New Clinical Funds Flow Overview

The new clinical funds flow took effect July 1, 2014.

The timing of the transition coincided with the completion of the UCSF Clinical Enterprise Strategic Plan. With the implementation of the strategic plan, a number of initiatives are underway to help focus our efforts on those that will be most beneficial to our patients and to our future.

As part of the transformation, we will refer to all of the components that comprise the clinical organization at UCSF, including the UCSF Medical Center and the Physician Practices, as the "UCSF Health System." This change signifies our commitment to operating as a true integrated delivery system.

In the new clinical funds flow model, professional fee revenue and technical (ancillary) revenue accrues to the Health System.  The Health System has assumed financial responsibility for the costs of operating ambulatory and inpatient practices (e.g., clinic support staff, facilities, supplies), with the exception of the costs of physician faculty clinical effort.

Departmental clinical income includes a combination of four tiers of payment from the Health System:

  • Tier 1 is a payment based on the number of clinical work relative value units (wRVUs) generated by faculty in the department. The dollar per wRVU for various sub-specialties is determined using national standards for physician productivity and compensation. The dollar per wRVU is multiplied by the number of wRVUs generated within the department to determine the departmental payment.
  • Tier 2 is a margin sharing incentive payment where the Health System, Clinical Departments, and Dean’s office share in the margin earned above the annual combined budget for the Health System.
  • Tier 3 is an incentive plan that aligns the Health System around goals that are designed to enhance performance in quality, access, and the patient experience.
  • Tier 4, the staffing payment, is reserved for the small number of clinical services for which physician staffing is a requirement for safety, regulatory mandates, or good patient care.

Some agreements between the Health System and the School of Medicine Clinical Departments have been retained under the new clinical funds flow model in order to support growth and start-up expenses. For example, strategic support will continue to cover costs such as business plans for new faculty, business development activities and some program support.

In addition, the Health System will reimburse the department for the actual benefits expense related to faculty clinical time as reflected by the clinical operating statement and pay for the clinical operating overhead expense within each Department.

The Tier 1 wRVU-based payment represents the largest share of the payment from the Health System to the clinical departments.  Payments will be made to clinical departments, not to divisions or individual faculty. Faculty should direct their specific questions regarding the relationship between the clinical funds flow changes to individual compensation to their Division Chiefs/Department Chairs.

The Health System will directly cover the dean’s tax, malpractice, billing and medical group costs.

The information above is summarized on the Model Structure page.

For additional information, please visit the Model Mechanics and FAQs pages.