Minutes of the Academic Medical Centers and Hospitals Committee of the Board of Trustees of the State University of New York November 14, 2012 Pursuant to a notice of meeting duly given on November 7, 2012, the Academic Medical Centers and Hospitals Committee of the Board of Trustees of the State University of New York held a meeting on November 14, 2012 at the State University Plaza, 353 Broadway, Albany, New York. Committee Members Present: Mr. John Murad (Chair) Mr. Cary Staller Mr. Stephen Hunt (via video) Mr. Marshall Lichtman (via video) Ms. Eunice Lewin (via video) Mr. Ronald Ehrenberg (via video) Committee Members Not Present: Ms. Linda Sanford Committee Liaison Present: Ms. Kathleen Preston Other Trustees Present: Chairman H. Carl McCall Trustee Dullea Others Present: Chancellor Zimpher Mr. William Howard Dr. David Lavallee Mr. Brian Hutzley Mr. Cliff Stromberg Mr. David Ho Mr. Fred Matthews Mr. James Campbell The Academic Medical Centers and Hospitals Committee meeting was called to order by Trustee John Murad at 10:05 am on Wednesday, November 14, 2012 at SUNY System Administration in Albany. * Mr. John Murad made a motion to accept the minutes from the September 11, 2012, Committee Meeting. The motion was carried. * Mr. Murad introduced Mr. Cliff Stromberg, author of the Stromberg Report. * Mr. Stromberg thanked the Trustees for the opportunity to present and advise them. He further stated that he is aware that the Trustees consider the academic health centers a critical component of the University. * Mr. Stromberg stated that all the health science centers face serious challenges and that each of the health science centers are different. * Mr. Stromberg reviewed the different factors that are affecting the health science centers and that they have to be looked at on an institution by institution basis. * Mr. Stromberg stated that over the last thirty years, many institutions have had to make decisions on what is the best structure for their hospitals. He stated there is no simple answer to what the appropriate structure would be. * Mr. Stromberg discussed the risks and possible benefits related to academic medical center hospitals. * Mr. Stromberg noted that the first thing you need to do is address those factors that are under your control. For those outside of your control, such as State fringe benefits andcollective bargaining packages, procurement rules, debt limits, etc., it makes it very difficult to manage or change the finances of these hospitals. Mr. Stromberg stated that you cannot save your way to prosperity. * Mr. Stromberg noted that the challenge to health science centers is to increase topside revenue. He noted that the privates have been better at this. * Mr. Stromberg noted that the Affordable Care Act will not help SUNY. * Mr. Stromberg stated that he felt the best option was to transfer SUNY hospitals to a quasi independent entity such as the Research Foundation. In addition, the entity’smission would be to support SUNY’s mission. * Mr. Stromberg reviewed other structural options and discussed some of the challenges with each. * Mr. Stromberg also discussed the impact of changes in structure on the academic enterprise. * Mr. Stromberg discussed the need to have the hospitals and physicians in alignment in terms of success. * Mr. Murad thanked Mr. Stromberg for his presentation and asked which model would support increased NIH grants. * Mr. Stromberg stated that generally speaking, you need funds to invest in labs and a robust clinical enterprise. Whichever model accomplishes these items would be the best model to pursue. He further noted that hospitals will not support research unless it has that underlying mission. However, he did note a few examples of hospitals that did support research. * Mr. Staller thanked Mr. Stromberg for his presentation. Mr. Staller asked if he had a counterpart on the business side that could advise the Board. Mr. Stromberg stated that if you want to sell assets, than you should hire an investment banker. Otherwise, to save Downstate you hire a consultant like David Pitts. * Mr. Staller asked Mr. Stromberg how do you figure out which way to go on these institutions. Mr. Stromberg responded that the correct way to do it is to do a report that identifies the options and then determine which options are financially viable. Mr. Stromberg also recommended that the Board request a sensitivity analysis for 6, 12 and 18 months that identifies the likelihood of success. * Chancellor Zimpher stated that these options were presented to the leadership of the academic medical centers and that some of the narrowing of options had occurred. * Mr. Howard noted that option 5 was agreed to be the best option for Downstate and Upstate and supported changes in current processes for all three hospitals. Mr. Howard noted that plan is to work with Mr. Stromberg and provide a more detailed recommendation to the Board in January. * Mr. Murad asked if this proposal would include what would need to be done legislatively, including union contracts. * Mr. Howard noted it would. * Dr. Lichtman noted that he is not sure what a turnaround would look like. He noted that the medical school would be harmed if the hospital is not financially viable. Dr. Lichtman discussed the issues effecting Downstate and what is the best way to proceed. * Mr. McCall noted we will know what we want, but not what is feasible. We will need to determine what is feasible. * Ms. Preston noted that there was a concern that the hospital and the medical school move together. * Mr. Staller noted that we will not be able to be successful without labor relief. * Mr. O’Brien asked what is the impact on patient care when these spin offs happen. * Mr. Stromberg noted that there are plenty of good hospitals that pay less than SUNY. In addition, he noted some of the other constraints on the SUNY hospitals. * Mr. Murad thanked Mr. Stromberg for the presentation and then asked Mr. Ho and Ms. Preston to present the next item on the agenda, Downstate Leadership and LCME Update. * Mr. Ho noted a new senior leadership team has been put in place. Mr. Ho noted that there has been a complete turnover in senior leadership, including Dr. Williams as the new campus President. Mr. Ho further noted there are new CEOs in place at UHB and LICH. In addition, Mr. Ho discussed other leadership changes at the campus and hospital. * Ms. Preston provided an overview of the Downstate LCME process. She noted that Downstate had completed their self-study that included the entire campus. In addition, Ms. Preston discussed the mock review with on-site reviewers from the University of Washington and Albany Medical College. Ms. Preston noted that this review went very well. Ms. Preston further noted that the reviewers noted that there has to be a credible plan for future financial success to ensure that the campus is sustainable. * Chancellor Zimpher noted that the key question is can Downstate provide adequate clinical experience for our doctors? Chancellor Zimpher noted that we should think about a plan that would ensure good clinical placement for our doctors. * Ms. Preston discussed the size of the residency programs at Downstate and the residents other Brooklyn hospitals. * Mr. McCall noted that a promising location for residency slots would be at Kings County Hospitals. * Mr. Howard noted that residency programs are not accredited by LCME, but by other accrediting bodies. * Ms. Preston noted she is sure Dr. Williams is working on different fronts to make sure the campus stays intact. * Ms. Preston presented the findings of the mock site visit in which the reviewer complemented Downstate on its pass rates on licensure exams, demographic makeup of students and faculty, increase in research expenditures and recent grant award. * Mr. Murad noted that this would be Ms. Preston’s last meeting. Mr. Murad thanked Ms. Preston for being a tireless advocate for the hospitals and for providing expertise and guidance on hospital related issues. * Mr. Murad noted a pending resolution related to the pay differentials at Upstate. Mr. Howard provided background on the resolution and noted that additional work needs to be completed. Mr. Howard stated that the resolution would be ready for the next meeting. * Mr. Murad made motion to go in to Executive Session. * Mr. Murad made a motion to end the meeting. Academic Medical Centers November 14, 2012 and Hospitals Committee minutes 2 | Page