San Francisco’s demands for CPMC hospital project reek of politics
San Francisco Business Times
June 10, 2011

The San Francisco Business Times writes about hospital construction projects in the Bay Area. In reference to CPMC’s new Cathedral Hill campus, the article discusses the various “asks” of CPMC for benefits such as housing and traffic improvements:

Bay Area officials see major hospital projects in much the same way as Willie Sutton saw banks: It’s where the money is.

More than $12 billion worth of hospital construction is in progress or planned in the Bay Area, and cash-starved local officials want to make sure part of that bounty finds its way into city and county coffers.

To be fair, you really can’t blame them. Nobody’s going to argue that cities across the region don’t badly need the money. And right now, cities have leverage: Hospitals need entitlements to get on with projects to meet state seismic safety mandates, so they can’t be hard bargainers.

As a result, cities are extracting tens or even hundreds of millions of dollars from hospital projects to provide infrastructure and “mitigate” the negative “impacts” on traffic and housing. (It’s a skewed calculation, of course — a genuine one would balance positive impacts like thousands of jobs, related economic activity and the value to the community of state-of-the-art medical facilities. But balance isn’t the point; cash is.)

Payments range from $11 million on John Muir’s $824 million in construction work in Concord and Walnut Creek, to $60 million for UCSF’s $1.5 billion Mission Bay hospital, to $195 million for the combined $3.5 billion rebuild of Stanford Hospital & Clinics and the Lucile Packard Children’s Hospitals in Palo Alto.

Even against this backdrop, however, the demands imposed by San Francisco on California Pacific Medical Center are in a league of their own. The Mayor’s Office has presented a list of 36-point list of “city asks” to CPMC parent Sutter as a condition of clearing the way for its $1.7 billion Cathedral Hill hospital.

In addition to details about how CPMC will operate and what services it must offer, there’s $108 million in one-time payments for housing and traffic improvements. There’s $3.375 million in mandatory annual contributions to specific community health organizations and $2 million a year to transit. Over the hospital’s 50-year lifespan, those will total $268 million. But the biggest-ticket item by far is charity and Medi-Cal care, which could surpass $1 billion over the same period.

The city can and should ensure that CPMC, and all other hospitals, do their fair share of caring for the city’s indigent and uninsured. But a fair share requires a fair comparison. Instead, the city is fiddling with what constitutes an “average” that CPMC will have to meet. As this figure specifically excludes lesser charity-care providers, such as UCSF and Kaiser, the benchmark is artificially high.

It’s hard not to see the malign hand of politics in all this. Sutter and health unions, particularly the California Nurses’ Association, have been battling for years, and the unions have made it clear they consider the Cathedral Hill approvals process simply another front in that war. Fair enough — except that we, the non-combatants, are caught in the middle.

Worse still, we’ll eventually pay the bill. It’s a San Francisco habit to load social obligations onto businesses so they appear “free” to the populace. But the city understands perfectly that this will ultimately come out in health care costs — indeed, one of the 36 “asks” limits the price rises CPMC can impose on the city’s main health insurance plan. In other words, City Hall would be protected; nobody else would.

It’s time to cut the ask list down to size. The amount the city should extract from CPMC isn’t what best serves Sutter. It isn’t what best serves the unions. It’s what best serves the rest of us: getting this hospital built with city requirements that are reasonable — in every sense.

In addition to details about how CPMC will operate and what services it must offer, there’s $108 million in one-time payments for housing and traffic improvements. There’s $3.375 million in mandatory annual contributions to specific community health organizations and $2 million a year to transit. Over the hospital’s 50-year lifespan, those will total $268 million. But the biggest-ticket item by far is charity and Medi-Cal care, which could surpass $1 billion over the same period.

The city can and should ensure that CPMC, and all other hospitals, do their fair share of caring for the city’s indigent and uninsured. But a fair share requires a fair comparison. Instead, the city is fiddling with what constitutes an “average” that CPMC will have to meet. As this figure specifically excludes lesser charity-care providers, such as UCSF and Kaiser, the benchmark is artificially high.

It’s hard not to see the malign hand of politics in all this. Sutter and health unions, particularly the California Nurses’ Association, have been battling for years, and the unions have made it clear they consider the Cathedral Hill approvals process simply another front in that war. Fair enough — except that we, the non-combatants, are caught in the middle.

Worse still, we’ll eventually pay the bill. It’s a San Francisco habit to load social obligations onto businesses so they appear “free” to the populace. But the city understands perfectly that this will ultimately come out in health care costs — indeed, one of the 36 “asks” limits the price rises CPMC can impose on the city’s main health insurance plan. In other words, City Hall would be protected; nobody else would.

It’s time to cut the ask list down to size. The amount the city should extract from CPMC isn’t what best serves Sutter. It isn’t what best serves the unions. It’s what best serves the rest of us: getting this hospital built with city requirements that are reasonable — in every sense.