California Attorney General Rob Bonta announced a cooperative settlement agreement with The Regents of the University of California (The Regents) and UCSF Health regarding their acquisition of Dignity Health's two San Francisco hospitals, St. Mary’s Medical Center (SMMC) and Saint Francis Memorial Hospital (SFMH). The agreement aims to ensure health equity and maintain competition in the healthcare market.
Dignity Health, a nonprofit public benefit corporation, 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 diverse communities, including elderly, unhoused, and publicly insured patients who may rely on Medi-Cal, Medicare, or charity care for essential health services.
The settlement agreement approved by the San Francisco Superior Court commits The Regents/UCSF Health to maintaining services for unhoused individuals and Medi-Cal and Medicare beneficiaries. They will also provide $430 million in capital investments to protect competition in the healthcare market and safeguard the affordability of services for San Francisco residents. This agreement was reached under Corporations Code section 5920 and the Clayton Act.
“San Franciscans deserve access to high-quality, affordable healthcare 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 ten-year conditions of the settlement:
- Operate SFMH and SMMC as licensed general acute care hospitals with existing service levels.
- Continue participation in Medi-Cal and Medicare.
- Provide annual 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 annual community benefit spending at SFMH equal to or greater than $1.6 million and at SMMC equal to or greater than $10.7 million with an annual increase of 2.4% at both hospitals.
- Invest at least $430 million in electronic medical record systems ($80 million) and deferred maintenance/physical infrastructure improvements ($350 million).
Additionally, over seven years:
- Maintain contracts with San Francisco unless terminated for cause.
- Avoid conditioning medical staff privileges on affiliation with UCSF Health.
- Ensure no restrictions on hospital medical staff contracting with other providers.
- Negotiate payor contracts separately from UCSF Health contracts.
- Implement a price growth cap limiting year-to-year charge increases upon contract renegotiation.
The California Department of Justice’s Healthcare Rights and Access Section (HRA) works proactively to enhance healthcare affordability, accessibility, quality; monitor nonprofit healthcare transactions; address consumer rights; combat anticompetitive practices; manage privacy issues; uphold civil rights including reproductive rights; support LGBTQ-related healthcare rights; tackle public health concerns such as tobacco use.
A copy of the complaint and settlement agreement is available online.