Three key members of the Board of Supervisors today presented what they say are documents leaked by a whistleblower within California Pacific Medical Center showing it will likely shut down St. Luke’s Hospital by invoking an escape clause in the development agreement that the Mayor’s Office negotiated and the board is now considering.
The CPMC internal financial documents sent to the supervisors Sunday from an anonymous whistleblower predict a financial scenario in which the operating revenue will fall below a 1 percent margin  by 2018. The predicted loss would allow CPMC to exit its 20-year commitment to St. Luke’s and close the hospital in 2020, just five years after its scheduled reopening. Sups. David Chiu, Malia Cohen, and Christina Olague say they worry the financial shortfall would also limit CPMC’s charitable donations while its Sutter Health parent company cuts hundreds of hospital jobs to save a projected $70 million per year.
CPMC has promised to seismically retrofit St. Luke’s and run it for 20 years. In return, the medical group gets to build a massive hospital on Cathedral Hill. Inserted into the deal is what Chiu calls the fine print, which states if CPMC operating margin falls below 1 percent for two years it may close the hospital. Chiu said CPMC presented the escape clause as a very unlikely event, occurring only in a catastrophic scenario.
Instead, the leaked documents present a negative operating margin as an incredibly probably situation that CPMC has known about for months and misrepresented to city officials. “CPMC knew it was possible and likely they would default on their commitment,” Cohen said, adding that her greatest grievance is CPMC’s refusal to do anything about the situation.
Cohen said the financial revelations aren’t surprising considering Sutter Health has a reputation for shady practices. She said we should all wonder how a supposedly not-for-profit corporation is able to make so much profit.
CPMC spokesman Sam Singer said the documents are fraudulent, flawed financial reports that CPMC threw away a long time ago. He suggested someone must have dug them out of the garbage in a conspiracy like fashion. Singer said the mayor had learned about the document a few weeks ago.
Chui said that may help explain why the Mayor’s Office recently acknowledged it reentered negotiations with the CPMC after becoming concerned about the viability of St. Luke’s, telling supervisors it was based on CPMC’s revised revenue estimates, sparking a controversy during last week’s hearing .
Whatever the reason, the three supervisors want more time to investigate the matter.
“Let’s be clear,” said Cohen said, “these contract negotiations should be informed by actual financial information and not just by the word of CPMC leadership, which we’ve unfortunately found to be untrustworthy.”