Leaked plans for a new California hospital are setting off alarm bells.
Whatever actually went on behind the scenes at Sutter Health and California Pacific Medical Center regarding plans for construction of two affiliate hospitals, it does not look good.
Internal documents leaked last week make some observers wonder if the Sacramento-based health system was secretly planning to purposefully drive down CPMC's bottom line, which would allow it to prematurely close San Francisco safety-net St. Luke's Hospital.
The documents in question detail the medical center's plans to re-build the hospital so that it is seismically sound, in order to comply with a new state law. CPMC also plans on building a brand-new 555-bed facility called Cathedral Hill Hospital.
The deal CPMC struck with the city of San Francisco states that construction of the new facility is contingent on St. Luke's remaining open for at least 20 more years.
As the current deal stands, St. Luke's must stay open for a minimum of 20 years unless the medical center's operating margin is less than 1% for two years in a row. In that case, an escape clause in the organization's contract will allow leaders to shut its doors. It doesn't seem like this should be a problem since CPMC's current operating margin is at about 14%.