St. Luke’s Hospital’s Future Uncertain

The future of St. Luke’s Hospital, a rundown facility that predominantly serves the poor and the elderly on the southeast side of the city, is up in the air thanks to a high-risk game of poker between a health care provider and city authorities.

Earlier this year, Mayor Ed Lee brokered an agreement between the city and Sutter Health-affiliated California Pacific Medical Center (CPMC) to build two new hospitals. One would be a 555-bed facility on Cathedral Hill, the other a seismically safe rebuild of St. Luke’s, on the corner of Valencia and Cesar Chavez streets.

Under the deal, St. Luke’s current 12 floors would shrink to six and the number of beds it could support would decrease from 229 to 80. Previously, Sutter had planned to turn the building into an outpatient facility and possibly close the hospital.

A key part of the deal unraveled last week after members of the Board of Supervisors held a press conference during which they presented leaked documents that painted a scenario in which St. Luke’s would be closed within four years of its reopening in the fall of 2016, although CPMC had promised to keep it open for 20 years.

CPMC representatives say the documents are “literally trash,” and were never meant to be part of the deal. The documents show that operating revenue for the hospital will fall below 1 percent by 2018. If this were to happen twice in a row, CPMC could activate an escape clause allowing it to close St. Luke’s.

The mayor responded by saying that he wants CPMC to agree to keep St. Luke’s open without conditions, in a so-called “ironclad” agreement.

Warren Browner, CPMC’s chief executive officer, yesterday fired back with a letter to the mayor that basically says “no.”

“As you know, CPMC shared with your staff our Board-approved 10-year plan, which projects that the operating margin trigger will not be breached,” Browner wrote to the mayor. “Projections by their nature cannot be guaranteed because the future is unknowable. That is why it would be irresponsible for CPMC to promise to keep any of our hospitals open without regard to our financial situation.”

In the letter, Browner also reminded the mayor that St. Luke’s will have to close if the Cathedral Hill project is stalled. CPMC’s Cathedral Hill hospital, which has been in the works for a decade, is currently being reviewed by the mayor’s office in conjunction with the plans for St. Luke’s.

“Please also remember that, as a matter of law, St. Luke’s will have to close if we do not secure approval to rebuild it, which we can only afford to do if we are permitted to rebuild our other facilities as well,” Browner wrote.

Some members of the Board of Supervisors are also not backing down, and are demanding more transparency from the health care provider.

“We need unlimited obligation from CPMC to operate St. Luke’s for 20 years,” said Supervisor Malia Cohen at a Land Use Committee meeting on Monday. “Not one that is dependent on financial assumptions that we are not able to review.”

Supervisor Jane Kim said the Board needs to see more financial information from CPMC before it approves any deal.

“There is no way we can make a decision on this deal without having the full sets of data and information available,” Kim said. “As we move forward on what the future of this project looks like, there [are] going to be a lot of questions that need to be answered.”