STATE OF THE HEALTH SCIENCES
Message from the Vice Chancellor
February 4, 2002 At the beginning of this new year, I would like to reflect upon our strengths and achievements, bring you up to date on some important initiatives and future objectives, and talk about some of the challenges ahead. With this message, I would also like to begin 2002 with a commitment to ongoing communication with you about our continuing efforts to improve the services provided by the Vice Chancellor's office, and to keep you apprised of new programs and progress on other fronts. As part of this commitment, we will launch a new Vice Chancellor's website and will share that with you in the coming weeks. I have been at UCSD a little over a year now, and I am as enthusiastic about this campus as I was when I first arrived. This is an outstanding university, and our School of Medicine and UCSD Healthcare system are tremendous assets for the campus and the region in every respect. The new School of Pharmacy and Pharmaceutical Sciences promises to further enrich our university community. I am as excited by opportunity as I am by accomplishment. What sets UCSD apart is our powerful potential to be a leader in the design and delivery of 21st century medicine, while further strengthening our unique role as this region's only academic medical center. First, I'll share the good news and the challenges regarding our financial position.  FISCAL
HEALTHWe finished the last fiscal year in good shape. The primary financial "engine" of our clinical enterprise is the UCSD Medical Center, which has maintained positive alignment of costs and revenue since the deficit crisis of FY 95/96, with income not only covering costs, but also contributing to a comfortable margin every year . UCSD Medical Center ended FY 00/01 with a $36.7 million margin. We achieved this despite the fact that while UCSD has about 9% of the total San Diego inpatient market, we provide 45% of uninsured inpatient care in San Diego. Our faculty, staff and hospital leadership are to be congratulated for ensuring that UCSD Medical Center has maintained a favorable margin, enabling us to reinvest in our institution. This margin supports clinical enterprise development, primary care, recruitment, academic enrichment and department support, as well as hospital infrastructure improvements, equipment, capital investments, and so forth. It has been a sustained and concerted effort, and it has paid off.
Further, our labor costs are increasing at a higher rate than reimbursement levels; this dilemma is exacerbated by the nursing and other health professional shortages which have resulted in the use of contract personnel at much higher costs. Consequently, while the Medical Center is still maintaining a positive bottom line, we are currently short of our projected FY 01/02 profit margin by approximately 24%. We are tracking this closely and are taking steps to adjust our costs and improve revenue to address this shortfall. We anticipate completing this Fiscal Year on target. THE PROGNOSIS In FY 00/01, approximately $76 million of our total medical center revenues of $415.9 million was made up of 'funds at risk' -- state and federal support provided to help compensate hospitals that care for uninsured patients (disproportionate share funds), and for the additional costs we bear as a teaching hospital (medical education funds). These funds are critical for maintaining our positive bottom line. With the economic downturn affecting our state and our nation, and with the redirection of federal funds as our nation engages in the war on terrorism, we anticipate substantial reductions in these funds at risk. It is still unclear what the impact of the current state budget situation will be on the support provided to the University of California, and we are watching closely as this takes shape. These factors all add up to diminished resource and leaner budgets in the coming year. We are working with our faculty and staff to ensure that our costs are in line with projected revenues, even with these projected revenue reductions. As we look for opportunities to be more efficient and cost effective, we will also be working with the Office of the President in their lobbying activities to protect and restore cuts to some of these sources of public funding. We are carefully evaluating and enhancing our managed care and health care contracting strategies. Finally, we are working vigorously to bring funds in from alternate sources in the private sector through aggressive fundraising and other strategies. SIGNIFICANT ACHIEVEMENTS Even as we tighten our belts, we are facing the coming year from a position of strength both financially and programmatically. Thanks to the dedicated efforts of many, we celebrated a number of milestones last year:
PATIENT CARE San Diego is the nation's largest city with only one School of Medicine, and we continue to evolve a clinical strategy that builds on our strengths and fulfills our responsibilities as this region's only academic medical system. We ended 2001 with an outstanding JCAHO review, and are proud of the accreditation equivalent of a blue ribbon earned by our hospitals and Home Care colleagues. We will continue to provide a full spectrum of services for a diverse patient population in order to meet our educational and clinical research missions, and to maintain our commitment as a safety net provider. We also plan to focus resources on specialty programs that set us apart as a referral center, and we will expand our role as a clinical trials center. We will continue to support vitally important community programs, from violence prevention to breast cancer screening and free clinics. These are programs that the university is proud of, as they truly benefit the public's health at the grassroots level.
An example of our faculty and staff response to public health needs is the effort put forth following the attacks of September 1l and the ensuing events. UCSD health professionals have conducted numerous public and professional education sessions, and are working with the Medical Society, and the County and City public health and emergency medical systems, to improve disaster preparedness and train providers. And, a team of San Diego health professionals who volunteer for San Diego's Disaster Medical Assistance Team (DMAT), with sponsorship and leadership provided by UCSD Medical Center, did a tour of duty at Ground Zero in New York City, providing first-aid to the workers on the site of the World Trade Center disaster. Finally, we will continue to address clinical workforce shortages through recruitment, and by participating in training to develop new caregivers and enhance the skills and knowledge of those already in the workforce. ACADEMIC EXCELLENCE The caliber of our faculty forms our foundation of excellence. This year two UCSD faculty members were elected to the Institute of Medicine, bringing our total number of members to 21;18 of UCSD's 67 NAS members are School of Medicine faculty or affiliated faculty; six School of Medicine departments rank in the 'Top 10' among their peer departments in NIH funding, and of 29 San Diego physicians named in the current 'America's Top Doctors,' 24 are UCSD faculty members. UCSD medical faculty rank second in the country in research funding per faculty member. Some of the sizable federal grants awarded this year include the $54 million Alzheimer's Disease Cooperative Study and the $20 million Biomedical Informatics Research Network, both national consortia directed by UCSD faculty; an $11.6 million pharmacogenomics grant in partnership with Celera, and partnership in a $34 million grant to The Scripps Research Institute for a 'functional glycomics' consortium. These represent a new, 'big' science approach with teams of researchers working together, a model with which UCSD has great success.
A school is only as good as its students, and ours are among the best. This year's first-year class had a GPA of 3.7, MCAT scores among the nation's highest, and their scores in the biological sciences are in the 95th percentile. Our M.D. and M.D./Ph.D. students excel academically, and also participate in activities that enrich our community, through clinics, student outreach and education, and other volunteer efforts. To continue attracting top quality students we must ensure that when they are here, they have a positive experience academically and in more personal respects. We must ensure a culturally and ethnically diverse class, both to enrich the student experience and to fulfill our commitment to serve a diverse community. We want to graduate physicians who are skilled and knowledgeable, and also caring and compassionate. To address these issues, a task force led by Dr. David Bailey has developed recommendations that we are in the process of implementing. SOLVING OUR SPACE CRUNCH All of this success translates to need for additional space to support our growth. A number of new projects, many funded primarily through philanthropy, are under way that will provide additional opportunities for enhancement of our academic and research programs in the next few years:
MODERNIZATION AND THE SEISMIC MANDATE We also must plan toward replacing and expanding essential patient care facilities, to accommodate patients and to ensure we have state of the art facilities that meet current guidelines for safety. This will include providing additional capacity at Thornton Hospital, which is consistently operating at capacity. An even greater challenge is addressing the significant state seismic requirements in Hillcrest. In order to meet the current mandates for earthquake safety, we must make substantial facility and infrastructure upgrades at the UCSD Medical Center, in Hillcrest, which is over 40 years old. An alternative to retrofitting is phased replacement of the inpatient tower on land adjacent to the current facility, which is the better option both financially as well as operationally. We are still evaluating options, and exploring sources of funding to undertake this multi-million dollar project. RECRUITING NEW TALENT Our recruitment to fill key positions, and our administrative restructuring to provide more efficient service to the organization, is ongoing. Tom Jackiewicz has joined our executive team as Chief of Staff, UCSD Health Sciences. He will coordinate and operationalize many of the initiatives we have undertaken, and oversee many of the administrative functions in Health Sciences. David Bailey, M.D., is serving as Deputy Vice Chancellor and Deputy Dean, and has taken on the additional responsibilities that will be assumed by the new Dean for Education and Academic Affairs, a position we have not yet filled that will oversee academic and student support functions. Until we begin recruitment for this position, Dr. Bailey will provide oversight for activities in medical school admissions, education, student affairs, academic affairs and continuing medical education. We are recruiting a Physician-in-Chief, a new leadership position to coordinate clinician-related issues across the UCSD Healthcare system. Dr. Kenneth Kaushansky joined us February 1 as our new Chair of Medicine, and recruitment is progressing for a new Chair of Radiology and we hope to soon name our first Dean for the School of Pharmacy and Pharmaceutical Sciences. And I am delighted to report that Rebecca Newman has been named the new Executive Director of Health Sciences Development, a key position at a time when attracting new resources to support or missions is more important than ever.
COILS: A NEW PARADIGM FOR PROGRESS
We continue developing the concept for a College of Integrated Life Systems (COILS). COILS will provide a structure for collaboration throughout the spectrum of health sciences research, from molecules to mankind. Our multidisciplinary emphasis will engage our colleagues on the main campus and at Scripps Institution of Oceanography, as well as in the community and private sector. COILS is designed to provide a continuum of programs and opportunities bridging preclinical discovery, technology development, clinical research and patient care. Components include:
We will also continue to develop new opportunities for dual degrees, whether doctorates in science, or in fields such as public health and business, and are working on programs to offer in conjunction with UCSD's new School of Management. UCSD and the Health Sciences have had a rapid trajectory to the top, and we enjoy a deserved reputation as the youngest of the best universities in the country, and as a leading health care system, providing high quality, advanced care. But we are committed to being even better. We are in a position to create our own future, and to shape the future of medicine. I look forward to working with you to meet the challenges of the coming year and achieve the goals I have outlined.
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In addition
we've seen a steady trend of increased patient volumes at both of our
hospitals - UCSD Medical Center, Hillcrest and the John M. and Sally B.
Thornton Hospital in La Jolla. While this is good news, an
idiosyncrasy of today's market is that a busy hospital presents its own
financial challenges. For example, much of our increase in volume
is attributable to managed care patients for whom we receive fixed
monthly payments irrespective of health status or use of services. The
result is significant under-reimbursement, a problem not only for UCSD
but for health care providers throughout the nation.
