Mortgaging Laguna Honda Hospital’s Futurenew Laguna Honda building

When voters approved a general obligation bond measure to rebuild Laguna Honda Hospital (LHH) in November 1999, they understood at a gut level they were “mortgaging” Laguna Honda’s future in the form of $299 million in principal, plus additional interest, on bonds for a project voters were told was initially budgeted to only cost $401 million. Voters were lured into believing the bond would fund a healthcare facility for our elderly.

Voters were not told in 1999 that in addition to the “mortgage” they were undertaking to rebuild Laguna Honda, that our City fathers would then turn around and enter into two separate rental leases on the value of LHH’s property in addition to the bonded indebtedness, by issuing another form of long-term debt known as Certificates of Participation (COP’s) that are based on leasing property owned by the City.

To date, $227 million in COP’s are being leveraged against the value of LHH’s future in the form of principal payments; another $163.4 million in interest will be required to pay off the COP’s, even though only $120 million of the $227 million of COP’s are actually being applied to complete construction of LHH.

Voters were told the bonds would be used to build some sort of “continuing health care facility,” principally to care for San Francisco’s “old-old” (a.k.a. the “frail elderly,” meaning those over the age of 85) and disabled San Franciscans. To date, between the general obligation bonds and COP’s, the City has leveraged Laguna Honda for long-term debt of $745.7 million including principal and interest, and is using an additional $177.9 million in other sources of funding (mainly from tobacco settlement revenues) to complete LHH’s rebuild. This totals $923.6 million between long-term debt and other financing sources to complete a project currently budgeted to cost $594 million (at current minimum), only $354 million of which includes “hard costs” for actual construction.

On April 28, San Francisco’s Board of Supervisors approved issuing $42 million in COP’s using the “residual rental value of Laguna Honda Hospital’s property,” on advice of the City’s Real Estate Division and the Mayor’s Office of Public Finance, who assert that LHH’s “special use” is not fully leveraged. They also assert the $42 million in new long-term financing via COP’s are the “most efficient way of timely accessing capital” to finance street improvement projects, by adding a second lease and sublease to Laguna Honda Hospital’s $575 million “market value.”

The street improvement projects include Union Street, Montgomery Street, Kearny Street, Chestnut Street, Stockton Street, Steiner Street, Castro Street (between Divisadero and 15th Street), and Bush Street (between Van Ness and Battery Street), among other streets nowhere close to LHH.

The street COP projects are in addition to the planned $309 million “Road Repair and Safety Improvement” general obligation bond in November 2009 that also deals with street resurfacing, and in addition to any federal stimulus money San Francisco may receive for street improvement projects.

Recently, Peter Scheer, a lawyer, journalist, and executive director of the California First Amendment Coalition, noted that “Legitimacy, the most valuable asset of any court, is diminished by judicial secrecy and enhanced by openness.” Reasonable people assume that Mayor Gavin Newsom, and his appointed president of San Francisco’s Health Commission, Jim Illig, would know by now that the legitimacy of Newsom’s administration is diminished by its level of secrecy and failure of open government. The nearly-secretive COP’s are not the only change affecting Laguna Honda’s replacement project and its changing mission.

The Health Commission’s subcommittee known as the Laguna Honda Joint Conference Committee (JCC) secretly discussed on January 12 reducing its monthly meetings to quarterly meetings, when Commissioner Illig introduced the discussion without placing it beforehand on the JCC’s publicly-noticed agenda. Remarkably, minutes of its January 12 meeting fail to document that this discussion had actually taken place. The LHH-JCC has managed to add a layer of secrecy to Laguna Honda by holding fewer public meetings annually. Illig now claims this decision wasn’t made on January 12, as some meeting participants asserted had occurred. Instead, he now claims the decision to reduce the number of the LHH-JCC’s public meetings was made at a later date and doesn’t require notice under San Francisco’s open-government Sunshine Ordinance. He neglected to elaborate on whether this decision was possibly made during an illegal seriatim meeting of the Health Commission outside the public view.

During the LHH-JCC’s April 22 meeting, both Illig and LHH’s Communications Director, Marc Slavin, noted that “themes” being advanced include Laguna Honda’s evolving “community mission” to bring San Franciscans on campus as a recreation destination of hiking trails, public park space, and community auditorium, with the help of the Mount Sutro Stewards, a group dedicated to expanding trail spaces and habitat restoration.

In 1999, Laguna Honda supplied one-third of skilled nursing beds in San Francisco. By the year 2013, given additional skilled nursing beds that are projected to close, Laguna Honda will provide just over one-quarter of desperately-needed skilled nursing facilities for San Francisco’s frail elderly, who are expected to increase by the year 2030, since San Francisco is projected to have another 1,280 people over the age of 85, and another 15,790 people over the age of 75 who also may need skilled nursing level of care.

Voters weren’t told in 1999 that rather than building critically-needed skilled nursing beds for elderly and disabled San Franciscans we’d get, instead, community amenities and hiking trails from the bond expenditures and COP funding being used to complete LHH’s replacement project, or that a third “mortgage on the future” would be added to bond expenses by renting and subleasing Laguna Honda’s property to fund street improvement projects.

Reasonable people must now consider whether before completing LHH’s rebuild the City will issue even more COP’s for other non-project uses, claiming LHH’s “residual rental value” justifies leveraging additional mortgages against Laguna Honda Hospital’s future. After all, various forms of principal and interest for long-term debt, combined with additional financing sources, now stands at $923.6 million “leveraged” against LHH — just $76.4 million shy of a cool one-billion-dollar investment — for a project of $354 million in construction hard costs.

At what cost — in both dollars and declining healthcare services — will mortgaging LHH’s future end?

Monette-Shaw, an accountability watchdog, operates

May 2009

War on Laguna Honda Seniors Heats UpExecutive Director Kanaley

Although voters approved a 1999 bond measure to rebuild Laguna Honda Hospital (LHH) to care for elderly and disabled San Franciscans needing long-term skilled nursing care, a sudden plan to convert it from a “medical model of care” to a “social-health model of care” is advancing rapidly — less than a year before the replacement facility is scheduled to open. The design and construction has been underway for over six years.

The sudden removal in January 2009 of LHH’s Medical Director, Paul Isakson, MD, and Assistant Medical Director, Tim Skovrinski, MD, may be related to upcoming changes to that model of care. Staff at the hospitial have asserted privately that Skovrinski was removed because he expressed concerns about the “vision” of implementing a “social-health” model of care and was viewed as not being “aligned” with its future “mission.”

(Executive Director John Kanaley shown)

For a number of years, the Mayor’s Long-Term Care Coordinating Council (LTCCC) has been aggressively involved in micromanaging the facility. Their “Living With Dignity Strategic Plan” was distributed in November 2008, including a membership roster that showed Isakson was replaced as a member by John Kanaley, Laguna Honda’s Executive Administrator. Kanaley was present during the October, November, December, and January meetings of the Council, suggesting Isakson’s removal had been long considered.

protesters at Laguna Honda Town Hall meetingKanaley’s official January report to two Health Commissioners — and LHH’s January newsletter, The Grapevine, distributed externally — indicated Isakson took an extended leave and wasn’t expected to return, and Skovrinski’s position had been eliminated. These two documents report a nationwide search is underway to hire a new Medical Director, presumably someone who will support the “social-health” care model change.

(Protesters at the Laguna Honda Town Hall Meeting)

Many staff believe unofficial, not official, reports of what transpired. A recent “communications audit” revealed that even senior administrators believe “official channels” of communication are the least reliable and the least believable, and that some administrators apparently disagree with the change in model of care.

The Mayor’s Council has significant political clout at City Hall, since its members are appointed by the Mayor (except eight, who are employees in various City departments). To skirt the City’s Sunshine laws, the group pretends it is a “passive meeting body,” not a formal “policy body,” while, in fact, it develops policies regarding San Francisco’s long-term care continuum of services, and aggressively pushes its policy recommendations on the Mayor, Board of Supervisors, and several City departments.

At the Council’s December 2008 meeting a draft of priority objectives was discussed for its “Living With Dignity Strategic Plan,” a policy document developed by the Human Services Agency and staff members in the Department of Aging and Adult Services and the Department of Public Health. This document guides programming by those agencies, and is used to develop the City’s budget.

Priority objective 1E asserts that the Council will “Participate in advocacy efforts to move Laguna Honda Hospital from a medical model to an inter-disciplinary social-health model of care, based on a philosophy of community re-integration, choice, providing rehabilitation services, chronic care, dementia care, and end of life care.” This may sound very worthwhile to untrained consumers of bureaucratic gobbledygook, but to advocates for senior care at Laguna Honda, it indicates an extreme shift in scarce resources away from the promises made during the campaign for the $299 million bond financing to rebuild LHH “for our seniors and disabled.” Critics of the program fear that the plan will move San Francisco’s most vulnerable population to out-of-county “senior mills” to make room for less-expensive drug treatment and mental maintenance programs. [One irony is that LHH has utilized Interdisciplinary Teams for over a decade.]

The City capitulated in its “friendly” (read uncontested) Chambers settlement agreement, and the separate U.S. Department of Justice settlement agreement, to increase mental health and substance abuse services to prepare and enable residents to be discharged to the community. Both settlement agreements indicated the City will provide a “continuum of care” model at LHH to focus on options that will enable individuals to age in place outside of hospital, even if they need long-term, skilled nursing care, and even though there is no plan to raise funds to move the patients into their own apartments outside the facility. A May 23, 2008 side letter to the settlement agreement stated that the, “City shall introduce as much flexibility as possible into existing and ongoing construction efforts at Laguna Honda Hospital so as to maximize adaptability of use from skilled nursing facility services to other integrated services going forward.” I guess that means it will be converted to a “social-health” model of care, just before its replacement facility opens.

A consultant recently hired to interview senior hospital staff reportedly expressed shock that LHH’s staff have not been openly informed about plans the conversion to a “social-health” model of care.

The LTCCC will be aggressively pursuing the conversion from a medical model of care to this new “social-health” model of care. How do you tell a patient with advanced Alzheimer’s that they only need “social-health” care, not a medical model of care?

The Council is stepping up its micromanagement at the hospital. On February 2, Margaret Baran, Executive Director of the In-Home Supportive Services Consortium and a member of the Council, submitted a public records request to DPH seeking the hospital’s FY 09–10 Line Item Budget, since City budget decisions are now being made. The Council apparently wants to tweak the hospital’s budget and monitor the conversion to “social-health” programming.

Staff at the City’s Mental Health Rehab Facility (now called the Behavioral Health Center) have already heard unofficially about plans to “integrate” the hospital and the MHRF’s patients. Changes to the patient population to be served in early 2010 in the newly rebuilt replacement facility are still being developed at this late date, but are slowly leaking out to the public.

This isn’t what voters were led to believe in 1999.

Monette-Shaw, an accountability watchdog, operates and is a member of the California First Amendment Coalition, an organization protecting and defending the public’s right to know.

March 2009

The Chambers Settlement: The Betrayal of the Laguna HonDa Hospital residents and the San Francisco Voters

Laguna Honda under constructionAs reported in last month’s Observer, San Francisco and its Department of Public Health (DPH) are rushing through approval of an obscure lawsuit — the Chambers settlement agreement — that will drastically change public health policies at Laguna Honda Hospital (LHH). The Chambers settlement not only goes against the will of San Francisco voters, it also creates huge, open-ended housing and public service entitlements.

If adopted as currently written, the Chambers settlement will drain the City’s remaining General Fund, stripping City Supervisors of legislative authority over the discretionary portion of the General Fund.
The City’s Mayor, Supervisors, and DPH aren’t doing their jobs. By choosing litigation over intelligent, well-researched legislation, City government is being restricted to rebuilding only 780 beds at LHH; LHH’s mission will be changed to feature short-term, 90-day stay rehabilitative treatment, rather than long-term care.

The City has no idea what acceptance of the Chambers settlement will actually cost, since no cost analysis of the entitlement programs has been performed. There’s no guarantee LHH residents will receive adequate medical care if the Chambers settlement results in placing LHH residents into alternative community placements. While community-based services are claimed to save City funds, as entitlement costs caring for and placing patients into the community soars, fewer discretionary General Funds will be available for transportation, education, parks, libraries, pothole repair, etc.

The City is currently rapidly reducing LHH’s census from 1,040 to 780 residents over the next 12 months. The City doesn’t have housing for many of them, and is discharging some to out-of-county placements. Due to budget deficits, the Mayor is already cutting services to vulnerable LHH residents being forced into untenable community placements. The Mayor is eliminating community-based public health nurses, cutting funds to single room occupancy (SRO) hotels, cutting Heath-at-Home program services, and is reducing “community program services” by 15 percent. Rapid displacement of LHH residents without community services being in place will force LHH residents into making choices between leaving their City, living in dangerous Tenderloin SRO rooms, or simply becoming homeless.

Even LHH’s largest union —Service Employees International Union — is alarmed San Francisco’s most vulnerable residents won’t obtain true choice if the Chambers agreement is adopted, violating the U.S. Supreme Court’s Olmstead decision that residents must be integrated into their home communities, not displaced out-of-county. The Chambers settlement is a class action lawsuit which applies to all current LHH residents. The lawsuit does not have an opt-out clause for LHH residents that do not want to participate.
In the City of St. Francis, this stinks. Before March 11, urge District Supervisors to reject or modify the Chambers settlement agreement before final adoption.
George Wooding/ West of Twin Peaks Central Council


March 2008


Downsizing Laguna Honda: Who Gets the Boot?

by Patrick Monet-ShawLHH residents


In last November’s Observer, John Farrell noted that radically reducing the number of skilled nursing beds at Laguna Honda Hospital (LHH) would jeopardize proper care for our elderly and physically disabled. His prediction is dangerously close to rapid implementation.

In the Laguna Honda 1999 election, 73.3% of San Franciscans approved bonds to rebuild 1,200 beds at LHH for the elderly and disabled. LHH supplies one-third of San Francisco’s skilled nursing beds.

Now, just six Plaintiffs in the Chambers vs. City and County of San Francisco lawsuit are about to overturn the will of 139,000 voters if San Francisco accepts the settlement agreement. There’s been a virtual media blackout regarding this lawsuit, and there’s been no public forums sponsored by the City or LHH since the case was filed on October 12, 2006 by six LHH residents lead by Independent Living Resource Center of San Francisco.mailer text

Among other provisions, the Chambers settlement proposes that upon completion of the reconstruction project, the City agrees to restrict LHH to 780 beds — eliminating 420 planned beds — and LHH will focus on 90-day short-stay and rehabilitation patients. The Chambers settlement doesn’t specify LHH can continue its long-term care mission.

Health Commissioner’s reportedly proposed during closed session to rapidly fast-track LHH’s downsizing to 780 beds, displacing 240 residents two years prematurely, in the absence of a Board of Supervisors policy decision to do so.

The Health Commission voted in closed session January 22 to accept the Chambers settlement, knowing San Francisco faces a potential shortage of 4,000 skilled nursing beds in the next 12 years and 10,000 Alzheimer’s patients over the age of 85 by the year 2020. Apparently alarmed by public testimony linking future bond measures to failure to rebuild LHH as promised, Health Commissioner’s took an unusual step, disclosing that a Deputy City Attorney advised them, during closed session, that some language in the Chambers settlement doesn’t really mean what it says it plain English. But this rationale fails to reassure community members.Who will be evicted at Laguna Honda?

The Chambers settlement proposes San Francisco will create 500 rental subsidies — 100 annually over five years — to discharge residents slowly. Health Commissioner’s reportedly proposed during closed session to rapidly fast-track LHH’s downsizing to 780 beds, displacing 240 residents two years prematurely, in the absence of a Board of Supervisors policy decision to do so. This will occur partly through attrition (deaths and transfers), through aggressive discharge planning, and by curtailing general skilled nursing admissions for long-term care. LHH is expected to submit a fiscal year 08–09 budget revision based on a 780-resident census, and concomitant reduction in staffing, involving layoffs.Where will vulnerable elderly San Franciscans needing long-term care go? Out of county?

Voters know LHH’s residents are among the most vulnerable San Franciscans, in part because they’re dependent on nursing home caregivers for their day-to-day safety and well-being, and because 95 percent rely on Medi-Cal for their care; fewer San Francisco nursing homes are accepting Medi-Cal patients. Since 2002, LHH has admitted 3,199 patients, including at least 611 who have had strokes, traumatic brain injuries, spinal cord injuries, or orthopedic disorders, like hip fractures, and scores of others with Alzheimer’s, Parkinson’s, and Multiple Sclerosis.

In 2006, the “No on D” Committee backed by Newsom administration allies raised nearly $300,000 to defeat Proposition D, and reportedly paid $173,000, developed the campaign mailer shown above, falsely asserting 300 Alzheimer’s patients would be evicted if Prop. D passed.

Why aren’t Newsom’s allies now asking “Where will our vulnerable elderly go, and what will they do, without Laguna Honda?” Will the City of St. Francis strip thousands of San Franciscans of their right to choose long-term care at LHH?

Since 240 residents face rapid discharge, out-of-county placement, and unknown levels of care, get involved and take action: Call or write to the Health Commission, Board of Supervisors, and Mayor Newsom urging them to reject the Chambers settlement.

February 2008