The University of California Board of Regents today (Friday, Nov. 15) approved the formation of the corporation that will implement and complete the proposed merger of clinical services at the medical centers of UC San Francisco and Stanford University.

The corporation, which will be called UCSF Stanford Health Care, will oversee the joint operations of UCSF and Stanford medical centers effective by July 1997.

The private, nonprofit public benefit corporation's specific and primary purpose is to support, benefit and further the charitable, scientific and educational purposes of UCSF and Stanford medical schools.

The merger will be final after the adoption of several agreements including those that detail the corporations support for the medical schools, establish compensation packages for physicians and other academic personnel, and determine the assumption or assignment of liabilities and assets. The Regents will be asked to approve a process for adoption of those agreements in January.

"The union of UCSF and Stanford clinical activities has the potential to enrich the teaching and research programs of the two universities, to create extraordinary opportunities to move research discoveries to the bedside, and to provide a stronger financial underpinning for the clinical enterprise," said UC President Richard C. Atkinson.

Atkinson, acting on behalf of the Regents, will take steps toward approval of the articles of incorporation and bylaws and transferral of $8.25 million from the UCSF Medical Center, subject to equal contribution from Stanford, for initial capitalization of the venture.

Also, President Atkinson, in consultation with the chairman of the board and the chairman of the Committee on Health Services, will represent the Regents in the immediate formation of the 17-member board of directors to oversee the corporation.

UC will 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 will have also 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 will include a chief executive officer, a medical officer and three independent directors.

The independent directors will ve selected by four individuals, who are not members of either the UC or Stanford boards and are not employees of either university. The Regents and trustees will each name two of the four individuals.

Officials at UCSF and Stanford initiated merger discussions last year in response to the growth of managed health care and probable reduction in state and federal support for academic health centers. UCSF and Stanford have concurred that a partnership of two academic medical centers is the best way to meet the challenges posed by the highly competitive managed care market and continue to provide support for the medical schools' teaching and research efforts.

An independent third-party review of the merger, presented to the Regents last week, concluded that the proposed partnership is a sound business decision for the university.

The report indicated that a merged enterprise could reduce administrative costs, expand its share of speciality care service in the region and more effectively compete for managed care contracts.

As a result, the report concluded that the medical centers will be in a better position to support the teaching and research functions at their respective medical schools, which will remain separate under the merger. Traditionally, UCSF and Stanford medical centers each have provided approximately $20 million in support to their medical schools.

Restructuring and consolidation of UCSF and Stanford programs may result in a reduction of employees in some areas or an increase in others, particularly specialty care. Ninety-five percent of UCSF employees affected by the merger will be offered new positions by UCSF Stanford Health Care.

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