Supervisors back settlement to preserve funding and time for Laguna Honda recertification; closed session held

The San Francisco Board of Supervisors on Nov. 1 passed, on first reading, an ordinance authorizing the City and County of San Francisco to settle its litigation with the federal Centers for Medicare & Medicaid Services (CMS) and related state agencies while the city pursues recertification for Laguna Honda Hospital.

The board also held a closed session to discuss the settlement and voted not to disclose the closed-session deliberations. The board recorded an 11-0 roll-call vote in favor of the ordinance on first reading.

Why it matters: Laguna Honda is the largest publicly run skilled nursing facility in the United States and had its federal certification paused in April after the hospital reported two nonfatal overdoses and subsequent surveys found deficiencies. CMS funds the bulk of Laguna Hondas operating budget; officials told supervisors the settlement will preserve federal payments while the hospital works to meet CMS standards and pursue recertification.

Department of Public Health (DPH) and Laguna Honda leaders told the board they have contracted outside experts and launched sustained quality-improvement work. Roland Pickens, interim CEO of Laguna Honda Hospital and director of the San Francisco Health Network, said two consulting groupsHealth Management Associates and Health Services Advisory Grouphave been working onsite to identify root causes, implement corrective action plans and validate fixes.

"We immediately brought on two consulting experts," Pickens said. He told supervisors that consultants and hospital staff identified about 101 corrective-action items in a mock survey exercise; Laguna staff have implemented corrective actions and are moving items through monitoring and validation steps.

DPH reported weekly monitoring across key performance indicators tied to the April findings, including environment-of-care checks, hand hygiene and infection-prevention rounds. Pickens said the hospital has been meeting or exceeding an internally set 90% compliance threshold on those indicators in recent weeks and that about 36% of corrective-action items had been fully validated as of the update, with a goal of full validation by Nov. 30.

Settlement terms presented to the board include continued federal reimbursement for resident care through at least Nov. 13, 2023, a pause on CMS-ordered involuntary discharges and transfers until February 2023, and a mechanism for CMS to extend the pause if Laguna demonstrates progress. DPH leaders said the pause gives the hospital time to focus on sustained improvements rather than relocation logistics.

Pickens and Baljeet Sangha, the hospitals incident commander, described steps taken by staff: a large staff-education effort, 24/7 observational rounding to collect more than 6,000 weekly data points, leadership rounds, frequent meetings with labor representatives, and management-led performance improvement teams.

Board members asked for specifics. Supervisor Matt Dorsey asked whether "substantial compliance" has a numeric definition; Pickens said CMS does not publish a single numeric threshold and that compliance is assessed across many standards and can be subjective depending on whether deficiencies appear systemic.

Several supervisors raised long-standing concerns about how different patient populations are served. Supervisor Rafael Mandelman asked about cohorting residents with distinct clinical or behavioral needs; Pickens said cohorting is being considered to boost staff competency and safety for patients who have behavioral-health needs alongside skilled nursing needs.

Public comment at the hearing included pleas to avoid forced transfers and concerns about the health impacts of transfers. Joseph Burton, whose family member had been transferred, said the city must study "transfer trauma" and its mortality risks. Dr. Teresa Palmer, a former Laguna employee, told the board that forced discharges would be dangerous and urged transparency. Other callers and advocates asked that transfers be halted until the hospital is recertified and until the city provides clearer public plans.

After discussion, the board met in closed session to confer with the city attorney about the settlement. When the board returned to open session it announced no action had been taken in closed session and then voted 11-0 to adopt the ordinance on first reading that authorizes settlement negotiations and related actions.

What happens next: DPH said it will continue weekly public updates to the Health Commission and maintain the on-site consulting and monitoring work. The pause on involuntary transfers extends only to February 2023 under the terms presented; CMS retains the option to extend the pause if it determines Laguna is making sufficient progress toward recertification. The ordinance approving the settlement must still complete the supervisory legislative process and final sign-off procedures.

Quotes

"This pause gives us the resources and time to redouble our efforts and focus right now exclusively on recertification without having to divert resources toward trying to transfer patients out," Roland Pickens said.

"There have been months and months of intense effort from our Department of Public Health, federal and state delegation, and advocates," Supervisor Matt Haney Melgar said, summarizing the board's deliberations and thanking community advocates.

Ending

The ordinance authorizing settlement was approved on first reading unanimously. DPH officials told the board they will continue on-site monitoring, staff education, and weekly public reporting as Laguna Honda works toward a CMS recertification survey.