional schools and five academic health centers statewide. The system has been operating at an revenue surplus for many years now, but, as Stobo mentioned during his presentation, “The future does not look as rosy.”

“This revenue is critically important,” he said. The budgetary surplus allows the medical centers “to have a capital that’s important in renewing and supporting its clinical mission… But equally important, this financial success allows our medical centers to support the programs that it needs.” The mission of UC Health is threefold, focusing specifically on clinical care, academic instruction, and research.

But that all-important revenue is in jeopardy, Stobo indicated, in light of a recent report that cites revenue increases at 4 to 5 percent, while expense increases are at a slightly higher rate of 6 percent. Their paths are set to cross—which would set UC Health to operating at a loss—as early as 2017.

Stobo’s recommendation for the Board of Regents, summed up in the phrase “Leveraging Scale for Value,” denotes a transitionary healthcare model that would confront an imminent fiscal imbalance. Citing a parabolic projection chart of UC Health’s finances, Stobo explained that the current volume-based approach reflects, “the more we do, the more we get paid,” but this system lacks “emphasis on how well we do it on the clinical level.”

He recognized that though this system has been successful for UC Health in the past, it is, by design, deficient in how it empowers patients and emphasizes prevention.

Motioning to the peak of the graph, Stobo said, “The challenge to us is—what does the second curve look like?”

In order to avoid the “atrophy” of the system with overwhelming expenses, the fiscal perseverance of UC Health necessitated a more standardized incorporation of the different academic health centers, he said. Oversight for this program would be by UC Health Shared Services Management Council, comprised of five UC medical center CEOs, three medical school deans, two chancellors, one regent, three external expert advisors, and Stobo. The job of this council, besides identifying new opportunities to cut costs, would focus on scale of purchasing and revenue cycles as central to their duties.

“I’m convinced we need to move from a volume based to a value based model,” Stobo said, mentioning that the proposition would improve the quality, as well as efficiency, of patient care.

“A value based model, in which we’re not the sum of five individual member campuses but we act as an integrated health system of academic medical centers, working… to address issues related to excellence in the provision of medical care, excellence in how we educate health professionals and excellence in how we conduct medical research.”

Gov. Jerry Brown responded to the proposition with “trepidation,” noting, “there are certain inherent constraints in human services,” especially in light of the state budget crisis, increased Medi-Cal enrollment, and the rising costs of healthcare.

Brown also pointed out that the institutional examples of this plan’s success were not only varied, but spread across multiple establishments.

“There is no model,” he said. “There are examples of subsets of your challenge—but for you to succeed, you have to take the best of all of these places and succeed in every area that others have succeeded. Even though they have only succeeded in one, you have to succeed in all.”

Stobo expressed that though the challenge is daunting, their anticipation of the issue could translate into the perpetuity of the UC Health system’s essential financial success. Citing “a system-wide, integrated, coordinated approach to expense reduction,” he noted accomplishment would hinge on the outcomes of clinical care, the utilization of technology, and the promotion of wellness and prevention.

Lacking from the report, however, was testimony from employees of any of the UC medical centers—AFSCME patient care technical workers recently ratified a new contract with the UC, but modifications to employment in regards to the future of UC Health remained an unmentionable topic.

In a brief interview following the conclusion of the Regents meeting, Napolitano commented on the subject.

“We’ve got an agreement with AFSCME now—that’s one of the good things about it is that it’s a long term contract—which gives us the ability now to build the provisions of the contract into the base budget,” she said. “When we talk about increasing costs of healthcare, part of it is the labor side. And that will be a cost that will be calculated in.”

The presentation on UC Health was followed up with a brief report from UC Student Association (UCSA) President Kareem Aref. He discussed recent efforts by Invest in Graduation Not Incarceration, Transform Education (IGNITE), an appeal to drop charges on arrested UC Santa Cruz protesters, and the effort at fossil fuel divestment.

Aref began by discussing Senate Constitutional Amendment No.5 (SCA-5), an affirmative action bill to increase gender and ethnic diversity for African Americans and Latinos on UC campuses. Currently, Proposition 209 restricts the consideration of race, ethnicity, or gender in college admissions.

“We really appreciate the Regents’ support on that,” he said, noting however that the bill would likely be pushed to the 2016 ballot. “We think it’s very pivotal to increasing diversity across the UC and ensuring that our student population does begin to reflect the state that we represent.”

Aref also made the suggestion for an Oil Severance Tax, which could bring a potential $300 million to the UC system. After relating UCSA’s solidarity with Fossil Free UC (FFUC)—an organization who had made their presence indisputably known the day prior—Aref prompted a response from Gov. Brown.

Brown noted that though a complete divestment from fossil fuels was “not very practical,” he was interested in the prospect of reducing demand for chemicals that are harmful to the environment.

“Not all Fossil Fuel is created equal. Some generates more greenhouse gasses than others, namely coal,” he said. “I think there’s some particular pathways that might make some sense, that could be very credible, so I’m looking forward to that… I do think some targeted disinvestment, I’d like to hear the argument that there could be something there.”

The Committee on Finance commenced next, with a specific and extended focus on the Budget for the Office of the President (UCOP). In the past year, there was an overall OP budget increase of 5.3 percent to $618.7 million, due to the eventual inclusion of the Education Abroad Program.

Executive Vice President for Business Operation Nathan Brostrom conducted the presentation, often indicating to proposed actions to reduce UCOP expenses. In reference to UC campuses, Brostrom explained a new approach to the university tax system that finances the Office. Initially the tax was based 100 percent on total campus expenditure. But since this approach weighed unfavorably on the medical campuses, a new system was developed: by campus, 1/3 on actual expenditures, 1/3 on total number of employees, and 1/3 on total number of students.

The Regents meeting finished with a flurry of Resolutions in Appreciation for various Board members, officers, and advisers with achievements in the past year.

In her report at the conclusion of the conference, UC President Napolitano encapsulated the sentiment of the Regents and the guests.

“As we all know,” she said, “the May Regents meeting is somewhat bittersweet, as it is a time of saying farewell to many friends and colleagues.”