Children’s Hospital’s Uncertain Future

Three years ago, Children’s Hospital Oakland merged with UC San Francisco and received $50 million from Marc Benioff. Yet now it’s facing major budget cuts.


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Photo By D. Ross Cameron

Nancy Netherland says the Children’s primary care clinic has been invaluable to her kids’ care.

Anderson assured that a partnership for the primary care clinic would only be explored “if they provide the highest-quality care possible, and we can educate our residents.”

The hospital is also looking to restructure the administration of its research, which has seen decreased government funding in recent years, said Krigel. In the next couple of months, administrators are considering selling or sub-leasing the large building on Martin Luther King Jr. Way that houses the Children’s Hospital Oakland Research Institute. The historic building, the former site of University High School, is also the home of the North Oakland Senior Center.

Anderson said it makes sense to consolidate the costs of conducting research. “UCSF is the nation’s leading research university,” he said. “Why wouldn’t the children on the East Bay deserve the same depth and breadth of research resources as the children on the West Bay do?”

But physicians say the loss of the building would have rippling effects on the hospital’s research. “Faculty like myself come to Children’s because it has a research facility like that,” said Vichinsky. The loss could also make it more difficult for researchers to get grants. Hagar said, “It’s hard to set up for studies when you don’t know what’s available.”

Photo by D. Doss Cameron

Drs. Hastings and Vichinky say closing CHORI would be a big mistake.

As for the research currently being conducted at CHORI, there are questions about how it would be affected. And if research activities have to move to UCSF, this could also make them more expensive. “The rates go up,” Vichinsky explained. “It becomes much more bureaucratic.”

Research facilities don’t typically make money, Vichinsky continued, and he believes the amount of money the CHORI building loses is lower than its value to the public and the hospital’s image. “It’s a huge mistake,” he said. “It’s very shortsighted.”

“If we lose research, we will lose who we are,” Hastings added. “You can’t separate clinical care, education, and research. For people to get the latest and best clinical care, you have to be training and teaching and learning continuously and be involved in research in real time. They really do go all together.”

But Krigel dismissed these fears, saying research at the hospital is not going away. “Our intent has always been to keep research at UCSF Benioff Children’s Oakland,” she wrote in an email to the magazine. “We expect that to continue. While no decisions have been made, it makes sense to integrate CHORI administratively into UCSF’s large research infrastructure to take advantage of the economies of scale and the larger patient population that UCSF research provides.”

As for Durand, he downplayed the importance of the CHORI building. “The infrastructure to support a robust ongoing research program is essential,” he said, “but the exact details of who, where, and how that research infrastructure is provided is less important.”

As Children’s eyes tens of millions of dollars in budget cuts, it’s worth noting that the hospital’s top administrators make very lucrative salaries. According to publicly available records from the University of California, Anderson, who was hired in December, is paid a total cash compensation of more than $1 million. As of 2015, Chief Operating Officer Richard DeCarlo (who recently stepped down) was compensated $641,474. Lubin, who is now associate dean of children’s health, had a gross compensation of $935,668, while Durand topped out at $504,749. Mark Laret, CEO of UCSF Health, has a base salary of more than $1 million. Last year, he came under scrutiny for serving on the boards of two vendors that do business with UCSF, earning an average of $556,000 a year, according to the San Francisco Chronicle.

Anderson defended the salaries. “I think if you’re going to bring in the leadership that’s going to guide through this next storm, then that’s part of doing business as a big academic medical center.”

But some health care providers worry about where the hospital is being guided to. And others haven’t waited to find out.

Karen Hardy was the director of Bay Area Pediatric Pulmonary Medical Corporation, which was contracted to provide comprehensive inpatient and outpatient services to Children’s Hospital Oakland, since 1998. When the hospital decided to merge with UCSF, she said her group received offers to join the academic faculty from both Stanford and UCSF. “We looked at both practices,” she said. “In the end, we felt that the merger with Stanford was the stronger option for us and our patients.”

Hardy said the decision was based on several factors. Her group had previous experience working with Stanford and was already contracted with California Pacific Medical Center, or CPMC, in San Francisco, which had recently entered a joint venture with Stanford. Merging with UCSF would have meant her practice could no longer see patients at CPMC.

But there were also cultural differences with UCSF. “The general feeling was more welcoming and collegial from Stanford.” Hardy said. “We had a better alignment of our practice philosophy.”

In December 2015, Hardy’s group joined the pediatric pulmonology academic faculty at Stanford and relocated its outpatient site from Oakland to Emeryville. “We’re very happy we did so,” she said.

For many physicians still at Children’s Hospital Oakland, morale is low. “This is an affiliation that’s three-plus years going, and I can tell you it’s only gotten more confusing,” said Hastings. “And the medical staff at Children’s Hospital is very upset about this. I don’t know anybody who’s happy about this.”

Some physicians say the merger with UCSF has felt more like a corporate takeover than an affiliation. Hastings said some of the subspecialties at Children’s—including endocrinology, cardiology, and ear, nose, and throat—have already merged with their UCSF counterparts, but that all the chiefs of the new integrated divisions are from UCSF. “Many physicians at Oakland have impressive academic records and national reputations and have been here a long time,” she said. “There isn’t a shared leadership vision.”

Durand countered that all the division chiefs are from UCSF because of reasons having to do with the university’s structure. While the reporting relationships have become more complex, he said, “the bottom line it leads to is increased stability to do more strategic planning and more aligned recruitment of more subspecialists and more synchronized program development between the two campuses.”

But Vichinsky said the fact that all integrated divisions fall under UCSF leadership wasn’t made clear at the beginning of the affiliation. “If everything was clear and transparent, you could respond to that,” he said, “but it’s this cloud.”

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