Health Commission: $2B department budget, EPIC EHR and major capital work top priorities amid tighter city guidance

The San Francisco Health Commission on Dec. 19 heard a detailed finance briefing that positioned the Department of Public Health to live within the mayor—s budget instructions while preparing for two major multiyear programs: an EPIC electronic health record rollout and a city capital program that includes seismic work on hospital and clinic buildings.

"Our total budget is a little over $2,000,000,000," said Mr. Wagner, the department—s finance lead, giving commissioners the numerical context for a plan that aims to both restrain growth and preserve services. He described mayoral guidance that asks departments to limit general fund support growth by 2.5% in the first year and another 2.5% in the second year and to avoid adding ongoing FTEs.

Why it matters: the department draws a large share of discretionary local tax dollars and is carrying high fixed costs, including salaries, pensions and health benefits. Wagner—s five-year projection shows employee costs as the single largest upward pressure; without action, the department—s general fund support could grow faster than city revenues and help drive an increasing long-term deficit.

Key numbers and tradeoffs: department staff said meeting the mayor—s two-year restraint equates to roughly $16.5 million in the first year and larger amounts thereafter; after accounting for restrained growth and a target to limit upward spending in later years, staff estimated an order-of-magnitude gap of about $36 million in the out years if additional revenue or efficiency gains are not realized. Wagner said a 1% revenue improvement could yield about $15 million.

EHR and project controls: commissioners and staff discussed the EPIC EHR project consistently as a core financial and operational risk and opportunity. Director Garcia told the commission the Board of Supervisors had approved the department—s EPIC contract; Wagner presented a draft multi‑year budget for implementation that shows about $52 million in near-term spend growing to $87 million in the big implementation year and an illustrative ten‑year expenditure estimate of roughly $330 million. Wagner said the budget structure will track contract-level spending against the project budget and that the department will provide Gantt-chart style status updates to the commission and the finance and planning committee.

Contracts tied to EHR implementation were on the consent calendar earlier in the meeting. The commission approved several project-management and implementation contracts, including multiple roughly $9.9 million awards for third‑party project management and an overflow pool meant to supplement Deloitte work if needed. Mr. Wagner said the department will package and present contracts to the committee so commissioners can see how individual awards map to the project budget.

Capital program: staff reviewed a multi‑year capital plan that includes seismic renovations and upgrades across the department—s hospital and clinic campuses. The department is planning renovations funded in part by certificates of participation and a possible November 2022 bond placeholder; Wagner said $155 million is currently programmed for near‑term capital work and another placeholder of about $300 million is in the ten‑year capital plan.

Financial strategies and reserves: staff highlighted a set of mitigations—building reserves, revenue maximization (including improved charge capture and waiver program performance), and slowing the growth in operating costs (materials, professional services, limiting FTE growth). Wagner noted a department management reserve of about $92.1 million and a central $50 million placeholder held to mitigate federal funding shocks.

What comes next: commissioners asked for ongoing reports that show the EHR project—s burn rate, schedule and contract roll‑ups, and for updates on the financial drivers that could close the projected gap. Wagner said staff will bring more detailed plans and continue to coordinate with the mayor—s office and controller.

At the end of the presentation commissioners thanked staff for the briefing and affirmed the direction to restrain growth while protecting services.