to liquidate the damages. the value of that is 150% of the value of the commitment that they failed to meet. one other provision in the development agreement. there was the backstop commitment. as a backstop, if one of two things happens. it can be a backstop. it is kept out by 40% of a beat- up -- of about -- ebitda. that is there as an additional pool of 40% of the ebitda cap, if it interferes.

and just to give you a sense of what these numbers look like, i have got two grass in the presentation that shares two different presentations. what these are are the bars at the bottom. this will be in the development agreement. this is 40% of the cpmc ebitda. the first line that is in black of this is what happens if the cpmc ebitda goes with inflation. essentially keeping pace, the

base line commitment. this is if it stays flat entirely the money being required out of the backstop commitment. this would be a pretty pessimistic scenario. for cpmc's ebitda to stay flat,

that would essentially represent a pretty substantial deterioration compared to where they are today, since they would be the organization, the financial operation not keeping pace with inflation, and it would be for them to come into play. of course, if there is a higher rate of inflation, or if there is a decline in the cpmc ebitda, that is when you would see the two lines cross. >> the next provision that addresses this is the 10,000 new medical beneficiaries a commitment. can i have the overhead, please.

30,000 low-income san franciscans who were uninsured will get insurance under medical. it requires cpmc to provide service for some of those beneficiaries. one of these must be located in the tenderloin to provide hospital care. this accounts for one-third of the anticipated 30,000 new medical beneficiaries, which is the same as the hospital care in san francisco. this is 30,000 san franciscans with a managed-care provider. this increases the managed care

and provides for the fee-for- service, which was described earlier. in the managed care, this is to agree a network of care. this is for the hospital care for the 10,000 medical beneficiaries. this is regardless of how frequently or infrequently they are. this increases the active participation of the provider network. physicians, specialists, and hospital, to work together to assure that they get the care they need when they needed to avoid costs. this is what i meant earlier when i said this is with managed

care. cpmc will collaborate with at least two primary care providers, one in the tenderloin. cpmc shout care for at least 1500. approximately 1500 enrolled must be seniors and those with disabilities. this is to manage health care needs. in terms of the timing, this must be within one year of the effective date, and the others by december 31, 2015. unfortunately, the cost of caring for these medical patients exceeds the cost, and it is called the metical shortfall -- medical shortfall.

the agreement limits costs them a $9.50 million per year, adjusted annually for medical inflation. the city conducted an actuarial analysis with the 10,000 new patients and is confident that the 9.5 million upper limit will be sufficient to assure that all 10,000 beneficiaries may be cared for. there are the various populations. for example, seniors and persons with disabilities utilize hospital care more frequently than children. this accounts for these variances. it would remain flat.

this is not a likely scenario. finally, we model scenarios that showed the costs increasing faster than the rate of depletion. -- of inflation. inflation only rose 3%. with these conservative assumptions, the inflation cap, it provides sufficient capacity to assure that they can provide all of the necessary hospital care for those beneficiaries. mr. wagner earlier described the backstop commitment but this may also be used for the cost of caring for the beneficiaries. while this is an allowable expense, it is unlikely that it will be needed. the final provision for the

agreement addresses the patients, and this requires cpmc to manage some of these beds for 10 years. there is the laguna honda, an example you are likely familiar with. there are rehabilitation services in a residential setting. the skilled nursing is the highest level of care that they can receive outside of the hospital. the skilled nursing services are 24-hour residential care. cpmc provides this skilled care for approximately 100 patients. there are approximately 62 patients that are receiving the care at st. luke's. they have 79 skilled nursing beds. this is equal to 62.

cpmc is not looking at including new beds, but instead, they will look at the new beds in san francisco. these will be new ones, currently in use. this will maintain the overall availability of the care in san francisco. all 100 of the beds will have those who have medicare or private health insurance. if they default, they will be liquidated and comprise two elements. first, there will be a onetime startup costs, estimated at $600,000 per bed, and said it would be an ongoing operational shortfall for operating those, and that would be the medical shortfall for each of the beds that were not created for each year that the beds were not in existence.

so the third category that director garcia mentioned earlier is focusing the community benefit on a vulnerable population, and they addressed this priority. the development agreement creates a new community care innovation fund to support the clinic and health and social service providers in san francisco. this $20 million fund would help community-based clinics develop the capacity that they need to thrive under health reform. 75 percent of this fund or $50 million will support community clinics. earlier, i spoke about the network, and i mentioned the primary care provider with 1 is essential component. it requires infrastructure to provide this with a managed plan. as part of the commitment, they must partner with the tenderloin

provider. however, there is currently no provider that has the infrastructure necessary. this fund will into a delicate that capacity and this will help clinics not only so they can be a partner as they strive to meet their obligations, but also said that the clinics can participate more broadly in managed care. community clinics are the primary in order to meet the needs of san franciscans. there is a focus on the low- income in high need areas. the first investment by cpmc

will be for $3.50 million and will occur within 35 days. the remaining will be made 30 days after the date that final approvals are granted. they will have a 10 year grant plan, and it will be managed by the san francisco foundation and jointly controlled by representatives from dph, the foundation, and cpmc. it also specifically addresses the services. specifically, the draft agreement was amended at the commission to allow for the innovation fund to support partnerships. this is to support community- based alternatives for inpatient psychiatric care. this amendment was in concern that there would be no inpatient beds on the campus. there are 18 licensed beds at

this specific campus, which serves psychiatric patients from all campuses, and it proposes to continue. the draft development agreement is not proposed to change that. rather, it will address the need i just expressed for alternatives to hospital-based psychiatric care. under this model, a community- based center will be available 24/7 to assist those who may be in need of crisis intervention, medications work, and counseling, but who do not need to be in the hospital to reserve these services. the urgent care center, which is a partner, is a good example of what we are envisioning. they were designed to assist the psychiatric emergency services and other hospital emergency services by accepting clients in psychiatric crisis which do not require hospitalization but are currently taken for the services

for evaluation and assessment. they are an alternative to hospitalization, providing comprehensive 24-hour services. since this issue was raised, we thought it would be helpful to talk about mental health care. the psychiatric emergency services is how the crisis enters the hospital system. the san francisco general hospital is the only hospital that provides psychiatric emergency services. patients are also brought by law-enforcement under what is known as a 5150, which is when a person is deemed to be a danger to themselves or greatly disabled. they are in psychiatric crisis. patients are taken by law enforcement to the closest hospital emergency room. 30% of the patients need to

continue to receive high level of hospital services to an inpatient beds. however, the majority can be stabilized on medication, but what they need is a place to be discharged to. the next level down is a cute psychiatrist. the many hospitals are involved, i will first focus on one. these services help stabilize a patient and we initiate any treatment options that are inappropriate. they are currently operating 54 acute psychiatric beds. while the inpatient psychiatric beds are often filled to capacity, the majority of those patients could receive and lower level of care if that was available to them. some of the patients are eligible for other low level of services. this means that not acute

patients in the hospital because they need to stabilize the medications or because they need a different level of care, because they need this high level of care. i mention that other hospitals also provide this care. pacific has 18. st. francis has 31. also, the psychiatric hospital at langley quarter. with the exception of langley porter, which is a dedicated psychiatric hospital. these other run at about 60%. as mentioned previously, hospitals also receive psychiatric patients in the emergency room, and of course patients with psychiatric disorders also have this. as with san francisco general hospital, patients in the

emergency rooms at these hospitals, whether they were on diversion or they came to the emergency room some other way, the majority of them need to stabilize on medications or be transferred to a different program. acute care is not a lasting need. the take away is it is not more psychiatric needs that are needed in the city but brother- in-law level of care for a place for people to wait for transfer to another type of program. this was amended to specifically provide for this important service. finally, in this category, and the d.a. would provide a range of community benefits that would support the vulnerable population in san francisco and that are in line with the help commission's recommendation. these include working with dph and others to have proposals for subacute care in san francisco.

this is a level of care by a patient that does not require the level of acute care but that he requires more care than the nursing is able to provide. no other facility provides this level of care. the second is to continue these efforts at all of the campuses. currently, st. luke's has the staff. integrating the staff will help insure that all patients regardless of insurance status have equal class -- equal access. third, continuing to actively participate in the partnership, the community benefits partnership is a coalition of dph, hospitals, clinics, and others that assess committee meet and assess resources to meet that need. they also shopping required to have secure services to hospital patients.

and this includes the agreement where there are services to chinese hospital patients. this is culturally and linguistically appropriate services that are representative of the divorce population and thick with national standards. and i wanted to get back to you on the supreme court decision. the supreme court heard arguments and is expected to render its decision this coming thursday. it is not clear and it could uphold the law, strike down the law in its entirety or strike down specific provisions within the law.

the park that we rely most heavily on is the medicaid expansion. unlike health reforms, the medicaid expansion has been previously upheld two times in the lower courts. both of the times it was raised in the low records. hopefully this will remain intact. and, in fact, even if it is wholly or partially struck down, the state of california can implement many of its own provisions. and has stated its intent to do so. however, it requires the city and cpmc to me if there is any thing that renders it. there will be a range of alternatives including participation in the program and providing services for the uninsured. it would depend on how the court rules.

so that includes the overview of the agreement. there are just two quick summary slides. one more item on background. we gave a lot of information in the presentation, and this shows it in dollars. specifically, this graph shows how this deals with the expenditures on the care and this is adjusted annually for medical inflation. and this includes the un reimburse cost of caring for the 10,000 medical beneficiaries that we managed -- mentioned earlier. and these include the rebuild

of say looks altogether. there is the establishment of the centers of excellence. i also mentioned that we would provide a summary of the liquidated damages. there are the enforcement provisions. i did go over these individually. i will not review them again. but it is also important to note that they will submit an annual health care compliance report to the city which will be monitored by the health commission. so finally, i wanted to provide a little bit of background. and i wanted to give you a

status of a master plan. as you know, the health care service ordinance became effective in january of 2011. it requires the development, as they make decisions. consumers, health care providers, and others to bring in the stakeholder voice into the development of the master plan, and it has its work for recommendations for dph and the planning department as we develop the master plan. the draft of the master plan has public, to follow. the master plan must be reviewed by the planning commission which is expected in the winter, and a final condition is expected in 2013. the master plan will be updated every three years. so i mentioned that the plan,

the development is under way, and we have some preliminary findings and recommendations that we wanted to share with you today. the data analysis shows that san francisco has many resources. whether it is them measure a primary care physicians, hospital providers, or dentists, san francisco ranks far better than nearly every other county in california and definitely better than the state as a whole. when measuring access by care, either by miles or time, san francisco has harrigan access compared to other communities. there is poor access with any distance from home between 24 to 50 miles for hospital services. in the u.s., the average distance was 8.3 miles for urban

residents. in san francisco, the health care is always within 7 miles from come. this does not equal access to care. particularly for the vulnerable populations. there are many reasons that this is true, including that some do not accept medical. because some have difficulty taking time off of work to get the care that they need. because this makes it more time- consuming and difficult or because there might be cultural or linguistic barriers. they recommend that the master plan prioritize projects that meet the needs of honorable san franciscans. the report is not yet complete, this would be consistent with the master plan. at this point, i would like to return the presentation to give you an update on the commitment.

>> this was outlined a few moments ago. this is that they keep the hospital open on less cpmc's margin were to sink below 2% for a couple of years. we did this in light of the knowledge. there is the 201010-year financial projections. based on this information and working with the financial consultants, we were comfortable with the likelihood that the operating margin -- it was extremely low. these where recently reviewed.

this is based on prior projections. specifically, it shows the operating margin coming closer than originally projected in the 1% margin in the years providing -- provided, although not breaching it. they say the reason that these projections are different from the 2010 projections is because cpmc took a more conservative approach at the hospital charges as well as the volume in light of the greater uncertainty in the finances going forward. as a result, we began conversations on the changes that would offer the city additional protection that we believe is merited. we have not yet reached agreement on changes to respond to this new information.

clearly, our goal is to have stronger protections for the city in the years immediately following the new st. luke's hospital. supervisor mar. -- mar: there is a question from supervisor campus -- campos. supervisor campos: you are talking about yourself expressing concerns about when this threshold would be met, so could you walk me through the steps that you have taken before to ensure that the threshold is the right threshold? what kind of information did you get from cpmc and for how many years? >> we have only had this information for two weeks. i have about two more sentences,