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DPH third‑quarter report shows revenue surpluses in behavioral health and primary care, Laguna Honda faces a $28M revenue deficit
Summary
The department's third‑quarter financial update projected a roughly $102 million revenue surplus driven by higher-than-expected Medi‑Cal claiming in behavioral health and ZSFG revenue gains, while Laguna Honda Hospital continued to report a substantial patient‑revenue shortfall tied to low census.
Drew Morell, the department financial presenter, told the commission that the Department of Public Health projects a roughly $102 million revenue surplus for FY 2024–25, driven in part by improved Medi‑Cal claiming in behavioral health and better than expected revenue at Zuckerberg San Francisco General (ZSFG).
Key points from the third‑quarter report (actuals through March 31 and projections to fiscal year end):
- Projected surplus: The presentation stated a projected revenue surplus of approximately $102,000,000; after accounting for mid‑year reserve instructions related to sugary‑drink tax funds held on mayoral reserve, the memo indicated a $103,800,000 change in general‑fund reductions/surplus. - ZSFG: The hospital saw substantial revenue gains related to improved claiming (global payment program and other sources) but also faces an expenditure gap of about $28,000,000 driven by materials, supplies and higher drug costs. - Behavioral Health Services (BHS): BHS had about $48,700,000 in Medi‑Cal revenue above budget, attributed to billing efficiencies following the EPIC go‑live and to CalAIM payment reform changes. - Laguna Honda Hospital (LHH): LHH continued to show a revenue deficit of roughly $28,000,000 (about a 10% shortfall), attributed primarily to lower than budgeted patient service revenue associated with a lower census during recertification and slow readmission of medical patients. - Primary care and other network lines: Primary care projected a $12.7 million revenue surplus driven by quality incentive payments (QIP) and improved Medi‑Cal revenues at certain clinics; jail health and other lines showed small shortfalls related to premium pay, medications and overtime.
Presenters noted that the department has reserves including a mayoral reserve and a DPH management reserve to mitigate timing and revenue uncertainty, but also cautioned that federal and state changes could alter outlooks.
Ending: Commissioners thanked the finance team for clear materials; a remote commenter urged a rapid increase in Laguna Honda admissions to recover Medi‑Cal revenue.
