1. Stanford University School of Medicine
Stanford Clinical
Funds Flow Model
Stanford Health Care &
Stanford University School of Medicine
June 27, 2016

2. Stanford Clinical Funds Flow Model: Medical Center Organization
Stanford University School of Medicine
17 Adult Clinical Departments
Two Wholly Owned Hospital Systems
Stanford Hospital and Clinics (SHC):
Stanford Children’s Health
SHC and Children’s Health purchase professional services from School under separately negotiated terms
Adult Funds Flow 5-year agreement established in 2006 and negotiated for renewal in 2011 and 2016
Joint SHC and School Oversight of Funds Flow

3. Stanford Clinical Funds Flow Model:
Stanford Hospital & Clinics (SHC) Organization
2 Adult Inpatient Hospitals
On-Campus Specialty Clinics
6 Ambulatory Care Centers
SHC Off-Campus Primary Care Clinics
University Health Alliance (UHA) Foundation
2 Insurance Products

4. Stanford Clinical Funds Flow Model: Objectives
Funds Flow objectives have remained unchanged since first agreement in 2006:
Align desired outcomes and incentives between SHC and School
Be simple, formula-driven, stable, predictable and transparent
Be inclusive of the full range of professional services and funding:
Professional clinical services
Medical administrative services, e.g., medical direction, essential services and Graduate Medical Education program direction
Other funding support, e.g., program development and mission-based funding
Support increased productivity and market-based compensation for physicians
Provide physicians with incentives that will enhance the clinical enterprise while ensuring high quality care as well as service standards

5. Stanford Clinical Funds Flow Model:
History & Evolution – School of Medicine
Increased reliance on clinical income
Balance of academic and clinical activity
Local and national economic pressures:
Faculty recruitments
Compensation and housing
More Complex Clinical Management Model:
Primary Care & Community Outreach
Collaboration with Foundation providers
Rapidly increasing network of facilities and providers

6. Stanford Clinical Funds Flow Model: History & Evolution – SHC
Maintaining alignment of clinical growth objectives with academic mission
Targeting financial incentives effectively
Control of one-off agreements
Cost accountability

7. Stanford Clinical Funds Flow Model: Funds Flow Components
Work RVU Payment – MGMA Comp/WRVU Rates
School of Medicine Expense Reimbursement:
Faculty Benefits
Clinical Overhead
University Overhead
GME Program Direction
Other Income:
“Cash Services”
Professional Services Contract Income

8. Stanford Clinical Funds Flow Model: Funds Flow Components (cont.)
Clinical Services Agreements:
Medical Direction
Essential Services
Purchased Services
Program Development Support – Clinical Faculty Recruitments
Service, Quality & Value Incentives – Percentage of WRVU Payment
Academic Grants

9. Stanford Clinical Funds Flow Model: Recent Changes
Increased Pressures:
Optimizing Clinical Income
Sustaining Rapid Program Growth
Competing in an Active Local economy
Increased Expense Accountability
Resulting Changes:
Increased MGMA Benchmark
SHC Adoption of Greater Share of Risk:
Faculty Benefit Expenses
University Assessment

10. Stanford Clinical Funds Flow Model: Management & Oversight
Joint SHC and School Oversight of Funds Flow
11 Year Track Record
Forum for Addressing Differences
School and SHC
Clinical Chairs
Funds Flow Administration Accountability