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West of Twin Peaks Observer
Audit the Health
by George Wooding
How can it be the City Controller has never performed a full financial audit of San Franciscos Department of Public Health (DPH)?
In November 2003 voters passed Proposition C expanding the Controllers audit responsibilities, requiring two-tenths of one percent of the Citys budget be diverted to performing audits. Mayor Newsoms proposed $6.5 billion Fiscal Year 08-09 budget should dedicate $13 million for audit services.
Since Prop. Cs implementation in July 2004, DPH has been required to set aside approximately $8.6 million over the past four fiscal years for Controller audit services. DPH is required to set aside an additional $3 million for audit services from its $1.5 billion 08-09 budget. How has DPHs $12 million audit fees been spent?
Both San Francisco property owners and renters must demand a comprehensive financial audit be performed on DPH before voting on Novembers gigantic general obligation bond measure to rebuild San Francisco General Hospital (SFGH). Its almost three times larger than any bond measure in San Franciscos history, likely to cost $1.7 billion dollars, assuming zero future cost overruns.
DPH is San Franciscos largest and most financially irresponsible department. Every bond measure DPH has been involved with has either been massively reconfigured after opening (the Mental Health Rehabilitation Facility), or has been substantially reduced in scope. Laguna Honda Hospital (LHH) has been reduced from a planned 1,200 beds to only 780. Although LHHs rebuild is now smaller by 420 beds, the 780 beds to be constructed are currently forecasted to cost $642 million, $241 million or 60 percent over the initial budget; yet cost overruns continue rising [Editors note: See accompanying article].
Having over 7,000 employees (6,000 full-time equivalents), DPH consumes $1.5 billion, or 23 percent, of the Citys $6.5 billion budget. Two-thirds of San Franciscos $1.5 billion discretionary budget goes to DPH. San Francisco spends more per person annually on public health than other cities by a huge margin: In 2005, San Francisco spent approximately $400 on every man, woman, and child - six times more than the $64 national average. If the SFGH bond passes, per capita public health expenditures will skyrocket.
Never subjected to a comprehensive audit, DPH misspends voters bond money as it pleases, since DPH administration has zero respect for voters. After receiving bond financing, DPH routinely changes project parameters, redirecting bond funds to pet projects, salaries, and special-interest health groups. Voters were originally told LHHs rebuild would be a long-term care facility for frail, elderly, and disabled San Franciscans. LHHs mission was recently changed to serve 90-day, short-term stay rehabilitation patients. Money earmarked for LHHs rebuild is being diverted to shipping patients back into the community or to out-of-county placement, given the shortage of appropriate local housing. DPHs recent mid-year budget cuts and next years budget eliminate community services to LHH residents being dumped into the community. This isnt what 139,000 voters approved passing LHHs 1999 rebuild bond.
SFGHs deceptive bond measure is riddled with hidden costs: $30 million preparing the bond; $887.4 million to construct the replacement hospital; $157 million for furniture, fixtures, and equipment; and $640.3 million for debt service, totaling over $1.7 billion. But theres additional hidden costs: Back-up generators to power the hospital. Cost: Unknown. Anticipated campus master planning activities, including seismic retrofit of 462,935 gross square feet in six existing steel framed, unreinforced masonry/brick buildings. The retrofit of these 93-year-old buildings will occur AFTER the construction of the new hospital, if funding becomes available. Cost: Unknown and open-ended. Add the helipad. Cost: $6.8 million.
Expect budget trickery. Mayor Newsoms administration announced June 19 it will return $9 million for health and human services after suddenly finding miscalculations in next years City budget. Most of the money $6.8 million comes from General Funds his administration earmarked for SFGHs helipad. Now Newsom claims the helipad will be funded from Novembers bond. DPH increased SFGHs rebuild cost by $6.8 million, without increasing the bond amount, already creating project cost overruns. This malfeasance with DPH budget planning is exactly why the LHH rebuild is, at minimum, a quarter of a billion dollars over budget and may rise. Does DPH believe San Francisco voters are idiots, not paying attention, or both?
Douglas Yep, an 18-year employee at SFGH and 14-year resident of District 7, is a candidate seeking to unseat incumbent Supervisor Sean Elsbernd. Yep says hes basing his campaign on fiscal responsibility issues, including budget irregularities of LHHs rebuild fiasco and SFGHs upcoming rebuild. Yep has requested a full financial audit of DPH, curious why one has never been performed. While Yep has raised many questions regarding competency of current DPH administrators, Elsbernd having insider knowledge serving on the Budget and Finance Committee has remained curiously silent.
Too little, too late, and inadequately, the City just released Controller Ben Rosenfields report on DPH entitled Performance and Efficiency Review: Department of Public Health. Rosenfields cover letter states The Controllers Office has issued this report in response to requests from City leadership and community advocates to audit DPH. Rosenfield failed issuing an audit of DPH; his report merely analyzes DPHs services, efficiency of operations, patients, and payer mix.
Why wont the City fully audit DPH? What are officials afraid of finding? A financial audit of DPH may well uncover not only has DPH misspent and misused hundreds of millions of tax-payer dollars, but may also expose DPHs wide open, dirty secret: That it has failed departmentwide to collect hundreds of millions of dollars in revenue for greater than a decade due to billing failures that DPH administrators have simply refused to rectify. The Citys fear may be that independent auditors tend to uncover millions misspent, and millions left uncollected.
The LHH rebuild is the worst bond disaster in San Francisco history. Its time DPH becomes accountable to voters. An independent prosecutor or grand jury should investigate the LHH replacement project. The same DPH administrators who screwed up the LHH rebuild so badly should be fired for incompetence, not given a second opportunity to screw up SFGHs rebuild. San Francisco voters shouldnt hand DPH any more bond financing until a thorough, independent audit of DPH is performed.
Plan voting No on
Novembers $1.7 billion SFGH bond scheme.
West of Twin Peaks Central Council
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