Guest Editorial: The Battle of Cathedral Hill

by Bob Prentice on January 24, 2011

The Battle of Cathedral Hill is taking shape on the site of a new hospital proposed by the California Pacific Medical Center (CPMC), Sutter Health’s affiliate in San Francisco. CPMC wants to build a 555-bed specialty hospital on the site of the former Cathedral Hill Hotel at the corner of Van Ness and Geary, in part to meet state requirements that all hospitals meet seismic safety standards by 2015. But also to consolidate Sutter Health’s regional provider network into a destination hospital, with highly specialized services that will draw patients from around the country. The development will include a new medical office building across the street from the proposed hospital.

For Sutter, this is not unique, since they have also been embroiled in controversy in other places, including Marin, San Leandro and Santa Rosa. Across Sutter’s two dozen or so affiliate hospitals in California, Sutter is consolidating hospital services, consolidating physician groups and preparing to roll out a commercial insurance product to compete with Kaiser, but with market dominance in many areas.

For CPMC, this is the culmination of an organizational vision of the controversial leadership of a hospital network consisting of four formerly independent San Francisco hospitals to construct a new hospital around highly specialized services, including organ transplants, to be recognized as one of the premiere boutique hospitals in the nation.

But what will all this mean for the health care system in San Francisco? As described in CPMC’s Institutional Master Plan, the new hospital would be a consolidation involving the proposed closure and probable sale of their California campus (the former Children’s Hospital) and the elimination of inpatient hospital services at their Pacific campus (the former Pacific Presbyterian Hospital on Sacramento and Buchanan). The Davies campus (the former Ralph K. Davies Hospital on Divisadero, in the Castro) will become a neuro-science center, with unclear consequences for other inpatient services.

One of the most controversial parts of the plan, however, is the fate of the St. Luke’s campus (the former St. Luke’s Hospital), located at the corner of Valencia and Cesar Chavez in the Mission, the only private hospital south of Market Street.

On first take, it is puzzling to understand why St. Luke’s ever became part of the CPMC/Sutter network, since it is so clearly at odds with the organizational persona of both CPMC and Sutter. As one of the last independent hospitals in San Francisco — what was once over a dozen hospitals has been concentrated into three private (Sutter, CHW and Kaiser) and two public (UCSF and SFGH) hospital systems — St. Luke’s has a long history of serving low-income people in the southeastern portion of the city, including many immigrants who have moved into surrounding neighborhoods.

As a result, St. Luke’s has lost money consistently, which is the fate of a hospital that serves high percentages of patients on Medi-Cal and Medicare, or who are uninsured. That is a stark contrast to the rest of the CPMC network, which serves a high percentage of privately insured patients that produces a very favorable bottom line. Moreover, CPMC has a notoriously bad reputation for labor relations — nurses at St. Luke’s are unionized, for example, but nurses at the Pacific campus are not — and failing to live up to their obligations as a non-profit organization to provide charity care.

So why did CPMC/Sutter take over St. Luke’s in 2001? For starters, in the late nineties St. Luke’s, when it was still struggling desperately for survival as an independent hospital, filed an antitrust lawsuit against Sutter Health, Brown & Toland medical group and CPMC for allegedly driving insured patients away from St Luke’s. The antitrust lawsuit settlement included an agreement that Sutter would maintain St Luke’s until 2005. CPMC then decided to take over St. Luke’s and keep it open through 2009, which served both as a tax write-off for charity care and a bargaining chip to get approval to build Cathedral Hill.

In addition, CPMC/Sutter was under pressure from labor unions and community health advocates for their poor record on charity care, for which St. Luke’s could partially compensate. Finally, CPMC/Sutter knew it would have to garner the political support necessary to secure the permits to construct their dream hospital at Cathedral Hill, so they were willing to absorb the losses at St. Luke’s if it helped pave the way to their larger goal.

But they also tried to minimize their losses. When CPMC/Sutter announced in 2007 that they would close acute (inpatient) care at St. Luke’s as part of their Institutional Master Plan, they were not only met with an outpouring of community opposition, but were privately informed by city officials that they would jeopardize support for the new hospital if they went ahead with their plans. In what was widely regarded as a face-saving device, CPMC/Sutter announced the formation of a high-profile Blue Ribbon Panel in 2008, ostensibly to reconsider the future of St. Luke’s.

The Blue Ribbon Panel, made up of representatives from government, private sector, labor, church and community groups (I represented the Bernal Heights Neighborhood Center), recommended that St. Luke’s remain open as a full-service hospital, and that a number of specific services be emphasized to anticipate the needs of the surrounding communities. Even though it was a public cover for some basic decisions that were made in private, many of us were willing to participate if it meant keeping St. Luke’s open. Although the CPMC/Sutter board endorsed the recommendations, it only set the stage for the next phase of the battle.

As soon as the Blue Ribbon Panel completed its recommendations, CPMC/Sutter took over the publicity. The Blue Ribbon Panel explicitly decided not to take a position on the size of a future St. Luke’s Hospital, emphasizing instead the range of services and the populations to be served. The CPMC/Sutter press release the next day, however, referred to a 60-bed hospital (since upped to 80 beds in their plans), which is not only inadequate for covering the services and populations outlined in the Blue Ribbon Panel recommendations, but probably too small to maintain its viability as an urban hospital.

Moreover, it would undermine any pretensions they had for retaining, let alone recruiting, physicians and nurses, a recurring problem at St. Luke’s. (My primary care doctor’s group practice, which is based at St. Luke’s, has lost three physicians in the last two years. And according to the California Nurses Association, nearly two-thirds of the RNs hired at St. Luke’s between 2005-2007 lasted less than two years.) To add insult to injury, CPMC/Sutter launched a PR campaign on the sides of buses and on billboards proclaiming St. Luke’s as the “southern gateway” to CPMC, as if it were some kind of turnstile to get to the real show. It became clear that CPMC/Sutter intended to get what they needed politically by keeping St. Luke’s open, but minimizing its burden on their grander plans.

Hence, the battle over Cathedral Hill. As Sarah Phelan described in her cover article in the November 24-30, 2010 issue of the San Francisco Bay Guardian (Critical Care: How the Debate Over CPMC’s Controversial Multi-Hospital Project Revived the Idea of Healthcare Planning in San Francisco), the days of healthcare planning through regional Health Systems Agencies and Certificates of Need were eclipsed in the early 1980s by the political turn to the market for the resolution of all policy issues. As the case of CPMC/Sutter and St. Luke’s illustrates, however, the market leaves key decisions up to the individual business plans of private corporations, which in this case means large, consolidated hospital networks whose primary concerns do not necessarily include such issues as equity of access. What is good for CPMC/Sutter, from their management’s point of view, might not be what is best for the health care system of San Francisco as a whole.

While there is no longer a health care planning mechanism to make that determination, there is, however, leverage in land use, an intensely local function embedded by California statute in local government. CPMC/Sutter will have to get significant exemptions from the City and County of San Francisco in order to build a 555-bed hospital and medical office building on Van Ness and Geary, where density, among other land use issues, is already controversial.

That is the context for Health Care Master Plan legislation recently introduced by Supervisor David Campos, passed by a veto-proof majority of the Board of Supervisors and returned unsigned by Mayor Newsom, allowing it to become law. The legislation requires the Department of Public Health to conduct an assessment of health care need and to develop a “determination of consistency” to advise the Planning Commission and Board of Supervisors when considering land use implications related to health care facilities.

Although the legislation will not take full force until 2013, exempting projects currently in the works, the principles embodied in the legislation can still guide the deliberations related to Cathedral Hill. This is an opportunity to demonstrate how considerations of equity of access and other implications for the health care system of San Francisco can be incorporated into land use decisions.

What concessions in zoning or infrastructure will the City and County of San Francisco be asked to make to accommodate CPMC/Sutter’s plans, and what can be required of them in return? For example, there is no compelling reason, outside of their own organizational ambitions, why CPMC/Sutter needs to build a 555-bed specialty hospital on Van Ness and Geary, and an 80-bed low-tech hospital in the Mission. The land use approval process provides a forum in which these issues can be negotiated. A smaller hospital on Van Ness and Geary, and a larger hospital in the Mission, with a better distribution of specialty services to provide more equitable access to care, would be at least one very good result of this process.

It is important, though, to understand not only the stakes, but the players. CPMC/Sutter has the big bucks, with land use attorneys, hospital planners and PR specialists working City Hall and the media, as well as trying to buy off community opposition. On the other side is the Coalition for Health Planning (which grew out of the campaign to save St. Luke’s Hospital but became a broader, citywide coalition of neighborhood, labor and other community organizations), the Good Neighbor Coalition (representing Tenderloin organizations concerned about the neighborhood effects of the Cathedral Hill campus) and Jobs With Justice.

If there is to be a meaningful negotiation over Cathedral Hill and an ability to invoke the principles underlying the Health Care Master Plan legislation, the debates cannot be conducted through the distorted influence of money and power. It is important to mobilize a grassroots base that can effectively demand a commitment to equity as an underlying principle of public policy decisions.

The Battle of Cathedral Hill is not just about a hospital. It is about how we hope everyone can live and thrive in this city, and which values will guide that vision. It cannot be only the vision that emerges from corporate boardrooms.

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