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‘Hostage situation’: SF drug rehabs threaten closure, beg city for a bailout

A Google Street View of Baker Places at 170 9th St. in, San Francisco.

Two local nonprofits that run a conglomerate of addiction rehabs are shutting down some of their programs just months after the city awarded them emergency funding to prevent their collapse.

Baker Places and Positive Resource Center (PRC), two related nonprofits focused on addiction recovery, notified the city that they intend to close some of their programs this month unless the city provided millions in emergency funding, according to several sources in City Hall. 

Baker Places operates residential detox and other treatment programs for around 2,000 people annually while Positive Resource Center provides administrative support to Baker Places, among other social services programs. The two nonprofits approved a merger in 2016, but it's unclear what the current status of that merger is.  

In a Sept. 29 letter to Brian Schnieder, the president of PRC's board, Department of Public Health Director of Behavioral Health Hillary Kunins wrote that the department "feels strongly that it is in the best interest of our clients, the public, and the Baker/PRC for the City to find alternate care providers."

Kunins asked Schnieder to consider a transition period of six months that would allow the city to transfer its clients to other providers, and pointed to a prior emergency grant and other financial concessions by the city in recent months as sufficient to cover that transition period. 

On Monday, members of the Board of Supervisors were notified that the nonprofits were once again asking for a city bailout, just months after the board awarded them $1.2 million in emergency funding in June.

“It’s a little bit like a hostage situation [...] nobody has a choice because we can’t kick people out on the street,” said Supervisor Aaron Peskin. “We need them to keep their lights on for just long enough for the city to find alternative placements for their patients.” 

Baker Places has a total of 215 contracted behavioral health beds across several sites, including Hummingbird Valencia, Hummingbird General Hospital and Ferguson Place. 

But the nonprofits have found themselves continuously in debt since the two entities began a merger; one of their programs, the Joe Healy Detoxification Program, accrued between $750,000 and $1 million in annual debt, according to then-CEO Brett Andrews at a City Hall hearing in June. 

In a letter dated Oct. 3, Chuan Teng, interim CEO of PRC, reported a six-month projected shortfall of $4,242,498 and said that without the health department's assurance that it could cover those operational expenses, Baker Places "will have no other choice than to immediately notify staff of layoffs, discontinue intakes, and wind-down operations." 

Writing that the organization does not have the cash flow for a six-month transition, Teng gave the department a deadline to respond of Oct. 6, when PRC plans to begin making announcements to its staff. The letter identified four detox or treatment programs—Acceptance Place, Ferguson Place, Assisted Independent Living Program and Joe Healy Detox—that would be first to wind down. 

The Department of Public Health said that the nonprofits notified the city about their continuing financial struggles in mid-September, and added the city had done “everything possible” to keep the organizations solvent.

That included hiring a financial consulting firm at city expense, delaying repayment of funds owed to the city, expedited invoice payments and a $1.2 million contract increase on top of the emergency funding awarded by the board in June.  

“This is not normal operating behavior,” Peskin said. “They had stories that didn't match up, and they were kind of making stuff up as they went along.”

The collapse comes at an inopportune time for the city, which has struggled to provide accessible addiction treatment for people while around 12 people die from overdoses every week. According to a health department dashboard, the city has 30 available drug treatment beds and nine open placements for mental health treatment.

David Sjostedt can be reached at