New Study, “Profits & Patients,” Documents Sutter/CPMC’s Enormous Profitability, Poor Charitable Performance

PRESS RELEASE

FOR IMMEDIATE RELEASE

December 8, 2011

CONTACT:

Professor Mark Aaronson, UC Hastings, (415) 581-8924

Emily Lee, Chinese Progressive Association, (415) 625-3382

New Study, “Profits & Patients,” Documents Sutter/CPMC’s Enormous Profitability, Poor Charitable Performance

UC Hastings Community Economic Development Clinic white paper finds Sutter/CPMC has much greater financial capacity, but spends proportionately much less on community health care benefits than San Francisco’s other private non-profit hospitals, a disparity to be worsened by downsizing St. Luke’s.

Today, members of the Community Economic Development Clinic, at the University of California Hastings College of the Law, released “Profits & Patients: The Financial Strength and Charitable Contributions of San Francisco Hospitals,” a detailed study of the financial capacity and charitable performance of San Francisco’s private, non-profit hospitals, based on a comprehensive review of data gathered by the City and County of San Francisco’s Department of Public Health and the State of California’s Office of Statewide Health Planning and Development, the hospitals’ filings with the United States Internal Revenue Service, and other publicly available documents.

The white paper’s chief conclusion is that Sutter Health’s California Pacific Medical Center (CPMC), comprising the California, Pacific, and Davies hospital campuses north of Market Street, along with St. Luke’s Hospital in the Mission, has combined financial capacity much greater than any other of San Francisco’s private, non-profit hospitals covered by the City’s mandatory reporting requirements, yet spends proportionately much less than its peers on vital community health care benefits including both charity care provided without expectation of reimbursement and reimbursement shortfalls from Medi-Cal and Healthy San Francisco, the two primary publicly funded programs serving low and middle-income City residents.

The white paper concludes further that the disparity between CPMC’s charitable performance and that of the other mandatory reporting hospitals is likely to worsen with the downsizing of St. Luke’s Hospital to 80 licensed beds, given St. Luke’s roles as the CPMC system’s strongest charitable performer by far and as one of the City’s major providers of Medi-Cal services.

Among the study’s more detailed findings are the following:

Profits: Between 2006 and 2010, CPMC-St. Luke’s, had net income of $743.9 million compared to St. Mary’s which had net income of $22.6 million and Saint Francis which lost $14.8 million.  CPMC-St. Luke’s average annual profit over the same period, nearly $149 million, was almost 12 times the average annual profit of all other San Francisco mandatory reporting hospitals combined.  Moreover, CPMC-St. Luke’s is Sutter Health’s most profitable hospital statewide, accounting for more than 25% of Sutter’s total profits over the past five years.

Charity Care and Healthy San Francisco: In 2010, CPMC’s California, Pacific, and Davies campuses saw less than half the number of charity care patients per staffed bed as Saint Francis Hospital, including Healthy San Francisco patients, despite being more than three times the size of Saint Francis and having significantly greater financial capacity.  Last year these same three campuses spent only 0.96% of their net revenue on charity care without expectation of reimbursement and only 0.17% of their net revenue on Healthy San Francisco shortfalls.

St. Luke’s and Medi-Cal: In 2010, St. Luke’s reported that approximately half its patient days were attributable to individuals on Medi-Cal, the only hospital in the City other than San Francisco General Hospital with anywhere near that high a Medi-Cal census.  By comparison, individuals on Medi-Cal accounted for less than 12% of patient days at CPMC’s other three campuses.  Because of St. Luke’s unique role as a Medi-Cal provider, its planned downsizing to 80 licensed beds threatens this critical access to care.

Equitable Provision of Community Health Care Benefits is a Critically Important Public Policy Goal:  With approximately 99,000 patients currently seeking charity care, another 130,945 patients currently relying on Medi-Cal, and an expectation that these numbers will grow even under federal health care reform, it is a critically important public policy goal to ensure that all of San Francisco’s private non-profit hospitals serve low and middle-income San Franciscans without private health insurance at levels commensurate with their market share and financial capacity.

Jeff Ugai, a student author of the study, remarked on its purpose and findings:

We examined the comparative financial capacity and charitable performance of San Francisco’s private non-profit hospitals in order to provide an appropriate context for determining the community healthcare benefits that should be required from CPMC in conjunction with its proposed $2 billion campus rebuild and consolidation plan.  Our analysis shows that CPMC has the financial capacity to provide more of a share of services for uninsured and underinsured San Franciscans than it presently does, and that it is crucial for CPMC to do so in order to meet the City’s health care needs.

Emily Lee, Lead Organizer for the Chinese Progressive Association, speaking on behalf of the citywide community benefits coalition comprising the Good Neighbor Coalition, the Coalition for Health Planning – San Francisco, and Jobs with Justice – San Francisco, observed:

Dozens of community groups and a majority of the Board of Supervisors have called upon CPMC to negotiate a Community Benefits Agreement that will guarantee it meets the same charitable performance standards as San Francisco’s other private, non-profit hospitals and maintains a full complement of services at St. Luke’s Hospital.  This study makes plain that all our demands are totally justified by CPMC’s poor track record, entirely reasonable given CPMC’s enormous profitability, and absolutely necessary to protect San Francisco’s health care and its taxpayers.

Paul Kumar, a spokesperson for the National Union of Healthcare Workers, which represents service and maintenance employees at CPMC’s California, Pacific, and Davies campuses, and who helped draft San Francisco’s Charity Care Ordinance commented:

When San Francisco enacted its Charity Care Ordinance, its two statutes mandating review of charitable performance in conjunction with hospital construction, and most recently its citywide Health Care Master Plan legislation, it sought to ensure that the health care and fiscal impacts of hospital projects were fully assessed as part of the approval process, and that hospitals be held accountable to perform at fair and consistent standards.  The Hastings study does an enormous service by making crystal clear that CPMC can well afford to take up the burden it is currently shifting onto other hospitals and City taxpayers, and must do so for the sake of the City’s health care.

The University of California Hastings College of the Law Community Economic Development Clinic provides students with hands-on, community-based, transactional planning experiences. The clinic works closely with and provides counsel to residents, advocacy organizations, social service providers, and businesses in San Francisco's Tenderloin, a low-income neighborhood near the Hastings campus. Examples of recent projects include preparing nonprofit incorporation papers and tax-exemption applications for the Uptown Tenderloin Historic Museum, strategic planning regarding neighborhood public safety and quality of life issues, legislative and administrative advocacy to reduce conflicts in state and federal law affecting the renovation of low-income housing, and working with a grass roots tenants association on preserving affordable housing.

The report is available for download here.

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