CPMC not budging on hospital deal

mike koozmin/the s.f. examinerDispute: Mayor Ed Lee has asked CPMC officials to guarantee that they will run

mike koozmin/the s.f. examinerDispute: Mayor Ed Lee has asked CPMC officials to guarantee that they will run

Negotiations over the terms of a $2.5 billion development agreement for two new seismically safe hospitals in The City remained in a stalemate Monday, with California Pacific Medical Center officials refusing to modify a part of the deal that Mayor Ed Lee now has concerns about.

While the centerpiece of the deal is a new 555-bed hospital on Cathedral Hill, at issue is the long-term future of St. Luke’s Hospital, which serves primarily lower-income patients in the Mission district and surrounding areas. An escape clause in the deal would allow the Sutter Health-owned hospital group to release itself from its obligation to St. Luke’s if CPMC has an operating margin of less than 1 percent for two straight years.

CPMC officials acknowledge that the hospital’s financial future is uncertain, but say its current financial projections don’t trigger that escape clause like an earlier document recently leaked to city officials.

Lee now wants a deal guaranteeing that St. Luke’s will be rebuilt and run for 20 years, with no escape clause, his representative said.

“As of today, there is not an agreement,” Ken Rich of the Mayor’s Office of Economic and Workforce Development said at a Board of Supervisors committee hearing to discuss the proposal.

Both sides remain optimistic that an agreement will be reached.

The prior deal with the Mayor’s Office, approved by the Planning Commission in April, is now before the board for approval. Some supervisors have expressed concern about CPMC officials’ unwillingness to share its financial data, and worry that they may be looking for a way to back out of operating St. Luke’s once it is rebuilt.

Prior to Monday’s hearing, CPMC officials called a news conference to reaffirm their commitment to building and operating St. Luke’s for at least 20 years, and pushed supervisors to quickly approve the deal, in order to comply with new state seismic standards for hospitals.

“Delay is unconscionable,” CPMC CEO Dr. Warren Browner said. “We stand by the development agreement as it is written,” he added, even while acknowledging that negotiations with the Mayor’s Office were still ongoing.

“Without this project, St. Luke’s doors will be closed,” said Dr. Ed Kersh, chief of staff at St. Luke’s. Kersh said that would leave the only other hospital south of Market Street, the city-run San Francisco General Hospital, “inundated” with patients.

The board is scheduled to vote on the deal July 17, but the Mayor’s Office said Monday that a delay may be necessary.


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