By Thomas K. Pendergast

Laguna Honda Hospital is finally coming out the other side of a difficult administrative struggle that almost led to shutting it down for lack of funds after federal and state regulators decertified it in 2022.

Last month, the San Francisco Department of Public Health announced the hospital and rehabilitation center were approved for Medicare recertification, the final step in making sure they stay open.

Laguna Honda can continue to provide skilled nursing for low-income, long-term-care patients now that they will be reimbursed by both Medicare and Medicaid. Hospital officials say more than 95% of Laguna Honda residents rely on Medicaid funding, while the remaining rely on Medicare.

“Today we look to the future of Laguna Honda with great excitement and optimism,” said Roland Pickens, director of the San Francisco Health Network. “We asked our staff to do something extraordinary and they delivered. Together, we worked with our regulators to make facility-wide improvements to bring our 150-year-old facility to the forefront of today’s skilled nursing practices.”

“I am grateful for the relief this brings to our current residents and their families, who have made it clear that Laguna Honda is where they want to receive care,” said SF Mayor London Breed. “Laguna Honda embodies our City’s values and is what makes San Francisco special. We are a resilient city that cares for our most vulnerable and we never, ever give up.”

Laguna Honda was recertified for Medicaid in August of last year, so Medicare recertification completes the process with the Centers for Medicare and Medicaid Services (CMS), the federal agency which oversees these programs.

Problems at the hospital first became public in 2019, when six workers were fired and two top executives resigned amid allegations that nearly two dozen patients were abused, according to an ABC News report.

While investigating an unrelated dispute by two employees, health officials found evidence that 23 dementia patients in two wards were victims of abuse, including physical abuse, neglect, privacy violations, medical errors and the administration of non-prescribed drugs from the hospital pharmacy while attempting to pacify them.

Investigators found evidence of abuse dating as far back as 2016.

The workers were also accused of making unauthorized video and audio recordings of the patients.

Then, in July of 2021, Laguna Honda self-reported two non-fatal overdoses to the California Department of Public Health (CDPH). According to the San Francisco City Attorney’s Office, that report triggered a series of inspections by CDPH and CMS, resulting in citations for deficiencies in care related to cigarette lighters and drug paraphernalia found on campus.

Inspectors also found deficiencies in safety protocols and improper hygiene practices by the staff.

By June of 2022, the hospital was looking into possibly relocating 670 patients over a four-month period because of the funding crisis.

At the time, Pickens said there were approximately 2,000 skilled nursing facilities throughout California. And although 15 of those were in San Francisco, none had beds available for patients with Medicare or Medicaid coverage.

This in turn points to larger healthcare issues involving the low-income population.

Dr. Melanie Grossman, president of the Older Women’s League San Francisco, claimed the root cause of this challenging situation is systemic, regardless of hospital staff violations.

“Laguna Honda got into trouble because of the ‘flow project’ at San Francisco General,” Grossman said. “These patients were difficult to place and therefore they were sent to Laguna Honda. Now Laguna Honda is in trouble and again, patients are very difficult to place.

“The City for years has allowed our institutions, our hospitals to close their skilled nursing beds slowly but surely. People who cared about the elderly objected but here we are … we have very few skilled nursing beds in the City.”

A month later, however, federal and state regulators paused all patient transfers and discharges from the hospital after 12 patients died soon after their removal from the facility.

Throughout the following year, regulatory authorities granted Laguna Honda temporary pauses in transferring out patients three separate times.

After the City sued the feds for failing to provide adequate time to repeal the original citations, they agreed to a settlement, with the understanding that CMS would extend Medicare and Medicaid payments for services through Nov. 13, 2023, contingent upon the hospital making health and safety improvements.

Finally, CMS offered to extend payments yet again to March of 2024 but with the caveat that “CMS will not consider any other amendments to the agreement or any further extensions.”

“I could not be prouder of Laguna Honda staff,” said Dr. Grant Colfax, San Francisco’s director of health. “For more than 24 months, they have worked under immense pressure to transform Laguna Honda into a top-skilled nursing facility, making it clear to our regulators that we can meet and will continue to meet high standards of care. Throughout this transformation, Laguna Honda staff have remained dedicated to the health, safety and wellbeing of their residents.”

“Over the last two years, we have worked together to preserve this critical public health institution and restore an essential safety net for the people of San Francisco,” City Attorney David Chiu said. “Achieving this first step in the recertification process means Laguna Honda will be here to care for San Franciscans for generations to come.”