The University of California Board of Regents on Thursday authorized a search for one or more financial partners to team up with UC Irvine's struggling medical center.
The regents, during their monthly meeting in San Francisco, agreed with UCI administrators that Orange County's only academic medical center must soon link up with a health-care company or face being driven out of the market.
The medical center's executive director, Mark Laret, told the regents that the center will lose $8 million this year, in spite of a restructuring that included nearly 200 layoffs.
"We have no preconceived notions about who our ideal partner or partners would be," said Laret, who followed UCI Chancellor Laurel L. Wilkening in addressing the regents. "But [we must] move swiftly."
Regent approval conforms to an apparent strategy to privatize major parts of its five-campus hospital system. All five hospitals are fighting to hold their own in the face of threatened cuts in Medicare and Medi-Cal, fierce competition from the private managed-care industry, and lower payments from health insurance plans.
At Thursday's meeting, the regents also listened to a controversial proposal to privatize UC San Francisco Medical Center, regarded by many as the UC system's crown jewel, and merge it with the private Stanford University Medical Center. Regents are expected to vote on the matter in July.
With regent approval, UCI officials will go about collecting formal statements of interest from health-care providers--both profit and nonprofit.
Critics, who concede the financial necessity of a partnership, worry that linking UCI's medical center with a for-profit business could undermine the center's mission of teaching and research. Critics also contend a for-profit partner would reduce the quality of health care, especially for the poor.
"There's a real fear if they go for profit, then the center's current commitment to teaching and research will vanish," said Cynthia Hanna, council representative for the American Federation of State, County and Municipal Employees, which represents most of UCI's laid-off hospital workers. "And what they will become is committed to the bottom-line, another fast-food HMO."
But UCI officials say they would reject any partner that did not respect the center's academic priorities.
"In one to two years, a stand-alone [hospital] will be a marginal clinical and financial institution, at best," Wilkening told the regents. "[But] most importantly, we are looking for the relationship that will protect and enhance the education and research missions of the medical school."
So far, UCI officials said they have received expressions of interest in a partnership from at least 10 health-care organizations, including Columbia/HCA Health Services, which operates more than 300 hospitals nationwide and is one of the fastest-growing chains in the country. Others involved in discussions with the medical center are Memorial Health Services and Tenet Health Care Corp.
On the nonprofit side, UCI officials also have had talks with the Children's Hospital of Orange County about possibly consolidating pediatric services.
It will probably a year before UCI officials choose a partner or partners. The regents must give final approval before a partnership can proceed.