You’ve undoubtedly seen the news and felt the noticeable increase in prices for basic life staples. Think about the impacts on the scale of UCSF and across patient care and research enterprises, administrative support and construction program. Inflation adds up to a major challenge.

Vice Chancellor for Finance and Administration Erin Gore and Chief Financial Officer Mike Clune recently sat down with outgoing Executive Vice Chancellor and Provost Dan Lowenstein for a conversation for EVC Expresso (see full article here) about how UCSF is positioned to handle inflationary pressures.

“Recently, we’ve been in a fairly good place,” Clune said. Through March of the past fiscal year, UCSF had strong growth in revenue for both patient care and research activities. (Year-end results are still being evaluated.) State support is very strong for the coming year, and our philanthropy remains robust. But he strongly cautions, “There are some big challenges. Inflation is driving up our costs. Our investment performance has weakened. And the cost of borrowing is ratcheting up.”

Regarding talk of a recession, he added, “We don’t know specifically what that is going to actually mean for the University. It usually means that the state has lower revenues, and therefore our state funding takes a hit, but the state has some healthy reserves, and we probably won’t know about potential cuts for a while.”

The rising cost of everything from construction to pharmaceuticals to lab supplies means we needs to be efficient, steadfastly responsible in our public fund spending, and willing to identify savings to support the University’s goals. Campus and UCSF Health supply chain teams are working to identify strategic sources and secure best prices, and evaluating options to address supply chain disruptions.

Clune passed along some tips – which serve as best practices no matter the economic climate – from new Associate Vice Chancellor and Chief Procurement Officer Justin Sullivan:

• Use University of California (UC) contracted suppliers. Limits on price increases are pre-negotiated, and to keep our business, suppliers have the incentive to hold the line on cost increases.
• Consider alternative products. Constrained supply chains mean that some items may carry high price tags, while competitive substitutes may be available and even discounted.
• Consider small and disadvantaged suppliers, particularly for services where smaller firms have capable talent without the overhead and cost structure of larger firms.
• Invest in reusable and sustainable products, which often have a longer useful life and lower total cost of ownership, rather than consume disposable or more expensive to operate goods.
• Check out UCSF Finance Explained – UCSF Finance’s website to promote understanding among our community about finance basics, how funds flow into and within the institution, long-term planning, and the latest news about our finances – materials are updated regularly.

While many factors, including labor costs, inflation, market fluctuation and philanthropy, play a role in how UCSF weathers the current storm, UC-wide policies govern University spending toward fiscal responsibility. And, as the past couple of years have shown, thanks to resilience and fiscal precautions, UCSF has continued to thrive.

“It’s such a point of pride how UCSF managed through the pandemic in terms of expanding services, meeting people’s needs, and being fiscally responsible,” said SVC Erin Gore. “Whether it’s recession, pandemic, inflation or something else, we need to continually ask: How do we dedicate our resources to their highest and best use? UCSF does a great job of that and that’s something to keep reinforcing.”

And a final word from Lowenstein: “In carpentry, there’s a saying, ‘Measure twice, cut once.’ The same applies with money. Before funds are spent, make sure you’re clear on the goal, you’ve considered all options, and the amount and purpose are justifiable (and not fodder for morning headlines).”