The big problems with Mayor Lee's CPMC deal

Oh, how pretty. But who gets to work there, and where do they live?

The mayor announced a deal for the largest private hospital construction project in San Francisco history with great fanfare, and the folks at Beyond Chron seem to think that it's pretty much dandy.

But there's a lot -- a whole lot -- wrong with this deal, and the San Francisco supervisors need to give it a very hard look before they just roll over and do what the mayor wants.

The centerpiece of this goes to one of the biggest issues in this crowded city: Jobs and housing costs.

The mayor talks about jobs all the time -- he's the "jobs mayor, jobs jobs jobs." Which is popular when unemployment remains stubbornly high. But there's a flip side: If you create a lot of jobs that attract new residents to the city, and you don't build housing that's affordable to those workers, you put additional pressure on the existing housing stock, driving up costs for everyone.

The big winners are the landlords and speculators.

In this case, CPMC says that the project will create 1,500 permanent jobs in San Francisco. But the deal only guarantees a tiny portion -- about 5 percent -- of the new jobs will go to existing San Francisco residents. Not many jobs for Lee's unemployed consitituents.

And there's nowhere near enough housing money in the deal to handle a workforce that won't be primarily existing residents.

For most of the long negotiations, CPMC took the position that it wasn't responsible for any housing at all, and the mayor was demanding more than $70 million. In the end, Lee accepted a promise for $33 million -- but only about $3 million will be up front and the rest will be paid out as the project is built. That's if nobody sues; if any organization goes to court to block the deal, the housing money goes away.

At least half of the workforce at the new hospital will be people who make less than astronomical salaries -- nurses, orderlies, cooks, janitors, clerical staff, support staff etc. Based on the city's existing figures, only about 10 percent of them will be able to afford market rent in San Francisco. And the money CPMC is promising will account for less than half of the affordable housing need it's creating with this project.

Oh, but it gets better: CPMC is counting as part of its affordable housing contribution a $29 million fund to help its employees make down payments on houses. What does that do? It drives up the cost of a house in San Francisco by adding a pool of bidders who have down-payment assistance. And most of them probably won't be buying million-dollar condos -- which seems to be what the city is building these days. So the average San Franciscan who wants to buy a house will be up against not only the Facebook millionaires but the CPMC employees who -- in the absurd name of affordable housing -- will have a subsidized down payment.

"So the new CPMC employees can outbid existing residents," Calvin Welch, a critic of the project, told me. "At the very best, we might have a deal that might possibly meet half of the housing impact."

Oh, and the delayed payments on the housing money will mean that affordable housing won't be built until well after the new jobs begin.

That really helps the housing crisis.

Then there's the commitment to treatment for the medically indigent. What CPMC has agreed to do, in essence, is to provide the same level of charity care the big Sutter Health chain does today -- and that's laughably, shockingly low. The commuity health advocates wanted CPMC to agree to a charity care level that's the average of what other big hospital groups provide; no go, says CPMC.

A key provision of any deal has to involve the future of St. Luke's, the only full-service hospital (outisde of SF General) on the south side of town. It's a crucial part of the city's health infrastructure, and for years, Sutter has been looking for a way to close it down.

The deal preserves St. Luke's -- but cuts it down from 200 beds to 80. The hospital will remain open for 20 years -- as long as CPMC's system-wide operating margin doesn't drop below 1 percent. That's actually a significant way out -- particularly since CMPC/Sutter controls its own books and could potentially do all sorts of things to change the reported operating margin.

Emily Lee, who has been working on the health-care part of this deal for the Chinese Progressive Association, told me that she's glad St. Luke's will be preserved. "But we have to ask, will it be sustainable as an 80-bed hospital?"

The neighborhood hospital is also a key bargaining chip -- and the CPMC folks, I am told, are using it to pressure supervisors and community groups to accept the deal. "I'm hearing, 'you better support this or St. Luke's will die,'" one source told me.

Then there's the labor problem.

CPMC is having serious problems with its unionized workforce, particularly because the health-care outfit won't guarantee that people who currently work in the hospitals that will be demolished will get jobs at the new site. "Nobody's guaranteed a job," said California Nurses Association representative Joanne Jung. "We're talking about some people with 30 years seniority. And if they do get jobs at the new hospital, they will very likely lose that seniority. It's a lightening-rod issue."

The draft development agreement says nothing about ensuring workplace protections for union members. "They're trying to pit the building trades unions against us," Jung said. "This is the deep, dark secret of this deal."

Now: By law, city officials say they can't tie a land-use decision to the resolution of a labor dispute. But there's no way this is going forward if the construction jobs aren't fully unionized. And so far, the nurses say, Mayor Lee isn't even addressing the concern.

Could the mayor say to CPMC: Look, you solve your labor issues -- not my business, but you and the unions work it out -- then come to me and we'll talk about a deal? It's certainly happened in the past, with previous mayors and previous projects. Not here.

Of course, the biggest problem is that all of this was done in secret, without any input from the wide range of community groups involved in and watching this project. "The community has no role in the development agreement,"  Emily Lee told me. "It's unfortunate that the Mayor's Office did this without community involvement."

Why did Mayor Lee -- the consensus builder -- craft a deal that so many people are going to oppose and that will set off a pitched battle at the Board of Supervisors and pass, if it passes, by a very narrow margin? I can't read his mind, but let me speculate for a moment.

Over the past few months, Lee has been taking a fairly tough line with CPMC, and by some accounts, was unwilling to settle for the type of limited housing mitigation the hospital chain is offering. But Salesforce just abandoned a major construction project in the city, the America's Cup is being downsized -- and the Chamber of Commerce types really, really want this hospital. You add it up.









2 new, state of the art hospitals in SF (with $2B in construction value and all the jobs that such construction creates), St. Lukes to remain open for 20 years, $20M for community clinics, 10,000 new Medical patients at the new hospital, including 1,500 from the Tenderloin, $20M to the MTA, and $33M dedicated affordable housing.

and this is a big problem for SF? that the Mayor didn't shake down CPMC for even more? give me a break, man

Posted by DanO on Mar. 30, 2012 @ 3:22 pm

It's not about the amount, it's about what the amount means in city. $20M for community clinic is nothing, especially if they won't pay this once. Considering housing market in the city, how many people can live in $33M, and where it would be??? 1,500 patients from Tenderloin seems a lot, but when you work in healthcare field in this city, this should be 10 times more in order to claim for "not for profit" and get huge tax deduction.

If CPMC messes up the city finance even more, we have to pay the gap as tax and we would lose public services.

Posted by Lu on Apr. 01, 2012 @ 7:12 pm

It seems there is always a problem with development (period). What, exactly, is wrong with $29 million for housing. Any money in any market will have an effect on the market. This money is in the hands of union members as a result of the coercive negotiation process. You can't have your cake and eat it, too. Either be happy with the extraction of the funds due to the process or don't participate in the process.

Posted by Guest on Mar. 30, 2012 @ 5:19 pm

I worked in SF hospitals over a 25 year period, at the General, St Lukes and finally for CPMC.
CPMC, presently the most expensive per day hospital in the city. That is what a "not for profit" hospital for profit does. Also a hospital known for its virulent anti-union history. It's specialty is going into communities and closing smaller hospitals that are often the ones taking care of the poor, the underinsured and the uninsured. That was the plan for St Luke's, a hospital that for nearly 150 years has taken care of a disproportinate amount of poor patients and MediCal patients. The vast majority of Doctors who admit patients to CPMC uptown (Buchanan) don't take MediCal patients even if patients could make the 2 hour bus ride to their offices from the Bay View and Mission areas.

St Luke's as an 80 bed hospital-that isn't a hospital, it is a clinic with short stay facilities. If they don't have adequate beds and adequate staff in different specialites (yes it is different to be a nurse on the OB-Gyn floor than on the orthopedic post-op floor) then physicians won't use St Luke's specialty facilities (surgery, etc) and there will be no patients and then St Luke's will die-exactly what CPMC envisions.

St Luke's is also the second busiest ER in the city (after The General). If it doesn't have the services of specialty doctors available because doctors can't admit patients from the ER to the hospital-another blow to medical care in our part of the city.

Finally let me ask Mayor Lee this. When St Luke's can no longer take care of the
thousands of under and uninsured does he think that CPMC is going to accept them as patients? They don't now. So Mayor Lee better look for some big time funding for SF General because their patient load is going to see a huge increase.

Posted by catherine cusic on Mar. 30, 2012 @ 5:38 pm

True, CPMC is famous for not accepting patients without insurance. Even though CPMC affiliates with Sutter Groups, many patients from Sutter Groups are transferred to UC or General if they don't have insurance, instead of CPMC. Every time this happen, CPMC says "we don't have bed" or "doctors are not available."

Posted by samy on Apr. 01, 2012 @ 7:20 pm

why would anyone buy insurance?

The whole point of insurance is so that hospitals will accept you!!

Posted by Guest on Apr. 06, 2012 @ 1:42 am

opine on why you don't like this deal? It's the same lame set of reasons why you don't want to build anything else either.

If you had your way, SF would still look the way it did in "The Streets of San Francisco" or "Bullett" or Vertigo".

NIMBY, thy name is Tim.

Posted by Guest on Mar. 30, 2012 @ 5:40 pm

the Yerba Buena Center, the Transamerica Pyramid, MOMA... You name the development and the Guardian opposed it.

Posted by Troll II on Mar. 30, 2012 @ 5:50 pm

In San Francisco were the same (compared to the average income of a city resident) as they were when The Steets of San Francisco was made.


Posted by tim on Apr. 02, 2012 @ 2:36 pm

The price of housing is subject to the same market forces that render the price of a copy of the SFBG to be, well, zero.

Posted by Guest on Apr. 02, 2012 @ 3:00 pm

That could only have been accomplished by massive development of new housing over that time, both market and affordable, which you would have oppossed, no doubt.

Posted by Guest on Apr. 02, 2012 @ 3:13 pm

Only in SF do we get upset that a hospital wants to upgrade their faculty, in the process creating several hundred construction jobs. Only in SF do we shake that hospital down for housing money, even though that hospital will be rehabbing a vacant lot that is doing nothing right now.

The whole St. Luke's argument is BS. The new hospital is in the center of the city, other than treasure island, there is no where in the city that is more that 4 miles from a hospital. Trying finding that in the burbs. SF General is not much farther than st. Luke's and it is a great facility. The city is almost as bad as the mafia at shaking people down.

Posted by D. native on Mar. 30, 2012 @ 6:17 pm

We have forgotten the folks in the Western half of the City who will not be able to get their loved ones to the hospital in time after a big quake.

That is because they will have to walk their loved ones to the hospital as the roadways will be out.

We failed to do an Acute Care Facilities Master Plan (as we did for Sub-Acute Facilities ie.clinics). This is because Sutter did not want to be told where we needed them to go.

So now all our Acute Care Hospitals will be in the east. But of course, this reality will not occur to anyone except after the Quake. It is then we will realize our Government has failed us as they prioritized Corporation Goals.

By the way: Sutter is a PPO in competition with Kaiser HMO--and 94109 and 94115 are the Rich and Elderly Zip Codes, so they go where the $$ is...

Tragic. I live in the East and will be well served. Why haven't any of the Supervisors in the West not raised this question?

Posted by Guest Charley_sf on Mar. 30, 2012 @ 7:25 pm

UCSF is in the Inner Sunset/Cole Valley. So the western parts of the cities are really not entirely bereft of hospital care when the earthquake comes.

Posted by Troll II on Mar. 30, 2012 @ 7:42 pm

It is not realistic to go from Noe Valley or Bernal Heights to Cathedral Hill on Van Ness when your kid broke his leg or have trouble breathing. This is seriously matter of life.

Posted by koi on Apr. 01, 2012 @ 7:21 pm

The VA hospital is about as far west as you can get and will be a resource if there's a big emergency like an earthquake

Posted by Guest on Apr. 01, 2012 @ 9:48 pm

I think the mayor is a coward for not standing up and demanding some kind of support for the current workforce. I mean, say you worked somewhere for many years and suddenly felt you could really loose your job (make way for the younger and/or cheaper folks!), wouldn't that create a great deal of anxiety? Wouldn't it be better if CPMC shored up it's internal support for their rebuild by sincerely addressing the fear of job security for its current employees? Or am I missing something here....

Posted by Guest on Mar. 30, 2012 @ 8:09 pm

I have been actively involved in the process to Save St Luke's. I am a rank and file Registered Nurse @ St Luke's, serving the underserved, and have done so for 26 years. To summarize the fight would seem to minimize its importance. But for those who are naysayers or do not know the full history of the fight: CPMC had a stealth mission to shut down St Luke's in 2010. Their master plan was to "provide a spectrum of services consistent with community need." With community and union support and outrage, St Luke's was saved and CPMC vowed their "commitment" for transparency. Fast forward to 2012, with CPMC's Trojan Horse of a plan: boasting their plan to serve SF with jobs, a shiny Vegas-style hospital and scaled down St Luke's. I have sat in on countless hearings regarding the rebuild. Public comment often goes into late hours of the evening. CPMC's poor track record cannot be overlooked. Their charity care record is well documented below the rest of SF hospital's contributions, while they continue to reap record breaking profits (the most profitable of all the Sutter hospitals) and reap the benefit of their non-profit status. Equal access to healthcare for ALL of SF, not just the affluent, a community benefits agreement, provision for the displaced residents, ADEQUATE local hiring, careful analysis of the environmental impact report (with appropriate plan of action in relation to this report) and labor peace are details CPMC must address. We will not stop until this issues are addressed for the health and well being of all SF, regardless of economic status, color, or creed.

Posted by Guest on Mar. 30, 2012 @ 10:13 pm

SFGH won't pay any taxes while a private hospital will. It's easy to be generous with money when it isn't yours and the taxpayer foots the bill.

And it's not a hospital's job to provide housing, let alone cheap housing. I would expect them to provide quarters close by for on-call doctors, however.

Posted by Guest on Mar. 31, 2012 @ 12:35 pm

Remember CPMC has only to offer help with down payment for employees wanting homes in SF. Believe me it will need to be paid back one hundredfold. Employees may not qualify for a loan and then CPMC can say they tried and the down payment plan can go to big salaried execs. Even so there will be no oversight of the down payment plan. Employees may not be comfortable in the neighborhood their down payment may be able to get them into, preferring the suburbs where they can get a bigger bang for their bucks as well as address school and safety concerns. As far as I am concerned this is another CPMC trick: look good and do nothing on the backs of the employees.

CPMC said they would pay two hundred dollars to every nurse who was certified in her specialty. They denied me because my specialty was not on their list. There was no list. Then they offered another bonus and denied me because I did not take the review class. I know how they work, intimately.

Sometimes I think the organization is so busy spinning that they forget they are in the business of health care, especially in the way it currently exists for the poor. An 80 bed St. Luke's will always be an afterthought.

Posted by Guest on Apr. 01, 2012 @ 5:18 pm

Only in San Francisco is the building of a new hospital and the commitment to keep a hospital in a low income area open met with protest etc. Seriously pathetic.

I also don't get the concerns about closing down St. Lukes- which under this agreement it will not be. The New hospital will be less than 3 miles away from St. Lukes. Most people in the suburbs live significantly more than 3 miles from the nearest hospital. SF is 7 miles by 7 miles and we have several hospitals located in the city, many of them in the center. I would dare say that with the exception of TI, no one in SF lives more than 4 miles from a hospital with an ER.

I also find it sad that a non-profit hospital has to pay money into a fund for affordable housing. Makes ZERO sense. Right now the only thing the current site is good for is a place for Occupy SF to cause trouble.

Posted by D. native on Apr. 01, 2012 @ 9:04 pm

So it appears that the CMPC proposal is bad because it creates jobs which creates housing demand, and, OMG, the workers would get subsidies to help them afford that housing. What devious fiends thought up this catastrophe? Thankfully, there is a simple solution. Oppose the project; no jobs, no housing allowance, no increase in demand, no increase in housing prices. Perfect.

Posted by Guest on Apr. 02, 2012 @ 3:11 pm

This is so ridiculous. First of all, Ed Lee has no credibility as mayor, and it should be just assumed that every project he green lights, he or someone he knows. Probably one of, "The big winners are the landlords and speculators".. Like, Rose Pak is benefiting financially in some way from it. Meanwhile, OccupySF can't even get the city to puke up an abandoned building.. Yet we can sit here talk about investing Millions of dollars into a hospital that no one can afford to go to. First question, will this hospital be apart of Healthy San Francisco?!?

Posted by Guest on Apr. 03, 2012 @ 2:09 pm