DPH projects $6.9 million shortfall for fiscal year to date; Laguna Honda census and delayed settlements cited

Jenny Louie, DPH chief financial officer, presented the departments third-quarter financial report on May 16 and told the commission that DPH is projecting a $6.9 million deficit for the fiscal year to date, an improvement from a prior $14.9 million projection.

Louie said the departments revenue shortfall is roughly $18 million and is primarily driven by reduced census at Laguna Honda during the recertification process and by an expected $38 million in prior-year medical waiver settlements that the state does not expect to arrive in time for the current fiscal year. She said the shortfall is partially offset by about $11 million in projected expenditure improvements.

On the expenditure side, Louie said the department anticipates some salary savings and has already moved transfers between internal funds to balance operational needs. She described transfers and offsets made for Zuckerberg San Francisco General and Laguna Honda to manage facility-specific variances.

Louie provided a program-level breakdown: Zuckerberg San Francisco General faces mixed revenue dynamics tied to a shift to fee-for-service payments; Laguna Honda continues to show a revenue shortfall tied to reduced skilled nursing volumes; behavioral health and other divisions show mixed variances driven by changes in patient eligibility and state allocations.

Public comment and commissioner questions focused on staffing and the practical meaning of salary savings. A commenter worried salary savings reflected chronic understaffing at Laguna Honda and suggested that the current numbers may underrepresent service strain. Commissioners asked for clarification that salary and fringe savings largely reflect unfilled positions rather than operational efficiencies; Louie confirmed that salary savings reflect vacancies and that DPH is monitoring hiring and separations.

What happens next: If the $6.9 million deficit persists at year end, Louie said DPH would withdraw from its management reserve to balance the year. She also said the department is continuing to refine projections as revenue timing (for settlements and state program payments) becomes clearer.