year investment. to that extent, i think st. luke's is really important. the other issue that is really important, we try to construct a new medicare health program, particularly because it is moving to a neighborhood. it took us a lot of conversation to discuss how we would ensure that the st. louis was not the only health care provider in the system. and also incorporated too important community clinics within that period. we also want to have another one in the tenderloin area. that is a new service, a new way of providing care and they will

have benefits. it was a very important constructs that we created to insure that patients would be able to take advantage of the program. the other was the fact that working internally in terms of its discharge, many times the discharges from the hospital's heart difficult and you kind of lose their community connection. it is a warm handoff, and we have asked them to work with community programs to assist them in the patient's navigation program. those are the major three areas, and trying to keep to the charity care physician and continuing that in the future. supervisor campos: if i may ask

you more specifics about that, the issue of charity care is an important issue. i don't know if you are aware of this independent study that just came out -- it just came out at the hastings college of law. quite frankly, it is a very disturbing study in terms of what it points to. it finds thatcpm cpmc is the city's most profitable hospitals. it posted a net income -- that is compared to say to mary's hospital, and saint francis that

lost close to 15 million. when you look to the issue of charity care, according to the study, cpmc is not living up to the same level of charity care than other hospitals are. it is less than half of that of saint francis even though it is more than three times the size of that hospital. the profits of $743 million in saint francis close to $15 million. what do you think of that? what are your plans going forward in terms of addressing that disparity that you had the most profitable hospital that is providing a level of charity care that is below that of other hospitals. >> of the health commission has

had many conversations about this. they worked directly with them for many years. they have the attempts to expand the charity care. in the future, as my deputy talked-about, we will have people who moving from charity care. we addressed some of those issues because of the charity care to focus on the future is missing an important area. many of the individuals today can be seeking charity care, and a few years, they will have a benefit for insurance. we would try to work towards the future of that, for the last four years the health commission has continued to increase the charity care. to develop a program for the future that will capture the

rest of the vulnerable population that now has a benefit. the proposal did not have that when we started that compensation. that is how we are looking at it. it will also be supervised from the health care perspective and we will continue to discuss that issue. in the future, they have some projects that they are looking at to continue to look at charity care and the development partnership. but it is a concern and has been a concern for the health commission for the last four years or five years. to try to approach it from a future direction in terms of the large population that does not have insurance or coverage today will have that. and how you structure a program to ensure that the future of a vulnerable populations will be covered. we believe the program will address some of your concerns.

>> on the issue of charity care, the board of supervisors has taken a position on this, calling upon cpmc to provide more charity care. as i understand, what you are envisioning right now is that you are asking that they provide about $86 million worth of charity care plus inflation. as i understand that figure, that figure basically, if they do that, it would maintain them at the level of historical levels in terms of what they had been doing around charity care. but it doesn't actually increase that level. >> it would be my opinion that in the future, charity care will reduce due to the fact that many of the individuals will be having coverage. in anticipation of that, we try to develop a program that would

address that issue by moving people to a new program with benefits. i understand your concern, and it is an issue of partnership that they continue to provide charity care. supervisor campos: i will get to the issue of medical shortly. if you look at what you're proposing, it is a little over 1/3 of the 3% that the board resolution calls for. if we really are, we want them to address the issue of charity care and do something that is comparable to other hospitals that are a lot less profitable, why not ask them to provide charity care that is beyond --

>> part of the negotiation is what is the future of health care? i think that in the future of charity care, we will see a drop in all hospitals. we do believe that is starkly -- the commission has worked very hard for the last four years as we have seen a continued increase of charity care. supervisor campos: i know that as a concern for the folks there represented districts like mine where you have issues that are directly impacting our

constituents. i just want to make sure that we are aware that the level of charity care at least that we are talking about is a lot less than what prior boards have indicated in the past. in terms of medical, how did you get to 10,000 by 2015? >> what is that we worked with the northeast medical services, trying to look at the capacity of the clinics in existence that are trying to provide this kind of comprehensive plan that would also not only provide the primary care, but special hospitalizations. with the clinic consortium, we looked at how quickly can we get the number of lives within the system. we felt that 10,000 or 30,000,

1/3 is unable to be met. one concern was that if we raise that much more, we may not be able to meet that number. not because we don't want to meet those numbers, but because we don't have the infrastructure in the clinic to be able to approach it. from the health department, it is the managed care system. we have the infrastructure and the administrative ability to manage these along with cpmc. it is their ability to serve and the ability for clinics to do that. that is another reason we have asked for a contribution for the community clinics, to build the infrastructure so that they can have their management services organization and the

relationship with the hospital. i don't think we could be doing a good service for any of us. supervisor campos: a final area of inquiry is the issue about st. luke's. i want to thank you and the mayor for the commitment that you have made a route to st. luke's. but one of the things -- one of the things that i am worried about, though, from my understanding and maybe i am mistaken, he approached that you are taking a around the commitment to operate saint luke's for 20 years is that there is an escape clause, if you will, that would be embedded in the development agreement. i am wondering if you can, or at least there is thought that your

thinking about a possible escape? any time that is being talked about, the fear is that the devil was in the details, it opens the door for someone like whoever to really use that clause creatively and find a way to get out of its obligation to build and operate the hospital. >> hotel and rich has been the financially. >> as soon as we first started discussions, immediately saint luke's rose to the top of our discussion and we said that we need a promise that you can't open your big hospital hot cathedral hill until you open st. luke's.

nothing can happen during construction, you have to open st. luke's. secondly, once you open it, you need a running for 20 years. those discussions were difficult to get into, but we made it clear that we really needed these gangs. we can get to the 20-year commitment. you and everyone else wants to have it. if there were a caveat that said that the system, not save lives but the whole system, is going broke, there is a way to consider that. but you have to understand that by going broke, we mean going broke. we meet on the verge of insolvency. the devil is in the details, but we have not arrived at a measure for that caveat. but i will make it clear that it is something that we have to be very comfortable with.

it is incredibly unlikely to happen. before you take action on this project, you will have a chance to look at that number and talk about it. we don't have the number yet, but is the approach we are taking. president chiu: can i ask a question to the city attorney about that? part of the wonders why such a clause will be necessary. legally, there are certain obligations that you have when you enter into a contract. i don't even know why the need for something like that would be, so i am trying to understand how typical this kind of clause is in a development agreement? is this something with any other project that has come before us for the typical project that we allow for the inclusion of something like this?

>> i do not think that a clause like this is legally necessary. one of the things, it is a business and the negotiation. i also did not think that having a clause that requires me to maintain an operation for 20 years is normal either. in most of the development of payments, we care about getting in bill. there are no longer any ongoing operations. you have to build its, maintain and operate it. when we do reach agreement on that clause, we approve of what we are doing is reasonable. without any more specifics, i don't have any more to say about that.

>> i think the devil is in the details. i think that the extent of this clause is not legally necessary, i wonder why we will have it in there. the statement that this is so unlikely to happen, kind of don't worry about it. i have seen that movie before. you have corporations, pg&e is the perfect example. they did the reorganize and after filing for bankruptcy, turned around and gave executives millions of dollars. so there have been examples in the corporate world, and i am not saying that it is going to happen here. we don't live in an ideal world.

and so, that is the fear and concern that i have, and again, the devil will be in the details. you will be wise to heed some of the comments. >> if you had to take the most critical sentence, it will define this caveat as carefully as we can losing -- using outside expertise. we're being very deliberate and careful --

supervisor campos: we want to be sure that we are careful about how we approach this. it is something that i asked as the supervisor, and someone who is a consumer in terms of health care and is something that i think all of us have to worry about. it is the rising cost of health care. we had a hearing that the government ought and oversight committee that talked about how expensive health care in san francisco is relative to other parts of the state. one of the concerns that came out who was the extent to which it seems, at least, they have

been able to increase costs and drive some of the costs. so what are we doing to make sure to the extent that we are asking things of them, we are not opening ourselves to a situation where the turnaround and pass those costs onto consumers, whose san franciscans, to the city as a provider. >> our director of our own health services system, she is here. i would like to give her an opportunity to address that. supervisor campos: i know that she cares deeply about these issues and has been doing great work on this. i certainly know how critical is for her. thank you for being here. >> thank you, supervisors.

at the government operations committee, it was established in our testimony that average cost for the health services for hospitals today was about $1,000 more than the average cost of other hospitals. 70% of our blue shield costs are hospital costs. the health service board is entertaining right now passing substantial amounts of the premium costs on to employees in the form of co pays and deductibles just to keep lucio competitive. the increasing cost of hospital care is what is driving the health premium cost of. having that is why we are looking at the office of economic development who work with cpmc to make sure the costs of the development agreement are

not passed on. sutter did step up and agreed to allow us to have our consultant who worked into the cost data. that agreement was come to relatively early on and lucio was pleased for that as well. the cost per day in hospitals is significantly higher than the facilities in center and it is driving the health costs of. supervisor campos: i have to say that what makes me nervous is that we see there are some that things that have happened. even at the state level, we talked about the lawsuit and the -- i want to make sure that

we are diligent in how we approach this, so it is definitely a big issue for us and other jurisdictions have issues about how they are dealing with it. >> as costs go up, the other hospitals have come and underneath and shadow price that. i will assure you that the health service's board and the health services system is doing everything they can to try to find transparency so that we don't just kind of turn our budget over to the health care providers.

everyone else -- president chiu: on the issue of the possibility that over the next 20 years, there may be an escape clause to get out of being able to continue to fly to st. louis, have you considered what other options might be available to maintain saint luke's under different ownership? is it viable for the hospital to exist outside of the framework? >> it would be very difficult for that, but we know that in the work of what we're doing is

to protect the 20 years and whether they would still have the obligation if it wanted to pull out of it, what obligation they would have to complete the 20 years. there are systems in the city, when of those being our own. that is a concern that i certainly have. that is why it is so important to maintain the 20-year commitment to ensure that we do have a hospital that continues to provide in that community and also support the most vulnerable populations. part of that negotiation will be to ensure that there is commitment continuing. president chiu: a second question was related to the initial comments around the health care master plan. part of the point of creating a master plan is to think about

the geographic distribution of health care. while the plan exempts how projects, how should we think about the geographic distribution of health care of these new hospitals? i have major health care institutions which are six blocks and not to much further from the new campus. how should we think about how the hospitals are going to impact the other and what type of consequences mit? >> the hospital council that works collaborative lee, health care west is looking at their own hospice system and how they may have to merge some of these services. president chiu: based on what cpmc is doing. >> not so much cpmc, but a health care reform as well.

we also have to go from a steeper service were the goal is as many visits as you can to a per-month payment. that is going to change the quality of the direction that will be able to manage. it is a great concern around the country about how health care assistance are going to respond. the hospitals will reconsider the plans of how they will go to health care. they are talking to each other. they are having those conversations, and san francisco general hospital as part of the council to discuss how we are going to do that. i am being approached to look at how we are going to move closer together. president chiu: if this anisn't

addressed in public comment, i would like to look at that. supervisor kim: the are many questions on charity care i had as well, and the feel like most of the questions were predominantly already asked, but specifically to the tenderloin, and you anticipate them setting up competing services in the neighborhood? the you perceive that they will work with existing medical institutions? >> this is one of the discussions we have had, the importance of partnering with another organization.

there is a demand ahead of him and the cisco households as a result of the development. is not current from the -- >> thank you, supervisor kim, for that question. our conversation regarding the

housing package was based upon the existing regulatory framework imposed by the special use district and also by section 415 a, planning inclusion marry a zoning ordinance. based on those frameworks, it would have been based on the original square footage and would have been roughly 220 housing units. currently, the direction of the negotiations are trying to move in the direction of 190 units. given that, we are attempting to meet the obligations under the existing regulatory frameworks if they would have been imposed. another regulatory framework that exist for this project is