REGENTS APPROVE GOVERNANCE OF PROPOSED UCSF-STANFORD HOSPITAL MERGER

The University of California Board of Regents today (Friday, July 19) approved the composition of a board of directors for a nonprofit public benefit corporation that would oversee the proposed merged clinical services of UC San Francisco and Stanford University.

The Regents voted 14-4 to approve the governance structure. It is the first formal step in a process that would merge the clinical activities of the two universities. Other actions to be taken before final approval of the merger include an independent third party review of the financial viability of the merger and formation of the new corporation.

The 17-member board of directors would oversee the proposed corporation. UC would have six representatives on the board -- three Regents, including the UC president; the UCSF chancellor; and the dean and one faculty member of the UCSF School of Medicine. Stanford University would have six representatives -- three Stanford trustees; the Stanford president; and the dean and a faculty member of the Stanford School of Medicine. The new board also would have a chief executive officer, a medical officer and three outside directors.

The composition of the board is designed to ensure a balanced membership between the two universities, one that meets various legal requirements and one that has leadership that understands the business aspects of health care and the unique needs of academic medical centers.

The proposed board would make periodic reports on its finances and programs to the UC Regents and the Stanford trustees to provide accountability. The Regents and Stanford trustees would have the authority to approve the principal terms of the proposed merger and approve a sale, lease, transfer or exchange of corporate assets.

"This is a rare and exciting opportunity that deserves to be evaluated fully," said UC President Richard Atkinson. "The proposal is tailored to address the fierce market forces confronting these two premier health sciences institutions."

The proposed merger would include UCSF Medical Center, Mount Zion Medical Center, Stanford Health Services, Lucile Packard Children's Hospital and other clinical activities. The two medical schools and their faculties would remain independent.

"We are very pleased with the Regents' action today," said UCSF Chancellor Joseph B. Martin. "We are convinced that a merger between the UCSF and Stanford medical centers will ensure that the people of northern California continue to benefit from the advances in health care that each of us provides."

The single purpose of the nonprofit public benefit corporation would be to generate revenue for the UCSF and Stanford medical schools and their missions of teaching, research and public service.

The proposed corporation would be subject to Internal Revenue Service rules and regulations and oversight by the state attorney general.

The corporation bylaws would give UC and Stanford boards the power to:

• Approve corporate borrowing.
  
• Dissolve the corporation if it incurs losses beyond a certain level or fails to support the academic mission to a predetermined level.
  
• Dissolve the corporation if it is determined by a court of final jurisdiction to be subject to statutes applicable to public agencies or bodies.
  

Stanford and UCSF announced last November that they were discussing the possibility of a merger. The proposed agreement would help ensure that both medical schools have the clinical resources necessary to train medical students and resident physicians for the 21st century. The goals of the merger are to provide cost effective health services, improve community access to the latest advances in medical science and maintain strong medical training programs.

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