City officials must cement deal to keep St. Luke’s Hospital open

St. Luke’s Hospital is a vital component of The City’s health care system, particularly for its poorest residents. San Francisco should not lose this hospital, and Mayor Ed Lee and members of the Board of Supervisors are right to expect California Pacific Medical Center to keep the facility open.

Presently, just two hospitals provide most of the health care for The City’s indigent and uninsured in the southeastern neighborhoods: St. Luke’s and San Francisco General Hospital. Without the former, poor patients would swamp the already-overtaxed San Francisco General, seriously undermining its quality of care.

But St. Luke’s doesn’t pay for itself, primarily because most of its 229 beds aren’t filled with paying patients. CPMC, an affiliate of the nonprofit hospital chain Sutter Health, has long tried to shut down the hospital and build a larger facility at Cathedral Hill as part of a state-mandated project to make acute-care facilities seismically safe. But city officials have opposed any deal that would shutter the Mission district hospital. And since the potential closure of the hospital is tied up in the new facility’s construction, CPMC officials have been forced to negotiate.

In April, Lee announced a compromise: in return for receiving approval for the Cathedral Hill project, CPMC would rebuild St. Luke’s with roughly one-third of its current beds, streamlining St. Luke’s operation and cutting costs. As part of the deal, hospital officials would retain the right to shut St. Luke’s if CMPC’s overall operating margins dropped below 1 percent for two consecutive years.

At one time, such financial performance may have seemed unlikely for the hospital chain. But recently released documents indicate that CPMC could well dip below that 1 percent threshold. And critics have hammered the company with allegations that officials there have considered deliberately driving up costs, manipulating its bottom line below 1 percent just to trigger the St. Luke’s “escape clause.”

Since then, both Lee and the Board of Supervisors have changed their position on the deal. Now, they claim, CPMC must agree to a rock-solid guarantee that it will keep St. Luke’s open for at least 20 years.

It is appropriate that city officials should want to keep open a medical facility that mainly serves poor residents of San Francisco. The City’s poorest residents have decidedly few options when it comes to health care.

If CPMC finds a way to close St. Luke’s for good, those options will contract yet again, and San Francisco General will be forced to shoulder the burden of caring for the poor by itself, which is unacceptable. This must not be allowed to happen.

Yet politicians have a funny way of getting cold feet in negotiations like this, and they could easily waver behind closed doors, especially under the pressure of a $2.5 billion CPMC deal falling apart. The mayor and the board should stand firm on their commitment to require CPMC to run St. Luke’s for two decades.

But at the same time, it also is understandable for hospital officials to expect a reasonable rate of return on their $2.5 billion investment in San Francisco. Thus, as negotiations continue over the fate of St. Luke’s, city officials should be mindful that CPMC might choose to make cuts elsewhere if its bottom line falls below 1 percent and closing St. Luke’s is not an option.

Whatever compromise is reached should manage to save St. Luke’s without exposing The City to even more onerous cuts in the future.

Bay Area NewsBoard of SupervisorsCalifornia Pacific Medical CenterGovernment & PoliticshospitalPolitics

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