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UC Regents approve breaking ground on UCSF’s $1.5 billion Mission Bay hospital

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San Francisco Business Times | [ View Original Source (opens in new window) ]


The Regents of the University of California voted Thursday to approve construction of a new $1.52 billion women’s, children’s, and cancer specialty hospital at UC San Francisco’s burgeoning Mission Bay campus.

 The Regents unanimously approved going ahead with the 289-bed hospital in their Sept. 16 board meeting at the Rutter Center in Mission Bay. Plans now call for breaking ground on the 878,000-square-foot hospital project in December. Officials say it will be the first new hospital to be built in San Francisco in decades.

UCSF Chancellor Susan Desmond-Hellmann, M.D., said in a Sept. 16 statement that the Regents’ vote is “a major milestone for UCSF.”

“It is hard to overstate the importance of the new Medical Center at Mission Bay, which will reinforce UCSF and the entire Bay Area as a hub of innovation, biotechnology and premier health care,” Desmond-Hellmann said.

The new hospital, adjacent to UCSF’s fast-growing biomedical research campus at Mission Bay on a 14.5-acre parcel, is expected to speed the application of research discoveries from lab bench to patient bedside. And it’s slated to open by 2014 — a tight time frame in the hospital construction world.

UCSF boasted in June that the new hospital and nearby research facilities could be the “tipping point” that helps establish San Francisco as a full-fledged health care hub like Cleveland or Pittsburgh, where health-related businesses are a crucial part of the local economy.

At the time, Mark Laret, CEO of UCSF Medical Center and the UCSF Benioff Children’s Hospital, said the huge project would create hundreds of short-term construction jobs, and ultimately bring more than 1,000 hospital employees to the new medical campus, along with thousands of patients and visiting family members.

The existing multi-campus medical center is already a huge economic engine within UC San Francisco, UCSF officials said in June, accounting for nearly $1.83 billion of the campus’ $3.3 billion in 2009 revenue. (The $1.83 billion includes $300 million in faculty physicians’ medical practice revenue, along with the medical center’s.)

It accounts for one in three jobs at UCSF, about half of UCSF’s $3.2 billion in yearly expenses, and roughly half of its estimated annual capital construction costs of $180 million.

The medical center, like the rest of the biomedical research university, has been hurting for space since the mid-1970s, when UCSF agreed to cap growth at its Parnassus Heights campus to placate unhappy neighborhood residents. Things got even tighter in recent years, so the medical center, again like the rest of UCSF, started spreading into other parts of town.

Non-Parnassus outposts include its major outpatient campus at Mt. Zion; radiology services and clinical laboratory at China Basin; a women’s health center on Sutter Street; initial clinical outposts at Mission Bay, such as the Orthopedics Institute; and the Lakeshore Family and Community Medicine Center, plus a number of community clinics where UCSF doctors and other health professionals practice and, in some cases, learn their professions.

To date, the massive project has garnered $375 million in philanthropic support, including a $100 million pledge from CEO and founder Marc Benioff for the facility’s 183-bed pediatric hospital, a $125 million matching grant from philanthropist Charles Feeney and his Atlantic Philanthropies last year, and two anonymous gifts of $25 million each.

In recent months, UCSF Medical Center’s leaders have been scrambling to slash at least $160 million in interest charges on financing the big project, taking advantage of subsidized rates under the federal stimulus package’s Build America bond program. They’ve also used lean construction techniques and high-tech 3-D modeling software to shave costs from the overall project’s price tag.

As recently as two years ago, the medical center expected to receive $200 million in support from the state government for the project. But the recession and the continuing California budget crisis destroyed those hopes.

As of this spring, local officials anticipated putting up to $220 million of UCSF’s own equity into the pot, along with a hoped-for $600 million in philanthropic gifts and $69 million in Children’s Hospital bonds made possible by a November 2008 California ballot initiative.

The UCSF Medical Center is an Atlantic grantee. 

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