Sutter Health said it will merge its two San Francisco hospitals, California Pacific Medical Center and St. Luke's Hospital, in an arrangement designed to save the latter from closing.
St Luke's, which serves a large portion of the city's uninsured and low-income population, lost $21 million last year and is on track to lose $24 million to $26 million this year, Sutter said.
The system said the 260-bed hospital would continue to operate as an acute-care facility, most likely as the fourth campus of 700-bed California Pacific, which earned net income of $113 million in 2003.
The proposal follows almost two years of negotiations between Sutter and the hospitals. Critics, including some labor unions and patient advocates, have long feared a merger would result in the loss of critical services at St. Luke's -- and some say their fears persist. Sacramento, Calif.-based Sutter acquired St. Luke's amid controversy in 2001.
As part of the deal, Sutter agreed to keep St. Luke's emergency room open and maintain the hospital's level of charity care through July 2006. The merger with California Pacific could take up to a year and must be approved by the state attorney general.