UCSF Health Plans Purchase of Two Dignity Health Hospitals | Healthcare Innovation

At a time of increasing regulatory scrutiny of hospital consolidation, UCSF Health is in discussions with Dignity Health to acquire San Francisco-based St. Mary’s Medical Center (SMMC), Saint Francis Memorial Hospital (SFMH) and associated outpatient and urgent care clinics.

Besides the two San Francisco hospitals, Dignity Health also owns Sequoia Hospital in Redwood City and Dominican Hospital in Santa Cruz in the Bay Area.

UCSF Health already includes UCSF Helen Diller Medical Center at Parnassus Heights, UCSF Medical Center at Mount Zion and UCSF Medical Center at Mission Bay as well as UCSF Benioff Children’s Hospitals, Langley Porter Psychiatric Hospital and Clinics, UCSF Benioff Children’s Physicians and the UCSF Faculty Practice. UCSF Health includes approximately 18,000 staff and physicians, maintains 1,290 beds, admits 41,000 patients and has over 2.5 million outpatient visits yearly, and has annual revenue of more than $5 billion. The organization also has expanding network of affiliated healthcare organizations throughout Northern California.

In 2019, Dignity Health and Catholic Health Initiatives came together to form CommonSpirit Health, a new nonprofit Catholic health system that operates more than 700 care sites and 142 hospitals in 21 states.

In a letter to the UCSF community, Suresh Gunasekaran, M.B.A., president and CEO, said the acquisition would help UCSF Health meet the health needs of more people in the community who are underserved. Dignity Health is currently the largest provider of Medi-Cal services in California. “As we transition the ownership of these facilities, we will continue to honor our shared commitment to improve the health of vulnerable populations, regardless of their ability to pay,” he wrote.

Gunasekaran said the request he hears most from UCSF teams is for more space: more inpatient beds, more surgical time, more clinic rooms—more capacity to meet the needs of the community. “This acquisition is an opportunity to directly address those concerns. The additional beds will also help us manage patient demand during the nine-year construction timeline of the new hospital at our Parnassus Heights campus,” he wrote.

Here is the outline he gave about how the deal will come together:

• SMMC and SFMH will become UCSF Health facilities when the acquisition is complete.

• As part of the integration, the hospitals will no longer have any religious affiliation and will not be subject to Ethical Religious Directives or Statement of Common Values.

• The plan is to substantially maintain the existing workforce of the two hospitals. Organizational integration takes time, and many aspects of the acquisition are still to be determined. Ultimately, he envisions having all employees be a part of UCSF Health.

• A collaborative process that supports the continuity and quality of patient care is UCSF Health’s top priority. “In partnership with the UCSF School of Medicine, we expect to engage with existing members of the SMMC and SFMH medical staff to develop long-term plans for staffing and services,” he wrote.

Gunasekaran said that the ongoing financial stresses facing UCSF Health remain a reality, “but we have made substantial progress over the last six months that has put us on firmer financial ground. Importantly, this acquisition will allow us to sustain that financial stability by alleviating our top economic challenge: limited capacity to serve patients who seek our care.”

The University of California Board of Regents is meeting in San Francisco from July 18–20 and their agenda includes a request to approve UCSF Health’s starting the process of negotiating definitive agreements with Dignity Health.

On Twitter, health policy veteran Dan O’Neill wrote, “If California leaders are serious about healthcare access and affordability, California Attorney General Rob Bonta should move to block this effort to turn San Francisco into a (de facto) hospital duopoly.” (Currently an executive at Pine Park Health in San Francisco, O’Neill has served as a Robert Wood Johnson Foundation Health Policy Fellow, working on the professional staff of the U.S. Senate Committee on Health (HELP) and as a senior vice president at Change Healthcare Inc.)