"Unlikely trio" of supervisors saves CPMC hospital deal

Mediator Lou Giraudo (from left) and Sup. Mark Farrell, David Chiu, and David Campos were keys to reaching a deal.
Mike Koozmin/SF Newspaper Co.

An ideologically diverse trio of supervisors, a community-minded mediator, and a deliberate negotiations process (one that that involved local stakeholders and verified corporate claims) has managed to do what the Mayor's Office couldn't: reach an agreement that seems to be a good deal for the city and has broad political support for California Pacific Medical Center to build two new full-service hospitals in town.

It differs from the disastrous deal announced by Mayor Ed Lee last year in key ways. St. Luke's Hospital – a staple of care for low-income San Franciscans that must to rebuilt to meet new state earthquake safety standards – will be about 50 percent larger than previously proposed, while the new luxury hospital that CPMC has been trying to build on Cathedral Hill will be about 50 percent smaller.

That simple flip alleviated much of the Cathedral Hill project's impact on traffic and affordable housing – which CPMC will still pay $14 million and $36.5 million respectively to mitigate, more than in the previous agreement and part of a roughly $80 million payment to the city – and overcame community concerns about the company's commitment to St. Luke's.

The new deal also has stronger local hiring requirements and more stringent guarantees that CPMC will serve MediCal patients and provide more charity care to the poor, regardless of the company's financial situation, while maintaining contributions to community-based organizations at the same level as under the previous agreement.

In many ways, the agreement repudiates the deal cut last year by Mayor Ed Lee, which CPMC refused to significantly modify or even support with verifiable financial claims even as it fell apart in spectacular fashion under scrutiny last year by the Board of Supervisors, particularly during hearings at the Land Use Committee chaired by Sup. Eric Mar.

That flawed deal was rushed to completion just as the Saleforce headquarters expansion that had been trumpeted by Lee and the America's Cup real estate deal both fell apart, which sources tell the Guardian put pressure on Lee to quickly deliver something to the business community and building trades (read tomorrow's Guardian for more on Lee's approach to tough negotiations and its implications).

But today's press conference to announce the new deal at St. Luke's was a forward-looking celebration of what was universally lauded as a big victory for the community. And most of the credit seems to go to mediator Lou Giraudo, who owns Boudin Bakery, and Sups. David Campos, David Chiu, and Mark Farrell, who all stepped up late last summer to salvage the project.

“There are two stories: the deal itself and the process,” Giraudo told the crowd. He said that he had some trepidation going in and that all he knew of the supervisors was what he read in the newspapers, and that the three represented the left (Campos), right (Farrell), and center (Chiu). Giraudo said they were the keys to making this deal happen.

“I have never been so impressed by politicians to come together as one,” Giraudo said, praising the trio for working hard, bringing in outside expertise to verify CPMC's financial claims, and working with their constituencies. “We depoliticized together and then we built trust.”

Farrell also praised both the deal – “It ensures we have access to quality health care for years to come in San Francisco.” – and the process, in which the three supervisors worked well together. “I think about the future of the Board of Supervisors and us working together as colleagues,” he said. “None of us have spent more time on anything than we have CPMC.”

Campos echoed the point. “I really cannot be more proud of the work that we as the Board of Supervisors did here,” Campos said, noting how they had all committed to work together for the good of the city, demonstrating “how we, as the Board of Supervisors, can work on even the most difficult issues and resolve them.”

He also praised his constituents in the community coalition of labor, housing, and social justice advocates – including San Franciscans for Healthcare, Housing, Jobs, and Justice – who had pushed for a better deal for San Francisco. “This is a victory for them at the end of the day,” Campos said, singling out their consultant Paul Kumar for helping shape a deal that ensures that, “St. Luke's plays a large role in the CPMC system.”

Kumar, a consultant with the National Union of Healthcare Workers who wasn't at the event, later told the Guardian, “This is a victory for democratic planning.” He noted that CPMC and its parent company, Sutter Health, are notoriously hard-nosed negotiators and that he's hoping this agreement represents a turning point in their relationship with the community and their employees.

“The question is if we can parlay this into a better and more responsible relationship between Sutter and the city,” Kumar said.

Chiu – who has been at the center of several difficult city negotiations in recent years, and who helped lead the board's charge against CPMC last year – told the conference, “When we started this process, I was not hugely optimistic we would get here,” calling the supervisors “an unlikely trio.” But he praised all parties involved for working to get a deal with strong local hiring and charity care provisions.

“This is a comprehensive project,” Chiu said.

When Lee spoke, he praised the deal and the crucial role played by the three supervisors. “This project would not have gotten done without their direct involvement,” said Lee, who didn't attend any of the dozens of negotiating sessions, although Ken Rich from the Mayor's Office was involved. Yet the unusually grim-faced mayor also seemed to bring up the only doubts expressed about the deal, saying “The job is never done, this is an announcement about where we are today” and vaguely warning that, “It's sensitive, people do have trepidation about what this will mean to them going forward.”

Afterward, Lee took reporters' questions while walking steadily to his car, without pausing to get into what he was alluded to or why this deal seems so much better than the one he cut, except to say that the “health care landscape has changed.” Later, a mayoral staffer who would only speak on background, said one key to this deal was that CPMC had decided that demand for hospital beds would drop in the future and that they needed fewer in San Francisco.

CPMC CEO Dr. Warren Browner, who had some tough clashes with supervisors last year, didn't go into the reasons behind the sweetened deal during his presentation (except to contest Giraudo's comment that he had fought through “deal fatigue and was weary at times” by saying that he actually had a lingering case of “walking pneumonia” that he thanked CPMC's medical staff for helping to cure.).

After comparing the negotiations to the legend of Sisyphus repeatedly pushing a boulder uphill, Browner said, “We are looking forward to going through the process and putting shovels in the ground, hopefully in 2013.”


Terms of the deal, which were formally introduced at today's Board of Supervisors meeting, include:

  • Permits for a 120-bed St. Luke's Hospital, 274-bed Cathedral Hill Hospital (or an additional 30 beds if St. Luke's operates at 75 percent capacity), medical office buildings at both hospitals, a parking garage with up to 990 spaces (limited to CPMC staff and patients only) on Cathedral Hill, and a new Neurosciences Institute at Davies Medical Center.

  • St. Luke's Hospital will have a number of specified services – including acute care, senior and community health care, labor and delivery, intensive care, cancer treatment, mental health services, and outpatient care – to ensure it remains a full-service hospital.

  • CPMC caring for 30,000 charity care and 5,400 Medi-Cal managed care patients per year, limits on healthcare cost increases to city employees, and CPMC endowing a new $9 million Healthcare Innovation Fund to increase capacity at local clinics.

  • CPMC contributing $36.5 million to the city's affordable housing fund and paying $4.1 million to replace the homes it displaces on Cathedral Hill.

  • At least 30 percent of construction job and 40 percent of the permanent entry-level positions in the new facilities will be San Franciscans, and CPMC will contribute $4 million to job training.

  • To offset transportation impacts at Cathedral Hill, CPMC will give $14 million to the SFMTA and “institute a robust transportation demand management program,” as well as spending $13 million on pedestrian safety and streetscape improvements at all its San Francisco facilities.




The unions, Non Profit Inc and the city's rapacious MTA all get their taste!! Campos spends 10 minutes rhetorically masturbating on how proud he is of himself. Glorious!! GLORIOUS!!

Posted by Lucretia Snapples on Mar. 05, 2013 @ 7:39 pm

This is a nasty deal, but better than nothing. It's disturbing how many compromizes have to be made to get anything built in this dinosaur of a town.

Posted by Guest on Mar. 06, 2013 @ 6:54 am

Chiu is compromising.

He has lost his ideological purity.

Time to kick him off the Progressive Island.

Posted by Guest on Mar. 06, 2013 @ 7:46 am

Thanks go to Chiu, who made the others act and negotiate like professionals instead of ideologues. However, in exchange for the expansion of St Lukes, the city actually ended up with fewer total hospital beds, and only the ability to add 30 more.

Posted by Richmondman on Mar. 06, 2013 @ 11:03 am

But of course everything gets politicized in SF.

Posted by anonymous on Mar. 06, 2013 @ 11:13 am

It's beyond fathomable that this paper champions a deal where we are building a brand new hospital with less beds than the one it replaces - why ? Because three supervisors of different ethnicity came together?

SF: where less is so much much more.
I wish CPMC had pulled up stakes and relocated to daly city or some other locale where NIMBY neighbors, non profits, unions, and two bit politicians weren't so easily brought together.

Posted by Erick Brooks on Mar. 06, 2013 @ 7:52 am

San Mateo, where they would be delighted to have the investment, and where taxes, fees and regulations would be far less onerous.

They should have given the city the finger. And let SFGH take over the unviable St. Lukes if they are that concerned.

Posted by Guest on Mar. 06, 2013 @ 7:58 am

So why didn't they? Could there be enough cash to be extracted here that even with a slimmed down and burdened project, the nonprofit comes out smelling like a rose?

And this idea that the Cathedral Hill hospital is a "luxury hospital" is a joke. All City employees who are in network of CMPC would have access to that hospital.

Perhaps compared to the great uninsured masses this is a luxury hospital, but that is a function of health insurance distortions more so than the hospital facility itself.

In any event, large facilities should not outsource their transit impacts to San Franciscans, they should cover their own freight. Anything less is corporate welfare.

Posted by marcos on Mar. 06, 2013 @ 8:25 am

•To offset transportation impacts at Cathedral Hill, CPMC will give $14 million to the SFMTA and “institute a robust transportation demand management program,” as well as spending $13 million on pedestrian safety and streetscape improvements at all its San Francisco facilities.

Do you mean that the hospital itself should create this "demand management program?" Can you imagine the howls if this was proposed, as opposed ot the money going to SFMTA?

Posted by GuestD on Mar. 06, 2013 @ 10:14 am

They tried to outsource transit impacts with the previous proposal, the one that Ed Lee trumpeted but which failed.

By downsizing the project and paying more for transportation, CPMC seems to have been forced by the community to take steps to bridge that gap/

Posted by marcos on Mar. 06, 2013 @ 10:28 am

Sick people generally do not want to take a bus.

Posted by anonymous on Mar. 06, 2013 @ 10:33 am

be paying the hospital, and not the other way around?

It's a weird world when you have to pay someone to provide them with paying customers and profits.

Posted by anonymous on Mar. 06, 2013 @ 10:40 am

Fares don't cover the full cost of public transit, not in San Francisco or any major city. There is a public good that comes from transit, both for its users and everyone from drivers to businesses, so it gets public subsidies.

Posted by steven on Mar. 06, 2013 @ 11:09 am

it's costs from fares. Although that could be because London has a congestion charge, I suppose.

Posted by anonymous on Mar. 06, 2013 @ 11:25 am

When asked for a citation, you remained mute. Now, under another of your numerous screen names, you are citing your own pollution as as source. What a complete ass-clown.

Posted by lillipublicans on Mar. 06, 2013 @ 12:01 pm

You must be thinking of "Guest" instead.

Posted by anonymous on Mar. 06, 2013 @ 12:21 pm

As I wrote, yes, CPMC will institute the program, which probably just involves encouraging employees to use transit. And I haven't heard any howls.

Posted by steven on Mar. 06, 2013 @ 11:12 am

for their employees. We all know how the Guardian feels about THOSE.

Posted by Lucretia Snapples on Mar. 06, 2013 @ 11:48 am

How could SFBG not hate that?

Posted by anonymous on Mar. 06, 2013 @ 12:02 pm

It will be illegal not to have insurance, so there should be no more "free" care.

Posted by anonymous on Mar. 06, 2013 @ 10:32 am

Obamacare. It will be cheaper to pay the IRS penalty.

The next attempts at social change under the Obamacare model:

Ending homelessness by passing a law requiring everyone to have a home.

Ending poverty by passing a law making poverty illegal.

Posted by Guest on Mar. 06, 2013 @ 10:55 am

So it can be a crime not to buy health insurance.

Posted by anonymous on Mar. 06, 2013 @ 11:12 am

Obamacare and still be uninsured by paying the IRS penalty. Millions will do so.

One cannot legally avoid the requirement for car insurance by paying a penalty, yet there are many uninsured motorists.

Driving is a privilege; healthcare is a necessity.

Posted by Guest on Mar. 06, 2013 @ 11:33 am

then individuals would have to buy their own, or face prison.

Unaffordable healthcare is neither a right nor a privilege. What do you have to spend your money on that is MORE important?

Posted by anonymous on Mar. 06, 2013 @ 12:00 pm

the penalty rather than buy insurance.

Posted by Guest on Mar. 06, 2013 @ 1:48 pm

have to pay cash in advance for any treatment.

Works for me.

Posted by Guest on Mar. 06, 2013 @ 2:06 pm

Has anyone ever been treated at CPMC pacific heights?
They routinely have people on gurney's in the hallway because they don't have enough beds. How is less beds in a brand new facility a win?

Did they really downsize this facility because someone complained that they would no longer be able to see the city hall dome from their condo?

This town's ability to sweat the small stuff never ceases to amaze.

Posted by Bizarro on Mar. 06, 2013 @ 9:03 am

We'll be getting more beds (229 now, up to 424 being built) between the two new hospitals, but this new deal concentrates fewer of them at one location that is already congested with traffic, which was the issue and not your bizarro claim about some powerful condo owner getting his view blocked. The stuff trolls say never ceases to amaze.

Posted by steven on Mar. 06, 2013 @ 11:21 am

Of course its bizarro to claim that NIMBYs in SF had anything to do with the downsizing of the cathedral hill campus. I am sure they had nothing to do with it.

So you're telling me that as a car-less single older person in SF who lives near both pac heights and cathedral hill, that I should be forced to go down to St Luke's If I need hospitalization and there are no beds available at the significantly smaller cathedral hill new campus? How is this smart?
As someone with health concerns who routinely waits for an available bed at pac heights, this plan is terrible.
But I suppose, the right squeaky wheels were heard.

Posted by Bizarro on Mar. 06, 2013 @ 2:01 pm

and there are many senior complexes there.

St. Lukes is in the Mission which has the lowest average age of any part of the city.

But logic takes a back seat when special interest groups are involved.

Me? I go to UCSF which is much better anyway.

Posted by Guest on Mar. 06, 2013 @ 2:09 pm

Actually this is a lie.

Current beds:
St lukes - 229
Pac heights - 313

Total available beds: 542

Future beds:
St Lukes :120 beds
Cathedral hill: 303

Total available beds: 423

So how again is this "MORE BEDS" looks to me like a reduction of 119 beds

Posted by Bizarro on Mar. 06, 2013 @ 2:09 pm

for in-patient care is expected under the Affordable Care Act. AKA Obamacare. CPMC saw the writing on the wall and decided they no longer wanted 500+ beds. ACA aims to get people treated and maintain their health to decrease the need for acute hospitalizations and will reduce reimbursement for expensive care that is deemed 'unnecessary' one of the ways CPMC makes their huge profits and the "non profit' organization.

Posted by Guest on Mar. 06, 2013 @ 2:11 pm

that could include those under crappy ObamaCare plans as well as Medicare/Medicaid, if the payoutsd are cut.

They will figure that SFGH can pick up the slack, as that is on the taxpayer dime.

Posted by Guest on Mar. 08, 2013 @ 11:41 am

Let the kickbacks to the politicians and those letting the contracts begin. I expect some of our local politicians will double their net worth with this deal.

Posted by Guest on Mar. 06, 2013 @ 5:15 pm


Can you please explain how this = more beds?
Current beds:
St lukes - 229
Pac heights - 313

Total available beds: 542

Future beds:
St Lukes :120 beds
Cathedral hill: 303

Total available beds: 423

This is what you said:
"More beds
We'll be getting more beds (229 now, up to 424 being built) between the two new hospitals"

Again, what magical thinking shows this is more beds?

Posted by Erick Brooks on Mar. 07, 2013 @ 7:45 am

Apparently, some transit activists do not like the new CPMC plan because the parking garage has more spaces than the previous plan.

You cannot please all of the progressives all of the time. Especially the ones who hate cars so much they would rather not have a new hospital at all than allow a few sick patients to drive to a hospital.

Posted by Guest on Mar. 07, 2013 @ 8:45 am

When businesses have to pay off ten different interests to get anything done, what happens? The money goes to those who waste it and the rest of us are made poorer.

Posted by Guest on Mar. 12, 2013 @ 9:24 am