San Francisco's Laguna Honda Hospital is once again in trouble with regulators at the state and federal level, leaving it in a precarious financial situation — however city health officials insist the skilled nursing facility is not in danger of closing.

Following an April 14 deadline to clean up a raft of violations — some of which involved patients having contraband on the premises, like lighters — federal officials are freezing Medicare and Medicaid funding for Laguna Honda in 30 days, and state inspectors have found new violations in their latest inspection.

The hospital receives about two-thirds of its funding from Medicare and Medicaid payments.

There are over 700 long-term patients at Laguna Honda Hospital, many of whom are low-income and members of vulnerable populations. If the hospital's cash flow is interrupted, they could have to relocate. But as the Chronicle reports, the current situation may not be so dire, even as bad as it sounds.

The San Francisco Department of Public Health (SFDPH) reported six months ago that the facility was told it would lose funding if it didn’t make changes to bring it up to the standards required by the Centers for Medicare and Medicaid Services (CMS). At the time, the hospital was told it needed to crack down on contraband like drug paraphernalia after two patients overdosed.

The SFDPH says the hospital did address those changes. It says it also re-trained staff and implemented a new front entrance screening process and package safety inspection protocol to keep prohibited items out moving forward.

However, in an inspection this week to see whether the facility was in compliance, state surveyors found new issues.

Those included issues with hand hygiene, documentation problems, and infection prevention and control. The Health Department explained the unmet standards for infection prevention were flagged because of a lack of PPE signage on a particular unit, two missed doses of a medication, and a singular instance of a staff member storing a face shield improperly.

“There was insufficient time to address those deficiencies before CMS’s review period ended, and as a result, CMS moved to terminate Laguna Honda from the Medicare/Medicaid program, which funds more than two-thirds of Laguna Honda’s services,” the Health Department explained.

DPH Director Dr. Grant Colfax played all this off as fairly routine in a press conference, per the Chronicle. "Laguna Honda is not going anywhere," Colfax said. And Laguna Honda CEO Michael Phillips added, "We can rectify it and we are on our way."

House Speaker Nancy Pelosi said in a statement Thursday that her office is working with Mayor Breed and the Biden Administration to help bring the hospital up to compliance.

“Laguna Honda has long been a pillar of the health and well-being for generations of San Francisco families.  At this very moment, this indispensable institution is ensuring that hundreds of patients with critical and complex medical and behavioral health conditions can get care they need, regardless of their financial means,” said Pelosi.

Laguna Honda has been facing issues for some time now.

In 2019, an investigation began to look into allegations of patient abuse at the hospital. The Department of Public Health found 23 patients in a ward dealing mostly with dementia were subjected to verbal and physical abuse by a group of half a dozen employees. The Chronicle reported the hospital paid out $800,000 in 2021 in just the first of three lawsuits stemming from that investigation.

In 2020, the hospital at first seemed to be in good shape in the pandemic, keeping some infections from leading to a major surge, only to have another outbreak months later that killed 3 elderly residents.

The SFDPH says Laguna Hospital is now re-applying to continue its participation in the Medicare/Medicaid programs, and in the meantime is working to come up to compliance.

“We understand that the decision made today by CMS may cause anxiety for our community of patients, families, and staff,” said Colfax in a statement. “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. We will continue to provide excellent care for patients and support our healthcare professionals.”

Payment from CMS will continue for the next 30 days. The hospital is working to extend that pay period out further.

“It is unfathomable that Laguna Honda could lose the vital federal funding it needs to support life-saving programs for some of our most vulnerable San Franciscans — especially as we continue to be threatened by the pandemic,” added House Speaker Pelosi. “That is why it is both urgent and essential that city, state and national officials work together to help address areas of concern and protect this crucial health care provider.”

Photo: Laguna Honda Hospital