August 2012

City-Sutter Wrangle Over St. Luke’s Future

Rigoberto Hernandez

The future of St. Luke’s Hospital — a rundown facility that predominantly serves the poor and the elderly living in San Francisco’s southside — has become a key sticking point in final negotiations between a health care provider and City authorities. Earlier this year, Mayor Ed Lee brokered an agreement between the City and Sutter Health-affiliated California Pacific Medical Center (CPMC) to build two new hospitals. One would be a 555-bed facility on Cathedral Hill; the other a seismically safe rebuild of St. Luke’s, on the corner of Valencia and Cesar Chavez streets. Under the deal, St. Luke’s current 12 floors would shrink to six, and its number of beds wotuld decrease from 229 to 80. Previously, Sutter had planned to turn the building into an outpatient facility, possibly closing the hospital.

But last month members of the Board of Supervisors held a press conference during which they presented leaked documents that painted a scenario in which St. Luke’s would be closed four years after it reopened in the fall of 2016, though CPMC had promised to keep it operating for 20 years. Board members later threatened to delay the project by 18 months or more by rejecting its environmental impact report.

According to CPMC representatives, the documents were “literally trash,” and were never meant to be part of the deal. The documents show that operating revenue for the hospital could fall below one percent by 2018. If this were to happen two years in a row, CPMC could activate an escape clause allowing it to close St. Luke’s.

The mayor responded to the press conference by insisting that CPMC agree to keep St. Luke’s open without conditions, in an “ironclad” agreement. Warren Browner, CPMC’s chief executive officer, fired back with a letter to the mayor that basically said “no.” “As you know, CPMC shared with your staff our Board-approved 10-year plan, which projects that the operating margin trigger will not be breached,” Browner wrote to the mayor. “Projections by their nature cannot be guaranteed because the future is unknowable. That is why it would be irresponsible for CPMC to promise to keep any of our hospitals open without regard to our financial situation.”

In the letter, Browner also reminded the mayor that St. Luke’s will have to close if the Cathedral Hill project is stalled. Plans for CPMC’s Cathedral Hill hospital, which have been in the works for a decade, are currently being reviewed by the mayor’s office in conjunction with proposals for St. Luke’s. “Please also remember that, as a matter of law, St. Luke’s will have to close if we do not secure approval to rebuild it, which we can only afford to do if we are permitted to rebuild our other facilities as well,” Browner wrote.

Some supervisors mimicked the mayor in demanding a clearer commitment from the health care provider. “We need unlimited obligation from CPMC to operate St. Luke’s for 20 years,” said District 10 Supervisor Malia Cohen. “Not one that is dependent on financial assumptions that we are not able to review.”

District 6 Supervisor Jane Kim said the Board needs to see more financial information from CPMC before it approved any agreement. “There is no way we can make a decision on this deal without having the full sets of data and information available,” Kim said. “As we move forward on what the future of this project looks like, there [are] going to be a lot of questions that need to be answered.”

 

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