Attorney General Bonta, The Regents/UCSF Health Enter into Cooperative Settlement Agreement to Protect Health Services for San Francisco Residents

Under the settlement, The Regents/UCSF Health agree to conditions on their purchase of Dignity Health's San Francisco hospitals to ensure health equity and maintain competition in the healthcare market

OAKLAND - California Attorney General Rob Bonta today announced a settlement agreement reached cooperatively with The Regents of the University of California (The Regents) and UCSF Health regarding their purchase of Dignity Health's two San Francisco hospitals, St. Mary's Medical Center (SMMC) and Saint Francis Memorial Hospital (SFMH). Dignity Health is a nonprofit public benefit corporation that owns and operates SFMH, a 259-licensed-bed general acute care hospital, and SMMC, a 240-licensed-bed general acute care hospital. Both hospitals serve a diverse community, including a large number of elderly, unhoused, and publicly insured patients who may rely on Medi-Cal, Medicare, or charity care to access essential health services. Under the settlement agreement approved by the San Francisco Superior Court today, The Regents/UCSF Health commit to maintain services for the unhoused and Medi-Cal and Medicare beneficiaries, provide $430 million in capital investments, protect competition in the healthcare market, and safeguard the affordability of and access to services for residents of San Francisco. The settlement agreement was reached under Corporations Code section 5920 and the Clayton Act.

"San Franciscans deserve access to high-quality, affordable healthcare services, and today, we are ensuring they can continue to rely on both Saint Francis Memorial and St. Mary's Medical Center for those services," said Attorney General Bonta. "As the People's Attorney, I take my responsibility to protect access to medical services in California seriously, and I am grateful to The Regents, UCSF Health, and Dignity Health for working cooperatively and in good faith with my office to put the health of San Franciscans first. Today's settlement agreement will also protect competition in the healthcare market. At every turn, DOJ will fight for healthcare access, affordability, and equity for all Californians."

Under the settlement agreement, The Regents/UCSF Health agree to the following conditions for ten years in order to maintain health equity and access:

• Operate and maintain SFMH and SMMC as licensed general acute care hospitals with the same types and levels of services, and associated staffing.
• Continued participation in Medi-Cal and Medicare.
• Provide an annual amount of charity care at SFMH equal to or greater than $6.5 million and at SMMC equal to or greater than $3.5 million with an annual increase of 2.4% at both hospitals.
• Provide an annual amount of community benefit spending for community healthcare needs at SFMH equal to or greater than $1.6 million and at SMMC equal to or greater than $10.7 million to increase yearly by 2.4% at both hospitals.
• Invest at least $430 million, including at least $80 million for electronic medical record systems and related technologies, and at least $350 million in deferred maintenance and physical infrastructure improvements at both hospitals.

In addition, The Regents/UCSF Health agree to the following conditions for seven years in order to maintain competition in the healthcare market:

• Maintain contracts with the City and County of San Francisco for services at SFMH and SMMC unless terminated for cause.
• Not condition medical staff privileges or contracts on the employment, contracting, affiliation, or appointment status of a physician with UCSF Health or any affiliate.
• Not impose any requirement upon any member of the hospitals' medical staff, as a condition of either their medical staff membership or privileges that restricts them from contracting with providers other than UC Health.
• Not bundle or condition, expressly or implicitly, the participation of the hospitals on the participation of UCSF Health or evade this provision through UC systemwide negotiations.
• Negotiate all payor contracts for the hospitals separately and independently from payor contracts for UCSF Health and maintain an information firewall between the two negotiating teams.
• Require (for five years) a price growth cap that limits the maximum that the hospitals may charge a payor from year to year upon renegotiation of contracts.

The California Department of Justice's Healthcare Rights and Access Section (HRA) works proactively to increase and protect the affordability, accessibility, and quality of healthcare in California. HRA's attorneys monitor and contribute to various areas of the Attorney General's healthcare work, including nonprofit healthcare transactions; consumer rights; anticompetitive consolidation in the healthcare market; anticompetitive drug pricing; privacy issues; civil rights, such as reproductive rights and LGBTQ healthcare-related rights; and public health work on tobacco, e-cigarettes, and other products.

A copy of the complaint and settlement agreement can be found here and here.

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