New hospitals will grace both Cathedral Hill and the Mission district after a lengthy and contentious development squabble between city leaders and California Pacific Medical Center officials ended in a tentative compromise announced Tuesday.
CPMC had once sought to tear down the vacant Cathedral Hill Hotel and replace it with a 555-bed hospital nearly twice the size of San Francisco General Hospital. St. Luke’s Hospital in the Mission district, which primarily serves low-income people, would have been reduced in size and could have been shut down.
Under the deal announced Tuesday, the Sutter Health affiliate will build a new hospital with up to 304 beds at Cathedral Hill at Geary Boulevard and Van Ness Avenue while spending $2 billion to replace the aging, seismically unsafe St. Luke’s campus on Cesar Chavez Street with a 120-bed general acute care hospital. Offices for doctors may also be built at both locations, as well as a parking garage with up to 990 spaces on Van Ness Avenue. No taxpayer money is involved.
Disagreements over the size of the Cathedral Hill hospital, how many charity care patients CPMC would take, and the future of St. Luke’s led the talks between hospital officials and city leaders to break down many times. At one point, a deal was struck, only to be scuttled after it was revealed the deal included an escape clause that could have allowed CPMC to shutter St. Luke’s if it were not profitable enough.
The two sides’ positions became so intractable and negotiations so acrimonious that the intervention of a mediator — attorney and business executive Lou Giraudo, who chairs Boudin Bakery — was required “to create trust” between the two sides, Supervisor David Campos said.
“There was more than one time everyone involved felt justified walking away,” said Mayor Ed Lee, whose office worked with Board of Supervisors President David Chiu and supervisors Mark Farrell and Campos to broker the deal. But, “We have to get this thing built,” the mayor added. “These are major health care institutions, and they will lead to hundreds of permanent jobs in our city.”
CPMC employs 6,500 people at its existing campuses in the Mission, Laurel Heights and Duboce Park neighborhoods.
With the new deal, the Cathedral Hill hospital will be built first, and then St. Luke’s will be rebuilt at a still-undetermined time thereafter. Under terms of the development agreement, 30 percent of local construction jobs will be given to San Francisco residents, and 40 percent of an undetermined number of entry-level hospital jobs also will go to locals.
Construction must be approved by city planning officials as well as the Board of Supervisors, but could begin as soon as this year, according to Dr. Warren Browner, CPMC’s CEO.
Under terms of the deal, which all sides still view with “trepidation,” according to the mayor, the health care giant will dole out $14 million per year for five years to The City to fund efforts in affordable housing, transportation and health care.
Health care premium increases to city employees also will be capped at 5 percent per year.
CPMC agreed also to provide health care for “at least” 30,000 uninsured or Medi-Cal patients per year and pay $9 million into a “health care innovation fund,” to be used by to deliver medical treatment to poor and working-class San Franciscans.