From the San Francisco Business Times:

California Pacific Medical Center said Tuesday it has offered to pay for $1.1 billion in community benefits for the poor and uninsured in San Francisco as part of its effort to gain city approvals for its proposed Cathedral Hill medical complex and rebuild of St. Luke’s Hospital.

CPMC, part of Sutter Health, called the offer “an unprecedented commitment,” but it also clearly represents a response to political realities in San Francisco.

“We sent this to (city officials) on Friday, and we’re hoping to have a reaction from them in the next week or so,” said CPMC spokesman Kevin McCormack. A Planning Commission meeting on hospital projects scheduled for July 15 has been postponed until Aug. 11, he said.”

SF Mayor To CPMC: $108 Million To Approve Cathedral Hill Hospital [SocketSite]
California Pacific Medical Center offers $1.1B deal for city OKs [Business Times]
CPMC: Latest Designs, Renderings, And Architecture Review [SocketSite]

14 thoughts on “California Pacific Medical Center Ups Its Cathedral Hill Ante”
  1. The Planning Commission is out of control. Will they declare the building the “Jack Tar Historic District” in an attempt to squeeze more from the Hospital? Wouldn’t surprise me.

  2. Sounds like extortion to me. CPMC is compelled by state law to bring its facilities up to seismic code. It’s outrageous that the City is using this as an opportunity for just another shakedown.

  3. Shakedown my ass. All levels of government should be shaking down these for-profit health care companies even more than we are. Loosely regulated, for-profit, health care is an abomination. The free-marketeers are ridiculous.
    Plus, how do they arrive at this figure? It’s probably an accounting gimmick and I wouldn’t be surprised if they are counting money they fail to collect (for e.g., the patient declaring bankruptcy).
    Health care and the hospital facilities in a large city is a public need. They should be regulated. They are under-regulated now. The free market does not work for health care and if we are going to have a bunch of leeches that make their profit off the backs of the people’s health we should regulate the heck out of them–as they do in Switzerland, for instance.

  4. Um…I realize that the most recent Business Times article doesn’t mention this, but according to their web site:

    Unlike investor-owned health care systems, Sutter Health is a not-for-profit organization. As such, any money left over after employees and bills have been paid is reinvested in health care.

    Emphasis added. Clearly Sutter Health is retaining some earnings somewhere to be able to self-fund this project, but even the stories that I’ve read about this in The Chron haven’t really dug down into why The Mayor et. al. have their hackles up about this project. Or perhaps I just don’t understand their objections.

  5. It’s all a show. The city pretends to shake them down, they pretend to pay something.
    This is a classic example: they probably already write off a large amount of money as uncollectible when people refuse to pay or file for bankruptcy.
    So now they offer to do what they were going to do anyway and it looks like the city drove a hard bargain. Instead, the city drove no bargain.
    Campaign contributions will be made. Contractors in bed with powerful city officials will be hired for the project and no traceable money will change hands, though lots of money will be paid, favors traded, etc.
    All this is happening right under your noses, and yet you’ll be happy that the city “got $1.1B from them”.
    Save your outrage for the real problems here.

  6. As long as we’re still turning the screws, could someone try to extort a better, more engaging street front on Van Ness? Major commercial districts shouldn’t have dead blocks.

  7. I worked in the corporate side of CPMC/Sutter. Not for profit doesn’t mean they don’t make money, it just means they hide it under foundations and internal charities.
    This $1 billion looks a lot like a bribe. That a business has an extra billion shows how much cash flows through the heath care industry.

  8. Yeah, Brahma. The health insurance companies and health companies are not truly “not for profit.”
    You see why I’m skeptical of their claims that they are providing the benefit they claim to be providing? One has to learn to read between the lines and propaganda.
    Furthermore, we have seen similar deceptions from health care and insurance industries in the past. Like the way they characterize their profits as being small based on all the money that flows through their business rather than their return on equity. It would be like an armored truck company saying they only make a little bit of profit when they make billions because they carry trillions of dollars around.
    Our media has stopped being skeptical of self-serving business claims (as well as most levels of government) and takes the knee-jerk corporate line.

  9. Plus, how do they arrive at this figure? It’s probably an accounting gimmick and I wouldn’t be surprised if they are counting money they fail to collect (for e.g., the patient declaring bankruptcy).
    ^^ This would be my suspicion.
    Truly, I don’t have anything against hospitals, even for-profit hospitals (though they are a symptom of a broken system). But San Francisco can’t really do anything about that, apart from Healthy SF, which is a promising initiative.
    To the extent that the city can “extort” something, they should get some long-overdue improvements in Geary transit.

  10. SFHawkguy, point taken. I would just be willing to draw a bit of a distinction between an organization such as Sutter Health and a company which is clearly in the profit-making business, say HCA, that deserves absolutely no concessions from The City. I concede MM2’s point that nonprofits can make money, and in this particular case, lots of it; that’s why I mentioned that they are retaining earnings from somewhere to fund this project (if it were donor-funded or funded via some kind of a grant, they’d have already said so).
    It seems to me that the solution to the widespread use of accounting gimmicks to hide actual profits is to have the conditional use granted by the Planning Commission contingent upon the results of ongoing, third-party audits. I’m not an attorney, so I don’t know if that’d be legal to require, but I have noticed that use permits are conditioned on all kinds of things and it seems like I’m hearing about new ones every few months.
    I agree that the media has stopped being skeptical of self-serving business claims, but we probably shouldn’t expect a publication like The Business Times to take anything other than the line of the bourgeoisie and count ourselves lucky that we have SF Weekly and the like as a counterbalance (not saying SF Weekly, East Bay Express, et. al. are perfect, either…).

  11. Good god! WHy should they have to offer anything? Why must The City extort money from anyone wanting to build something in this city?
    And for the person who wrote, “Loosely regulated, for-profit, health care is an abomination. The free-marketeers are ridiculous.” Are you joking? Did you not hear about the new “health care reform”??? My non-profit health care provider just upped their rates by 25% to pay for all the new regulations that are required under the new law. Extortions like this will further increase costs.
    I’m sure in the future you too will rage against the increased costs but will fail to connect the dots.

  12. My non-profit health care provider just upped their rates by 25% to pay for all the new regulations that are required under the new law.
    I call BS. The only real change before 2014 is that dependents are allowed to stay on their parents’ plans until they turn 26.
    This isn’t actually a huge change that would raise premiums — young people typically don’t require that much healthcare for one thing. In addition, for people who are in college and whose parents have health insurance, this just moves the funds that would have been paid to the college health plan (cheap) to the parents’ health plan (also cheap).
    Furthermore, while some plans like Kaiser kicked dependents off at 19, other plans kicked dependents off at age 25, so there’s only 1 year difference. States have already regulated this, and several of them required you to stay on until 25. The extreme case is New Jersey, which for 5 years has already required insurers to cover dependents until age 31.
    What most people don’t realize about insurance is that premiums almost always rise in a bad economy. That’s because of how insurance works — the insurance company takes your premiums and does the actuarial math to determine potential costs, including several assumptions based on investing the premiums. When you have a down economy and investments are down, premiums must go up to compensate. This ALWAYS happens.
    The insurance companies used the new healthcare changes as an excuse when they were going to raise rates anyway, and a bunch of gullible chumps now repeat it as a talking point, even though the substantial majority of the new law hasn’t gone into effect.

  13. brahma, sfhawk,
    i think the mayor’s and city council’s major objection is that as a 501c3 not for profit, sutter is exempt from paying property tax, hence there is no property tax revenue coming from this building. thats 1.16% of $2 billion, that the city wont be collecting.
    i previously mentioned that cpmc pacific alone had revenues of about $1.2 Billion in 2009.
    all else equal, as a non for profit, they get a capital reinvestment advantage equal to their tax bracket over a conventional for profit corp, like hca. in this case, non for profit actually offers competitive advantages over a for profit structure.
    i think the mayor and councils initial request was fair, given the scope of the deal.

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