Date of Report: May 17, 2001



San Francisco General Hospital (SFGH) is an internationally renowned public health hospital associated with the University of California, San Francisco (UCSF). It is one of the last great county teaching hospitals that provides care of the highest quality for the poor of the City, care not provided by any other hospital in the City. It also provides education and training to students from four health science disciplines: medicine, nursing, pharmacy, and dentistry. SFGH is critically important to the academic mission of UCSF for both pre-doctoral and post-doctoral education. Its faculty are involved in biomedical research at the bench and bedside in a variety of organized research units including the Gladstone Institute of Cardiovascular Disease, Liver Center, Lung Biology Center, Drug Research Unit and Gladstone Institute of Virology and Immunology that also provide research training for UCSF students. Loss of SFGH would have a huge and deleterious effect on our academic mission.

SFGH provides the core of San Francisco’s Emergency Response Network through its ER, ICUs, and Trauma Center (the only Level I unit in the City). Similarly, it is the core of patient care for the Public Health Department, through its extensive outreach programs, which includes HIV care and prevention, the Northern California Poison Control Center, trauma and violence prevention programs, tuberculosis control services, and Refugee Health Services among many others. It provides a full range of primary and specialty outpatient clinics, and inpatient medical, surgical and psychiatric care. It is vital to the health care of newly arrived immigrants, the Asian, Latino, and African-American Communities, as well as many patients with no other healthcare options.

Summary of annual statistics regarding clinical care provided in the year 2000 underscores the importance of this institution to the health of citizens of San Francisco:

  • 18,399 acute care inpatient discharges
  • 106,884 inpatient hospital days
  • over100,000 visits to hospital-based primary care clinics
  • over 150,000 visits to hospital-based specialty clinics
  • over 60,000 visits to ED/psychiatric emergency unit

In the School of Medicine, at least one-third of the clinical teaching for medical students and residents in primary care and all specialties occurs at SFGH. SFGH is equally, or even more important for the training programs of the other schools: at least 1/2 of the clinical teaching occurs at SFGH in the School of Nursing and Pharmacy and 1/4 –1/2 of the clinical teaching occurs at SFGH in the School of Dentistry. For many of the training programs, SFGH provides required components not available elsewhere in the system. In addition there is a broad research base that ranges from health systems research to fundamental molecular and cell biology. Over the years the clinical and research training programs at SFGH have become essential to the academic mission of the University. In return, the students provide care for the unserved minority and indigent patients in San Francisco.


During the past several years, SFGH like most hospitals let alone those associated with academic medical centers has sustained substantial reductions in reimbursements as costs increased, resulting in budget shortfalls. Unlike other UCSF affiliated hospitals, SFGH has to rely on the support of the City to replace operating losses. Recently, the City has not been willing to make up the full amount of the deficit resulting in service reductions and closure of some programs and units. This is happening at a time when the numbers of uninsured and homeless persons in San Francisco are rising and the City is richer than ever.. Paradoxically, as City revenues increased during the late 1980's and early 1990's, ad valorem support for SFGH by the City decreased. With the reductions in revenue from other sources, a subsidy from the City of more than $50 million, an amount similar to the subsidy that was required in the early 1990s, was required to break even this year.

Furthermore, hospital and health department administrators recognize that a number of operating efficiencies might be implemented to save money, but none are politically acceptable because lay-off and out-sourcing would be required. Thus, in addition to the decreased reimbursements, increasing costs (including labor costs), and inability of the City to increase the required subsidy to SFGH, the hospital must be operated without making changes that most businesses would make, if confronted with similar financial problems.


The Balanced Budget Act (BBA) of 1997 resulted in decreased Medicare and MediCal payments. Of these, MediCal payments are most critical for SFGH and these have decreased $38 million in the last 5 years. The number of MediCal patients has decreased, reimbursement rates have stagnated, numbers of uninsured patients have increased as a result of Welfare Reform, and while Federal/State policies on immigrants have become more restrictive. Revenues have also decreased because diversions from the Emergency Department have shifted paying patients to other hospitals and reduced elective cardiac and surgical procedures as well. Like all teaching hospitals, SFGH depends on added payments from the Federal Government for care provided very sick patients (so-called Disproportionate Share Hospital [DSH] payments) and added payments for training young doctors (Indirect Medical Education [IME] payments), both of which were reduced by the BBA 1997. The general fund payments from the City are complicated to track because the DPH changed one of their accounting methods last year that inflates the general fund figures for SFGH. Prior to the fiscal year 2000-2001, city general fund support for the Mental Health Rehabilitation Facility (the long term psyche facility on the SFGH campus) was counted in the Community Mental Health budget as part of the Population Health and Prevention Division of the DPH (the non-CHN/SFGH part of DPH). Beginning in 2000/2001, the DPH began counting MHRF general funds under the SFGH budget category (technically, the MHRF is part of SFGH so this is legitimate, but it obviously produces a real discontinuity of data when comparing time trends for the core services at SFGH). The MHRF general funds were about $16M in 2000/2001 and are budgeted for about that much for 2001/2002.

According to Kevin Grumbach’s analysis, SFGH general funds 2000/2001: incl. MHRF $79.5M, without MHRF about $63.5M. SFGH general funds 2001/2002(proposed): incl. MHRF $85.5, without MHRF about $69M.

So using figures that maintain continuity over time for core SFGH services (i.e., without the MHRF $s), SFGH definitely saw some increased general funds in 2000/2001 but still well below the "benchmarks" used for comparison purposes in my report (the $80-90M figures). And the general fund increase proposed for 2001/2002 is fairly modest (about $6M). The 2001/2002 general fund may be moving up by about $2M more to $87.5M (incl. MHRF). According to Grumbach.

Thus, in terms of the 1999/2000 budget, the general fund for SFGH (excluding MHRF) was budgeted at about $50M (as indicated in the Grumbach’s report, Appendix 1).


During this period, costs have increased from $205 million in 1990 to $315 million in 1999. This represents an increase of 4.4% whereas the national average for the same period increased 5.6%. These costs include upgrades in technology, facilities, equipment and increased labor costs as well as added costs of training health care professionals. Not included are the enormous future costs for seismic refits required by State law for research buildings by 2008 and for clinical care buildings by 2030.


As a result of the budget shortfalls, the Department of Health instituted critical reductions in staffing. These included a freeze on hiring and the loss of 247 positions. These decreased staff positions were wide-ranging and included OR nurses, med-surg nurses, dieticians, radiology technicians, clerks, custodians, security personnel, and translators. As a consequence of the changes in personnel, aggravated by aging facilities and equipment that have not been upgraded, recruitment and retention of 260 full-time faculty and 225 residents are threatened, as are the training programs for undergraduates offered by all four schools at UCSF.


One of the major results of the changes described thus far is an increase in diversions of ambulances from the Emergency Department. When the Emergency Department cannot handle additional patients, all ambulances in the City are put on diversion: that is, they are sent to other hospitals. In 1996, diversions occurred at 1% of the time; in September 2000, the rate climbed to 45% and averages 30-35% currently. There are exceptions of course, including trauma, psychiatric emergencies, burns, prisoners, critical obstetric/pediatric patients, and walk-in or drive-in patients.

Diversions occur because of a shortage of beds and staff. SFGH is licensed for 350 beds, has a daily census of 310 beds, and is budgeted for only 290 beds. All departments are understaffed, but the Emergency Department is critically understaffed. The shortage of nurses at SFGH is part of a nationwide problem. And the situation in the ED is compounded by the fact that there is no emergency medicine residency program (a requirement of the MOU with the State governing the ratio of primary care physicians to specialty physicians to be trained at UCSF).

Thus, patients admitted from the Emergency Department often must be treated in hallways for days while waiting for beds. Patients with heart attacks receive old-fashioned treatment with anticoagulants instead of state-of-the-art treatment with angiography/angioplasty and stents. Patients ordinarily treated in the ICU are treated in Recovery Rooms because the ICU is usually full. Paying patients are diverted to other hospitals, which worsens the balance of cash flow.


Major programs have been cut: 20 medical-surgical beds were closed, as were two ORs. Preventive medicine programs were curtailed, including surveillance mammograms for breast cancer and surveillance sigmoidoscopies for colon cancer. No medical primary care is provided for the long-term mental health facility because of the 15% cut in faculty salaries. One interventional cardiologist was cut resulting in a reduction of cardiac catheterizations by 50% and increased referral of patients elsewhere for diagnostic studies and pacemakers, further reducing revenues. Primary angioplasty cannot be provided for the care of patients with myocardial infarctions, as already noted. The closure of the Infectious Disease Clinic means less timely follow-up for acute infections, hepatitis C, and microbiology laboratory results. Loss of a full-time oncologist and RN has resulted in less timely care for all cancer patients.


Recently, the Health Department gave notice of its intention to close the outpatient pharmacy, to sell the Renal Center, and to close one of four psychiatric wards as part of the more general cutback in funding for SFGH. These three issues have been the focus of the media and of public political battles.


Pharmacy services might be replaced by a Walgreen's located one and a half blocks away that potentially provides better service than provided at SFGH at a lower cost. In response to community pressure, the City has decided to maintain outpatient SFGH pharmacy services for now.


The Renal Center also loses money. Worse, the physical plant needs substantial repairs that would require capital investments. Moreover, the Center is located in Building 100, a building that must be vacated by 2008 (like many of the old buildings at SFGH), unless there is a seismic refit. (Three years ago, this refit, for only one of the buildings, was estimated at $24 million). This sale was implemented despite concerns raised by community activists.


Psychiatry is more complex. This department is supported almost entirely by the main contract with the City, as well as by a variety of other contracts with Community Mental Health Services. The effective functioning of the Psychiatry Service is influenced by a wide variety of factors, many of which are beyond their control. These include the availability of community placements for patients who no longer require inpatient care but cannot be discharged safely, the availability of and approval for long-term locked facilities in state hospitals, and a variety of other services. Some of these facilities are affected by the current budget problems and some are not. For these as well as for other reasons, the Psychiatry Service is less integrated with the other hospital services, although a reduction in availability of psychiatric beds and consultation services would negatively impact on the rest of the services. In part, as a result of community pressure and political action, the City decided to maintain all psychiatric wards and make cuts elsewhere.


There are some very critical issues, however, that have not been considered in the media because they are not so easily defined as the pharmacy closure. In addition, they do not excite a political constituency, as did the threat to the Psychiatry beds or the closure of the outpatient pharmacy. The main issues regarding the SFGH crisis are: (1) the closure of 20 medical-surgical beds, (2) a reduction in the contract budget for Anesthesia that will close two Operating Rooms (and greatly reduce, if not eliminate elective surgery at SFGH), (3) a reduction in Cardiology faculty that will greatly reduce its capacity to do procedures, and (4) a substantial reduction in AIDS/Oncology budget that will greatly compromise the capacity to provide oncology services.

In the analysis by Dr. Mitchell Katz (San Francisco’s Director of Public Health), the (1) closure of 20 medical-surgery beds was not referred to as a "closure" because SFGH has not been budgeted for those beds. The beds were filled in response to a demand to care for sick patients and were staffed by per diem nurses, causing the hospital to go over-budget. Even with these beds the Emergency Department at SFGH has been on diversion 30 % of the time (45% in September). From the perspective of the City, the proposed closure will bring SFGH into line with its "real" budget, thus there is "no bed closure". As a consequence of this closure, diversion of patients away from SFGH has increased. Considering that some paying patients are diverted, the result potentially is an even worse payer mix, decreased pro-fee revenues, decreased hospital revenues, and a larger budget deficit next year.

(2) Closure of the two OR's will compound this effect: Because OR's must be kept open for trauma cases, SFGH will be unable to do much elective surgery, which will shift more elective surgical patients to other hospitals, cause discontinuity of care, and perhaps worse care. Procedures that are only semi-emergent will likely be delayed. Patients will suffer.

(3) Decreased Cardiology budget. This reduction will force a decrease in capacity to perform special cardiac procedures. Consequently, not only will patient care suffer, but also paying patients (as in the case of the ER diversion and OR closure) will be sent elsewhere with a negative impact on revenues.

(4) Decreased AIDS/Oncology budget. The budget cut is unlikely to significantly impact the AIDS program, however, the faculty staffing cuts in oncology will result in a reduction in care for cancer patients at SFGH.

SFGH is facing approximately $2.0 million decrease in the University contract. Hospital cuts, apart from the University contract, total nearly $13 million. And the deficit will be larger next year: in part because of the spiral outlined above, but also because revenues will continue to decline for other reasons while labor costs and patient care costs will increase. Unlike private hospitals or the University, the City is the only institution from which SFGH can make up its deficit. SFGH has no reserves.



SFGH provides clinical rotations that are critical to the third and fourth year medical students. (See Appendix II, medical student rotations at SFGH) Of 150 students in each class approximately 30 – 35 % take core clerkships at SFGH during the third year and a similar per cent take senior medicine at SFGH. In the last year, rotations at SFGH may involve almost 60% of the class for certain electives such as Dermatology and Emergency Medicine, which cannot be obtained anywhere else in the University.

Thirty percent of house staff training in Medicine depends on SFGH and for many specialties such as Pulmonary Medicine, the training program would fail without the clinical experience at SFGH.


The academic mission of the School of Pharmacy depends heavily on the resources available at SFGH. (See Appendix III. Impact of the SFGH Budget Crisis on School of Pharmacy) Fifty percent of San Francisco-based 4th year students rotate at SFGH for their ambulatory care training. Ten students rotate year-round in inpatient experiences including Critical Care, Inpatient Family Health, Psychiatry, Oncology/AIDS and Toxicology. The SFGH is critical to the training of pharmacy residents, pre and post-Pharm.D. students as well.

SFGH plays a critical role in the research program of the School of Pharmacy as well, especially through the activities of the Department of Clinical Pharmacy Drug Research Unit (DRUG) and the Poison Control Center.

Service to the hospital and the community occurs in a number ways: faculty, pharmacy residents and students provide primary care to patients throughout the clinics at SFGH as well as in the Poison Control Center.

Loss of SFGH would be devastating to the curriculum of the School and its research mission.

SCHOOL OF NURSING (See Appendix 4)

All of the Primary Care programs and most of the Clinical Nurse Specialist programs depend on SFGH. (SEE APPENDIX IV.) A total of 42-62 student clinical placements per year are provided in various clinics and wards at SFGH for nursing students. Furthermore, the cutbacks in staffing at SFGH already imperil much of this training. For example, "freezes" at SFGH have made it difficult to replace senior/staff and faculty midwives in the SFGH Midwifery Service. `The nursing shortage on labor and delivery has created an atmosphere of "chaos, resentment and short tempers all around." According to Dean Dracup, it would be impossible to continue various masters programs in their present form if the clinical facilities at SFGH were reduced further in scope. "The loss of SFGH to the UCSF School of Nursing would have devastating consequences for our training and service mission and would undoubtedly result in the loss of our reputation as the best School in the United States for education as a nurse practitioner."

SCHOOL OF DENTISTRY (see Appendix 5)

Virtually all of dental care provided by faculty of the School of Dentistry at SFGH occurs in ambulatory units. (SEE APPENDIX V.) From the cutbacks currently implemented, it is not clear exactly what the impact would be for Dentistry. If the Oral and Maxillofacial Surgery Center is closed, it would reduce the oral surgery experience for fourth year students in half. If the outer buildings were closed and thus the Family Dental Center (FDC), 20% of the fourth year clinical experience would be lost.

Our dental students provided 17,790 treatments during 10,756 patient visits in 199-2000, primarily to indigent and needy minority populations. Dental students provided 5,051 pediatric dental procedures during the same year, 95% of these patients are from minority and underserved communities. The FDC is the only major provider of comprehensive and emergency pediatric services in the Outer Mission, Mission, South of Market, Potrero Hill, Bay View, Hunter’s Point, Visitation Valley and Noe Valley Districts. Thus, the City receives an enormous amount of unreimbursed care for its citizens through UCSF and its students. Furthermore, the Clinic is currently involved in innovative research for the study of the epidemiology, prevention, and treatment of Early Childhood Caries and will become a clinical site for the Center for Research to Reduce Oral Heath Disparity (National Institute of Dental and Craniofacial Research) grant pending.

GRADUATE DIVION (see Appendix 6)


Strong support is vitally needed for a rational budget for SFGH, the contract with the University and, above all, appropriate financial support for the health of the people of San Francisco. Without a strong institutional tie to UCSF, it will be increasingly difficult to recruit and retain high quality faculty at SFGH. The loss of top quality training programs at SFGH will greatly and seriously affect the academic mission of the University. The loss of faculty and programs described will not only hurt the University, but also impair efforts to care for the people of San Francisco. Therefore, it is in the best interest of both institutions to maintain and fully support the contract between UCSF and SFGH, and to fully fund the hospital.

Appendix 1 (PDF)

Appendix 2 (PDF)

Appendix 3 (PDF)

Appendix 4 (PDF)

Appendix 5 (PDF)

Appendix 6 (PDF)

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