SF supes fume at provider of mental health, addiction care facing meltdown: ‘Massive fiscal mismanagement’

A leading San Francisco provider of treatment programs for substance abuse and mental health disorders that is in financial distress received a temporary lifeline from city leaders to maintain services for more than 200 people and keep dozens of nonprofit workers employed.

But the Board of Supervisors authorized less than half as much aid as the provider had sought after balking at what sharply critical supervisors viewed as a last-minute attempt to rescue what they said appeared to be a woefully mismanaged organization.

PRC and Baker Places, Two Nonprofits in the Process of Merging, Geged Supervisors to Bail Themed Out of a Combined $ 3.2 Million Short Falls So They Could Continue Running Beds to Provide Detoxification, Psychiatric Care and Other Urgently NEDED Help to some of the City’s Most vulnerable residents.

Without the infusion of cash, the nonprofits said their programs might have had to shut their doors and more than 250 employees would have lost their jobs.

The struggles come at a crucial time for San Francisco’s efforts to improve care for those who grapple with acute mental illness and drug addiction. City officials are trying to expand the care system by 400 treatment beds but, as of last month, less than 150 had been added so far. At the same time, the city is grappling with the potential closure of Laguna Honda Hospital that cares for more than 700 patients with complex medical needs, including dementia and addiction.

Supervisor Hillary Ronen proposed the lower dollar amount after consulting with the city controller’s office. The money can only be used for payroll and preventing the displacement of people who use the nonprofits’ treatment beds. Ronen said it should be enough funding until supervisors can revisit the issue in September, when they are expected to have more detailed information.

At their meeting, supervisors expressed dismay at the timing of the request, which arose just before they begin to vet Mayor London Breed’s proposed $14 billion budget in earnest. They were also unsatisfied with attempts by health officials and the nonprofits to explain how the shortfall arose in the first place.

“This is a complete systemic failure,” Ronen said.

Ronen and Supervisor Aaron Peskin were both outraged that just last month they had signed off on a five-year, $65 million contract extension with Baker Places — but neither the nonprofit nor the health department disclosed the financial concerns at the time.

“We doubled this contract without any knowledge that this was happening,” Ronen said.

In July 2021, PRC told the health department about a deficit in a key detox program it operates, officials said. The health department tried to help PRC and Baker Places improve their operations, but an analysis by the controller’s office confirmed a $3.2 million shortfall, bringing the programs to the brink of financial insolvency.

“The reasons for the financial distress are not fully understood,” said Dr. Hillary Kunins, the city’s behavioral health director.

The health department asked supervisors to let it award one-time grants to fill the shortfall, allowing the nonprofits to meet their payroll and lease obligations while they create a financial sustainability plan with input from a city-hired consultant.

PRC CEO Brett Andrews said the nonprofits’ payroll is about $750,000 every two weeks, and without supervisors’ help, they would not have enough funds available to pay workers starting July 6.

“This is government at its worst,” said Supervisor Ahsha Safaí. “There is a massive fiscal mismanagement that we’re being asked to bail out.”

JD Morris is a San Francisco Chronicle staff writer. Email: jd.morris@sfchronicle.com Twitter: @thejdmorris

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