An Edition of FastFacts — Claiming
$1.7 Million DPH Budget Savings From
LHH's Admissions Policy and SFGH's
Associated “Flow Project” — Is Untrue …
While Mitch and the Mayor Play With Fire

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Misinformation in FastFacts

On March 7, 2005, Dr. Mitch Katz, Director of Public Health, sent an edition of his e- mail newsletter titled “FastFacts” to an unknown subset of DPH’s 6,000 employees who have computers with access to e-mail and who have subscribed to FastFacts.  He mislead them, however unintentionally or intentionally, by repeating his assertion that DPH could save $1.7 million annually by changing the LHH admission policy.  Katz repeated this wild assertion knowing that his claim had already been disproved in a January 24, 2005 analysis sent to him, and publicly shown to be flawed again on February 18 during the Mayor’s Disability Council meeting.  

In his March 7 FastFacts, Katz asserted that because LHH’s staff were “distressed by” the original March 2004 admission policy change that the Mayor subsequently ordered be reversed on February 15, that he would have to make an additional $1.7 million reduction to DPH’s FY 05-06 base budget.  When this FastFacts arrived in LHH e-mail in boxes, there was general and widespread outrage among LHH staff that Katz was scapegoating LHH’s employees for causing additional reductions to his pending budget proposal.  Nothing could be further from the truth.

In the March 7 FastFacts, Katz asserted that his “flow project” transferring SFGH patients to Laguna Honda Hospital “saved the Department [of Public Health] an estimated $1.7 million.”  Katz could not be more wrong, and in this regard his FastFacts item is nothing more than misguided spin control.

Katz’s claim is based on a December 16 memo from his Chief Financial Officer, Gregg Sass. Sass based his analysis on a two-day moving average of referral data in the Web Based Referral Tracking System (WBRTS ) database.  However, the underlying data in the WBRTS is completely flawed, and LHH staff have asserted since at least March 2004 that the WBRTS is riddled with errors and erroneous data.  In a January 24, 2005 analysis by Maria Rivero, MD, an admitting physician at Laguna Honda, she notes that DPH has been told repeatedly that the database lists inappropriate referrals.  Flawed data entry includes:

Rivero’s analysis concludes Sass’ calculations are three times higher than valid data; by her calculations, DPH can save, at best only $510,000 annually, not $1.7 million.

Notably, on the same date of Katz’s March 7 FastFacts, Sass finally acknowledged in an e-mail that “The analysis only looked at the revenue pickup at SFGH”; as critics have rightly contended, Sass acknowledged he had not examined the expense side of the equation, despite the fact that everyone knows, as surely do CFO’s like Sass, that budgets are set by factoring in both revenue and expenses.  The disconnect between Sass’ noting on March 7 his failure to examine expenses, and Katz’s claim on the same day to staff who receive FastFacts that $1.7 million in revenue could be gained without considering expenses, is breathtaking.

Misinformation In, and Missing Information From, DPH's FY 05–06 Budget Submission

Indeed, the FY 05–06 budget proposal Katz is set to deliver to the Health Commission on Tuesday, March 29 asserts in initiative E-5 listed on the summary of the budget on page 85, that the reversal of LHH’s admissions policy will result in the loss of $1.7 million in revenue to DPH, which Katz also reflects by asking for an increase of $1.7 million in General Fund support.  On page 205, initiative E-5, the “Justification” section lamely reads: “With the admissions policy reverting back to the policy in place prior to March 2004, the positive economic impact to SFGH of increased revenue is expected to dissipate.”  The E-5 “Impact on Clients” section reads: “Some patients at SFGH ready to be transferred to a SNF level of care may not be placed at the appropriate level of care. Overcrowding in the SFGH ED and ED diversion may increase.”  

[Note: The WBRTS analysis showed that many of the patients Katz claims are “ready” are, in fact, neither ready nor appropriate referrals.] The E-5 “Expense and Revenue Impact” section reads: “Decrease in Medi-Cal revenue by $1,700,000 in FY 05/06,” but the Sass memo of December 16 did not elaborate on whether any of, or all of, the $1.7M in projected revenue was in fact Medi-Cal revenue, let alone whether the patients Katz hoped to put into empty beds at SFGH even had a payor source.

Katz is yet again blaming LHH for the loss of $1.7 million in revenue, despite the fact that Sass’ “Economic Impact” December 16 memo on the SFGH-LHH Patient Flow Policy Change on which initiative E-5 appears to be based has been disproved.  So Dr. Katz’s budget proposal is off by at least $1.2M.

In addition, initiatives A-2 for a $606,448 Behavioral Health program at LHH, and C-23, a $603,170 initiative to increase security at LHH will tack on a separate $1.2 million increase to DPH’s budget. Combined with the artificially inflated $1.2 million revenue projection, this represents a $2.4 million problem with the DPH budget that could be avoided, at least in part, if Katz were not insisting on transferring inappropriate patients to LHH.

Yet there are other expenses that remain unacknowledged, and missing from DPH’s budget submission.  The March 3, 2004 fire at LHH was ruled by the Fire Department to have been arson.  The fire resulted in the closure of a 30-bed ward at LHH that has not yet reopened, and is nowhere near ready to reopen, causing the loss of revenue to LHH for at least the past 13 months, with additional months of lost revenue before it will reopen.  Katz fails to consider the loss of revenue to LHH as being on a par with the loss of revenue to SFGH.  Then there’s the expenses of having to remodel the burned-out ward to bring it back on-line.  Additionally, other physical plant security enhancements are budgeted for $150,000 in capital improvements in the first year, without any information forthcoming about additional physical plant security-related improvements budgeted for subsequent years.

Mitch and the Mayor Play With Fire:  Class B Citation Against LHH

Also not factored in to any budget is the fact that LHH has also received fines for Cal-OSHA violations, and may eventually incur fines from State Licensing and Certification.  As summarized this week:

“Inspectors from the State Licensing and Certification completed a 7-day survey of LHH and at the [March 21] Exit Conference ... announced they would issue a Class B Citation for “Sub-standard Care.”  This is a serious deficiency which potentially jeopardizes LHH’s license and funding by the State Department of Health Services.  LHH must submit a comprehensive Plan of Correction.  But that is not sufficient, as in minor citations.  This is a major citation, so the State will return within 3 months for a follow-up survey, and if the problem has not been fixed, penalties will ensue.  LHH Administration is appealing this embarrassing citation.”

In addition, LHH’s plan of correction (POC) in response to an August 2004 Licensing and Certification citation is being appealed.  The appeal reads, in part:

“The LHH POC says: ‘The facility continues to use its Close Observation policy to assure a safe environment and care and appropriate assignment of clinical staff.’  In fact, multiple episodes of patient-on-patient and patient-on-staff violence occurred leading to this very citation while the Close Observation policy was on board.  The ‘Close Observation policy’ continues to be used to prevent or discontinue an actual doctor’s order for one-to-one observation of high risk patients.  By diffusing responsibility to nursing management and avoiding a doctor’s order, one-to-one observation may be discontinued at any time based on staffing available and not based on the patients’ risk.”

In Katz’s rush to help the Mayor implement Newsom’s election campaign rhetoric of “Care, Not Cash,” LHH’s future is being placed at increasing risk.  At no time in the past has LHH ever received a Class B citation; that citation, the first in LHH’s history, has occurred under Newsom’s watch as Mayor, and under Katz’s watch as Director of Public Health.  It is their combined so-called “leadership” that is now threatening LHH’s very survival as a long-term care skilled nursing facility that San Franciscans have treasured for many, many decades.  Mitch and the Mayor are playing fire with LHH’s mission as a long-term care skilled nursing home.

Scapegoating and Brinkmanship Sink to New Low

In years past, whenever there is a budget shortfall, Dr. Katz has pitted one desperate need for healthcare against a different need.  It’s a game that has, rightly, been called brinkmanship.  Repeatedly, each year dire stories of need are told before the Health Commission, and then — without a single change by the Health Commission to Katz’s proposed budget sent to the Board of Supervisors — the Supe’s have to re-hear a new litany of needs being pitted against needs, which they then have to sort out.

Unfortunately, this year the brinkmanship game has sunk to a new low.  By way of Katz’s March 7 FastFacts, LHH is being scapegoated for causing DPH to have to cut funding of perhaps up to $2.4M from other programs and projects to make up for the increased reliance on the General Fund and the increased expenses at LHH because — as Katz implied in FastFacts — LHH staff are simply reluctant to follow Dr. Katz’s esteemed leadership.  Katz claims that “In order to bridge the revenue gap … additional reductions will need to be included in the base budget.”

Katz claims LHH staff “felt uncomfortable with … [SFGH patients] with multiple and complex service needs.”  But Katz fails to note to FastFact readers that many typical LHH patients have multiple and complex healthcare needs of their own.  Consider an LHH typical “case study”:

An 85 year old female with a history of OBD, Schizophrenia s/p CVA, arthritis, chronic back pain, cataract surgeries, dementia with impaired judgement, degenerative joint disease, peptic ulcers, decreased safety awareness, lung cancer, impulsive behavior, and a history of falls.

This case study hardly represents an outlier of patients at LHH.  Although LHH already has a whole host of patients with multiple and complex healthcare needs, Katz seems to ask FastFact readers to ignore one set of complex needs for another set of complex needs, pitting yet again in his game of brinkmanship, severity of need against severity of need, as if SFGH complex patients are to take precedence over other complex patients presenting with multiple long-term care skilled nursing issues.

Katz fails to note the concerns of family members of patients, and actual patients of LHH who are also “distressed” by his unilateral admissions policy change.  Katz also fails to inform all DPH staff that the various citations against LHH from Cal-OSHA and the State L&C folks also created great “distress” to California officials charged with oversight of both staff and patient safety.  Instead, he paints for his FastFact readers that it is merely those pesky, troublesome community members (organizations including homeowner and neighborhood associations) and LHH staff seeking only to protect their patient’s safety, as being the “bad guys.”  The between-the-lines subtext to FastFact recipients is that if it weren’t for those employees who were uncomfortable, ignoring patients and regulators who were also uncomfortable, then he, Mitch, would not even have to consider any reductions totaling $1.7 million, but since he has to include those reductions, it is somehow the fault of patient advocates who happen to be LHH employees.  This level of scapegoating and brinkmanship proves just how low Katz is willing to go.

In the end, scapegoating LHH employees adds insult to injury.  After all, Katz never apologized completely to the entire LHH staff for his baseless accusations of discrimination against AIDS and African American patients.  Now, this issue of FastFacts further demonizes LHH staff baselessly.

Reportedly, Katz has belatedly admitted he was caught off guard by the Class B citation against LHH.  In that regard, Katz has played the brinkmanship game poorly and for far too long.  He has absolutely no idea of how many LHH employees were galvanized by yet more of his baseless accusations, and that his few remaining supporters at LHH are dwindling by the hour.  Katz has claimed that there are but a small handful of LHH staff who are his critics.  Nobody could have galvanized the purportedly small fence-sitting employees better than Katz himself.  This issue of FastFacts shows Katz is perfectly willing to shoot himself in the foot by alienating the very employees he hopes to keep on his side.  They’re not buying his scapegoating, and are instead fleeing in droves.

Hopefully, this will be Katz’s last game of brinkmanship, if only the Mayor will finally get around to replacing Katz as Department head.


Page Created 3/27/05


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