July 25, 2010
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UCSF Aims to Achieve Fiscal Strength and Operational Efficiency

A Message from the Chancellor

When it comes to my priority of business, there’s good news, bad news and encouraging news.

Business – shorthand for our balance sheet and our operational efficiency – remains the area where we face the most pressing challenges. As a $3.6 billion non-profit enterprise with an annual operating budget of $3.3 billion, UCSF must remain financially secure if we want to properly educate the next generation of health sciences professionals, carry out unparalleled scientific research and achieve our mission of advancing health worldwide.™
 

 

Let’s start with the good news, which is about fundraising. UCSF is historically among the top institutions in the country – private or public – in its ability to attract significant philanthropy. UCSF continues to enjoy terrific fundraising results among all public institutions, all-the-more remarkable considering the fact that we don’t have sports teams and other kinds of organizations that people think of as central to university fundraising efforts. For four consecutive years, private support has surpassed $200 million.

When stacked against other top institutions, it’s fair to say that, despite a deep recession, we’re ahead of the pack. We’ve managed to pull this off by forging a wonderful ongoing relationship with a relatively small group of extraordinarily generous donors while, at the same time, cultivating new friends of the University.

The bad news is that California has yet to lift itself out of its economic doldrums. While we hope that the state’s economy will rebound and, with it, our fair share of state support, which was $250 million in fiscal year 2010, we have to plan for a world in which state funding remains tight and other major sources of revenue – grants from the National Institutes of Health, payments by insurance companies for clinical care – are squeezed. Given these fiscal realities, none of our ambitions are possible unless we have a well-run institution. We can’t afford to waste any of our precious resources.

I know that creating efficient business processes can be difficult as we consider new and better ways of doing things. But let’s think about what achieving greater efficiencies can enable. If our administrative staff is twice as big as it needs to be, that’s money we don’t have for discovering the molecular basis of prostate cancer, improving the health of our community and supporting our faculty to be the best teachers they can be.

We want the right number of people doing a job and doing it well. At a time when unemployment is high, and when personal stories of people losing their jobs are so pervasive – and sad – it’s easy to lobby for job retention. But we can’t allow job security to trump our other imperatives.

We’re encouraging people to become excellent managers and we’re investing in IT solutions that will promote efficiency. And we’re focusing on staff development.
To ensure our financial health through all economic times, we’re implementing a series of common-sense business initiatives that will generate cost savings and improve organizational effectiveness.

“It’s fair to say that despite a deep recession we’re ahead of the pack on fundraising.”

And now for the encouraging news: The Chancellor’s Administrative and Operating Efficiencies Work Group set a savings goal of $21 million for the 2011 fiscal year (which started July 1). We’ve already achieved $15 million in savings. What’s more important is that by 2013, we’ll be able not only to save at a rate of about $50 million a year, but we can take that money and make strategic investments in our future.

In tandem with the work group, we’re implementing a growth strategy designed to keep the University on strong financial footing – regardless of economic conditions. In general terms, we’re aligning all resources and expenditures with the UCSF business plan and priorities; we’re continuing to diversify revenue sources through fundraising, industry partnerships and aggressive outreach in Washington DC and Sacramento, and we’re requiring maximum accountability for all spending and business decisions.

The bottom line is that I find it difficult to ask our patients and students to pay more, our donors to contribute more, and California taxpayers to invest more in UCSF when we haven’t asked the hard question: are we running this institution as efficiently as possible? The answer to that question must be yes.

UCSF is poised for great success now and in years to come. With more efficient operations and lower costs, vigorous fundraising initiatives and budgets allocated and aligned to our priorities, the future is bright. 

Photo by Susan Merrell