When Mark Laret stepped in as UCSF Medical Center’s new CEO in April 2000, it was just two weeks after the health care system had ended a bad three-year relationship.
The center had merged with Stanford Health Services to become UCSF Stanford Health Care in 1997, and everything seemed so promising. But three years later, a culture war was still raging within the combined organizations, and recognizing that the merger was a major mistake, the two centers separated.
“There were a couple of years of work to bring the organizations together, but when they decided to split, it happened in a matter of months,” Laret says.
The quick break left the organization reeling.
“It was a fairly grim situation on a number of fronts,” he says. “First, and the most obvious thing, was just how distressed the employees were.”
They had been promised certain benefits that weren’t fulfilled, and they were angry that all of this effort had gone on the past few years and hadn’t benefited anybody in any way. They were also mad that management had focused so much on the merger that quality of care had dropped.
Then there were the financial challenges, as the hospital was losing $1.25 million a week. “We were running out of cash, so there was some urgency to act,” he says.
On top of those two issues, operations were a mess. Many functions, such as payroll, were still housed at Stanford, so UCSF had to ask Stanford to do its first payroll checks after the split. Laret also had consultants in pretty much every major role in the hospital.
“There was no chief operating officer, no chief financial officer, no chief anything, no chief information officer, nobody running ambulatory care, so it was a big set of holes here,” he says.
Seeing all of this, he knew the hospital was on life support, but he also thought it could one day breathe on its own again if he could re-engage the employees, build a management team and control the finances — but it all had to be done simultaneously.
“It wasn’t a pleasant set of circumstances, but on the other hand, I knew that the fundamentals here were strong, and that was what we really built on over the next several years.”