California health system completes acquisition of two hospitals

It took some time and negotiation, but UCSF Health has completed the acquisition of two San Francisco hospitals from Dignity Health.

UCSF Health has now taken over Saint Francis Memorial Hospital and St. Mary’s Medical Center from Dignity Health, which is part of CommonSpirit Health, the large, nonprofit Catholic system. USCF Health completed the transaction earlier this month. The system announced the planned acquisition in February.

Suresh Gunasekaran, president and chief executive officer of UCSF Health, said the acquisition enables the system to “preserve these critical services for the City of San Francisco.”

“We’re investing in these hospitals and the people who work there so that our communities can continue to rely on them for excellent and accessible, everyday health care,” Gunasekaran said in a statement.

The completion of the transaction comes weeks after UCSF Health reached an agreement with the California attorney general’s office.

Under the settlement, UCSF Health pledged to commit at least $430 million in capital investments into the facilities. USCF Health has also guaranteed that the system will operate both facilities as acute care hospitals with the same levels of services and staffing for a minimum of 10 years, among a host of other conditions. California Attorney General Rob Bonta and UCSF Health announced the settlement in early July.

UCSF Health has also vowed that it will retain all employees from both hospitals. Both hospitals employ a combined 1,800 staff members and physicians. Both hospitals will preserve their open medical staff, enabling clinicians to work at each location, UCSF Health said.

The agreement calls for UCSF Health to provide at least $350 million in deferred maintenance and facility improvements, and at least $80 million for electronic medical record systems and other technologies.

USCF Health said it was investing $100 million immediately to facilitate the integration of the two hospitals into the system, a process that’s expected to take two years. UCSF Health also said it plans immediate work to upgrade the emergency departments of the facilities.

The system paid $100 million for the two hospitals, the San Francisco Chronicle reported.

As part of the acquisition, the two hospitals will no longer have any religious affiliation and patients will be able to access all UCSF Health services, including reproductive health, the system said. Patients will be able to keep their health insurance and can continue to see the same providers.

The facilities will now be known as UCSF Health Saint Francis Hospital and UCSF Health St. Mary's Hospital. Their associated clinics will also have the UCSF Health brand.

Shay Strachan, interim president of the UCSF Health Affiliates Network, will oversee the two hospitals, the system said. Strachan said the goal is to “build a more equitable, accessible system of care for all patients in our community.”

“We’re proud of our shared commitment to the people of San Francisco and proud to welcome these new teammates to the UCSF Health community,” Strachan said in a statement.

As part of the agreement with the attorney general’s office, UCSF Health pledged to continue participation in Medicare and Medi-Cal, California’s Medicaid program.

In March, UCI Health finalized the acquisition of four hospitals from Tenet Healthcare Corp. UCI Health, the clinical enterprise of the University of California, Irvine, purchased the hospitals in a $975 million deal.