"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.