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Monday, Jun 5, 2023

Hospitals Seeking Financial Cures for What Ails Them

Note from your doctor: California’s hospitals could use a lifeline.

The nation’s troubled economy has taken a toll on hospitals statewide, causing many to rethink equipment purchases, scale back construction plans and consider work force reductions.

San Diego County’s hospitals are seeking ways to eliminate debt and trim hefty expenses, while keeping up with the number of uninsured patients who seek medical care through the emergency room.

Health care executives say they’re worried that mounting job losses will continue to impact their emergency rooms at a time when the state budget crisis, coupled with frozen credit markets, has made access to capital even more difficult.

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Drop-Off In Insured Patients

“People are losing their jobs and, with it, employer-based coverage,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group based in Oakland. “I think we are bracing for a significant increase in the uninsured.”

According to a recent survey by the California Hospital Association, a third of all hospitals have experienced a rise in the number of uninsured patients in emergency rooms since the economic downturn. Making matters worse, they’ve also noticed a drop-off in patients with insurance.

“Having a larger number of uninsured means that there’s a great number of people who are living sicker, dying younger and who are one emergency away from financial ruin,” Wright said.

Employers faced with increasing health care expenses have shifted the cost burden to employees, causing workers to pay more out-of-pocket. But patients report that they’re increasingly struggling to pay for those medical costs. The Hospital Association survey showed a 73 percent increase in consumers having trouble keeping up with out-of-pocket costs.

“Between the economic crises and the fact that medical costs are rising two to three times faster than inflation, employers are left with no other option but to increase cost sharing and out-of-pocket costs for employees,” said Nicole Kasabian Evans, spokeswoman for the California Association of Health Plans.

It all adds up for hospitals, which typically rely on borrowing to finance operations but now fear limited access to working capital.

Locally, health care systems have begun scaling back expansion plans and cutting costs.

In Oceanside, Tri-City Medical Center is looking to put a stop to its escalating cost of debt. Acting CEO Michael Williams, during a board meeting, estimated that the debt has reached $400,000 a month.

Palomar Pomerado Health, an 800-square-mile health district covering inland North County, is looking to trim about $184 million off the cost of building a new $957 million hospital in Escondido.

Scaling Back Construction

Scripps Health, a nonprofit health care provider with five local hospitals, has halted any contracts for future remodeling and expansion.

“Now, with the credit market being what it is, many hospitals can’t get the financing lined up,” said Jan Emerson, spokeswoman for the California Hospital Association.

Adding to their concern, patients are increasingly putting off elective procedures because of high-cost deductibles. Hospitals typically profit off those procedures.

Others are forgoing routine care altogether, which can result in more serious complications requiring immediate care in the future.

Chris Van Gorder, CEO of Scripps Health, says doctors at Scripps Memorial Hospital La Jolla have noticed a 10 percent to 20 percent reduction in their workloads since last year.

Van Gorder and other health care analysts and providers say they expect a kind of shakeout to occur as hospitals start feeling the effects of low Medi-Cal reimbursements for poor patients, a bigger mix of uninsured patients and frozen credit markets.

“It’s very difficult for us to prepare for,” Van Gorder said. “If we lose any more hospitals or hospital beds, it could put the whole health care system in disaster mode.”


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