Laguna Honda Hospital in trouble with regulators, loses federal funding

San Francisco’s Laguna Honda Hospital and Rehabilitation Center lost its federal funding after state surveyors this week discovered more deficiencies at the skilled nursing facility.

Dr. Grant Colfax, director of the Department of Public Health, said at a City Hall press conference Thursday that the infractions were related to “hygiene, documentation and infection prevention and control.” In a DPH statement, it was revealed that a staff member failed to properly store a face shield, there was a lack of personal protective equipment signage on a unit and two doses of medication were missed.

The department added that there was “insufficient time” to address the deficiencies before the six-month review period ended.

As result of the state surveyor inspection findings, city officials said the Centers for Medicare and Medicaid Services have terminated the hospital’s participation in the federal program as of Thursday, which will impact the hospital’s funding. The facility provides care for more than 700 patients.

Laguna Honda’s CEO Michael Phillips said the hospital will continue receiving federal reimbursement payments over the next 30 days — a 30-day extension will then be requested.

Officials said they are taking the findings seriously and are working to correct them. The hospital remains open as a licensed skilled nursing facility, Colfax said.

Mayor London Breed said she believes the issues can be resolved, adding:

“Our plan is to do everything we can, in light of recent events, to ensure that it remains open, that it remains a place of refuge for those who cannot care for themselves.”

Phillips discussed how the hospital arrived at the point of federal program termination.

He explained that the “extended survey” was triggered in Oct. 2021 when the hospital reported two non-fatal overdoses. The hospital was given six months to correct deficiencies and improve safety measures to bring the facility into compliance with state regulations.

Phillips said there was an incident where a staff member did not follow protocol related to prohibited substances during the state’s first revisit survey in January, keeping the hospital from attaining compliance. In a second state visit March, a patient was found smoking in the communal bathroom and another patient, who was on oxygen, was in possession of a lighter. Again, the hospital was out of compliance.

In the third and most recent visit by state surveyors, the hospital was still not in compliance for issues mentioned by Colfax above, unrelated to prohibited items found in earlier inspections.

Phillips said:

“While this of course is not the outcome that we hoped for. We made great strides in patient safety.”

Since October of last year, officials said they have changed processes to quickly identify items not allowed in the hospital and prevent banned items from being brought in from outside. The hospital this week began front entrance screening.

Visitors found with banned items have the option to either store belongings in their own vehicle or in lockers provided by the hospital, Phillips said.

Other changes include an update to the tobacco product policy for patients who smoke outdoors, new staff training implementation and refining of the screening process related to patients who leave and return to the hospital using a day pass.

In a statement, House Speaker Nancy Pelosi called the hospital’s loss of federal funding “unfathomable,” adding that her office is working with Breed and the Biden administration to help bring the facility into full compliance.