Three members of the San Francisco Board of Supervisors today unveiled California Pacific Medical Center documents provided by an anonymous whistleblower that they say could put in jeopardy the development agreement to build two new hospitals in the city.
CPMC’s $2.5 billion project proposes the construction of five new buildings, including a 555-bed hospital on Cathedral Hill and an 80-bed facility to replace the existing 200-plus-bed St. Luke’s Hospital in the city’s Mission District.
However, financial documents released at a news conference this afternoon by board president David Chiu and Supervisors Malia Cohen and Christina Olague show that CPMC’s operating margin could go into negative numbers as soon as 2018.
If the operating margin stayed negative for two straight years, an escape clause could be triggered allowing CPMC to close St. Luke’s Hospital, a hospital that primarily serves low-income patients.
Chiu called the uncovering of the documents a “starting revelation,” particularly after city staff revealed last week that Mayor Ed Lee’s office was re-entering negotiations with CPMC. Both sides had announced in April that a deal had been reached.
He said, “We were told the only way these numbers could get close (to negative) is in a catastrophe.”
The documents show “an element of deception” that has led to a “breach of trust” between the supervisors and CPMC, Chiu said.
CPMC spokesman Sam Singer also attended today’s news conference and spoke to reporters afterward, calling the release of the documents “much ado about nothing.”
Singer said the financial figures, which were from this March, were found to be faulty, had been discarded in a trash can and were “never part of the consideration process for keeping St. Luke’s open.”
He said, “This is San Francisco so sometimes the best news does come out of a Dumpster, but that does not make it verifiable nor does it make the data real.”
Singer said the mayor’s office was made aware of the leaked documents a few weeks ago and “they did not express concern.”
Mayoral spokeswoman Christine Falvey confirmed that the mayor received the figures showing the escape clause could be triggered and “instructed staff to reevaluate that portion of the agreement.”
Falvey said Lee “wants an iron-clad contractual agreement to rebuild and operate” St. Luke’s and said negotiations with CPMC “continue to be under way.”
Singer said CPMC is committed to staying long-term at St. Luke’s, which under the plan would reopen in 2016.
“It’s highly unlikely they’re going to spend $350 million on a new hospital and then close it the next day,” he said.
Nevertheless, Chiu, in a letter to CPMC CEO Dr. Warren Browner that was also signed by Cohen, Olague and Supervisor David Campos, said the board is delaying its vote on the agreement–previously scheduled for July 17 — until an independent analysis is done on CPMC’s finances.
“If this development agreement is to be resurrected, it will take a full, thorough, and independent analysis of CPMC and Sutter Health’s finances, a full reworking of the agreement’s terms on the basis of that analysis, and a structured process to re-engage with community stakeholders, as well as ourselves, and to restore our trust in your corporation,” the letter said.
Dan McMenamin, Bay City News