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DPH projects small revenue surplus but flags $25.5M hospital staffing shortfall
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Summary
CFO Drew Merrill told the commission the department anticipates finishing the fiscal year roughly on budget with a modest $13.9M revenue surplus largely from one‑time adjustments; Zuckerberg San Francisco General faces a roughly $25.5M expenditure variance driven by per‑diem nursing and personnel costs.
Chief Financial Officer Drew Merrill presented the Department of Public Health’s first‑quarter revenue and expenditure projection, saying the department expects to end the year with a small net positive revenue variance of about $13.9 million (roughly 0.6% of the departmental budget) but cautioned much of that is one‑time and non‑recurring.
Merrill identified Zuckerberg San Francisco General (ZSFG) as the primary area of concern: an estimated revenue shortfall (about $50 million) tied to Medi‑Cal and Medicare timing and a roughly 9% reduction in inpatient census year‑over‑year, alongside a projected $25.5 million expenditure deficit. He attributed cost pressures to personnel, professional services, materials and elevated use of per‑diem nursing staff. "The area that we see the biggest variance in salary costs right now is tied into our use of per diem nursing," Merrill said, and described mitigation steps to reduce per‑diem reliance and rebalance staffing.
Other division highlights: Laguna Honda shows a one‑time positive revenue variance (about $23M) mainly from supplemental DP NIF payments that are not ongoing; behavioral health shows a large positive revenue variance (~$37.9M) primarily due to accelerated one‑time claiming and prior‑year recognition; primary care and health network services report small variances tied to capitation and fee reversals; jail health revenue improved under CalAIM but pharmaceutical costs rose.
Merrill said the department will monitor personnel spend, hospital census at Laguna Honda, and grants' indirect cost recovery to ensure that year‑end results align with projections. Commissioners asked clarifying questions about one‑time funding, the sustainability of revenue gains and the relationship between declining census and spending.
