Laguna Honda Lifeline: Funding Extended for 156-Year-Old San Francisco Hospital

Funding was extended for Laguna Honda Hospital as part of a legal settlement negotiated between City Hall and federal regulators, which had been trying to close the 156-year-old skilled nursing facility by this fall. 

The deal announced Thursday—culminating months of negotiations between city officials and the U.S. Centers for Medicare and Medicaid Services—also allows the hospital to hold off on transferring patients until at least Feb. 2.

“All parties are committed to ensuring that, regardless of income, people living in nursing homes are receiving safe, high-quality services and support,” City Attorney David Chiu wrote in a prepared statement. “We are all focused on resident wellbeing while Laguna Honda continues to provide critically needed health care services for hundreds of residents.”

The public hospital—the nation’s largest skilled nursing facility, which cares for some of the poorest and most vulnerable San Franciscans—has faced an existential crisis since April, when federal officials decertified the facility after identifying a series of violations. With plans to yank funding in a matter of months, CMS ordered the hospital to transfer or discharge its 700 or so patients and close for good.

But officials halted those transfers in July after several patients died within days of relocation. Public outcry and pushback from City Hall over the deaths prompted regulators to extend the closure deadline from September through November.

Meanwhile, City Hall mounted a legal challenge that led to the agreement announced Thursday and now headed to the Board of Supervisors for final approval.

Under the negotiated deal, the San Francisco Public Health Department, which manages the hospital, will continue to receive Medicare and Medicaid funding through Nov. 13, 2023—as long as Laguna Honda meets health and safety standards. The goal, officials say, is for the hospital to eventually regain federal certification so it can continue receiving public funding.

Local leaders applauded the legal settlement.

Theresa Rutherford, president of the SEIU Local 1021 and a longtime nurse assistant at Laguna Honda, called it “great news.”

“This will save lives,” she said.

In a statement, U.S. Sen. Dianne Feinstein said she hopes the hospital can quickly regain its footing to avoid distressing the hundreds of medically fragile patients in its care, “most of whom have nowhere else to turn.”