Santa Barbara Hospital Expansion Approved

For almost a century, Santa Barbara has been a city with two hospitals. On Friday, one of them cleared a key hurdle to a major expansion. The other moved closer to at least partial demolition.

The California attorney general’s office, which regulates the sale and closure of nonprofit hospitals, gave formal consent Friday to the purchase of 95-year-old St. Francis Medical Center by Santa Barbara’s Cottage Hospital, an even more venerable institution established in 1888.

Although the hospital deal still faces many obstacles before it can move through the city’s planning process, an earlier vote by the Santa Barbara City Council gave preliminary approval to Cottage Hospital’s expansion.

Hospital officials said they were pleased with both decisions, but recognize that construction could still be a year or two away.

St. Francis, expected to lose about $7 million this fiscal year and facing $20 million in earthquake upgrades, was put up for sale two years ago by Catholic Healthcare West, the hospital chain that owns it. Cottage Hospital announced plans in March to buy it for about $18 million.

The eventual $350-million Cottage Hospital expansion plan -- facing opposition from some community groups, largely over traffic, air pollution and parking -- envisions about 435,000 square feet of construction on Santa Barbara’s west side.

St. Francis, always the smaller of the two hospitals, has 85 beds, but only 20 patients now. It is moving toward shutting down all operations by June 18, and Cottage Hospital hopes to use the seven-acre St. Francis site for a 130-unit housing project, primarily for hospital workers.

In approving the sale Friday, Deputy Atty. Gen. Wendi A. Horwitz declared that the transaction, with state conditions ensuring strong medical care, is “in the public interest.” The state also ruled that having one hospital instead of two would not create “a significant anti-competitive” effect on local health care.

Among the conditions attached to its approval, the state said Cottage Health System, which owns two other hospitals in Goleta and the Santa Ynez Valley, will have to provide enlarged emergency room services and convert some transitional care units into 25 beds for surgery patients.

“We are pleased and we think the state’s conditions are very reasonable,” said Janet O’Neill, a spokeswoman for Cottage Hospital. “At the same time, we are sad at the loss of St. Francis hospital. It has been part of Santa Barbara for a long time. And we realize we have a long road ahead of us before anything is actually built.”

Ron Biscaro, president of St. Francis Medical Center, said the state’s approval sets the stage for the sale later this month. He said it also takes any other attempts to purchase St. Francis “off the table.”

“This is a sad time for our employees,” he said. “But we have been losing money for years. I think some of our people will be going to Cottage, others to some of the other hospitals owned by Catholic Healthcare West. I believe Santa Barbara is a town that can survive with one hospital.”

Cottage Hospital is in an area of Santa Barbara’s upper west side, near Oak Park, about two miles from St. Francis.

One group that has opposed the expansion plan has been the Oak Park Neighborhood Committee, representing about a dozen residents who are primarily concerned about an initial plan that called for a parking garage that would have had four stories above ground and three below. But after a meeting this week, members of the group said hospital officials had scaled back the plans to three stories above ground and one below.

“We were really pleasantly surprised. The hospital is actually listening to us,” said Shirley Saunders, who thought the larger garage would clash with the 1920s-era bungalows in the immediate area. But she said residents continue to object to a plan for a second garage on the other side of the hospital.

Cottage Hospital is licensed for 436 beds, but will reduce the number to 337, O’Neill said. The average number of beds occupied on any given day in Santa Barbara now is 220, she said in one of many arguments for just one hospital.

Other critics have taken issue with other aspects of the plan, including the planned demolition of at least some of St. Francis Medical Center. But O’Neill said architects may be able to use part of the old hospital for condos and apartments, while mixing in a blend of new housing units.