CEO Mark Laret Discusses UCSF Medical Center's Rise From Near Financial Ruin to Recent Success, New Mission Bay Hospital
Mark Laret, CEO of UCSF Medical Center, was brought in to lead the hospital 10 years ago following a financially disastrous and brief merger with Stanford Hospitals & Clinics in the late-1990s. He helped to completely turn the facility around, leading it to become one of the top 10 hospitals in the country, as judged by U.S. News & World Report. Mr. Laret also led UC Irvine Medical Center after a change in management following the hospital's Center for Reproductive Health debacle in the mid-1990s.
Q: What challenges did you face coming to UCSF after the failed Stanford merger?
Mark Laret: [UCSF Medical Center] had been ripped from a merged entity, and it seemed everything was a challenge. The hospital was losing $1.5 million per week, cash was slipping away, employees were very unhappy because they had been promised things in the merger and when the merger ended they were angry. In a lot of ways it was a very difficult time here.
What I knew, though, in coming to the hospital was that the fundamentals were all here. The faculty physicians were and are very strong — the UCSF School of Medicine ranks second in the nation for NIH funding — and we had recruited from the very top of residency classes. We had a very strong nursing staff, a great children's hospital and we were the dominant provider in the area of complex organ transplants.
One thing I've learned about academic medical centers is that they are a high-dollar volume, low margin business. If you're losing money, a few changes can give you a big turnaround. In my first year here, we were projected to lose $60 million and, currently, we have been making between $60 million-$100 million over the last several years. The best thing that has happened over time here is that the confidence of the organization has developed.
Q: Being faced with so many challenges, what was the first step you took to turn the hospital around?
ML: First, I needed a management team that had common values about doing the right thing and helping an organization like this one fulfill its potential. After management was selected, the challenge was getting the entire organization, not just the staff, but the medical staff and academic leadership, all on the same page in terms of what it is we're trying to do here.
We are guided by the mission "Caring, healing, teaching, discovering," in that order. This is something that every employee learns, and we really do work out of this mission. In a time of a turnaround, you have to go back to the first principles — who are we, what are we here for — and getting agreement. Going back to those fundamentals is the best way to get people rowing in the same direction.
I also put together a non-fiduciary advisory board early on to include very senior leaders in our community. Governance is unique in a university medical center setting. I report to the chancellor and there is no board of directors in the traditional sense. The advisory board is made up of 6-8 people, including Mike Ullman, CEO of J.C. Penney, and Dick Rosenberg, former Bank of America CEO. The board has really helped me to focus on our priorities and make difficult decisions.
Q: The hospital has been very successful and consistently ranked among the best facilities in the country since its initial turnaround. What do you think has led to that success?
ML: Part of the reason we're ranked so highly is that we've been able to attract and retain really exceptional medical staff, and they in turn attracted extraordinary house staff and student groups, all doing cutting-edge work. There are a host of ways to measure performance, but our focus is on quality and safety, and we're dedicated to making that part of our DNA. We have been relentless on this. Most gratifying, beyond hospital rankings, is the difference that our organization can make in an individual's life — a death that is dignified, saving someone who otherwise would not have made it or being able to introduce a new medical technology. In the end, that is the most gratifying and the most important measure of success.
Q: What do you think will be the biggest challenge for you and UCSF going forward?
ML: As always, we will continue to work to improve our outcomes and quality and safety metrics; we are also implementing an electronic health record. However, I think the biggest challenge is that we've embarked on an exceptionally large endeavor to build a new children's, women's and cancer hospital at the Mission Bay campus. Right now, Mission Bay is only used for research, and we're adding 289 beds. The challenge is raising money. It's a $1.6 billion project. We plan to borrow and use reserves for $1 billion, and the remaining $600 million will come from philanthropy. We're well on our way, but this has been a big change in my duties. I'm now not only managing everything we do day-to-day, but also spending a significant amount of my time raising money and talking about our vision of UCSF Medical Center and how these facilities will help us provide that better level of care.
When we were first thinking about the Mission Bay project, it almost seemed too big. We knew we needed it, and we knew it would be better for our patients in terms of a more modern facility, but it just seemed too expensive. One day I met with a number of San Francisco business leaders to discuss the plans, and Dick Blum, who is a UC regent, encouraged me to go for it. He said that maybe the project was bigger than what I thought was possible, and that if I failed, I could always come back and try something less ambitious. But that if I didn't try it, I could obviously never succeed. And here we are: later this year we expect to receive final approval to begin construction. The power of the idea has proved to be more significant than the challenge of where the money will come from.
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