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Laguna Honda readies plan to move patients as fight to stay open reaches a critical juncture

By Rachel Swan
San Francisco Chronicle
May 16th, 2022

Officials at San Francisco’s Laguna Honda Hospital and Rehabilitation Center have drawn up plans to shut down and move patients to other treatment centers, a requirement to temporarily sustain critical federal funds at one of the country’s largest skilled nursing facilities while officials scramble to keep it open permanently.

Federal regulators approved the transfer and relocation plans late last week, the end of a grace period to keep Medicare and Medicaid payments flowing to support 700 patients with complicated medical needs.

In a letter sent out Monday to patients and their families, the hospital’s chief executive officer, Michael Phillips, said his staff had begun assessing each patient’s needs to help assure “an appropriate placement at another facility.” The hospital stopped accepting new patients in April, according to the letter.

Yet public health officials and political leaders in San Francisco have not given up their hard-fought efforts to keep Laguna Honda open. With Medicare and Medicaid payments now assured for four months, San Francisco’s Department of Public Health, which runs the facility, is working to get the hospital recertified, even as officials present options for patients to receive treatment elsewhere.

“Despite the fact that we’re rolling out this transition and closure plan, as we are required to do by (Centers for Medicare and Medicaid Services), our efforts are centered on recertifying this hospital,” Phillips told The Chronicle. He compared the process to opening a new hospital from scratch, and said the city hired a consulting team with experience in recertification. Laguna Honda has also committed to retaining its employees, representatives of the hospital workers union said Monday.

A spokesperson for the Centers for Medicare and Medicaid Services said the agency had granted several opportunities for Laguna Honda staff “to address their non-compliance,” but that the hospital “has failed to ensure the health, safety, and well-being of its residents.”

Given the shortage of skilled nursing beds in the Bay Area and across the state, it’s likely that patients would have to move outside California to receive care, Phillips said. The specter of so many displacements frustrates officials and political leaders, considering that Laguna Honda has been striving to implement reforms at the same time that regulators clamp down.

“The fact is, many of these patients could end up on the street, because there are not facilities that will be able to take them because of the complexity of their care,” Laguna Honda nursing assistant Theresa Rutherford said. Rutherford serves as vice president of SEIU Local 1021, the union representing hospital workers who are currently in bargaining talks with the city.

Like others, Rutherford sees a disconnect, in that the heightened scrutiny came as the hospital steadily made improvements. After a patient abuse scandal in 2019, Laguna Honda tightened its self-reporting requirements, instituted new safety measures and became a national leader with its aggressive response to the COVID-19 pandemic.

All the while, staff have grappled with evolving conditions, including a patient population once dominated by older people with dementia, but now largely comprising younger people with addictions or mental health episodes. That shift has changed the rules for supervision and oversight, Rutherford said, while obliging staff to balance patients’ freedom to move on and off campus with the need to enhance security.

“Our federal delegation, our whole city apparatus, has been very focused” on keeping the hospital afloat, Jeff Cretan, a spokesperson for Mayor London Breed, said Monday. He added that staff working for U.S. House Speaker Nancy Pelosi have been heavily engaged in the campaign, since Pelosi understands the stakes.

“The top priority should be keeping these people safe,” Cretan said.

Supervisor Myrna Melgar, whose district includes the hospital, echoed these sentiments, saying she feared a hospital closure could put people at risk of homelessness, and that she didn’t “want to see a single family have to deal with relocation” of a loved one.

Laguna Honda came under a microscope last July after its staff reported two overdoses from street drugs, neither of them fatal. In October, state inspectors found a raft of violations, mostly pertaining to the hospital’s protocols to keep out contraband, such as cigarette lighters and drug paraphernalia.

These discoveries led state regulators to deem the care at Laguna Honda “substandard,” initiating a six-month correction plan that ended April 14. As the hospital neared that deadline, state health officials conducted a round of inspections and found new problems related to hand hygiene, documentation and infection prevention and control.

“Unfortunately, we had a very short window to fix some of these findings,” Phillips said.

Charlene Harrington, professor emeritus at UC San Francisco School of Nursing, said she was shocked to see the Centers for Medicare and Medicaid Services targeting Laguna Honda for inspections and potential closure.

She stressed that it would be highly difficult to find placements for 700 vulnerable patients, many of whom present serious behavioral challenges.

“CMS only decertifies about 10 nursing homes in the country each year,” Harrington said. “To pick on Laguna Honda seems very strange.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: Twitter: @rachelswan