Hospital
conundrum:
Debates over billions
in S.F. hospital projects hinge on St. Luke's
Friday, April 18,
2008
San Francisco Business Times - by
Chris Rauber
The future of St. Luke's Hospital is
about to become a key debating point in San Francisco politics,
although many informed observers believe there's no economic
rationale for keeping the troubled safety net hospital alive as an
acute-care facility.
Even so, more than $3 billion in
proposed hospital construction work in San Francisco is directly or
indirectly tied to the results of the debate. For a jumbled mixture
of political and economic reasons, the future of St. Luke's Hospital
-- the South of Market nonprofit operated by
Sutter Health since 2001, and by Sutter's
California Pacific Medical Center since January
2007 -- is the fulcrum on which the size and shape of two giant
hospital projects rest. Those include:
California Pacific's proposed $1.7
billion, 555-bed Cathedral Hill medical campus at Geary Boulevard
and Van Ness Avenue, which requires city approvals that appear to be
contingent on solving the St. Luke's dilemma.
The city's own $1 billion-plus,
284-bed rebuild at
San Francisco General Hospital, which could be burdened with
additional low-income patients if St. Luke's were to disappear.
(San Francisco hopes to gain voter
approval for an $887.4 million hospital bond in November, but that
wouldn't cover hundreds of millions of dollars in additional costs
for fixtures, furnishings and equipment.)
Whether St. Luke's survives, and in
what form, will also dramatically affect medical care in a large
swathe of southern San Francisco, where today only St. Luke's and
S.F. General survive, while nine acute-care campuses, including
multiple CPMC and UCSF Medical Center sites, operate north and west
of the underserved and low-income SoMa region.
If St. Luke's were to close, many of
the patients who now use its inpatient wards and outpatient units
would patronize "The General," adding to its overcrowded daily
census, and possibly rendering its proposed shiny new inpatient
tower inadequate to handle the volume.
San Francisco Supervisor Michela
Alioto-Pier, a key player in getting community leaders together to
try to solve the problem, said the city's public hospital is
operating at 110 percent of capacity, "and if St. Luke's goes off
track, those numbers will go up dramatically."
Others suggest the influx won't be
that large on the acute-care side in part because
Seton Medical Center in Daly City has already
attracted some of St. Luke's former patients, just as CPMC has
attracted many of its former physicians.
Due to St. Luke's high operating costs
and low patient volume, CPMC announced plans last fall to close
acute and emergency care there. They planned to turn it into an
ambulatory hub for a new cluster of neighborhood clinics, only to be
hit by a "tremendous storm of protest," in the words of Dr. Martin
Brotman, California Pacific's CEO. "Medical redlining" was the term
used by critics, including a majority of the city's Board of
Supervisors.
The result, after pressure from labor
unions like SEIU's United Healthcare Workers West and the California
Nurses Association, along with various advocacy and community
groups, was City Hall's refusal to approve CPMC's master plan for
construction projects citywide, which led to CPMC's creation of a
blue-ribbon committee this spring to help it find a way out of the
impasse. Its charter is to create a viable way to keep St. Luke's
afloat in a way that complements California Pacific's master plan
and meets community needs.
"The stated goal is to keep St. Luke's
open, not to come up with a justification to close it," said John
Borsos, a UHW administrative vice president and director of its
Northern California hospitals and clinics division.
But the 31-member panel -- which
includes representatives of UHW, CNA, California Pacific, the
Mayor's Office, the San Francisco Chamber of Commerce, various local
politicos and other community, labor, health-care and business
groups -- faces turbulent political waters and a blunt economic
reality. Many observers say there's simply no economically feasible
way to retain emergency and acute care at St. Luke's without massive
subsidies.
Mitch Katz, M.D., head of San
Francisco's department of public health, said the city has its hands
full with the rebuild of San Francisco General and caring for the
bulk of the city's poor and won't have room for more non-paying
customers. Sutter, meanwhile, is "planning a large building at
Cathedral Hill, and they've met with some neighborhood opposition
over its size," Katz said. "This may give them the opportunity to
make that facility a little smaller," and devote the savings to
revitalizing St. Luke's.
But CPMC says it won't buy into that
scenario. "There is no way we can downsize Cathedral Hill," Brotman
told the Business Times. "We know what size we need, and what the
demand for beds will be, so we're building the size we need. You
can't afford to underbuild."
As for subsidizing St. Luke's over the
long term, "the answer is simple," Brotman said, "there isn't enough
money."
That appears to leave San Francisco's
already-overburdened public health system to take on the task,
possibly with an assist from Sutter/CPMC, unless the taskforce led
by Stephen Shortell, a University of California, Berkeley, dean and
public health professor, can pull a miracle out of its hat.
Looking ahead
No one connected to the blue-ribbon
panel, including Shortell, is saying anything about specific options
it may consider. Shortell and team have scheduled a series of
meetings expected to culminate in a recommendation to CPMC's board
of directors by mid- to late June. The Board of Supervisors may also
receive a presentation.
"We're going in with 31 different and
talented people, with a blank slate," Shortell said. "We want to
look at it from all perspectives, and we're looking 20 years ahead,
to roughly 2030." But even the taskforce's chairman doesn't know for
sure if California Pacific will abide by the recommendation. "I have
no idea," he said. "You'd have to talk to them about it."
Alioto-Pier, meanwhile, suggested that
fresh thinking is needed, such as making St. Luke's into a specialty
hospital or transplant center, in addition to its traditional role
of caring for many of the city's poor and uninsured residents.
"Right now, everything's on the table," she said, including, "what
it would look like, how big it is, and who it would serve."
The only thing that's certain,
Alioto-Pier insisted, is that CPMC has committed to finding a
solution that keeps St. Luke's open with acute-care and emergency
services.
But Brotman, who said Sutter earlier
promised to keep St. Luke's open only through 2009, has a very
different take. The panel's job is to look at what CPMC can and
should do in SoMa, Brotman said. "This is not a site-specific
charge, specific to St. Luke's."
Where's the money?
Behind the scenes, informed sources
believe the only politically feasible options are for either the
city or Sutter/CPMC to subsidize some of those services at St.
Luke's -- and Brotman appears to have closed off that option,
arguing that Sutter has invested close to $300 million in St. Luke's
since 2001, including improvements and accumulated financial losses
averaging about $35 million annually.
Further, hospital experts say the city
doesn't need an acute-care hospital there.
Wanda Jones, president of San
Francisco's
New Century Healthcare Institute, a nonprofit think tank and
research organization -- and a longtime hospital consultant with
close ties to Sutter -- said all of the economically feasible
options are unappealing, and none involves retaining acute-care or a
24-hour emergency room.
She said feasible options include
converting St. Luke's to a skilled nursing and rehabilitation
facility with some urgent care (which wouldn't require seismic
upgrading under state law); converting it to a residential addiction
treatment center, like San Francisco's
Delancey Street Foundation and
Walden House, or -- "a very long shot, and very ill-advised" --
tearing it down and building a compact "50-bedder" that primarily
would function as an ambulatory center.
That's "the reasonable range of things
that could happen," Jones suggested, while acknowledging that the
politically pleasing option would be to build a fancy new structure
and subsidize it. The problem is, she said, that "there is no
politically acceptable option that is also cheap."
Although Katz suggested a revitalized
St. Luke's could draw patients from more prosperous neighborhoods,
such as Noe Valley or Bernal Heights, Jones argues that that's a
misreading of the city's hospital marketplace. Residents of Noe
Valley "have other choices: CPMC itself, UCSF, St. Mary's and Saint
Francis," she said. "The whole city is a single market,"
economically speaking, except when it comes to primary care.
The real problem afflicting St. Luke's
is that its physicians can't make a living, due to constant Medi-Cal
reimbursement cuts, so private doctors are abandoning the area "and
it's physicians that make a hospital viable." That's the reality
politicians and the unions refuse to face, Jones said.
But union leaders insist any rescue
plan for St. Luke's must include a functioning acute-care hospital.
And some agree with Katz that a more appealing version of the
existing facility could attract enough insured patients from pockets
like Noe Valley, Bernal Heights and Glen Park to make the new
version more economically independent. "Strong public sentiment
requires a solution that includes a revitalized St. Luke's
Hospital," argued Paul Kumar, UHW's director of government affairs
"As Dr. Katz said, it's a question of whether services can be better
balanced, so good-quality acute care is available to all San
Francisco residents."
The death of St. Luke's would put an
added burden on San Francisco General and San Francisco taxpayers,
and building a new S.F. General with the capacity to serve that
population "isn't easily in the cards," he said.
Other sources say the city will have
to bite the bullet anyway.
"If the city thinks it's important to
have a second (safety net) hospital in that location, isn't it their
responsibility to fund it?" asked Ron Smith, the Bay Area regional
vice president for the Hospital Council of Northern and Central
California.
"That's not going to happen," said a
high-ranking source at a non-Sutter hospital system. "Health-care
economics will require that it be a clinic. There's no money to pay
for that hospital."
Brotman offered no solution but agreed
that neither CPMC nor the city can afford to go it alone. "To me,"
he said, "the politics are meeting identified needs, and everybody
playing an appropriate part."
crauber@bizjournals.com / (415) 288-4946
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Sutter bleeds St. Luke's, San Francisco Bay
Guardian, CA:
Dr.
Bonita Palmer has worked at the embattled St. Luke's Hospital on the
southwest corner of César Chávez and Valencia for 17 years. Before a
packed room of union organizers and religious leaders Sept. 12 at
St. Mary's Cathedral near Japantown, she gave a brief speech about
her experiences at the beloved but financially troubled hospital.
"St. Luke's has
been struggling to stay afloat for many years," Palmer told the
audience. "Under managed care, reimbursements are down, the numbers
of uninsured patients are up, and the growing gap between income and
cost of care stresses the health of working people." Money woes at
St. Luke's are no secret. Its parent company, California Pacific
Medical Center, an otherwise lucrative group of San Francisco
hospitals owned by Sacramento's Sutter Health, describes the losses
at St. Luke's as anywhere from $20 million to $30 million annually.
Patient advocates and unions representing St. Luke's workers have
long feared closure of the hospital and its badly needed acute-care
services, which thousands of residents — the city's poorest among
them, living nearby in the SoMa, Mission, and Bayview–Hunters Point
neighborhoods — often visit when they can't get expensive medical
treatment elsewhere.
The
hospital continually faces cuts executed by the CPMC, from its
downgraded neonatal nursery to the subacute unit, where, Palmer
says, patients who require nonemergency but highly specialized care
from professionals are being turned away. "Sutter scrapped its plan
for a much-needed upgrade to our emergency room even as we continue
to receive the overflow of patients from" San Francisco General
Hospital, she said.
Staffers learned most recently that outpatient physical therapy,
which had already been trimmed, will be done away with completely,
while the hospital's 36-bed inpatient psychiatric unit and
outpatient clinic have already been closed. A woman in the audience
confessed afterward that she was nearly brought to tears by Palmer's
tale.
The
decisions only worsened Sutter's reputation across Northern
California for dwelling on its bottom line and further enraged the
United Healthcare Workers–West union, which represents thousands of
Sutter workers and with which the company has regularly battled for
a decade.
St.
Luke's contains one of the most active emergency rooms in the city,
and aside from General Hospital a mile or so away on Potrero Avenue,
it serves more patients benefiting from Medi-Cal and Sutter's
version of charity care services than just about any other facility.
