UCSF must continue charity care, adhere to price growth caps and invest hundreds of millions of dollars into St. Mary’s Medical Center and St. Francis Memorial Hospital, the two struggling San Francisco hospitals it is acquiring for $100 million, under a settlement reached with the California attorney general.

The settlement, announced Tuesday, resolves a complaint brought by the attorney general that sought to halt the deal over concerns it could harm people’s access to medical services that are currently available at St. Mary’s and St. Francis — including emergency and psychiatric care — quash competition and create a monopoly for inpatient hospital services in San Francisco.

Under the terms of the agreement, UCSF must maintain the same services that now exist at the two hospitals, continue to accept Medicare and Medi-Cal public insurance, provide charity care equal to at least $6.5 million at St. Francis and $3.5 million at St. Mary’s, and invest at least $430 million in infrastructure and technology improvements. The terms were approved by a San Francisco Superior Court judge and cover the period of 10 years after the deal closes Aug. 1.

For seven years after the deal is completed, UCSF must negotiate contracts with insurers for the two hospitals separately from the rest of UCSF Health. This is to prevent UCSF from engaging in so-called “all or nothing” contracting, in which large providers can compel insurers and employers to contract with all hospitals in their system, or not at all. This practice has come under fire in recent years, as California’s health care market has gotten increasingly consolidated, for being anticompetitive.

Additionally, UCSF must cap annual increases on how much the hospitals can charge insurers to no more than 4% each year. These measures are meant to maintain competition in the health care market.

“San Franciscans deserve access to high-quality, affordable health care services,” Attorney General Rob Bonta said in a statement. “I take my responsibility to protect access to medical services in California seriously, and I am grateful to the Regents, UCSF Health and Dignity Health for working cooperatively and in good faith with my office to put the health of San Franciscans first.”

St. Mary’s and St. Francis have long treated many of the city’s poorest residents, including unhoused residents and patients on government insurance. When the UC Regents in 2023 approved UCSF advancing negotiations to acquire the two hospitals, it raised concerns among many medical staff and others whether the community hospitals would continue to serve this vulnerable population.

“We want to ensure that St. Francis and St. Mary’s are places our communities can continue to rely on for excellent care,” Suresh Gunasekaran, UCSF Health’s president and CEO, said in a statement. “This agreement underscores our commitment to the community and our responsibility to maintain and enhance health care services at both hospitals.”