Medi-Cal Reinstates Laguna Honda in Major Win for the State’s Largest Public Nursing Home

California’s Medi-Cal program has fully restored funding to San Francisco’s Laguna Honda Hospital more than a year after the public nursing facility was threatened with closure, a major reprieve and victory for the 156-year-old nursing home.

The state approved the hospital’s application to rejoin Medi-Cal just five days after it was submitted, giving residents and officials a sigh of relief after nearly two years of uncertainty. Federal and state regulators decertified Laguna Honda from Medi-Cal and Medicare in 2022.

“With this funding secure, Laguna Honda is here to stay,” San Francisco Director of Public Health Grant Colfax said at a press announcement Wednesday. “This represents a new beginning for Laguna Honda. Going forward, Laguna Honda will be the exemplary model of the new, modern skilled nursing facility.”

Laguna Honda is the largest public nursing facility in the state and is home to nearly 500 medically fragile residents with needs ranging from stroke rehabilitation to dementia treatment and mental health care. In 2022, federal regulators at the Centers for Medicare & Medicaid Services decertified Laguna Honda after finding numerous health and safety shortcomings across multiple inspection surveys, which were triggered after the hospital self-reported two non-fatal overdoses on-site.

Medi-Cal covers about 95% of residents at the facility, making the state’s health-care program a crucial financial lifeline.

Acceptance back into Medi-Cal means that the $200 million the hospital relies on annually to cover its majority lower-income residents will continue to flow, soothing fears of a shutdown. A legal settlement in 2022, in the meantime, extended the funding while the hospital worked to address deficiencies cited by regulators.

Reinstatement also clears the hospital from having to relocate patients because of its decertified status. The Centers for Medicare & Medicaid services ordered the hospital to move patients out, but out of 57 people who were transferred or discharged during that process, 12 died shortly after their relocations. City Attorney David Chiu then led a lawsuit against the federal government, and the relocation program was paused as part of their settlement agreement.

The hospital previously had until Sept. 19 to resume transfers. Laguna Honda still needs to apply to be reinstated into the federal Medicare program.

“For the people who work at Laguna Honda, this is not just about their jobs, this is about their patients,” said Mayor London Breed, whose grandmother lived at Laguna Honda. “When the decertification threats came to us, we knew we had no other choice than to come together and make hard choices and fight for Laguna Honda. And fight we did. And no one worked harder than the people who work here.”

Breed acknowledged a number of public officials who had worked to keep funding flowing and the hospital open, including former Rep. Jackie Spear, Rep. Nancy Pelosi, Supervisor Myrna Melgar and state Sen. Scott Wiener.

Roland Pickens, director and chief executive of the San Francisco Health Network, said that residents who were relocated and still meet the needs for skilled nursing will receive priority for returning to Laguna Honda, where some residents have lived for decades.

It’s not clear exactly when the hospital will begin to readmit new patients. Admissions have been paused since the facility lost its certification in 2022.

“It has really been a challenging time for so many people, so this is a joyous occasion,” Breed said.