Media Wrongly Blames Mayor Lee For Sutter’s CPMC Reversal

by Randy Shaw on July 17, 2012

In an orchestrated campaign to shove a bad deal down San Francisco’s throat, the San Francisco Chronicle and SF Business Times are criticizing Mayor Ed Lee for insisting that Sutter Health keep St. Luke’s hospital open for twenty years, as required by the city’s development agreement. Instead of blaming Sutter for renouncing a central term of the deal—its CEO announced that he could not bind his successor with any agreement lasting through 2030— the papers have falsely charged Lee with trying to “renegotiate” one of the agreement’s central terms. The media has also ignored other key facts: CPMC never viewed its agreement with the mayor as the final text, CPMC was “renegotiating” its provisions from the day it was signed, and CPMC knew that the deal was always subject to Board of Supervisors revision. The Chronicle even criticizes Lee for a “unilateral move” in reaching the development deal, ignoring that the mayor had to reach an agreement prior to Board consideration.

In promoting Sutter’s agenda, the SF Business Times calls efforts to preserve St. Luke’s “nonsense.” It urges Lee to either side “with $3 billion in health care upgrades, jobs, economic vitality, public works and charity care” or with “Sutter-hating union activists.” The truth is that an “ironclad” agreement to preserve St, Luke’s was always central to the deal, and Sutter walked away from its commitment.

It’s not surprising that local media have reimagined San Francisco’s CPMC deal in order to shift blame from Sutter Health to Mayor Ed Lee. The media have long pressured city officials into bad deals—recall its demands that former Oakland Mayor Elihu Harris get a deal done to bring back the Raiders, which has cost Alameda County over $100 million to date—and are now demanding that San Francisco Mayor Lee put Sutter profits over San Franciscans’ health.

The Ironclad Agreement

Let’s get one critical fact out of the way: when I praised the mayor’s reaching agreement with CPMC on March 28, 2012, I reported that the city got an “ironclad guarantee that St. Luke’s will be open for at least twenty years after rebuilding.”

The Mayor’s Office always sought an ironclad agreement, and Sutter agreed to it.

Sutter secured an escape clause from the “ironclad” deal, arguing that it should not be bound to keep St. Luke’s open if the nation experienced the equivalent of another Great Depression. The Mayor’s Office evaluated the potential for such a future economic calamity as beyond remote, and did not view the escape clause as changing the “ironclad” nature of the agreement.

Yet in recent weeks we learned two disturbing facts.

First, Sutter failed to give the mayor’s staff the accurate financial data needed to ensure that the deal was in fact “ironclad.” This resulted in Sutter forging an agreement that it knew it could likely get out of soon after St. Luke’s was rebuilt.

Second, CPMC CEO Warren Browner stated in a press conference on July 9 that he was unwilling to bind his successors to any “ironclad” twenty year deal to keep St. Luke’s open: “I would love to be able to foresee the future, but I’m not willing to sign an agreement that will tie the hands of the CEO at CPMC in the year 2030.”

That sure doesn’t sound like Sutter ever contemplated making any longterm commitment to St. Luke’s. After all, any such agreement would “tie the hands” of Browner’s successors.

Browner’s July 9 statement flatly contradicts CPMS’s consistent representations to city officials and community groups that it would keep St. Luke’s open for at least twenty years. This was not considered a major concession by Sutter, as some community and health care groups opposed the deal keeping St. Luke’s at 82 beds, and did not perceive Sutter’s twenty year commitment as much of a victory.

Although Browner’s revealing comments about Sutter’s true intentions appeared in the Chronicle, the paper continues to insist that Mayor Lee, not Sutter, is changing the terms of the deal. The truth is that if Browner had publicly stated in March (or earlier) what he said on July 9 about not tying the hand of his successors, no development agreement would have been reached.

There was a meeting of the minds between both parties that the development agreement to keep St. Luke’s open would be “ironclad.” Sutter, not the mayor’s office, is now trying to escape this commitment.

Negotiations Ongoing

The preposterous fiction that Mayor Lee is the party “renegotiating” a core part of the CPMC deal is further exposed by another fact omitted from the Chronicle and Business Times coverage: the mayor’s agreement with CPMC was never considered the final deal. In fact, CPMC was negotiating changes with supervisors and community representatives almost from the day the development agreement was signed.

Browner’s repeated claims that CPMC insists on moving forward on the deal “as it is written” are false. And considering that these negotiations are hardly an open secret, the Chronicle’s continued treatment of the development agreement as carved in stone rather than subject to change raises troubling questions about its motives.

CPMC never contemplated that its development agreement with Mayor Lee would pass the Board of Supervisors without changes. It left money and other terms on the table because it knew that the Board of Supervisors would insist on their own modifications.

Mayor Lee understood that the CPMC project could not get six votes on the Board without a twenty-year commitment to St. Luke’s. Sutter understood this as well, which is why the media should be castigating its effort to escape this commitment by blaming the mayor and ignoring the political realities of Board approval.

The Chronicle is so hostile to Mayor Lee that it even criticizes him for allegedly forsaking Board consensus for a “unilateral move” in forging the development agreement. But we know that had Lee followed the Chronicle’s advice and delayed reaching a development agreement while seeking Board consensus, the Chronicle would have criticized him for not showing leadership.

The Chronicle also fails to disclose that Lee’s “unilateral” approach was mandated by the CPMC project’s approval process. The Mayor had to first negotiate a deal with CPMC, and then help move the deal forward while the hospital giant renegotiated the agreement with the Board of Supervisors on route to securing the necessary six votes.

Wanting Lee to Fail

Unfair criticism of Mayor Lee’s CPMC strategy is part of a larger Chronicle narrative that downplays the mayor’ successes—job creation, Mid-Market revitalization, an acrimony-free budget process, a consensus driven affordable housing trust fund ballot measure, a privately-funded new stadium/concert venue paid for by the Warriors, and his becoming the first mayor to get high-tech firms to stay in San Francisco rather than relocating after early growth—in favor of false “failures” like the San Francisco 49ers moving to Santa Clara (a done deal before Lee took office), the reduction in development plans for the America’s Cup (such plans were too rushed to ever work), and Salesforce’s decision not to build a new campus (though their jobs are staying in the city).

The Chronicle describes these three events as “stinging setbacks” for Lee; most voters would say they are irrelevant in evaluating his performance.

The mayor’s biggest misstep, his throwing out the idea of implementing a “stop and frisk” policy,” has gotten enormous publicity despite Police Chief Suhr’s immediate assurance that it would not happen.

The Chronicle and other media have relentlessly criticized the Mayor since the fall 2011 campaign, which is certainly their choice. And other than in Gavin Newsom’s first two years and Dianne Feinstein’s entire tenure, the local media typically criticizes San Francisco mayors.

But Sutter Health has a long history of conflicts with local governments, which is why the media’s efforts to blame Mayor Lee for CPMC renouncing its commitment toward St. Luke’s is particularly misplaced. All of the blame for a new CPMC facility not being built lies squarely with Browner and Sutter’s Sacramento-based Board.

Our mayor and supervisors deserve praise for not sacrificing the city’s health needs to corporate blackmail.

At its July 17 Board meeting, the Supervisors will either vote down the EIR approved by the Planning Commission for CPMC’s new project or continue the matter until November 20. Both scenarios could and should have been avoided.

This project would be on schedule for approval had CPMC played by the same rules accepted by all developers of major projects in San Francisco, rather than trying to bob, weave and ultimately try to sucker-punch a politically popular mayor and diligent Board of Supervisors.

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