[5] With the 1906 San Francisco earthquake destroying much of the housing in the city, the need for services provided by Laguna Honda became more acute, and three years later a new wing of 1,000 beds was dedicated by President Theodore Roosevelt.
[6] Issues arose again in 2019, when the San Francisco Department of Public Health found years of abuse by six hospital employees of the residents, which led to police investigation and later reforms to procedures and reporting.
[10] However, in March 2022, federal funding from Medicare and Medicaid was also put in jeopardy when regulators found drug paraphernalia, smoking, and, of the most concern, a patient possessing a lighter while also being on supplemental oxygen, a severe fire risk.
[8][12] The city sued the federal government, and in October, a settlement was reached, extending funding temporarily until November 2023 and putting a pause to the transferring of patients out of Laguna Honda.
[8] In August 2023, Laguna Honda applied for readmission into Medi-Cal, which more than 95% of its residents rely upon, based on its completion of its planned comprehensive improvements,[14] and funding was restored five days later.