DPH presents $3 billion two-year budget plan, flags shortfalls tied to Laguna Honda census

Jenny Louie, chief financial officer for the San Francisco Department of Public Health, presented the department's proposed two-year budget on Jan. 17 and warned of projected shortfalls driven in part by reduced Laguna Honda census and broader city revenue pressures.

Louie said the department's base operating budget is roughly $3.0 billion, with major divisions including Zuckerberg San Francisco General (about $1.2 billion), Behavioral Health Services (about $600 million) and Laguna Honda (about $336 million). Salaries and fringe benefits account for roughly half of expenditures, about $1.5 billion.

Louie highlighted that the department projects an overall Q1 deficit of about $15.3 million, with the largest component a $23.9 million revenue shortfall at Laguna Honda tied to the pause in new admissions during the recertification process. She noted that the department is projecting a two-year citywide deficit under current assumptions and that the mayor's office has issued instructions for a 5% general-fund reduction in the first year and 8% in the second year.

On programmatic changes, Louie discussed CalAIM's upcoming long-term-care payment transitions (managed care plans taking over some long-term-care payments) and behavioral-health payment reform that moves billing from service-modality/minutes to CPT codes; DPH staff said they are coordinating with health plans (San Francisco Health Plan and Anthem) to avoid disruptions to patient care. Louie also described plans for EPIC EHR Wave 3 deployment across behavioral health and partner agencies.

Asked by commissioners, clinical leaders explained that CalAIM will enroll Laguna Honda residents into managed care plans (San Francisco Health Plan and Anthem) and that DPH has been working with plans to protect access, formulary consistency and transportation options during the transition. "For the immediate sense, we are not concerned about loss of revenue," acting CMO Clara Horton said, noting built-in protections and state transitional provisions.

Louie said DPH will return to the commission on Feb. 7 with a detailed balancing plan and requested authorization to submit its proposed budget to the controller and mayor's office on Feb. 21. She also noted DPH will provide quarterly financial reports going forward and is using a management reserve to smooth short-term impacts.

Ending: Commissioners asked follow-up questions about revenue assumptions, CalAIM operational impacts and EPIC implementation. DPH staff committed to provide more detailed revenue/expenditure balancing proposals at the Feb. 7 hearing.