Black Holes At Laguna Honda

By Patrick Monette-Shaw

Laguna Honda Hospital’s (LHH) unresolved scandal with its patient gift fund, additional construction problems and potential cost over-runs exacerbate already-poor relationships with the community, donors, and its patients.

Construction Problems In recent months, there have been anecdotal reports that: 1) Air conditioning compressors, or some other units placed on the roofs of LHH’s new buildings, have been emitting a high-pitch noise disturbing patients and surrounding neighbors. Sound-dampening blankets reportedly failed to work because they were exposed to the elements and weren’t water-proof; 2) Passageways between the old building that will remain and the new “connector” building linking up with the new “Pavilion building” have encountered unexpected construction problems that may prevent safe patient transport on moving day; 3) A boiler in the new “connector” building may have had a blow-up, and may not be operational until February 2011; and 4) Inadequate cooling systems may be affecting the main telecommunications and data center in new computer server rooms. The equipment may have been turned off to avoid damage, because of inadequate air cooling, “value engineered” out of the plans to trim costs.

At a July 27 meeting of the LHH–Joint Conference Committee (LHH-JCC, a subcommittee of the Health Commission that jointly includes senior hospital managers), John Thomas, the LHH Replacement Project manager, noted that unexpected repairs to a significant portion of the roof structure of the existing old buildings, and newly-discovered “cracks and voids” in the concrete of the existing buildings, has added another $1 million in costs for the cracks and voids and costs to repair the roof were not estimated.

LHH’s staff assured the Health Commission members that patients would move in to the new facilities in October. But the move-in likely won’t happen until December, or the first of the year, months past the already-delayed April 2010 date that for the scheduled move.

Cost Over-Runs At the LHH-JCC’s meeting, Thomas reported on potential problems with a “contingency” involved $57 million budgeted for the remodel of the old buildings that will remain. $44.5 million for the remodel work has been “executed” to date, indicating a “fair amount of contingency” —to adjust the scope of the work within the remaining $12.5 million remodel budget.

Thomas also indicated that the $23 million budgeted for Site Work package #3 — for demolition of the existing building wings D through O, the east parking lot and an access bridge, an ADA-accessible pathway — scope is being reviewed, which will be “key on whether we’re able to stay within that $584 million” overall project budget.

The total project budget may be increased $5 million, along with further reduced scope in the final package.The “scope” of the project was reduced by $17 million in Budget Revision #14, and another $9 million in Budget Revision #15 to address “unfunded operating costs for the DPH.” Now, the City Controller’s “Discussion of the Mayor’s FY 2010-11 Proposed Budget” indicates that the LHH Project returned $2.1 million in “year-end surplus” savings from FY 09-10 to the Mayor’s proposed budget for FY 10-11, apparently to the General Fund.

This totals at least $26 million in “scope” features initially planned that have been cut, plus another $2.1 million in unexplained “surplus,” representing a black hole of at least $28 million. Why isn’t Louise Renne, chairperson of the Laguna Honda Foundation, looking into this?

Black-Tie Dinner Months after the June Black-Tie Gala Dinner, to”benefit Laguna Honda Volunteers, Inc.,” ostensibly for patient benefit, the amount is unknown.

At least $450,000 was potentially raised by the various major sponsors (“Gold,” “Platinum,” etc.), excluding an unknown amount added to gross receipts raised by individuals purchasing $250 and $350 event tickets.

Supervisor Sean Elsbernd’s recent Form 803 reports indicate he made personal “bequests” (personally solicited requests) that raised $165,000 for the Gala Dinner, plus another $40,000 for Volunteers, Inc.

Community Initiatives, a separate non-profit organization that now acts as the “fiscal sponsor” for Renne’s Laguna Honda Foundation (LHF), says her Foundation will share in proceeds raised at the Gala dinner, but refuses to disclose how much will be diverted to the Foundation, claiming event expenses are still unknown and the net amount raised is still unclear. Donors beware.Refuses to Disclose On August 12, Renne, refused when asked for summary-level non-profit financial data: how much was spent in the past three years on “program services,” “management and general,” and ”fundraising.” These three categories of information are typically used to evaluate non-profits, and are required by the IRS.

“I’m not taking a lot of time because I see no reason to put everybody to the trouble of doing busy-work” Renne said, she sees “no reason to provide details.”

Asked for her Foundation’s top five contractors for “professional services” in each of the past three years, and her top five contractors who provide “other services,” that the IRS requires 501(c)(3) organizations to report, along with grants made under required “grantmaking” purposes, Renne suddenly declared, “Enough!” refusing to provide any data, or to answer further questions.

This is summary data Renne must have, and should release, illustrating yet another enormous black hole.

Patient Gift Fund Scandal Don’t believe public service announcements reporter Dan Ashley on Channel 7, claiming LHH’s misspent patient gift funds “went back to patients” as a result of KGO TV’s I-Team single broadcast on May 20. It simply isn’t true, since there has been no audit, and no restitution of missing patient funds.

Indeed, Deputy City Controller Monique Zmuda is scheduled to return to LHH the week beginning August 30 to conduct yet another “review” — apparently not an actual audit — of LHH’s patient gift fund. Her “audits group” will ostensibly determine under what “authority” LHH may have departed from the Municipal Code in administering gift funds earmarked to benefit actual patients, and whether the patient gift fund was administered in accordance with stipulated mandates, before potentially re-performing allocation of over $100,000 in interest earned, diverted to staff sub-accounts, after determining ”reasonableness” of the diverted funds.

Zmuda will need to dig deeper to quell concerns, since former LHH doctors Maria Rivero and Derek Kerr have recently uncovered, through additional public records requests, that massive “cost shifting” of expenses from the hospital’s operating budget was pushed onto the patient gift fund beginning in 2004, despite provisions prohibiting use for routine hospital operations.

Basic patient care provided under hospital operating budgets is defined by Federal and State regulations governing skilled nursing facilities.

In the first eight months following John Kanaley’s appointment as LHH’s executive administrator in 2004, $745,000 appears missing from the patient gift fund, when the fund plummeted from $2 million to $1.3 million.

Since 2004, the two doctors suspect, LHH has improperly cost-shifted at least $550,543 for catering costs, basic patient activities and amenities, and patient transportation costs from its operating budget to the patient gift fund. Another $76,013 has been diverted for staff amenities: catered meals, travel expenses, employee recognition awards including $50 “thank you” checks to employees-of-the-month, and employee training expenses.

The patient gift fund has been depleted of at least $1,360,065 in questionable expenses since Kanaley first began cost-shifting in 2004; staff amenities questionably charged to the gift fund appear to have spiked in 2009 after Mivic Hirose became executive administrator.

Zmuda’s new “review” of the gift fund sub-accounts — still avoiding a full, impartial audit and still lacking actual restitution of misspent funds — may continue to whitewash LHH’s various black holes.

Monette-Shaw is an accountability advocate, and the San Francisco Hospital Examiner at Examiner.com. Feedback: monette-shaw@westsideobserver.com

Sept. 2010

Laguna Honda Hospital

Unanswered Questions Remain for the Patient Gift Fund

by Patrick Monette-Shaw

Ribbon Cutting Ceremony at Laguna Honda masks the
turmoil that is going on behind the scenes

Since a Whistleblower complaint about potential inappropriate spending from Laguna Honda Hospitals (LHH) Patient Gift Fund was filed last March, no corrective action has been taken.

After KGO TV’s “I-Team” investigative journalist Dan Noyes aired a story on May 20, nothing meaningful has been done. Numerous public records requests subsequently placed have lead to only more questions, and few answers.

LHH was cited by California’s Licensing and Certification (L&C) Division for a fairly serious “deficiency” involving patient choice in therapeutic activities, as a direct result of potential misappropriation of donations to LHH’s Patient Gift Fund. In a citation involving “misappropriation of property/activities,” L&C issued an “E” deficiency — citing a violation of Federal law — against LHH on May 19, the day before Noyes’ story aired. The State citation documented that patients now wait up to three months for bus trip outings to culturally-appropriate restaurants.

An “E” deficiency involves a “pattern” having a potential for more than minimal harm, but not immediate jeopardy and without actual harm.

It is thought that the State is required to report potential violations of Federal regulations to the U.S. Department of Justice, which remains concerned about the welfare of residents at LHH.

The day after the KGO story aired, City Controller Bed Rosenfield recommended on May 21 — following a cursory “review” to determine whether LHH’s accounting practices were consistent with City policies — that in order to avoid continuing questions regarding the Patient Gift Fund, the Department of Health should “create a separate account … for employee training and development,” effectively ordering DPH to segregate funds donated to benefit patients from funds for staff luncheons, education, and development.

Deputy City Controller Monique Zmuda acknowledged on May 25 the Controller’s review was “not an audit.” Indeed, no audit has been performed to anyone’s knowledge or the City would have already released results.

Later, Zmuda provided documentation indicating there are 20 separate sub-accounts within the Patient Gift Fund, four of which are for staff education purposes used mostly to fund catered meals for staff. The staff education accounts remain embedded within the Patient Gift Fund.

A patient was potentially denied funding from the Patient Gift Fund in the current fiscal year for a mechanical lift needed for discharge.

In stark contrast to the $2,500 needed to purchase the mechanical lift, documents provided responding to public records requests placed by former LHH physicians Dr. Maria Rivero and Dr. Derek Kerr revealed that in current fiscal year 2009–2010, the Patient Gift Fund spent at least $12,675 on catered meals for senior hospital staff members.

LHH suddenly, and deliberately, revised its Patient Gift Fund policy #45-01 on December 2, 2004 one month after former LHH Executive Administrator John Kanaley was hired, removing a patient representative from its Gift Fund Management Committee and a required quarterly report of gift fund activity to the Health Commission, weakening oversight. When LHH suddenly revised the policy again on April 15, 2010, the Gift Fund Management Committee was simply eliminated.

Shortly after LHH’s 2004 revisions to its Patient Gift Fund policy, increases in gift fund expenditures benefitting LHH’s staff, rather than patients, soon skyrocketed, after three staff education sub-accounts were created on August 12, 2005 shortly after Kanaley took control; the other education account was created in January 2008.

Although Dr. Rivero and Dr. Kerr have proposed a six-point action plan to restore the charity-donating public’s trust in the Patient Gift Fund, none of their proposed remedies have been implemented since KGO’s May 20 story aired.

Their action plan requested an independent fiscal audit of the gift fund’s income and expenses for the past five years; full restitution for any misspent donations intended for patients; reinstatement of the Gift Fund Management Committee; appointment of a patient representative or ombudsman to the Gift Fund Management Committee; inclusion of approval of any disbursement over $500 from the Patient Gift Fund in published minutes of monthly meetings of the Gift Fund Management Committee; and submission of quarterly reports itemizing all donations and expenses to the Patient Gift Fund to the San Francisco Board of Supervisors’ Budget and Finance Committee for public review.

Other remedies proposed include returning the gift fund policy to its pre-December 2004 status, and a mission statement describing the intended uses and “restricted purposes” for each of the 20 sub-accounts must be restored and posted on LHH’s web site.

In mid-2009 LHH’s current Executive Administrator Hirose combined previously-held community meetings with her monthly Town Hall staff meeting, opening the combined meeting to the public. But in reaction to the KGO story, on June 4 LHH’s combined meetings went closed, locking out the public.

“After two years of arm twisting by neighbors demanding LHH hold community meetings, now we can’t even get return calls or email replies. Denying us access to community meetings to ask whether our donations to the Patient Gift Fund and Volunteers, Inc. have been misappropriated is an affront,” says George Wooding, president of the West of Twin Peaks Central Council.

On May 24, Dr. Kerr and Dr. Rivero submitted a complaint to the California Attorney General’s Registry of Charitable Trusts, requesting that the State audit LHH’s Patient Gift Fund. They have since submitted supplements to the Registry documenting additional problems.

They documented that at least $188,442 in questionable allocations and expenses that should have benefitted patients, did not. The City has provided some conflicting public records highlighting potential accounting discrepancies. Rivero and Kerr are still investigating what has happened to three major bequests, and are concerned about irregularities with the Hospice sub-account.

“Various oversight authorities have an obligation to investigate,” Kerr maintains, convinced LHH’s patients and Patient Gift Fund donors deserve no less than a full audit.

To that end, Dr. Kerr and Dr. Rivero have asked that the U.S. Attorney for the Northern District of California, Joseph Russoniello, investigate and conduct a full audit, since his office pursues restitution on behalf of victims and violations of federal law.

The Patient Gift Fund balance was $2,086,872 in December 2004. The Controller’s Office confirmed as of June 6, 2010 the current balance dropped to only $726,808, indicating that within five-and-a-half years it shrank by $1.3 million. Of the remaining balance, 17% ($123,517) is dedicated for staff use, and only $603,291 remains in sub-accounts for patients.

At the rate of current earnings and spending, the Patient Gift Fund may be completely insolvent within three years.

Three donations totaling $54,502 from Laguna Honda Volunteers, Inc. likely intended for direct patient benefit were deposited into sub-accounts for nursing, administration, and physician education, instead.

Like most of us, patients enjoy going out to enjoy a meal at a nice restaurant Patient bus trips to restaurants plummeted 66 percent between first quarter 2009 and first quarter 2010, even while staff education sub-accounts earned $89,998 in interest on May 11, 2010. In first quarter 2009, 487 patients went on restaurant outings; by first quarter 2010, the number of patients provided restaurant trips plummeted to only 166.

The monthly bus trips provide unique opportunities for social dining, culturally meaningful meals, and connection with San Francisco’s greater community. The interest deposited into the staff education accounts could have funded an additional 464 restaurant outings for patients.

Supervisor Sean Elsbernd attempted to justify the reduced bus trips on the drop in LHH’s patient census and that current patients have a higher acuity, implying they are too sick for outings. He offered no proof LHH now has higher-acuity patients. And Elsbernd had his dates wrong; LHH’s census had already dropped to 790 patients by March 2009, and it had 760 patients in January 2010, indicating that the census had fallen by just 3.7 percent — which doesn’t justify cutting the restaurant bus trips by 66%.

When a donor to Laguna Honda Volunteers Inc. requested its board of directors support calls for an audit of LHH’s patient gift fund, the board’s administrative consultant responded that Volunteers, Inc. had been assured by LHH’s staff and the City Controller that “there was no impropriety” regarding funds Volunteers, Inc. donated for patient benefit. Details in the multiple complaints Dr. Rivero and Dr. Kerr submitted to various regulatory agencies reveal many improprieties in expense and revenue records.

Why would Volunteers, Inc. believe the very LHH staff thought to be responsible for potential misappropriation of funds from trust purposes to non-trust purposes?

To his discredit, Supervisor Elsbernd — who has the power to do so — hasn’t called for a full audit, nor has he held any hearings to explore potential Patient Gift Fund abuses. Donors and patients have a right to know what happened to these restricted-use donations.

Monette-Shaw, an accountability advocate, is a San Francisco Hospital Examiner at Examiner.com. Feedback: monette-shaw@westsideobserver.com.

July 2010

Behind the Scenes at Laguna Honda Hospital

Raiding the Public’s Trust

By Patrick Monette-Shaw

Why does Laguna Honda Hospital (LHH) continue trampling on, and raiding, the public’s trust? Trust once lost, is difficult to regain.

On May 20, ABC-TV “I-Team” investigative journalist Dan Noyes aired a story about Laguna Honda’s Patient Gift Fund, setting off a firestorm of outrage. The investigation revealed LHH’s Patient Gift Fund solicits donations for patients, then spends large sums on staff parties, but hasn’t informed donors of this bait-and-switch.

In an e-mail to staff the next day, LHH Executive Director Mivic Hirose claimed Noyes’ broadcast “distorted facts”; in truth, it’s Hirose and LHH public relations flack, Marc Slavin, distorting facts and deceiving the public, which is amazing since they’re both public servants collecting six-figure City salaries.

Noyes learned California’s Licensing and Certification Division (L&C) may investigate possible violations of the gift fund policy; his phone calls to Hirose went unreturned. Unsuccessful at reaching Hirose, Noyes attended a public meeting, but was accosted by Slavin, who refused to let Noyes ask Hirose any questions.

Slavin’s on-camera performance was offensive, deeply troubling, and unprofessional.

Among the I-Team’s revelations, Slavin claims Patient Gift Fund is “ … not a gift fund for residents.” If this new policy stands, why should donors continue making charitable contributions?

Last March, two LHH physicians—Maria Rivero, MD, a geriatrician and Derek Kerr, MD, CNA who developed the award-winning Hospice at Laguna Honda—submitted a detailed set of concerns regarding the Patient Gift Fund to the City’s Whistleblower Program administered by the City Controller. Among irregularities they uncovered through Sunshine Requests as private citizens, over $60,000 in questionable gift fund expenditures during fiscal year 2008–2009 had been made. They questioned payments to a non-existent organization, expensive catering of staff luncheons, reports that $2 million in LHH Gift Fund assets intended for the “comfort, welfare, pleasure and happiness” of patients had been depleted, risking the solvency of the fund, and the composition of the Gift Fund Management Committee, among other issues.

They requested the Whistleblower Program audit the Patient Gift Fund, and sought restitution of potentially misspent funds. How much more money has been diverted from the Patient Gift Fund in previous and more recent years to fund staff perks?

They also documented curtailment of off-campus bus trips for dementia patients, which Slavin and Hirose deny has occurred;, bus trips have been curtailed as LHH staff know. “Many residents can’t speak for themselves, so that’s why we’re here — to speak for them and say this is wrong,” said Dr. Rivero.

In 2008, Laguna Honda Hospital Volunteers, Inc—a separate entity from the Gift Fund—awarded the Gift Fund $71,574, restricting the grant “to make resident outings possible.”

LHH’s gift fund policy #45-01, dated December 2, 2004, had gone unchanged for nearly six years before LHH completely re-wrote it on April 15, 2010. The 2004 version, a three-page document, stated its “purpose” was “To ensure that LHH Gift Fund expenditures ‘add comfort, welfare, pleasure and happiness’ to the residents,” and noted the gift fund was a “restricted” fund not intended to support the City’s obligation to operate the hospital nor to fund routine City expenditures. Rather, the fund was established to benefit residents and enhance their quality of life.

The sudden April 15 policy rewrite, reduced to two-pages, completely eliminated the original purpose statement; the new “purpose” is merely to “ensure effective management” of the gift fund. The December 2004 version’s “policy” section clearly established a “Gift Fund Management Committee” charged with coordinating, planning, and recommending approval of projects to be funded, including approving all expenditures over $500. Kerr and Rivero had asked that the Committee be expanded to include a patient representative.

Instead, the April 2010 revision completely eliminated the Gift Fund Management Committee, leaving no oversight committee whatsoever and no patient representative. So much for LHH’s claim of “resident-centered care.”

The December 2004 version specified various subaccounts, each restricted; none included “staff support.” The April 15 revision — thought possibly to be a plan-of-correction response to State L&C — suddenly created three new subaccounts for nursing, physician, and administrator education. For decades, educational reimbursement was built into the nurse, physician, and management executive’s union contracts, requiring the City to set aside education funds for each of these three professions.

But the Whistleblower complaint and Noyes’ investigation exposed the Patient Gift Fund is being used to fund expensive meals for highly-compensated staff who in 2009 earned, on average, $91,165 (physicians), $126,234 (administrators), $135,825 (clinical nurse specialists), or $152,280 (nurse managers). They apparently feel entitled to free meals.

The April 2010 gift fund policy revision suddenly removed the “Authority” section included in the December 2004 version, which referenced San Francisco’s Administrative Code Section 10.100-201, Public Health Gift Funds, that clearly states the “LHH Gift Fund, a public trust, is intended for the general benefit and comfort of patients of Laguna Honda Hospital.” This section of the Administrative Code hasn’t been revised since December 2000; it provides no authority to use these restricted funds for staff education or staff meals.

The day after the gift fund policy revisions were approved on April 15, Dr. Kerr was reportedly instructed to transition his Hospice patients to another doctor and conclude administrative issues within two weeks. He was relieved of clinical duties well before being permanently laid off, in possible violation of Whistleblower Program protections. The timing of gift fund policy revisions and Kerr’s lay-off appear related.

While Slavin and Hirose may have intimidated LHH’s staff into changing policy #45-01, it appears they’ve done so without legal authority, since it’s unlikely the Board of Supervisors will risk changing Admin Code 10.100-201; what politician would dare to remove the exclusive use of the Patient Gift Fund for the benefit of patients by adding new provisions to permit food expenditures for highly-paid City employees?

Sherrie Matza, a donor to the Gift Fund and an expert Alzheimer’s patient advocate said, “I want to know whether or not funds were misspent, and if they were misspent, I want them replenished.” Like many, she expects funds she contributes will directly benefit patients, not Laguna Honda’s staff.

In an earlier, unrelated Whistleblower complaint, Rivero and Kerr raised questions about potential conflict-of-interest problems with a contract the Department of Public Health awarded to Davis Ja and Associates to assess LHH substance abuse and mental health services. The Controller’s Whistleblower Program reportedly forwarded their complaint to both San Francisco’s Ethics Department and San Francisco’s District Attorney’s office for investigation.

It’s clear that gift fund expenditures for non-patient expenses violate the public’s trust. Reportedly, the Whistleblower Program similarly forwarded Rivero’s and Kerr’s gift fund concerns to both San Francisco’s Ethics Department and San Francisco’s District Attorney’s office for follow-up.

“People who try to address these problems get marginalized; sometimes they get terminated,” Kerr said.

Considering the public trust, where is San Francisco District Attorney Kamala Harris in this mess? On May 23, ABC-TV/Channel 7 aired a debate of candidates for Attorney General, in which Harris participated. She noted citizens have a duty to step forward to report crimes, public officials’ oaths of office mandate that the most vulnerable should be protected, and that she had created a Public Integrity Unit in the DA’s office to investigate violations of the public trust.

If it were an in-home healthcare caregiver bilking money from an elderly home-bound, disabled woman, Harris would be all over prosecuting the caregiver for elder financial abuse, and interrelated elder neglect caused by patients losing their quality of life—reducing their “comfort, welfare, pleasure, and happiness.” Why would Harris hold caregiver-administrators to a different standard over the Patient Gift Fund intended to benefit its patients? Why hasn’t Harris’ Public Integrity Unit initiated an investigation?

Harris is seeking to become California’s Attorney General yet she won’t investigate potential white-collar mismanagement of restricted Patient Gift Funds intended for the City’s most vulnerable patients, after receiving a well-documented complaint forwarded by the Whistleblower Program to her office?

Harris should investigate, at minimum, whether donations made by Volunteers, Inc and others that contained “restricted” uses have been diverted to “unrestricted” uses, potentially illegally. After all, the Attorney General administers California’s Registry of Charitable Trusts, which is charged with investigating allegations that restricted funds are misspent improperly for unrestricted purposes.

If, as Slavin asserts, the Patient Gift Fund isn’t for patients anymore, why should donors continue generously supporting the fund? Please contact Volunteers, Inc’s board of directors, Laguna Honda Hospital Foundation’s board members, the Board of Supervisors, and Mayor Newsom to demand that the Patient Gift Fund policy be reinstated to its December 2004 version, and that Slavin be fired immediately. Donors should tell them they’re suspending gift fund and Volunteer, Inc contributions until this matter is resolved.

Until they get hit in the pocketbook, it’s unlikely the Patient Gift Fund will be restored exclusively for patient benefit, or that Slavin’s policy will be overturned returning the gift fund to the residents.

At a minimum, an independent audit, or an audit by the State Attorney General, whose purview includes non-profit fraud, should be conducted on behalf of the Patient Gift Fund.

When Laguna Honda holds its ribbon-cutting ceremony on Saturday, June 26 at 1:00 pm, either boycott the event (telling the Mayor why you did), or attend and ask him and other dignitaries about this unethical raid of Patient Gift Funds, and the raid of the public’s trust.

Monette-Shaw, an accountability advocate and a contributor at Examiner.com, operates www.stopLHHdownsize.com. Feedback: monette-shaw@westsideobserver.com.

Photo courtesy of ABC-TV/Channel 7’s “I-Team”; used with permission. http://iteamblog.abc7news.com

June 2010

Laguna Honda Hospital Rebuild:

LHH Lessons Unlearned Impacts All Bond-Financed Projects

by Patrick Monette-Shaw

Have any lessons been learned from the rebuild of Laguna Honda Hospital (LHH)? Or will LHH rebuild mistakes be repeated on other City construction projects — like San Francisco General Hospital — because LHH’s lessons weren’t learned?

Photo caption: Shortly following excavation, the Health Commission was told in June 2004 of a $25 million cost overrun; in five short years, overruns skyrocketed to $183.4 million, largely due to “change orders.” Where was the CGOBOC?

When LHH prematurely hosts its black-tie dinner tentatively scheduled for June 24, and holds its gala ribbon cutting ceremony on June 26 — it will actually open several months later somewhere between August and October, if then — there will be plenty of oohing and aahing over its new artwork, and the look-and-feel of LHH’s new digs.

But lurking inside is a sordid story of cost overruns and construction problems; the project wasn’t managed by either gold standard of “on time” or “within budget.”

Taxpayers should remember when they ooh and aah that the project is two years behind schedule and $183.4 million (47%) over budget. What went wrong?

"San Francisco’s Citizen’s General Obligation Bond Oversight Committee has never discussed publicly LHH’s cost overruns by the various change order categories. Nor has the CGOBOC discussed whether LHH’s “design-build” contracting has actually increased change orders to correct design errors and omissions potentially introduced by subcontractors."

The answer involves “change orders” — changes introduced after construction plans and specifications were completed. Change orders include those: 1) Necessary to resolve and correct errors made during design; 2) Necessary to resolve and correct omissions due to a lack of information that should have been considered during design; 3) Resulting from unforeseen site conditions encountered during construction; 4) Involving client- or owner–initiated requests to add, change, or delete scope to the project after design was completed; 5) Necessary to comply with construction codes revised after completion of design and the issued permits; or 6) Issued to incorporate cost savings.

A public records request inquiring about LHH’s change orders reveals, remarkably, that LHH disingenuously claims only $71.6 million (39%) of the $183.4 million project budget overrun was caused by change orders. The City’s response may wrongly allocate cost overruns between change orders vs. other costs.

Of the $71.6 million, the City claims $7.9 million (11.1%) are change orders to correct “errors” made during design. Isn’t that a lot of errors by whoever drew the plans, or who performed plan-checking?

The City claims $10.5 million (14.2%) of the $71.6 million are change orders to correct “omissions” during design. Between correcting design errors and omissions, this represents 25% — totaling $18.4 million — of the change orders the City admits to.

But 25% due to errors and omissions appears excessive, since the City hired an independent firm in 2003 to perform review of drawings for inconsistencies. A 2005 City document noted a Commissioning Agent had been hired, contractors were to perform “constructability reviews” during bidding, and Turner Construction was performing aggressive reviews hoping to mitigate potential change orders that Turner projected in 2005 might reach $11 million. How did we get from $11 million to $71.6 million in change orders, and an overall cost overrun of $183.4 million, in just four short years?

In its response, the City attributes nearly $44 million (61.4%) of the $71.6 million in change orders to unforeseen site conditions discovered during construction. Among this $44 million, the City claimed $30.3 million was due to “extended overhead costs for the contracting team related to the delays to the schedule.” Overhead costs related to resequencing of work should probably not have been attributed to site conditions, but attributed to other categories — such as resequencing of work due to errors, omissions, or owner-requested changes. When the $30.3 million of overhead costs are reallocated, changes due to actual site conditions drop to $13.7 million, only 19.1% of change orders.

The City claims merely $9.1 million (12.7%) of the $71.6 million in change orders were requests made by the client or owner. While a significant amount, this is likely very under-estimated, since LHH is known to have placed a large number of owner-initiated changes, and continues doing so.

Remarkably, the City’s response showed zero change orders to incorporate cost savings. Did LHH’s “design-build” contracting approach — introduced during the 2004 bidding phase — really result in no cost-saving changes?

The City claimed cost savings related to so-called “value engineering” incorporated in 2004 was included in the project’s May 2005 revised budget. A report issued to the Citizen’s General Obligation Bond Oversight Committee (CGOBOC) five years ago acknowledges $4.4 million savings due to value-engineering, then reports delays to the project’s schedule rapidly increased bids by $3.4 million — a $1 million savings, at best. “Value engineering” changes were eliminated by continuing project escalation costs that remain on-going.

So what does the City attribute the remaining $111.8 million in “non-change order” budget increases to?

The City creatively asserts an increase of $20.5 million to remodel administrative wings of the current main building hasn’t involved change orders. Shouldn’t that have been charged to unforeseen site conditions, or design errors and omissions? The City claims another $19 million of the total overrun is due to “staffing increases,” but much of the increased staffing is thought necessary to process change orders, redesign building plans, and resequence work. Surely staffing increases can be attributed to the various change order categories, particularly to client-initiated requests.

The City simply describes $81.2 million — 44% of LHH’s $183.4 million overrun — as “initial escalation impacts,” without acknowledging that deleted or added scope resulting from escalation had to be requested as client-requested change orders. In December 2008, the City initially reported $206.3 million in escalation; how did “initial escalation” drop somehow to only $81.2 million by March 2009?

Another $9 million is attributed to scope deleted in March 2009 — but as a negative number that should have been added (pushing the overrun from $183 million to $192 million), which should probably be charged as a client-requested change order deletion. Mysteriously, the City didn’t include another $17 million of scope deleted during Budget Revision 14 in March 2008. At minimum, there has been at least $26 million in scope deleted from the initial $401 million project budget that should have been reported as client-requested deletions — and the City expects us to believe that only $9.1 million in client-requested change orders to add, change, and delete scope has occurred, when a minimum of $26 million has already been deleted?

As recently as March 2, 2010, the Health Commission was informed of additional owner-requested changes, including adding bed-pan washers in patient rooms, modifying nurse call units to accommodate bed-exit alarms, and converting 13 storage rooms into laundry rooms to accommodate patient’s laundry needs.

Since the CGOBOC first began holding hearings on the LHH replacement project, CGOBOC has never conducted a meaningful analysis of LHH’s change orders or discussed publicly LHH’s cost overruns by the various change order categories. Nor has the CGOBOC discussed whether LHH’s “design-build” contracting has actually increased change orders to correct design errors and omissions potentially introduced by subcontractors. Project reports to the CGOBOC present great detail about how much of a project’s budget has been encumbered, but almost nothing about change orders. How can anything be learned if the CGOBOC simply evades conducting change order reviews?

On April 8, the CGOBOC presented a skimpy 11-page annual report for 2009 to the Board of Supervisors Government Audit and Oversight Committee concerning a number of bond-financed projects — including the LHH bond, SFGH rebuild bond, Branch Libraries bond, and two Recreation and Park bonds. All CGOBOC could muster reporting about the LHH bond was “[we’re] disappointed with the overall circumstances concerning the Laguna Honda Hospital replacement Program. … and a cost nearly double the ... amount approved by the voters somewhat dampens enthusiasm for the new Laguna Hospital.”

That’s it? Disappointment and dampened enthusiasm?

There’s not one word anywhere in CGOBOC’s 11-page annual report about change orders affecting any other bond-financed projects, despite the fact that the Department of Public Works is thought to be tracking six or seven change order categories for capital improvement projects in an internal database. Why isn’t DPW sharing all change order analyses with CGOBOC?

Construction industry project-delivery tools like “construction-manager at risk, “value engineering,” “design-build” contracting, “constructability reviews,” and “commissioning agents” — tools touted for bringing projects in on time and within budget — all appear to have failed miserably on the LHH Replacement Project.

As I asked in my February column, what is it going to take for City officials to provide accountability about the LHH rebuild — and other bond-financed projects — in a truly transparent and timely manner? How many other City-sponsored capital improvement projects face the same types of cost overruns because change order accountability lessons from the LHH rebuild haven’t been learned?

Monette-Shaw, an accountability watchdog, operates www.stopLHHdownsize.com.

Feedback: monette-shaw@westsideobserver.com

May 2010

Laguna Honda Hospital Won’t Discuss Delay

By Patrick Monette-Shaw

Reasonable people think that news released in late December indicating Laguna Honda Hospital (LHH) has again delayed the opening of its replacement facilities by somewhere between three and six months would be shared openly with the public, since it appears the delayed move-in may be a result of possibly failing one or more required State inspections.

Other reports that have surfaced since late December speculate that the State inspections may have involved:

1. Fire alarms, or fire alarm systems, in LHH’s new buildings being unreliable.

2. Furniture may have been moved into the new buildings before the State completed required fire alarm / sprinkler inspections.

3. Pipes in the new, or existing, facility may have burst, causing damage.

4. Failure to pass a “substantial completion” inspection and certification thought to be scheduled in December 2009.

5. Failure to pass a review of LHH’s policies and procedures in another December inspection.

6. Reports from exterminator’s that big rats are getting into the building because door jams aren’t tightly sealed and the hungry critters may have damaged electrical wiring or other things.

But Laguna Honda Hospital’s Executive Administrator, Mivic Hirose, appears to be following the playbook from the famous saying, “While Rome burned, Nero fiddled,” since she refuses to answer questions raised by members of the public.

For over nine months, the president of the West of Twin Peaks Central Council has attempted to ask a series of questions on behalf of his members about LHH’s replacement digs and the hospital’s plans for the future, but has run up against the proverbial brick wall of silence offered up by Hirose.

When, without forewarning, LHH announced on December 22, 2009 that it had suddenly postponed its move-in date to its new facilities from April 2010 until “June or July,” it apparently notified LHH’s staff, and potentially residents of the hospital. The December 22 announcement may explain why LHH had also suddenly canceled a meeting five days earlier of a joint subcommittee of the Health Commission and Laguna Honda’s executive staff scheduled for December 17.

But it was almost as if the Grinch had stolen Christmas, since LHH doesn’t appear to have notified the media, taxpayers, or policy and oversight agencies, that it had suddenly short-sheeted the long-scheduled move date into its new buildings.

Reports quickly surfaced that the move-in date may be, more realistically, September or October, adding significant expense to the rebuild project, and potential fines against the bond financing.

Facing potential fines or penalties, you’d think LHH would want to communicate the delayed move-in date to taxpayers. You’d be wrong.

Facing (at last report), that each month of delay on the construction project would cost an additional $1.5 million monthly, you’d think a potential five- to six-month delay that may cost $7.5 million to $9 million in additional expenses would be something LHH would want to communicate to taxpayers footing the bill. You’d be wrong.

Facing a $522 million deficit next fiscal year, the City doesn’t need surprising new expenses, so you’d think that the increased cost of operating both LHH’s current facilities and its new facilities — long feared by City officials as a dual-expense — would prompt LHH to communicate with the community. You’d be wrong.

Facing a delayed move-in date, you’d think LHH (given its handsomely-paid three-member Communications Department) would update its web site and its separate Replacement Project web site with information regarding the postponed grand opening. You’d be wrong, since as of January 18, a month after announcing to its staff the postponed move date, neither web site has been updated announcing the delay. (Indeed, the LHH web site’s “New Construction” feature “What’s New – Project Updates” links you to a one-page project status report dated January 2009 — a year-old document! Has nothing significant happened with construction during an entire year?)

And there’s more that LHH hasn’t communicated to you.

In a January 5 letter to Mivic Hirose, the president of the West of Twin Peaks Central Council, George Wooding, raised a number of questions about the postponed move-in date, asking detailed questions about what may have caused the delay. He requested that LHH re-establish communications with the local community, specifically asked Hirose to respond to each question raised in his letter, and asked for a date on which LHH intends to hold a community forum.

Hirose’s response was characteristically pathetic, completely evading answering any questions raised by Wooding and artfully dodging answering whether LHH will hold a Town Hall meeting with the community any time soon. Of note, her response failed to confirm or deny the six potential reasons that the LHH Replacement Program may have failed State inspections of its repacement facilities.

But her reply needs to be placed in perspective. Hirose’s evasiveness has been ongoing since her appointment as the interim, and then actual, Executive Administrator of Laguna Honda Hospital following John Kanaley’s death last March.

On April 16, 2009 Wooding had e-mailed a list of questions to Hirose regarding plans for the new hospital and whether there were any plans to integrate patients at SFGH’s Mental Health Rehabilitation Facility as patients at LHH — in effect turning LHH into a mixed-use facility serving both elderly and disabled patients with patients having primarily mental health diagnoses in a single facility. After no response from Hirose, he e-mailed her again asking pretty much the same questions, but she again never responded. So on June 25 he sent an e-mail to Hirose requesting a meeting. After several delays, Wooding and two associates were able to obtain an appointment with Hirose on August 14, four months after he contacted her in April.

From his standpoint, the August meeting in Hirose’s office was a failure since no opportunity to ask LHH about policy questions was permitted, and no policy questions answered. Hirose eventually agreed that LHH wanted to be good neighbors. At the end of the meeting, she agreed to introduce herself to the community at a West of Twin Peaks Central Council meeting.

Provided a five-minute slot on the October WOTPCC meeting agenda, Hirose introduced herself, but according to reports from attendees didn’t discuss any LHH policy questions other than to state that “LHH cares about helping its residents and is proud of its newly built hospital.” By reports, Hirose went over her allotted time by spending approximately eight minutes discussing her background, and spent another seven minutes showing pictures of the artwork proposed for the new campus and discussing the “success stories” of two or three of LHH’s residents. She apologized for having only brought only one copy of LHH’s annual report for 2009, failing to mention that it is readily available on LHH’s web site.

At the time of the October meeting — seven months following John Kanaley’s untimely death — LHH had not answered one policy question that had been asked.

Three months later, Hirose claimed in her January 5 response about the postponed opening of LHH’s new facilities that she had attended the October WOTPCC meeting, so she doesn’t “understand why” anyone would say she has not communicated with neighbors.

How can a woman of her education and experience as a City employee not understand that now 10 months following Kanaley’s death, still not one policy question about LHH has been answered for the community? How can someone of her purported stature pretend that her October presentation can be construed as effective community outreach by LHH?

The last community forum LHH sponsored was in September 2008; since then it has failed to do any community outreach, despite having a staff of three people in its Communications Dept. paid $380,000 annually (including fringe benefits), and despite the Nov 2008 Wide Angle Communications consultant report that recommended increasing community outreach.

If one of LHH’s public relations goals is to hide information from the surrounding community and the broader public, it has done a great job.

Will it take placing public records requests with California’s Office of Statewide Health Planning and Development (OSHPD) to uncover whether LHH’s delayed move-in date is the result of failing one, or more, required building inspections? And once that material becomes available publicly, will LHH then start communicating to all San Franciscans the status of its $584 million replacement buildings that are way over budget and approximately four-and-a-half-years way behind schedule?

Or will District 7 Supervisor Sean Elsbernd — with his seats on the Board of Supervisors Budget and Finance Committee, and the Board’s City Operations and Neighborhood Services Committee, the latter of which has authority to hold hearings on issues involving public works, infrastructure, public health, seniors, and the disabled, among others — perform his ministerial duties to schedule and hold a hearing on Laguna Honda’s newest delay?

What is it going to take for City officials to provide accountability about the Laguna Honda bond measure to San Franciscans in a truly transparent and timely manner?

Monette-Shaw, an accountability watchdog, operates www.stopLHHdownsize.com, where reports cited in this column can be found.

February 2010

 

Déjà Vu Haunts Laguna Honda

By Patrick Monette-Shaw

When it comes to Laguna Honda Hospital, community members often experience the illusion they’re reliving the past, even if it is the first time they’ve encountered Laguna Honda accountability issues. But the term déjà vu has evolved to include repetitive events and actions, and is also used to describe boring familiarity and tedium, along with repetitiveness. Each of these meanings haunt Laguna Honda’s house, in part because officials continue to evade members of the public they ostensibly serve. Let’s stroll down LHH’s déjà vu lane.

Diversion of Funds:The tobacco settlement revenue (TSR) account intended to rebuild LHH had previously been raided of at least $41.3 million: In 2003, former Mayor Willie Brown diverted $25 million from the TSR account in order to balance his final city budget. In July 2008, Mayor Newsom diverted $18.3 million in TSR’s to help balance the Department of Public Health’s budget and to fund new community-based housing subsidies.

Déjà vu: A new report from the LHH Replacement Project presented to the Citizen’s General Obligation Bond Oversight Committee on October 22, 2009 indicates Newsom has diverted another $9 million in TSR’s to “address unfunded operating costs” in the Dept. of Public Health’s current fiscal year ‘09–‘10 budget. This brings the total of diverted TSR’s initially earmarked for the LHH rebuild to $50.3 million. City Controller Ben Rosenfield and Nadia Sesay, the Mayor’s Director of Public Finance, indicated on October 22 that unlike other sources of LHH rebuild funds, TSR’s can be diverted to the City’s general fund.

Changes in Project Scope: Leading up to now, San Franciscans have seen the scope of the LHH rebuild project reduced in multiple ways: First, there was Newsom’s decision to reduce the replacement hospital from a 1,200-bed skilled nursing facility to only 780 beds, cutting 420 beds from the project scope. Then, the Assisted Living component of the replacement project, which had been planned to add a continuum of housing for an additional 200 people, was scuttled from the project. Following that, LHH’s on-site Adult Day Health Care (ADHC) center was closed, and plans for LHH’s award-winning hospice was cut by 50 percent, from 30 beds to only 15.

Déjà vu: Fast forward to 2009. Included in the $9 million of TSR funding reduction are plans to eliminate space for the ADHC in the replacement facility, meaning that it is effectively gone. Still unknown is whether LHH renewed its ADHC’s license by November 15, or whether it let the license expire, knowing the State has a moratorium against issuing new ADHC licenses. As well, previous planning to keep a 15-bed hospice appears to remain on the “project scope” potential chopping block. In addition, previous “key plans” describing the use of each floor in the replacement facility had indicated the “acute” hospital and admitting unit beds would be located in the residential towers; now they are being moved to the Rehabilitation unit in what is known as the Pavilion Building, decreasing the number (scope) of skilled-nursing rehabilitation beds from 45 to 28. There will be fewer beds available at LHH for people needing skilled-nursing rehabilitation to recover from strokes, brain injuries, motor vehicle- and bicycle-accidents, and cerebrovascular accidents brought on by old age.

Laguna Honda’s annual report for 2009 posted on its web site reports on page 10 that up to 45% of its capital construction costs could be paid for using federal dollars. So if the project may be reimbursed $158 million by the feds for 45% of the approximate $350 million construction portion of the Laguna Honda rebuild, why is $9 million now being cut from the project (including the ADHC space), when it could be reimbursed by the feds? (Note: The total cost of the project, now being reduced from $593 million to $584 million, includes approximately $234 million in so-called “soft costs,” including architectural design and consultant services.) Offsetting the $9 million in scope reductions eliminating space for the ADHC, is a déjà vu new increase of $4.6 million in architectural and engineering consultant services.

Failures to Meet With Neighbors and the Community: Neighbors so concerned about unilateral changes made by the Department of Public Health to Laguna Honda’s admission policies and LHH’s “mission” held a Town Hall meeting at St. Brendan’s Parish Hall on December 4, 2004. Neighborhood concerns led to the June 2006 Proposition D ballot measure to protect Laguna Honda residents. Three years after the defeat of Prop. D, neighbors remained so concerned about the displacement of senior citizens at LHH needing skilled nursing care, that they convened another Town Hall meeting held May 10, 2007 at the Forest Hills Christian Church. Neighbors have had lots of questions about the LHH replacement project over the years, but all along have received few answers from City officials.

Déjà vu: Late in the fall of 2009, a small community delegation met privately with LHH’s new executive administrator, Mivic Hirose, but again they received few answers to a laundry list of community concerns. She was subsequently invited to speak at the West of Twin Peak Central Council’s September 28 meeting, but reportedly went far over her allotted time discussing her career progression, issues related to the move into the new facility, and selected “success stories” of Laguna Honda residents. Legitimate neighborhood questions remain unanswered, since reportedly Hirose avoided addressing substantive issues. Taxpayers are increasingly asking for answers and information, not new-building tours, since there have been no community meetings held despite the Wide Angle Communications recommendation in November 2008 that Laguna Honda should hold more meetings with neighborhoods. A year has elapsed, and déjà vu, no community meetings have been held. And no neighborhood newsletters have been distributed, which Wide angle had also recommended, despite LHH’s three-member Communications Department costing nearly $400,000 in salaries and fringe benefits. the community’s mantra, “Answers, not tours!” is being ignored.

Continuing Government Secrecy: A November 3, 2004 meeting scheduled by the Laguna Honda Replacement Project was suddenly cancelled, potentially to stifle public debate about the future of LHH. Similarly, meetings of the Health Commission to discuss LHH’s future have also been cancelled on short notice, including the then long-awaited November 16, 2004 full Health Commission meeting at LHH.

Déjà vu: A Health Commission sub-committee known as the LHH-Joint Conference Committee inexplicably changed its decades-long monthly meetings to quarterly meetings in early 2009, shortly before the untimely death of LHH’s former executive administrator John Kanaley. It is widely believed that the LHH-JCC, under the stewardship of Health Commission president Jim Illig, wants to stifle public comment during its meetings. Illig has made a number of changes to how the JCC meetings are conducted, and has refused to take public comment during some of the meetings. So it was another instance of déjà vu when the long-scheduled quarterly meeting of the LHH-JCC on October 21, 2009 (that DPH wrongly then claimed was scheduled for October 28) was suddenly cancelled and rescheduled to December 9. Why Illig canceled a JCC meeting just six months before LHH’s new facility is scheduled to open is shocking. Will the now December 9 JCC meeting also be cancelled, in another bald attempt to limit public accountability and citizen involvement?

When the City decided to change the mission of the Mental Health Rehabilitation Facility (MHRF) on the grounds of San Francisco General Hospital, a Blue Ribbon Committee was formed in response. When CPMC announced that it wanted to change the operation of St. Luke’s Hospital in the Mission District, another Blue Ribbon Committee on the future of St. Luke’s was formed. Why is there no Blue Ribbon Committee being formed to examine the implications of changes at Laguna Honda Hospital, particularly given the dearth, when not complete absence, of meetings with the community? (Kanaley must be rolling in his grave over LHH’s retreat into a bunker mentality following his death.)

Laguna Honda’s Changing Mission: Over the years, neighbors and others have been concerned about Laguna Honda’s changing mission during the Newsom administration, which the City has adamantly refused to discuss openly. Beginning in 1999, when LHH’s elderly residents with chronic and progressive medical conditions were pushed out to make room for six psychosocial wards, LHH’s mission to provide long-term care for the frail elderly has been hijacked by the 2004 “flow project” to move San Francisco General Hospital’s patients to LHH (which is still occurring today). This came to a head in 2005 when Mayor Newsom was pressured into ordering the Department of Public Health to re-instate LHH’s previous admissions policy.

Déjà vu: The recent Davis Ja report recommends, among other issues the report raised, that a new organizational effectiveness consultant review LHH’s mission — again! Laguna Honda is still an island of safety for complex geriatric patients who may also have mental health needs. The pattern of inadequate care for complex geriatric patients, which is a huge problem, will continue as long as consultants such as the Ja report’s authors continue recommending replacing medical care and medical staff with behavioral care — without adequately evaluating either set of patients for both their medical care and behavioral care needs. Not surprisingly, the committee appointed to implement the Ja report recommendations are also meeting in secret — a Newsomian tradition — and will likely never hold meetings open to the public.

LHH isn’t talking with the community about any of these changes. Until the community demands, and gets, an open-to-the-public Blue Ribbon Committee addressing the future of Laguna Honda, you can expect that LHH’s roller-coaster déjà vu track record will continue to haunt it — and us — with boring repetitiveness.

Monette-Shaw, an accountability watchdog, operates www.stopLHHdownsize.com, where reports cited in this column can be found.

December 2009

Laguna Honda’s Unkindest Cut

by Patrick Monette-Shaw

Efforts underway to de-skill Laguna Honda Hospital’s (LHH) doctors and certified nursing assistants is the unkindest cut of all: Cutting medical care. De-skilling nursing home staff often precipitates a slide into substandard healthcare.

When newspapers reported the tragic murder–suicide at Oakland Springs Health Care Center nursing home involving a mother in failing health killing her brain-injured daughter, I was reminded of the Observer’s September staff report about LHH’s identity crisis and the so-called “Ja report” — which recommends replacing LHH’s doctors with nurses, psychologists, and social workers in order to increase mental health and substance abuse services at LHH.

Diana Harden had filed a series of complaints over the care of her daughter Yvette at Oakland Springs, which unlike Laguna Honda is a “free-standing” nursing home (one not affiliated with a hospital). But like LHH, Oakland Springs has had more than its share of complaints lodged with the State. Among the 152 complaints against Oakland Springs in the past five years, several involved residents waiting days or weeks to receive medical care. A common thread linking the two stories is the need for sufficient in-house physician staffing in nursing homes.

“Traveling” doctors serving free-standing nursing homes like Oakland Springs are only authorized to visit patients monthly, or every 60 days, unless patients have a documented medical necessity. Traveling MDs carry huge case loads, often covering more than one free-standing nursing facility.

By contrast, LHH has a staff of in-house MDs with relatively manageable case loads. LHH’s consistent physician staffing provides clinically-meaningful relationships with patients. LHH, to its credit, has never received licensing complaints involving residents having to wait weeks to receive medical care. At LHH, Yvette Harden would have been referred to its traumatic brain injury program.

The Ja report suggests replacing in a cost-neutral way supposedly “higher salaried” physicians with (ostensibly lower-paid) nurses, psychologists, and social workers, but fails to discuss how this will be done cost neutrally.

Salary data from the City Controller shows that in 2008, LHH had 21 physicians on staff involved in direct patient care, paid $2.9 million in total pay. By contrast, LHH had 37 nurse managers, clinical nurse specialist’s and nursing supervisors not involved in direct patient care, paid $5.2 million in total pay. The highest paid clinicians were three psychiatrists paid $600,000 in total pay, including $173,000 in “other pay” for carrying pagers as on-call staff; one of them is only a half-time psychiatrist, despite his pay. Only nine physicians earned more than $150,000; all three psychiatrists and 23 of the nurses did, due to overtime and “other” pay. Ja’s assertion LHH physicians are higher paid is erroneous.

In March 2009, the professional journal Annals of Internal Medicine published a peer-reviewed article about nursing home physician specialists, in which it noted that the quality of care in nursing homes is directly linked to physician practice, particularly for nursing home residents who have complex, multiple, comorbid conditions; chronic illnesses; and functional limitations. The article acknowledged a direct association between having physicians on staff, and the enhanced quality of care provided to residents, resulting, in part, from physicians knowledgeable about long-term care practice. Ja mentions none of this.

The Ja report recommends increasing LHH’s SATS (Substance Abuse Treatment Services) staffing, but presents scant evidence of need. It notes there were 348 SATS referrals between April 2006 and December 2008, but didn’t analyze the significance. Assuming a constant rate of referrals, the total is approximately 130 SATS referrals annually. During Ja’s study period, LHH had four SATS staff members; this translates to approximately 32 referrals per SATS staff annually. How does this compare to benchmark caseloads at similar facilities? Is it a valid rationale for Ja’s recommendation to increase behavioral staffing while cutting physicians? Does Oakland Springs employ SATS staff, whether “traveling” or otherwise?

Nowhere in the Ja report is there any analysis of caseloads for either physician or “behavioral health” staff, as if this wasn’t even considered before recommending reducing medical staff and increasing behavioral staff. From a Human Resources perspective, it’s inconceivable caseload benchmark levels at comparable facilities wasn’t evaluated.

Similarly, Ja presents no data whatsoever about the volume of services provided by physicians to the 1,263 residents in LHH’s medically-ill “control group” before recommending doctor positions be reduced. If one goal of Ja’s report was to assess capacity and needs at LHH and in the community that either discipline is able to provide, an impartial analysis of quantitative data regarding volumes of workloads in both disciplines is missing from the Ja report.

The Ja report wrongly claims LHH certified nursing assistants (CNAs) have not received training on de-escalating behavioral problems; he apparently wasn’t told CNAs already receive SMART and specialized dementia training, but he recommends increasing CNAs skills even though their pay is being drastically cut. The City has issued layoff notices effective November 15 to 289 CNAs, almost all of them at LHH. An unknown number of new “Patient Care Assistant” positions paid 20 percent less than CNAs will be created as part of the de-skilling of LHH staff. In addition, LHH has cut another 18 CNA positions and is replacing them with “Home Health Aides” paid 35 percent less. Some LHH residents have already voiced concern about how this may affect their quality of care.

Among Ja’s “study group” of patients with behavioral health needs, 31 percent died; among the “control group” of people with chronic illnesses, 45 percent died. Across the two groups, nearly 40 percent died either at LHH or post-discharge. This suggests both groups were severely medically ill and in need of medical care, which Ja all but ignores, since he didn’t discuss the medical reasons patients are admitted to LHH. He also failed discussing how either group is to access both medical and behavioral care post-discharge.

Rather than recommending augmenting existing medical staff at LHH by adding behavioral health staff, the Ja report recommended a “replacement” approach to subtract medical staff and shift resources from medical services to behavioral services in order to remain “cost neutral.” This is poppy-cock, and may involve actual, or perceived, conflicts of interest from not adequately acknowledging his personal relationships with staff employed by the City’s Community Behavioral Health Services department which commissioned the Ja study.

Insufficient availability of medical care at Oakland Springs Health Care led to a tragic murder-suicide. Subtracting physicians and certified nursing assistants at LHH — both of whom provide direct patient care — is not the answer, and may lead to increased rates of premature mortality. Is this really what we want for San Franciscans who rely on LHH for part of their medical care?

Twenty LHH physicians signed a resolution rejecting the Ja report’s recommendation to reduce physician staffing, due to Ja’s bias, inadequate data, flawed methodology, and lack of professional qualifications to assess physician services at LHH. You can join them by contacting Mayor Gavin Newsom and Supervisor Sean Elsbernd and urging them to reject the Ja Report recommendations.

Monette-Shaw, an accountability watchdog, operates www.stopLHHdownsize.com, where the Ja report and a critical analysis of it can be found.

October 2009

Laguna Honda Hospital: Pot-bellies v. Beds?

by Patrick Monette-Shaw

One outcome of California Pacific Medical Center’s (CPMC) plans to close three of its San Francisco hospitals and build its new Cathedral Hill hospital on Van Ness Avenue, is that the lack of planning for skilled nursing beds in San Francisco has become painfully evident.

There are multiple failures to plan thoughtfully. In March 2005, then-Health Commission president Lee Ann Monfredini requested that Director of Public Health Mitch Katz update his 1998 White Paper regarding needs for long-term care skilled nursing facility (SNF) beds. Now four years later, Dr. Katz hasn’t produced an updated report. In May 1997 the Hospital Council of Northern and Central California authored its San Francisco Nursing Facility Bed Study, which now hasn’t been updated in twelve years. Both studies predicted San Francisco faced a potential 4,207 SNF-bed deficit by 2020, but a number of their assumptions proved false.

The Council’s 1997 study predicted the then-existing stock of both “freestanding” and “hospital-based” SNF beds would be “maintained.” That hasn’t happened: San Francisco has already lost 746 SNF beds since 1997, and CPMC plans to eliminate another 180 licensed SNF beds, which will soon bring the total close to 926.

When I reported in “Mortgaging Laguna Honda Hospital’s Future” in the Observer’s May issue that voters weren’t told in 1999 that, rather than building critically-needed SNF beds at LHH for elderly and disabled San Franciscans, we’d get — instead — community amenities, hiking trails, and street improvement projects, I was unaware of new facts.

First, I didn’t know CPMC’s plans include reducing its total licensed capacity from 1,498 beds in 2004 to just 842 beds by 2015, a loss of 656 acute, psychiatric, and SNF beds. CPMC’s plan to close 180 of its short-term SNF beds will leave it with only 38 SNF beds in-house. CPMC’s plans to outsource operation of only 63 short-term SNF beds will supplant, by eliminating, long-term (defined as longer than 90-day) “custodial care” SNF beds in private facilities.

Even while admissions to Laguna Honda Hospital (LHH) have been severely restricted — and while San Francisco faces a twin epidemic of a significant shortage of SNF beds, combined with a huge surge in the number of elderly who will eventually need some level of nursing home care — planning efforts to ensure sufficient bed capacity across various levels of care is woefully inadequate, since the City refuses to plan for long-term care beds in nursing homes, claiming they are “institutions.”

Second, I didn’t know that on June 11, the Mayor’s Long-Term Care Coordinating Council (LTCCC) would pass a resolution calling for citywide health planning for acute care, post-acute care, rehabilitation services, and transitional care, but pointedly eliminated calling for planning for SNF level of care, an obvious planning need. The LTCCC completely eliminated from its final resolution a statement contained in its June 3 initial draft that said CMPC’s plans “will have a significant and negative impact on the overall availability” of SNF beds for vulnerable adults.

LTCCC member Herb Levine, who is Executive Director of the Independent Living Resource Center and a fierce hater of anything involving Laguna Honda, stated he couldn’t support including long-term care SNF bed planning in the resolution eventually adopted on June 11. This is the same Levine who told me in September 2004 that “If the right supports were in place to provide community-based alternatives to LHH, there would be a need for zero beds at LHH.” He’s misguided, at best, since he conveniently forgets the LTCCC’s mission statement specifically includes guiding development of “institutional” services for older adults.

The Council’s resolution claims a nationwide trend to eliminate hospital-based SNF beds. If other San Francisco hospitals follow CPMC’s lead closing SNF beds, we may lose another 200 SNF beds on top of the 926 already closed. Although the resolution calls for not closing CPMC’s SNF beds until “reasonable alternatives” are established, the Council’s April 8 meeting draft minutes expressed concern that people needing long-term care may be shoved out of county.

When LHH cut its beds to only 780, and restricted admissions in January 2008 to only rehabilitation, AIDS, and hospice units, admissions plummeted from 625 in calendar year 2004 to only 242 admissions in 2008 (a 61.3% net reduction, or 383 fewer admissions), according to LHH’s January 2009 Board of Supervisors quarterly report publicly available.

Third, although I knew data compiled by the Lewin Group presented to the LTCCC on April 8 claimed San Francisco’s population in 2030 would be less than it currently is, I didn’t know then the Lewin Group was wrong. California’s Department of Finance released new data on April 30 documenting San Francisco’s population increased 1.2% between 2008 and 2009 to 845,559 — though it had projected in 2007 we wouldn’t reach 844,000 residents until 2020. We’ve reached this threshold 11 years early; now we’re projected to have 855,000 residents, including 179,375 people over the age of 65, by 2030. (Notably, U.S. Health and Human Services Secretary Kathleen Sebelius told ABC News’ George Stephanopoulos on June 14 the Lewin Group’s “public health plan” single-payer data are being questioned.)

Fourth, I later learned the Alzheimer’s Association projects a “silver tsunami” by the year 2030 of 26,868 San Franciscans over the age of 55 having Alzheimer’s, six percent of whom — or 1,612 people — will at some point need nursing home level of care. Given San Francisco’s minimum 4,207 SNF-bed deficit, where will we care for Alzheimer’s patients needing nursing home care?

This is crucial, since the Alzheimer’s Association also reports that it currently costs Californians $86,692 annually to provide for a Medicare-certified and licensed home health aide for just 44 hours of care per week for home care, but only $64,068 annually for a semi-private room in a 24-hour-per-day, 168-hour-per-week skilled nursing facility, a difference of $22,624 more annually for just 44 hours of home care, compared to almost four times as many hours of care in a nursing facility.

Fifth, I didn’t know in late April that a prominent observer would question in May whether pot-bellied pigs and gardens planned for the new LHH might be great, but not if there aren’t enough beds for patients displaced due to LHH’s reduced size. San Francisco’s League of Women Voters (LWV) monthly newsletter started a new “Bond Watch” column to track general obligation bond performance. The column is written by LWV’s treasurer, Kristin Chu, who is both a member of SF’s Citizen’s General Obligation Bond Oversight Committee and the Sunshine Ordinance Task Force. In her May column (at www.lwvsf.org/pages/bonds.html) Chu wrote about the LHH bonds: “Pigs and gardens are great but shouldn’t we have a bed for each patient from the demolished building?,” referring to LHH’s loss of one-third of its beds and pot-bellied pigs planned for its farm.

Sixth, Mayor Newsom’s Deputy Chief of Staff for Health and Human Services, Catherine Dodd, stated during the Mayor’s LTCCC’s May 14 meeting that since SEIU Local 1021 members rejected a contract deal the previous day, there was nothing preventing Mayor Newsom from cutting more beds at LHH. Her comment was censored from that LTCCC meeting’s minutes.

Although Dodd didn’t specify the number of beds being considered for closure, the Mayor linked SEIU’s contract rejection to LHH’s size was unmistakable. She didn’t even mention any impact on patients, or that LHH has already lost 420 beds. Prior to SEIU’s second contract vote on June 3, anecdotal reports surfaced that a senior LHH nurse also told some LHH units its 780-bed capacity may be cut by another 200 beds.

Finally, I hadn’t completed an analysis of SFs current SNF capacity. My research found that rather than having a 4,207 SNF-bed deficit by 2020, San Francisco potentially faces a 5,341 SNF-bed shortage by 2030, assuming no further closure of “freestanding” and “hospital-based” SNF beds, and excluding plans to further cut LHH’s beds.

Before any further strategic planning decisions are made, capacity available at short-term care, vs. rehabilitation facilities, vs. long-term care SNF facilities must be updated, and tracked regularly with greater specificity.

Otherwise, the only alternative is to use lipstick-on-a-pig to gloss over failures to plan comprehensively for elderly San Franciscans needing affordable long-term care in a skilled nursing facility.

Monette-Shaw, is an accountability watchdog. Reports cited in this column are at www.stopLHHdownsize.com.

July/August 2009

Click Above to View Observer Pages

WHERE TO FIND A HARDCOPY

Search the Observer