Golden State Today

California Attorney General Rob Bonta has announced a cooperative settlement agreement with The Regents of the University of California and UCSF Health concerning their acquisition of Dignity Health's two San Francisco hospitals, St. Mary’s Medical Center (SMMC) and Saint Francis Memorial Hospital (SFMH). Dignity Health, a nonprofit public benefit corporation, owns and operates SMMC, a 240-licensed-bed general acute care hospital, and SFMH, a 259-licensed-bed general acute care hospital.

The settlement, approved by the San Francisco Superior Court, mandates that The Regents/UCSF Health maintain services for unhoused individuals and Medi-Cal and Medicare beneficiaries. They are also required to invest $430 million in capital improvements, ensure competition in the healthcare market, and safeguard the affordability and accessibility of services for San Francisco residents. The agreement falls 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,” stated 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.”

For ten years under this settlement agreement, The Regents/UCSF Health must:

- Operate SFMH and SMMC as licensed general acute care hospitals with consistent service levels.

- Continue participating 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%.

- Allocate community benefit spending at SFMH equal to or greater than $1.6 million annually and at SMMC equal to or greater than $10.7 million annually with a yearly increase of 2.4%.

- Invest at least $430 million into electronic medical record systems ($80 million) and deferred maintenance/physical infrastructure ($350 million).

To maintain competition over seven years:

- Maintain contracts with the City and County of San Francisco unless terminated for cause.

- Not condition medical staff privileges on affiliation status with UCSF Health.

- Avoid imposing restrictions on hospital medical staff from contracting with other providers.

- Negotiate payor contracts independently from UCSF Health while maintaining an information firewall between negotiating teams.

- Impose a price growth cap limiting year-to-year charge increases during contract renegotiations.

The California Department of Justice’s Healthcare Rights and Access Section actively works on increasing healthcare affordability, accessibility, quality; monitoring nonprofit transactions; consumer rights; anticompetitive consolidation; drug pricing issues; privacy matters; civil rights including reproductive rights; LGBTQ-related healthcare rights; tobacco control; e-cigarettes regulation; among other public health initiatives.

A copy of the complaint and settlement agreement is available online.