Feds Cut Funding to Laguna Honda Hospital, Putting Future in Doubt

San Francisco's Laguna Honda Hospital lost critical funding effective Thursday as a result of deficiencies identified by a federal agency, putting in doubt the future of the skilled nursing facility.

The city's Department of Public Health on Thursday announced that the Centers for Medicare and Medicaid Services (CMS) ended the hospital's participation in its Medicare/Medicaid programs, triggered by a requirement that the facility fix all its deficiencies by the end of a six-month period that started in October.

At that time, state surveyors had documented problems related to stopping contraband like drug paraphernalia from coming onto campus. In the latest surveys this week, investigators found new issues, "primarily having to do with hand hygiene, documentation, and infection prevention and control," city public health officials said in a news release.

As a result, CMS terminated Laguna Honda from the Medicare/Medicaid program, which funds more than two-thirds of services at Laguna Honda, which serves about 700 patients with complex medical needs who are low- or extremely low-income, according to the city.

The facility will remain open for at least the next 30 days as the city reapplies for participation in the programs.

"As we continue to address challenges brought on by the COVID-19 pandemic, we need to ensure that all patients have access to the services they depend on without the fear of any hospital funding being cut," Mayor London Breed said. "We will continue to work with our partners at every level of government to come into compliance with the violations at hand."

Dr. Grant Colfax, the city's director of public health, said, "We understand that the decision made today by CMS may cause anxiety for our community of patients, families, and staff. We will do everything it takes to continue serving San Francisco and we have full confidence that Laguna Honda, while working closely with local, state, and federal partners, will further improve our systems of care so that we may come back into compliance."