Lockyer Gives Conditional Approval to St. Luke’s/Sutter Health Merger

Attorney General Bill Lockyer (D) yesterday approved the merger of St. Luke's Hospital and Sutter Health but "imposed several conditions" designed to ensure that Sutter maintains current levels of charity care at the San Francisco facility. The proposed affiliation had been criticized by health care unions and consumer groups concerned that care for the poor and indigent at St. Luke's would "erode" as a result of the merger, which could take place as early as next month. Lockyer's approval says that Sutter must "maintain on-site acute care, emergency room service, an intensive care unit and clinics at [St. Luke's] for at least five years," and the hospital chain must provide at least $2 million per year in charity care. In addition, Sutter must contribute $15 million to a fund designed "to keep community clinics open if the hospital closes within five years," or $3 million if it closes after nine years. Officials from Sutter and St. Luke's -- who had said the affiliation was the "best way" to keep the financially struggling hospital open -- deemed the conditions "acceptable," and Sutter's board of directors will vote July 12 on whether to accept them. As part of the merger, Sutter Health will give St. Luke's $55 million over the next 10 years and cover seismic retrofitting costs that could total $20 million. St. Luke's CEO Jack Fries said, "St. Luke's will be bigger and better. In two to three years, I think you'll see a far superior hospital than what you see today." Sal Rosselli, president of the Service Employees International Union Local 250, which had expressed concern about the merger, called Lockyer's decision a "half victory," adding, "Now we challenge the good people in the community that have been fighting for this merger to ... hold Sutter accountable for the promises they've made" (Martin/Colliver, San Francisco Chronicle, 6/27).