GOOD WE WILL BEGIN. THE
SUBCOMITTEE ONE ON HEALTH
HEARING FOR TODAY. BEFORE WE
BEGIN. I WANT TO ADDRESS AN
ISSUE THAT HAS BEEN BROUGHT TO
MY ATTENTION. IT HAS BEEN
MENTIONED THAT THE PANELS THAT
WERE INVITED HERE TODAY. ONLY
PROVIDE THE PERSPECTIVE OF THE
HOSPITALS. DUE TO THE FACT THAT
HOSPITAL FINANCING IMPACTS
ACCESS AND QUALITY HEALTH CARE
AND AFFORDABILITY FOR CONSUMERS.
WE HAVE DECIDED TO SPLIT THIS
ISSUE INTO TWO HEARINGS. THE
ALTERNATIVE PERSPECTIVE ON THE
ISSUE OF HOSPITAL FINANCING WILL
BE ADDRESSED AT A LATER TIME IN
A SEPARATE HEARING AND SHOULD BE
FILED NOTICED VERY SOON. SO WITH
THAT I WANT TO WELCOME EVERYONE
HERE TODAY. THIS IS ASSEMBLY
BUDGET SUB-COMMITTEE NUMBER ONE
ON HEALTH, AND TODAY'S OVERSIGHT
HEARING IS ON HOSPITAL FINANCING
AND HOSPITAL CLOSURES IN
CALIFORNIA. AS WE ARE ALL AWARE
THE FINANCIAL SUSTAINABILITY AND
VITALITY OF HOSPITALS IN
CALIFORNIA HAS BECOME
INCREASINGLY CHALLENGING OVER
THE PAST SEVERAL YEARS. AS YOU
MAY KNOW, FINANCIAL INSTABILITY
AND HOSPITALS BEGAN BEFORE THE
PANDEMIC. MAKING THE PANDEMIC,
ESPECIALLY CHALLENGING FOR
HOSPITALS. A STORM THAT
UNFORTUNATELY, SEVERAL HOSPITALS
COULD NOT WEATHER FURTHERMORE,
DECREASING BIRTH RATES, COMBINED
WITH INCREASING COST OF MATERNAL
CARE IS LEADING TO AN ADDITIONAL
CRISIS IN THE FORM OF HOSPITALS,
CLOSING LABOR AND DELIVERY
UNITS. BECAUSE THEY CANNOT
CONTINUE TO PROVIDE THIS CARE.
IT IS IMPERATIVE THAT THE STATE
AND LEGISLATURE CLOSELY TRACK
THE IMPACTS THAT HOSPITALS AND
MATERNITY WARD CLOSURES ARE
HAVING ON ACCESS TO CARE.
PARTICULARLY THOSE WHO ALREADY
HAVE THE LEAST ACCESS SUCH AS
OUR LOW INCOME COMMUNITIES AND
RURAL CALIFORNIANS. THE GOALS OF
TODAY'S HEARING INCLUDE TO FIRST
BETTER UNDERSTAND THE CAUSES OF
FINANCIAL DISTRESS IN
CALIFORNIA'S HOSPITALS. SECOND
TO BETTER UNDERSTAND WHAT
OPPORTUNITIES AND OBLIGATION THE
STATE HAS IN SUPPORTING
HOSPITALS. AND THIRD TO BETTER
UNDERSTAND WHAT OPPORTUNITIES
AND OBLIGATIONS. OTHER KEY
STAKEHOLDERS HAVE, SUCH AS
MANAGED CARE PLANS. LOCAL
GOVERNMENTS AND THE HOSPITALS
THEMSELVES. WITH THAT I WILL SEE
IF ANY OF MY COLLEAGUES ON THE
DAIS HAVE ANY OPENING REMARKS.
JUST VERY QUICKLY. THANK YOU, UM
CHAIR. UM THANK YOU FOR DOING
THIS INFORMATIONAL HEARING AS,
UH, SOMEONE THAT REPRESENTS, UH,
THE CENTRAL VALLEY ASSEMBLY
DISTRICT, 27 AND, UM, REALLY THE
HEART OF WHERE WE SAW THE
CHALLENGES OF HOSPITAL CLOSURES
WITH MADEIRA HOSPITAL CLOSING. I
WANNA THANK YOU FOR REALLY, UH,
SHEDDING, ALLOWING US TO SHED
LIGHT TO THE ISSUES AND ALSO THE
OPPORTUNITIES THAT DO EXIST, UH,
TO MOVE FORWARD TO ENSURE THAT
COMMUNITIES LIKE MINE, UH, WITH
THAT HAVE THE MOST VULNERABLE.
UH, TYPES OF PATIENTS HAVE TRUE
ACCESS TO CARE, UH, IN THE
STATE. CALIFORNIA WHERE WE'VE
TRIED TO INCREASE, UH, ACCESS.
UH, BUT LOOKING AT REALLY, UM
YOU KNOW THE CLOSURES AS A BIG
COMPONENT AND A GAP THAT EXISTS
IN THE ACCESS PIECE. SO THANK
YOU SO MUCH CHAIRWOMAN FOR
INVITING ME TO BE HERE. UH,
TODAY AND, UM, LOOK FORWARD TO
HEARING UM, THE DIFFERENT
PERSPECTIVES ON THIS ISSUE.
THANK YOU SO MUCH FOR JOINING
US. SO LET US BEGIN NOW WITH OUR
FIRST SPEAKER CHRIST, STIS.
DIRECTOR OF MARKET ANALYSIS AND
INSIGHT FOR THE CALIFORNIA
HEALTHCARE FOUNDATION, WHO WILL
BE PROVIDING AN OVERVIEW OF THE
FINANCIAL HEALTH OF CALIFORNIA'S
HOSPITAL INDUSTRY. THANK YOU SO
MUCH. THANK YOU VERY MUCH. OR,
UM, EXCELLENT PRONUNCIATION. YOU
NAILED IT. AND UH, THANK YOU FOR
BEING HERE, UM, ASSEMBLY
MEMBERS, SO IT'S NICE TO SEE YOU
AGAIN. UM MY NAME IS CHRIST,
STACHUS. I'M THE DIRECTOR OF THE
MARKET ANALYSIS AND INSIGHT
PROGRAM IS DR WEER MENTIONED, UM
AT THE CALIFORNIA HEALTHCARE
FOUNDATION. èC HÌ èC F IS AN
INDEPENDENT, NONPROFIT
PHILANTHROPY DEDICATED TO
MEANINGFUL, MEASURABLE
IMPROVEMENT IN THE HEALTH CARE
DELIVERY SYSTEM HERE IN
CALIFORNIA. WE ARE PARTICULARLY
FOCUSED ON, UH, IMPROVEMENTS IN
THE HEALTH CARE DELIVERY SYSTEM
SERVING LOW INCOME CALIFORNIANS
AND OTHERS WHO ARE NOT WELL
SERVED BY THE STATUS QUO. ON THE
SECOND SLIDE. UH, WHICH YOU'LL
SEE OVER HERE ON YOUR RIGHT. UM
YOU'LL SEE THAT. UM UH, I HAVE A
PRETTY HARD JOB. UH, THIS
AFTERNOON IN NÓ MORE THAN 15
MINUTES OR SO. I'M GONNA TRY TO
DO THREE THINGS. NUMBER ONE
PROVIDE A VERY BROAD OVERVIEW OF
THE HOSPITAL SECTOR WITHIN
CALIFORNIA NUMBER TWO USING SOME
OF THE DATA THAT'S REPORTED, UH,
AUDITED AND PUBLISHED BY THE
REPORTED UP TO AUDITED AND
PUBLISHED BY THE STATE OF
CALIFORNIA GIVE YOU A GENERAL
SENSE OF WHAT DATA SHOWS ABOUT
THE FINANCIAL HEALTH OF THE
HEALTH OF THE HOSPITAL SECTOR
BROADLY AND THE NUMBER THREE
LEAVE YOU WITH NÓ ANSWERS, WHICH
MAY MAY BE A LITTLE BIT, UM
DISAPPOINTING BUT REALLY
HIGHLIGHT WHAT I THINK SOME OF
THE KEY QUESTIONS AND
CONSIDERATIONS ARE FOR YOU
BECAUSE WHILE MY JOB TO DO ALL
OF THAT, IN 15 MINUTES IS VERY,
VERY DIFFICULT YOUR JOB TO MAKE
THESE PUBLIC RESOURCE ALLOCATION
DECISIONS IS EVEN MORE
COMPLICATED, AND WE'LL GET TO
SOME OF THE REASONS WHY THAT'S
SO COMPLICATED IN JUST A MINUTE.
SO ON THE NEXT SLIDE. AND WE'LL
SKIP OVER THAT ONE BECAUSE I
JUST TALKED ABOUT IT. UH, LET ME
PROVIDE SOME JUST VERY BASIC
INFORMATION ON THE HOSPITAL
SECTOR HERE IN THE STATE OF
CALIFORNIA. I LOOKED LAST NIGHT.
UM AND AS OF, UH, LAST WEEK. I
THINK IT'S MARCH SECOND. THERE
ARE ABOUT 411 GENERAL ACUTE CARE
HOSPITALS OPERATING IN THE STATE
OF CALIFORNIA. THEY ARE IN ALL
58 COUNTIES, UH, SAVE FOR ALPINE
AND SIERRA. NOW FOR OUR PURPOSES
THIS AFTERNOON, I'M GONNA BE
LARGELY FOCUSED ON THE SMALLER
SUBSET OF THOSE FACILITIES THAT
HAVE BEEN DESIGNATED BY THE
DEPARTMENT OF HEALTH CARE
ACCESS. INFORMATION AS
COMPARABLE THIS EXCLUDE, AND
THIS IS IMPORTANT. THIS IS
EXCLUDES KAISER HOSPITAL, SOME
OF THE STATE LONG TERM CARE AND
LONG TERM PSYCHIATRIC AND LONG
TERM CARE FACILITIES. BUT FOR
PURPOSES HERE THIS AFTERNOON,
THIS IS THE START OR THE START
OF ONE CLUMP OF HOSPITALS THAT
HAS BEEN DESIGNATED COMPARABLE.
NOW, EVEN THOUGH THOSE ARE
COMPARABLE, THE VERY NEXT POINT
HERE IS THERE IS SIGNIFICANT
VARIATION AND WE SEE THE
SIGNIFICANT VARIATION IN
ORGANIZATIONAL CONTROL AMONG
THESE HOSPITALS. FORTUNATELY WE
HAVE SEVERAL HERE WITH US TODAY
THAT CAN TALK ABOUT THESE
DIFFERENT OWNERSHIP TYPES, WHICH
HAVE REALLY IMPORTANT
RAMIFICATIONS FOR THE PATIENTS
THAT THEY'RE SEEING, UM, THE
SERVICES THAT THEY'RE PROVIDING,
AND THE FINANCIAL STREAMS THAT
THEY RELY UPON AND RECEIVE TO
PROVIDE THOSE SERVICES. SO YOU
MAY HAVE HEARD SOME OF THESE
EXAMPLES LIKE CITY AND COUNTY
HOSPITALS. ZUCKERBERG SAN
FRANCISCO GENERAL WAS ONE IN MY
NEIGHBORHOOD, UH, RIVERSIDE
UNIVERSITY MEDICAL CENTER IS
DOWN IN THE INLAND EMPIRE
DISTRICT. HOSPITALS ARE ANOTHER
IMPORTANT TYPE. WE HAVE SOMEONE
HERE TODAY FROM KA DELTA. THEY
ARE A DISTRICT HOSPITAL THAT HAS
IMPORTANT RAMIFICATIONS FOR THE
FINANCING STREAMS THAT THEY RELY
UPON. THERE ARE INVESTOR OWNED
AND FOR PROFIT HOSPITALS
THROUGHOUT THIS STATE, UH, HIGH
DESERT MEDICAL CENTER PACIFICA
HOSPITAL OF THE VALLEY DOWN
SOUTH. THOSE ARE IMPORTANT OR
JUST WHEN WE'RE TALKING ABOUT
HOSPITALS. WE'RE TALKING ABOUT
MANY DIFFERENT TYPES, INCLUDING
NONPROFIT HOSPITALS, SUCH AS U
èC S¼ Dð, WHICH IS ALSO ON THE
ON A PANEL THIS AFTERNOON. SO ON
THE NEXT SLIDE AT A VERY HIGH
LEVEL WHEN WE'RE LOOKING ACROSS
THIS INDUSTRY BEFORE WE JUMP
INTO THE FINANCES, I THINK
THERE'S REALLY THREE THINGS THAT
JUMP OUT TO ME. WHEN I LOOK AT
IT. NUMBER ONE. IT IS ESSENTIAL.
I THINK CALIFORNIA'S HOSPITALS
HAVE LONG BEEN AND CONTINUE TO
BE AN ESSENTIAL COMPONENT OF OUR
DELIVERY SYSTEM. IT IS REALLY
IMPOSSIBLE FOR ME TO OVERSTATE
THE HEROIC NATURE THAT THIS
SECTOR OF THE PEOPLE THAT WORK
IN THIS SECTOR EXHIBITED DURING
THE COVID-19 PANDEMIC, AND THERE
IS CLEARLY A ROLE FOR HOSPITAL
CARE WITHIN OUR DELIVERY SYSTEM
GOING FORWARD. IT IS AN
ESSENTIAL PART OF OUR SYSTEM.
NUMBER TWO. IT IS A DIVERSE PART
OF OUR SYSTEM. I JUST MENTIONED
THE TREMENDOUS VARIATION IN
ORGANIZATIONAL CONTROL. THERE'S
ALSO TREMENDOUS VARIATION IN
GEOGRAPHIES THAT ARE SERVED. WE
HAVE 59 RURAL HOSPITALS IN THIS
STATE. UM THAT HAS IMPLICATIONS
FOR HOW HOSPITALS ARE PAID THE
TYPE OF CARE THAT'S PROVIDED
WHAT THE HEALTH NEEDS ARE IN
THOSE COMMUNITIES. THERE IS
TREMENDOUS VARIATION IN
POPULATION SERVE, THERE'S 100
AND 35. WHAT ARE CALLED DISPORT
SHARE OR HOSPITAL IN THE STATE
OF CALIFORNIA. THOSE HAVE UM
DISTINCT FUNDING STREAMS. AND UH
UH, OPERATIONAL. UM
CONSIDERATIONS. THERE ARE
DIFFERENT MISSIONS AND DIFFERENT
HOSPITALS THROUGHOUT THE STATE.
WE HAVE TEACHING HOSPITALS. WE
HAVE HOSPITALS THAT ARE FOCUSED
ON RESEARCH. THE REAL POINT HERE
IS THERE IS VARIATION IN
COMPLEXITY ACROSS THE INDUSTRY.
I'M GONNA DO THE BEST I CAN TO
PROVIDE A HIGH LEVEL, BUT ONE
THING TO ALWAYS REMEMBER IS
WITHIN THIS INDUSTRY. WE REALLY
NEED TO GO HOSPITAL TO HOSPITAL
TO UNDERSTAND FINANCIAL HEALTH.
WHAT THAT FACILITY NEEDS. REMAIN
VIABLE AND WHAT THE NEEDS ARE OF
THAT COMMUNITY. THE LAST, UH,
HIGH LEVEL. UM UH, TAKEAWAY WHEN
WE'RE LOOKING AT THE INDUSTRY IS
THAT IT'S EVOLVING. IT'S
EVOLVING, AND IT'S
INTERDEPENDENT WITH THE OTHER
INFRASTRUCTURE IN THE COMMUNITY
IN WHICH IT OPERATES. WHAT I
MEAN BY THE EVOLUTION. PART OF
THAT IS THE TYPE OF CARE THAT'S
PROVIDED IN HOSPITALS IS
CHANGING. WE ARE IN THE MIDDLE
OF A DECADES LONG SHIFT FROM
INPATIENT TO OUTPATIENT CARE DO
PARTLY TO DO PARTLY TO ADVANCES
IN MEDICAL TECHNOLOGY DUE TO
OTHER THINGS LIKE PATIENT
PREFERENCES AND ECONOMICS. AND
SO IN SOME WAYS, CARE IS MOVING
OUTSIDE THE WALLS OF A HOSPITAL.
WHILE AT THE SAME TIME THINGS
THAT ARE HAPPENING OUTSIDE THOSE
WALLS, BIGGER FORCES ARE
SOMETIMES PUSHING CARE IN
PATIENTS BACK INTO THE HOSPITAL.
THERE COULD BE UNDER INVESTMENTS
IN CERTAIN COMMUNITIES WHEN IT
COMES TO PRIMARY CARE AND
AMBULATORY CARE RESOURCES. WHEN
THAT HAPPENS, PEOPLE COULD SHOW
UP IN THE EMERGENCY ROOM AND TO
HAVE AND BE RECEIVING PRIMARY
CARE THERE. THERE COULD BE UNDER
INVESTMENTS AND THERE COULDN'T
BE. THERE MAY BE INSUFFICIENT
WORKFORCE AND POST ACUTE
DISCHARGE LOCATIONS. I DON'T
KNOW, BUT I WOULD SUSPECT YOU'RE
GOING TO HEAR, UH, TALK THIS
AFTERNOON AROUND. UM UH,
PATIENTS THAT ARE STAYING IN
HOSPITALS BECAUSE THERE'S NÓ
PLACE TO DISCHARGE THEM. THAT
DOESN'T SERVE ANY OF US THAT
DOESN'T SERVE HOSPITALS THAT
DOESN'T SERVE PATIENTS THAT
DOESN'T SERVE THE STATE OF
CALIFORNIA. WE NEED TO MAKE
INVESTMENTS IN THAT
INFRASTRUCTURE AS WELL. MAYBE
UNDER INVESTMENT IN SOCIAL
SERVICES. THERE MAY BE, UH,
PLACES THAT, UH, ARE THERE MAY
BE REASONS OR PEOPLE COMING TO
EMERGENCY ROOMS THAT ARE BETTER
TREATED ELSEWHERE THAT ARE
COMING. AND UM, UH UH, HAVE NÓ
PLACE TO GO AFTER THEY'RE READY
TO BE DISCHARGED. AND SO THE
POINT HERE IS CARE IS CHANGING,
AND IT'S INTERDEPENDENT. AND SO
AS WE'RE THINKING ABOUT SUPPORT
TO THE INFRASTRUCTURE THAT WE
HAVE NOW WE ALSO NEED TO BE
THINKING ABOUT THE SYSTEM THAT
WE WANT TO HAVE. AND THE OTHER
THINGS THAT ARE HAPPENING
OUTSIDE. A HOSPITAL. ON THE NEXT
SLIDE. WE START TO GET INTO WHAT
IS SORT OF AT A HIGH LEVEL, UH,
OF WHAT WE'RE TALKING OR WHAT
WE'RE TALKING ABOUT WHEN WE'RE
TALKING ABOUT HOSPITAL FINANCE,
UH, IN THE STATE OF CALIFORNIA A
GOOD PLACE TO START OR A PLACE
THAT I ALWAYS START IS JUST
TOTAL REVENUE FLOWING INTO THIS
SECTOR. ONE OF THE REASONS WE,
UH, POLICY MAKERS OFTEN FOCUS ON
IT IS IT'S A LOT OF MONEY WE
SPENT, ACCORDING TO THE FEDERAL
GOVERNMENT IN 2020 ABOUT $405
BILLION ON ACUTE CARE SERVICES,
ROUGHLY 40% OF THAT, OR $50
BILLION FLEW INTO THE HOSPITAL
SECTOR. UH THOSE FINANCIAL
RESOURCE, IT'S IMPORTANT TO NOTE
JUST LIKE ANY PLACE IN OUR
ECONOMY. DON'T JUST SHOW UP.
IT'S JUST NOT MONEY OUT OF THIN
AIR. ULTIMATELY ALL THOSE
DOLLARS THAT ARE FLOWING INTO
THIS SECTOR COME FROM
CALIFORNIANS IN THE FORM OF
TAXES THAT THEY'RE PAYING
FEDERAL, STATE AND LOCAL TAXES,
PREMIUMS AND OUT OF POCKET
EXPENSES THAT THEY'RE PAYING
DIRECTLY FOR CARE. UM AND THE
FOREGONE WAGES OF THOSE THAT
HAVE EMPLOYER SPONSORED
INSURANCE. AND SO THIS IS A LOT
OF MONEY. IT ULTIMATELY ALL
COMES FROM CALIFORNIANS. ON THE
NEXT SLIDE. THEN WE START TO DO
A LITTLE BIT MORE OF A
BREAKDOWN. SO WITHIN THIS BROAD
SECTOR THIS BROAD AMOUNT OF
MONEY WE CAN DO. SOME
ILLUSTRATIVE BREAKDOWNS ARE
BASED ON DATA THAT IS SUBMITTED
TO THE DEPARTMENT OF HEALTH
CARE, ACCESS AND INFORMATION. WE
HAVE A PRETTY GOOD SENSE OF HOW
MUCH REVENUE IS COMING FROM
DIFFERENT PAYERS WITHIN THE
STATE OF CALIFORNIA. AND ON THIS
SLIDE, YOU'LL SEE ROUGHLY 60% OF
THE NET PATIENT REVENUE NOW TO
HOSPITALS IS ARE GOING TO
HOSPITALS IN CALIFORNIA IS
ATTRIBUTABLE TO MEDICARE AND
MEDI THE REDS SLICE OF THAT. PIE
CHART. I WILL SAY WHEN YOU GO
BACK, PARTICULARLY OVER THE LAST
10 YEARS IS GROWING. AND SO THE
TAKE HOME MESSAGE THERE IS ME IS
AN INCREASINGLY IMPORTANT PAYER
WHEN IT COMES TO, UH, THE
FINANCIAL REVENUE THAT IS
FLOWING INTO OUR HOSPITALS. ON
THE NEXT SLIDE. WE'RE GOING TO
LIFT UP ONE MORE SORT OF SLICE
OF THE ONION HERE AND THEN, UH,
FOR PURPOSES OF TIME. WE'RE
GONNA HAVE TO CALL IT WE WE'RE
GONNA HAVE TO MOVE ON. BUT
WITHIN THESE LINES OF BUSINESS
IF I LEAVE YOU WITH NOTHING
ELSE. LET ME LEAVE YOU WITH THE
SENSE THAT THERE IS TREMENDOUS
COMPLEXITY THERE TREMENDOUS
COMPLEXITY AND IT'S VERY
COMPLICATED AND DIFFICULT TO
UNTANGLE. BUT THOSE THINGS THAT
WE DO UNTANGLE LEAVE US WITH A
FEW SORT OF CONCLUSIONS. THIS IS
AN ILLUSTRATION OF HOW FINANCING
TO HOSPITALS OR THE SOURCES OF
REVENUE TO HOSPITALS WITHIN THE
MEDICAL PROGRAM. WHAT YOU'LL SEE
WHEN YOU LOOK THERE IS THERE ARE
BASE PAYMENTS FROM MANAGED CARE
PLANS FOR INPATIENT AND
OUTPATIENT CARE. THERE IS
PAYMENTS DIRECTLY FROM THE STATE
FOR INPATIENT AND OUTPATIENT
CARE THROUGH THE FEE FOR SERVICE
PROGRAM. AND THEN THERE ARE
SUPPLEMENTAL PAYMENTS. THE CHART
THAT YOU SEE HERE SHOWS THAT AT
A NATIONAL LEVEL AND THIS COMES
FROM THE MEDICAID PAYMENT
ADVISORY COMMISSION ABOUT 25% OF
THE HOSPITAL'S REVENUE OR
PARTICIPATION IN THE PROGRAM
COMES FROM THE SUPPLEMENTAL
PAYMENT STREAMS. WE HAVE THESE
THINGS HERE IN CALIFORNIA. THE
NUMBER IS ACTUALLY HIGHER. THE
PROPORTION IS ACTUALLY HIGHER IN
CALIFORNIA, AND YOU'LL LIKELY
YOU'LL HEAR FROM DHCS AND THE
PUBLIC HOSPITALS LATER THERE ARE
SOME HOSPITALS WHERE THERE'S
SUPPLEMENTAL PAYMENT STREAMS
ACCOUNT FOR MORE THAN 50% OF
THEIR MEDICAL MEDICAL REVENUE
NOW, AND SO WHAT I TAKE ALL THAT
TO MEAN IS IT'S VERY IMPORTANT
WHEN WE'RE TALKING ABOUT MEDICAL
PAYMENTS AND MEDICAL RATES,
WHICH IS AN IMPORTANT DISCUSSION
THAT I KNOW YOU'RE GOING TO HEAR
A LOT ABOUT TODAY, IT CAN BE
MORE MEANINGFUL TO TALK ABOUT
MEDICAL REVENUE. WHAT IS THE
TOTAL AMOUNT OF MONEY THAT'S
FLOWING INTO A SECTOR? OR A
SYSTEM AND HOW DOES THAT COMPARE
TO THE COSTS RATES IS JUST ONE
PART OR ONE PIXEL OF A BIGGER
PICTURE PORTRAIT HERE. ON THE
NEXT SLIDE. THEN I'M GONNA
CONCLUDE WITH SORT OF A VERY
BASIC INSUFFICIENT BUT THE BEST
I COULD DO OVERVIEW OF HOSPITAL
FINANCE AND SOURCES OF FINANCE
AND IMPORTANTLY, THE COMPLEXITY
IN FINANCE AND MOVES TO WHAT WE
KNOW WHAT WE ALL CAN KNOW. USING
DATA THAT'S COLLECTED, AUDITED
AND REPORTED BY THE STATE OF
CALIFORNIA WHEN WE LOOK AT THAT
DATA WHEN WE ADD UP ALL THE
REVENUE THAT'S COMING IN FROM
ALL THE DIFFERENT PAYERS AND
LOOK AT ALL THE EXPENSES THAT
ARE PAID OUT. WE SOME REALLY, UH
INTERESTING AND IMPORTANT THINGS
. I'LL DIRECT YOUR ATTENTION TO
THE BOTTOM ROW HERE. IT'S
LABELED NET INCOME AND IT SAYS
PRE TAX AND THEN 2019 IS THE
FIRST YEAR AGAIN. THIS IS
LOOKING ACROSS ALL HOSPITALS
WHEN WE DO THAT, WHAT WE SEE IS
ROUGHLY $10 BILLION IN PROFIT IF
IT'S A FOR PROFIT SYSTEM AND NET
INCOME IF IT'S A NONPROFIT
SYSTEM, THIS IS THE YEAR BEFORE
COVID $10 BILLION IN 2020 THE
FIRST YEAR OF THE COVID
PANDEMIC. OBVIOUSLY YOU'LL SEE
THAT NUMBER FALL. IT'S STILL
POSITIVE. IT'S STILL POSITIVE
$5.3 BILLION YOU MOVE TO 2021
AGAIN. THIS IS ALL THE REVENUE
AND ALL THE EXPENSES THROUGHOUT
THE WHOLE SYSTEM. YOU SEE A
SIGNIFICANT REBOUND BACK TO
ABOUT $9 BILLION AND THEN IN
2022 I PRECIPITOUS DROP DOWN TO
AROUND $800 MILLION AND THEN
2020 THREE IS WHERE WE'LL LEAVE
SORT OF THIS SLIDE A VERY
IMPORTANT CAVEAT HERE. THIS
PUBLICLY AVAILABLE STATE DATA
ONLY RUNS RIGHT NOW THROUGH THE
THIRD QUARTER OF 2023. IF WE
ASSUME, THOUGH, THAT THE LAST
QUARTER LOOKS LIKE THE FIRST
THREE QUARTERS OF 2023. WE'RE
ROUGHLY PROJECTING ABOUT $5
BILLION IN NET PROFIT OR NET
REVENUE FOR THE SECTOR AS A
WHOLE. I WANNA SAY TWO REALLY
MORE IMPORTANT THINGS BEFORE WE
CONCLUDE WITH SOME OF THE
IMPORTANT POLICY QUESTIONS AND
CONSIDERATIONS. ON THE NEXT
SLIDE. AND THE NEXT SLIDE AFTER
THAT, BECAUSE IN THE INTEREST OF
TIME WE'LL GO TO THIS VERY
IMPORTANT POINT HERE. NUMBER ONE
WIDE VARIABILITY. WHAT? I JUST
SHOWED YOU WERE EXPENSES AND
REVENUES FOR THE SECTOR AS A
WHOLE. IT IS EXTREMELY IMPORTANT
TO NOTE THAT WITHIN THE SECTOR
IN ANY GIVEN QUARTER, THERE ARE
FACILITIES THAT ARE EXPERIENCING
A POSITIVE MARGIN, SOMETIMES A
VERY POSITIVE MARGIN IN
FACILITIES THAT ARE EXPERIENCING
A NEGATIVE MARGIN AND SOMETIMES
A VERY NEGATIVE MARGIN. AND SO
YOU'LL SEE THAT IN THIS CHART,
YOU'LL SEE THE BOTTOM QUARTILE,
THE WORST PERFORMING HOSPITALS
ON A ON A FINANCIAL MARGIN IN
ANY GIVEN QUARTER AND YOU'LL SEE
TOP QUARTILE. A NOTE ON THIS
VARIABILITY, THOUGH IT GOES EVEN
DEEPER THAN THAT. WHEN WE LOOK
WITHIN THESE LINES, WHAT THESE
LINES REPRESENT ARE A CERTAIN
NUMBER OF HOSPITALS ABOUT 70 OR
80. THESE QUARTS OF PERFORMANCE
ARE NOT STABLE AND SO A HOSPITAL
FROM ONE QUARTER TO THE NEXT IS
MOVING IN AND OUT OF A QUARTILE
OF THIS ONE MEASURE OF FINANCIAL
PERFORMANCE THAT HAS IMPORTANT
IMPLICATIONS AND JUST MAKES YOUR
JOB A LITTLE BIT HARDER WHEN
YOU'RE TRYING TO THINK ABOUT HOW
YOU TARGET REVENUE. THE OTHER
REALLY IMPORTANT THING TO NOTE.
HERE IS WE HAVE DONE ALL SORTS
OF STATISTICAL ANALYSIS AND
FOUND THINGS THAT I WILL QUITE
FRANKLY SURPRISE ME PERSONALLY
QUITE A BIT, AND WE KEEP FINDING
THEM. ONE OF THEM IS THE
ORGANIZATIONAL CHARACTERISTICS
THAT WOULD LEAD A FACILITY TO
HAVE PARTICULARLY HIGH OR
PARTICULARLY LOW PERFORMANCE ON
THIS MEASURE, AND THERE, I WILL
TELL YOU WE CAN'T FIND
STATISTICAL CORRELATIONS BETWEEN
THINGS LIKE URBAN AND RURAL
STATUS. WE DON'T FIND
STATISTICAL CORRELATIONS.
BETWEEN THE NUMBER OF MEDICAL
DISCHARGES AND FINANCIAL
PERFORMANCE. THAT IS THAT REALLY
SURPRISED ME THAT SURPRISES
FOLKS WHEN I TALK TO THEM TODAY,
AND I WILL TELL YOU IT'S REAL.
IT'S SOMETHING WE FOUND. IT'S
SOMETHING THAT OTHER FOLKS HAVE
FOUND. ON THE NEXT SLIDE, THE
LAST SORT OF TAKEAWAY FROM OVER
THIS OVERALL SORT OF FINANCIAL.
UM UH, DISCUSSION IS I HAVE JUST
SHOWN YOU ONE THING, WHICH IS
FINANCIAL MARGINS. FINANCIAL
MARGINS AGAIN ARE ONE PART OF A
BROADER PICTURE THAT YOU NEED TO
LOOK AT. WHEN YOU'RE AVAIL,
EVALUATING FINANCIAL PERFORMANCE
, AND WE'LL HEAR FROM HÌ Kò
LATER. I KNOW THAT TEAM LOOKED
AT SOME OF THESE OTHER MEASURES
WHEN THEY WERE MAKING DECISIONS
ABOUT THE DISTRESSED HOSPITAL
LOAN PROGRAM. I THINK OF THESE
THINGS ARE INTUITIVE IF YOU LOOK
AT INCOME AND EXPENSES IN ANY
GIVEN QUARTER, JUST LIKE YOU
WOULD FOR A FAMILY OR AN
INDIVIDUAL THAT'S REALLY
IMPORTANT INFORMATION. BUT
EQUALLY IMPORTANT IS HOW MUCH
FINANCIAL REVENUE DID OR HOW.
WHAT ARE THEIR RESERVES? WHAT
ARE THEIR SAVINGS? WHAT CAN THEY
DRAW FROM? WHEN THEY GO TO THE
CAPITAL MARKETS? HOW MUCH MONEY
CAN THEY RAISE? THESE ARE ALL
IMPORTANT THINGS AND JUST ADD TO
THE COMPLEXITY HERE, WHICH IS
LIKE WE CAN LOOK AT MARGINS.
MARGINS ARE IMPORTANT. BUT
AGAIN, IT'S JUST A SMALL PIECE
OF AN OVERALL PICTURE. LET ME
CONCLUDE THEN, IN THE INTEREST
OF TIME, I'M KIND OF BRUSHING UP
AGAINST MY 15 MINUTES, BUT I
WANNA I WANNA LEAVE YOU WITH
MAYBE UH TO OR OR MAYBE THREE
QUESTIONS AND THOSE ARE ON SORT
OF THE NEXT SLIDE. I WOULD SAY
THERE'S MAYBE TWO REALLY KEY
THINGS HERE TO REITERATE. NUMBER
ONE. THERE'S ONE OF THE ONE OF
THE LEVERS AVAILABLE TO YOU IS
AROUND, UM, MEDICAL PAYMENTS AND
MEDICAL PAYMENT RATES. AND THERE
IS A QUESTION ABOUT WHETHER
MEDICAL PAYMENT RATES ARE TOO
LOW OR TOO HIGH. THAT IS VERY
COMPLICATED. I'M VERY GLAD THE
DEPARTMENT IS HERE TO TALK ABOUT
IT. I'M SURE YOU WILL HEAR
PERSPECTIVES FROM ALL THE
HOSPITALS HERE ABOUT, UH, WHERE
THOSE RATES ARE AGAIN. I WOULD
REMIND YOU. THE DISCUSSION ABOUT
RATES IS HELPFUL. WHAT'S EVEN
MORE HELPFUL IS THE DISCUSSION
ABOUT REVENUE. I THINK IT'S MORE
HELPFUL TO UNDERSTAND, AND I
WISH WE ALL HAD MORE INFORMATION
ABOUT UNDERLYING COSTS.
INCREASING REVENUE INTO, UH, THE
SECTOR WILL UNDOUBTEDLY IMPROVE
A BALANCE SHEET IF COSTS ARE
HELD EQUAL. THAT IS A HUGE
ASSUMPTION THAT WE KNOW FROM THE
LITERATURE AND THE RESEARCH
THAT'S BEEN DONE HERE THE AMOUNT
OF MONEY THAT'S FLOWING IN OR
THOSE PAYMENTS IMPACT THE
UNDERLYING COSTS. WE CAN TALK
MORE ABOUT THAT IN Q AND A IF IT
WOULD BE HELPFUL, BUT THAT IS AN
IMPORTANT THING TO CONSIDER. IF
WE'RE PURELY CHASING, UM A MORE
FAVORABLE PAYMENT TO COST RATIO.
WE MAY NEVER CATCH UP. WE MAY
NEVER GET THERE BECAUSE AGAIN
THE NUMERATOR, THE PAYMENTS
IMPACT THE COSTS. ON THE NEXT
SLIDE SORT OF THE LAST SLIDE.
THERE'S ONE FINAL SORT OF
QUESTION. THE LAST BOARD, UM, IS
PERHAPS THE CORE OF WHAT YOU'RE
WRESTLING WITH HERE, WHICH I
THINK IS PROVIDING ADDITIONAL
FUNDING OR PUBLIC SUBSIDIES, A
GOOD USE OF PUBLIC RESOURCES. MY
GOODNESS GRACIOUS. THAT IS A
DIFFICULT QUESTION. UM AND I
DON'T HAVE THE ANSWER FOR YOU.
UM WHAT I DO HAVE ARE SOME OF
THE IMPORTANT CONSIDERATIONS
THAT I KNOW YOU'RE WRESTLING
WITH AGAIN. THIS IS A VERY
IMPORTANT PART OF OUR HEALTH
CARE DELIVERY SYSTEM. IT'S NOT
THE ONLY PART OF OUR HEALTH CARE
DELIVERY SYSTEM. IT IS IN
INTERDEPENDENT WITH THE OTHER
PARTS. IF YOU HAVE PUBLIC
RESOURCES YOU COULD MAKE YOU
HAVE CHOICES ABOUT HOW YOU
INVEST THOSE FOR SOME
COMMUNITIES. IT MAY MAKE SENSE
TO DIRECT THOSE HOSPITALS FOR
OTHER COMMUNITIES, IT MAY MAKE
MORE SENSE TO DIRECT THOSE TO
PRIMARY CARE PROVIDERS OR
INVESTMENTS IN BEHAVIORAL HEALTH
. THOSE ARE REALLY DIFFICULT
DECISIONS. IF I LEAVE YOU WITH
NOTHING ELSE. YOU HAVE A REALLY
HARD JOB. THERE'S A LOT OF
VARIABILITY. IT'S REALLY HARD TO
MAKE SORT OF BLANKET POLICY. YOU
HAVE TO GO COMMUNITY BY
COMMUNITY HOSPITAL BY HOSPITAL.
AND THERE. I JUST ABOUT MADE IT
IN 15 MINUTES. I'M SORRY. THAT
WAS MORE LIKE ANSWER. THANK YOU
SO MUCH. UM, THAT WAS A LOT OF
INFORMATION TO DIGEST. UM, BUT
THANK YOU SO MUCH. BEFORE I. I
TURN IT OVER AND SEE IF ANY OF
MY COLLEAGUES HAVE ANY
QUESTIONS. ONE OF THE THINGS I
DO WANNA STATE AND I SHOULD HAVE
STATED IT FROM THE BEGINNING. UM
IS THAT WE WILL HAVE PUBLIC
COMMENT AT THE END OF THIS
HEARING. AFTER ALL OF THE PANELS
IS WHEN WE WILL ACTUALLY HAVE
PUBLIC COMMENT. SO WITH THAT, UM
I WILL SEE IF ANY OF MY
COLLEAGUES HAVE ANY QUESTIONS. I
JUST HAVE ONE QUESTION. UM IN
ONE OF YOUR SLIDES THAT DENOTED
THE INCOME MARGIN ANALYSIS
BETWEEN 2019 AND TODAY. UM SO
THERE WAS A MAJOR DROP IN 20
22ND. WHAT? IS YOUR CONCLUSION
IN TERMS OF WHY WE SAW SUCH SUCH
SIGNIFICANT DROP IN THE NET
INCOME. YEAH, 2022. IF WE GO
BACK THERE, THERE'S A COUPLE OF
REASONS SO NUMBER ONE THE AMOUNT
OF REVENUE THAT WAS FLOWING INTO
HOSPITALS DECREASED IN 2022 NET
PATIENT REVENUE OR THE AMOUNT OF
MONEY THAT WAS FLOWING IN FOR
PATIENT CARE INCREASED THE
AMOUNT OF MONEY WHAT IS CALLED
NON OPERATING REVENUE, WHICH IS,
UH, ALL HOSPITALS IN THE STATE
OF CALIFORNIA HAVE, UH, AT LEAST
SOME OF THIS. THIS IS, UH, MONEY
THAT FLOWS INTO THE FACILITY
SOMETIMES RETURNS ON LIKE AN
ENDOWMENT. UH, RENT FROM LEA.
LIKE A DOCTOR'S OFFICE. THESE
NON OPERATING REVENUE SOURCES
FELL DRAMATICALLY IN 2022, AND
SO THERE WAS AN OVERALL DECREASE
IN THOSE REVENUES WHILE PATIENT
CARE REVENUES INCREASE NON
OPERATING REVENUE DECREASED. AND
THE OTHER THING THAT HAPPENED
WAS EXPENSES, WHICH I KNOW
YOU'LL HEAR ABOUT EXPENSES
AROUND STAFFING AND SUPPLIES.
THOSE WERE UP THOSE MODERATE
THOSE BEGAN TO MODERATE AT THEIR
HIGHER BUT THEY'VE MODERATED IN
2022, BUT IT'S NÓ MORE
COMPLICATED THAN AND DECREASED
REVENUE AND INCREASED EXPENSES.
AND WHEN YOU ADD ALL THOSE
THINGS UP AGAIN, ACROSS ALL
THESE HOSPITALS, YOU SEE ROUGHLY
$800 MILLION IN, UH, PROFIT OR,
UM, UH, NET REVENUE. THANK YOU
VERY MUCH. UM I WANT YOU WERE
TALKING ABOUT THE GRAPHS. I
WANNA CALL TO YOUR ATTENTION.
UH, THIS PARTICULAR GRAPH AND
YOU MADE A COMMENT THAT, UM,
THERE YOU WERE SURPRISED IN
TERMS OF A COMPARISON AND
CONTRAST AND THE COMPARISON WAS
WAS THE SAME. CAN YOU ELABORATE
ON ON THAT PLACE? I THINK THERE
WHEN YOU KNOW WHEN I LOOK AT
THAT GRAPH. THERE WERE TWO
THINGS THAT WERE, UH, MAYBE ONE
THING THAT'S REALLY IMPORTANT
AND ONE THING THAT REALLY
SURPRISED ME. THE THING THAT'S
REALLY IMPORTANT IS THERE'S
INSTABILITY IN THE COMPOSITION.
OF THE PERFORMANCE AND SO WHAT
YOU KNOW, AND SORT OF MORE
DIRECTLY IF YOU HAVE A POOR
MARGIN IN ANY GIVEN QUARTER THAT
DOESN'T PREDICT WHETHER YOU'LL
HAVE A POOR MARGIN IN A
SUBSEQUENT QUARTER OR HAD A POOR
MARGIN IN A PREVIOUS QUARTER.
THAT'S SORT OF AN IMPORTANT
PART. THOSE LOW PERFORMERS ARE
DEPICTED ON THAT GRAPH ARE
BOUNCING AROUND AND THEN THE
VERY SURPRISING THING TO ME
PERSONALLY WAS LOOKING FOR
CORRELATION. STATISTICAL
CORRELATIONS BETWEEN MEDICAL
DISCHARGES AND THIS TOTAL MAR
TOTAL REVENUE MARGIN
PERFORMANCE. WE COULDN'T FIND
ANY STA. CORRELATIONS AND WE
LOOKED EVERYWHERE AND TALKED TO
AN AWFUL LOT OF FOLKS. THAT IS
SURPRISING. THAT WAS SURPRISING
TO ME. WHAT I TAKE FROM THAT,
THOUGH, IS IT IS POSSIBLE. THERE
ARE HOSPITALS. ABSOLUTELY THAT
ARE LOSING MONEY ON ME. IT IS
ALSO POSSIBLE TO MAKE MONEY ON
ME. THERE ARE DECISIONS THAT CAN
BE MADE ABOUT COST STRUCTURES,
AND NOT EVERYONE HAS PERFECT
CONTROL OVER EVERYTHING, AND IT
IS POSSIBLE THE DATA BEAR IT OUT
. THERE ARE HOSPITALS THAT ARE
SEEING A HIGH PROPORTION OF
MEDICAL PATIENTS AND ARE
PROFITABLE. Dð Kò. WHAT WHAT
HOSPITALS CAN YOU TALK ABOUT? IF
YOU WOULD PLEASE, BECAUSE THE
REASON WHY I ASK BECAUSE I
REPRESENT MARTIN LUTHER KING
COMMUNITY HOSPITAL AND YOU KNOW,
I CAN'T REMEMBER THE EXACT
PERCENTAGE. BUT MOST OF ALL OF
THE CARE THAT COMES IN OR PEOPLE
WHO CAN'T PAY AS ME, AND THAT'S
WHAT YOU ALL KNOW THAT THE
REIMBURSEMENT IS EXTREMELY LOW.
AND SO I NEED TO UNDERSTAND AND
COMPARE AND CONTRAST WHAT
HOSPITALS RECEIVE A GREAT DEAL
AND STILL ARE PROFITABLE. YEAH
SO FORTUNATELY WHAT? WE LIVE IN
CALIFORNIA, AND SO WE HAVE. WE
ALL HAVE ACCESS TO PUBLIC DATA
ON REVENUE AND EXPENSES. THAT
AGAIN IS REPORTED TO THE
DEPARTMENT OF HEALTH CARE,
ACCESS AND INFORMATION, AUDITED
AND THEN PUBLISHED AND SO WE CAN
LOOK AT INDIVIDUAL HOSPITALS AND
SEE WHAT THEIR REVENUE MARGIN IS
IN ANY GIVEN QUARTER AND OVERALL
THROUGHOUT THE YEAR. THIS GETS
VERY COMPLICATED, VERY QUICK,
BUT WE CAN DO BREAKDOWNS BY
REVENUE ATTRIBUTED TO ME AND,
UH, EXPENSES ATTRIBUTED TO HAD A
COW AND WE CAN ALL DO THAT. AND
I'M HAPPY TO FOLLOW UP WITH A
LIST. UH, FOR YOUR OFFICE
AFTERWARDS. IF YOU WOULD PLEASE,
THAT WOULD JUST HELP. FRAME.
SOME QUESTIONS THAT I HAVE AND
TO BE CLEAR. THERE IS VARIATION
WITHIN THIS FINDING, TOO, AND SO
WHEN WE LOOK, THERE ARE ALSO
HOSPITALS THAT, UH, ARE NOT
RECEIVING MEDICAL REVENUE THAT
IS COMMENSURATE WITH THEIR
COSTS. WHAT THE SORT OF THE
OVERALL CONCLUSION HERE IS
THERE'S VARIATION WHEREVER WE
LOOK. OK, I. I WOULD JUST SAY
THAT IT'S I. I WOULD LOVE TO GET
THAT DATA BECAUSE IF YOU, UM IF
YOU'RE A HOSPITAL, AND YOU'RE
SURROUNDED IN A LOW INCOME
COMMUNITY IS GOING TO BE
EXTREMELY HARD. YOU'RE GONNA
RELY ON MEDICAL PATIENTS COMING
IN. AND THOSE INDIVIDUALS
RECEIVING THE SERVICES, UM AND
THEN TRYING TO FIND A PROFIT IN
THAT I. I JUST FIND THAT HARD,
BUT I WOULD LOVE TO SEE THE
DATA. ABSOLUTELY. THANK YOU. I
DO WANT TO ECHO THE CONCERNS OF
MY COLLEAGUE GIG. UH, GIBSON. UM
I WOULD HAVE APPRECIATED IF YOU
WOULD HAVE COME. HERE UH,
PREPARED TO ENUMERATE THOSE
HOSPITALS THAT YOU HAVE.
CONCLUDED. UH, HAVE ME
REIMBURSEMENTS. UH, COST
CONTROLS. APPARENTLY, UH, THAT
CREATE THE OPPORTUNITY THEN TO
HAVE, UH, YOU KNOW, UH MORE
REVENUE THAT THEN THERE THAN
THEIR EXPENSES, SO I WOULD LIKE
TO HAVE THAT INFORMATION AS WELL
, PARTICULARLY ALONG WITH MY
COLLEAGUE. UH, SORRY. UH UH. WE
HAVE IN COMMON. A BIG CONCERN
FOR THE MADERA HOSPITAL, AND SO
WHEN THEY COME UP, WE'RE GONNA
HAVE SOME CONVERSATIONS ABOUT
THAT AS WELL. BECAUSE I DO THINK
THAT THE COURT IN THAT
PARTICULAR CASE IS MOVING
FORWARD IN A IN A GOOD WAY. UM
I'VE SEEN THE AMERICAN ADVANCED
MANAGEMENT. UH, PROPOSALS, UH,
THEY HAVE A HISTORY OF
INTERVENING WITH HOSPITALS
SIMILAR TO MADEA AND, UM HAVE I
THINK THE RESOURCES NECESSARY TO
GET GET THAT DONE. UM BUT AT THE
SAME TIME, UH, IF YOU'RE GOING
TO MAKE, UH REFERENCES TO SOME
HOSPITALS THAT UH, HAVE THE
SIMILAR KINDS OF PROBLEMS WITH
REIMBURSEMENT THAT MADEA HAD AND
YET PREDOMINANTLY MEDICAL UH,
PATIENTS. UH, IT WOULD BE VERY
HELPFUL TO KNOW WHAT THOSE
HOSPITALS ARE. I'D LIKE TO
REVIEW THEM, PARTICULARLY IN THE
CONTEXT OF THE MADERA HOSPITAL
TO TRY TO FIGURE OUT IS THERE A
PATHWAY? WITH RESPECT TO, UH,
REVENUE. UH, THE, UH A PROPOSAL
WHAT THE BANKRUPTCY COURT IS
GOING TO DO, UM THERE IS SOME
HOPE THAT THE MADEA CAN OPEN IN
A IN A IN A FEW MONTHS. AND THE
COURT IS MOVING FORWARD TO DO
THAT. UH, WE LOOK FORWARD TO
THAT, UM BUT AT THE SAME TIME, I
REALLY WANT TO KNOW IF THERE ARE
WHAT THOSE HOSPITALS LOOK LIKE.
THAT YOU JUST ENUMERATED AND GET
INTO THE FINER PRINT. UM BECAUSE
IF THEIR HOSPITALS WITH HIGH
MEDICAL PATIENTS BUT HAVE FOUND
A WAY TO MANAGE. COST THAT WOULD
BE A VERY HELPFUL SET OF DATA
FOR WHAT WE'RE GOING THROUGH IN
MADEIRA. WE DO NOT WANT TO OPEN
THAT HOSPITAL AGAIN, ONLY TO
FIND THAT IT CLOSES AGAIN. SO WE
REALLY DO NEED TO UNDERSTAND
THAT THAT COST AND REVENUE
MATRIX AND COMPARE AND CONTRAST
HOSPITALS THAT MAKE IT WORK AND
HOSPITALS THAT HAVE FAILED.
YEAH, THANK YOU. APPRECIATE THE
POINTS AND APPRECIATE YOU KNOW,
THE APPRECIATE HAVING
REPRESENTATIVES FROM MADEA HERE
BECAUSE AGAIN I THINK YOU NEED
NEED TO GO TO YOU KNOW, HOSPITAL
BUT BY HOSPITAL, THERE ARE
STORIES THERE THERE IS REPORTING
THAT'S BEEN DONE VOLUMINOUS
REPORTING ON THE SITUATION
WITHIN MADEIRA AND THERE ARE
DIFFERENT OPINIONS. AND SO I'M
REALLY GLAD ABOUT WHY THAT
HOSPITAL WAS STRUGGLING, AND SO
I'M REALLY GLAD THEY'RE HERE TO
PROVIDE THEIR PERSPECTIVE. WELL
I WANNA THANK MY COLLEAGUES FOR
THEIR QUESTIONS. AND THANK YOU
SO MUCH FOR BEING HERE. LIKE I
SAID, YOU ARE. YOU PUT A LOT
INTO A SHORT AMOUNT OF TIME. UM
HOSPITAL FINANCING IS EXTREMELY
COMPLICATED. AND YOU KNOW, I
THINK ONE OF THE REASONS WHY
YOU'VE SEEN SO MANY QUESTIONS
OVER THIS ONE VARIABILITY GRAPH
IS BECAUSE, UM, A LOT OF TIMES
THE CONVERSATION AROUND, UH,
HOSPITALS IN DISTRESS HAVE TO DO
WITH THE PAYER MIX. AND SO THE
FACT THAT UM, WHEN YOU ALL RAN
THE DATA, YOU SAW NÓ STATISTICAL
SIGNIFICANCE WHEN YOU PUT IN
THESE DIFFERENT VARIABLES IS, I
THINK SHOCKING FOR ALL OF US UP
HERE BECAUSE IT GOES AGAINST THE
THINGS THAT WE HAVE BEEN TOLD,
UM, AND SOME OF THE THINGS THAT
PEOPLE MAY HAVE, YOU KNOW,
POTENTIALLY SEEN IN THEIR
COMMUNITIES. HOWEVER, TO YOUR
POINT THERE IS DIFFERENCES IN
HOW DIFFERENT HOSPITALS MANAGE
THEIR MONEY. HOW THEY, UM YOU
KNOW WHAT THEY CHOOSE TO INVEST
IN AND SOME OF THEIR REVENUES
AND THINGS LIKE THAT. AND SO,
UM, IT WOULD BE VERY HELPFUL.
NOT ONLY WHEN YOU'RE LOOKING AT
MADEIRA, BUT REALLY EVERY
HOSPITAL IN ALL OF OUR OUR
DISTRICTS, BECAUSE, UM, THEY'RE
ALL HAVE FACING SOME SIGNIFICANT
CHALLENGES. AND, UM FROM A
LEGISLATURE POINT OF VIEW. WE'RE
TRYING TO FIGURE OUT WHAT WE CAN
DO, HOW WE CAN IMPROVE IT. UM I
KNOW WHEN I SAY LIKE ONE SIZE
DOESN'T FIT ALL BUT WE HAVE TO
FIGURE SOMETHING OUT THAT CAN BE
USED, UM, UP AND DOWN THE STATE.
ONE OF THE, UH, ONE OF THE
OTHER. THINGS I FOUND SURPRISING
, UM, WAS IN THE, UH, HOSPITAL
INCOME MARGIN ANALYSIS AND SO IN
YOUR GRAFT. UM IT SHOWS A 5 TO
$6 BILLION PROFIT. IS THIS
CORRECT? OVERALL. YEAH 2023. IF
WE MAKE THE ASSUMPTION THE LAST
QUARTER OF 2023 IS CONSISTENT OR
LOOKS GENERALLY THE SAME AS THE
FIRST THREE QUARTERS OF 2023. IT
LOOKS LIKE THE INDUSTRY AS A
WHOLE AGAIN IS ON TRACK FOR
AROUND $5 BILLION AND NET
REVENUE OR PROFIT. SO HOW DO WE
RECONCILE THIS ONGOING
PROFITABILITY OF HOSPITALS AS A
WHOLE WHEN WE'RE HEARING THAT
HOSPITALS AND ARE IN SUCH
FINANCIAL DISTRESS. THIS IS SO
CHALLENGING AND AGAIN IT POINTS
I THINK TO THE VARIABILITY. AND
SO YOU MENTIONED YOU ARE MAKING
YOU KNOW YOU'RE TALKING ABOUT
PUBLIC POLICY FOR THE STATE AS A
WHOLE, WHICH IS WHAT YOU NEED TO
DO. AND WHEN IT COMES DOWN TO IT
LIKE I THINK IT REALLY TAKES
LIKE A HOSPITAL BY HOSPITAL
COMMUNITY BY COMMUNITY ANALYSIS.
THERE ARE HOSPITALS THAT ARE IN
COMMUNITIES THAT DON'T HAVE THE
RESOURCES THEY NEED IN ORDER TO
MEET THE NEEDS OF THAT
COMMUNITY. THAT IS ABSOLUTELY
TRUE. AND IN ORDER TO YOU HAVE
TO LOOK AND FIND IT AND IT'S
JUST AGAIN. I SEE VARIABILITY IS
SORT OF THE NUMBER ONE THING
THAT JUMPS OUT TO ME. I. I WISH
THERE WAS ONE SORT OF LIKE, UM
THERE WAS ONE CHARACTERISTIC OR
ONE OPTION THAT WOULD KIND OF
FIX IT OR FIX FIX. PUT EVERYONE
ON SOUND FINANCIAL FOOTING AND
JUST DON'T SEE THAT I REALLY SEE
A TAILORED SOLUTIONS IN LOCAL
COMMUNITIES. SO I KNOW YOU. YOU
ARE, UM, HERE AT THE CALIFORNIA
HEALTH. HEALTH CARE FOUNDATION.
DO YOU HAVE THESE KIND OF
CONVERSATIONS WITH, UM SIMILAR
INDIVIDUALS IN OTHER STATES? ARE
THEY HAVING THE SAME CHALLENGES
DO THEY HAVE THE SAME
VARIABILITY THAT YOU'RE SEEING
HERE IN CALIFORNIA? UH, WITH
FOLKS NATIONALLY, YOU KNOW,
FOLKS THAT ARE INVOLVED IN THE
NATIONAL LEVEL AND FOLKS THAT
ARE INVOLVED IN OTHER STATES.
AND UH YES, I WOULD SAY THIS IS
A TOPIC OF CONVERSATION THAT IS
HAPPENING ACROSS THE COUNTRY.
THERE ARE OTHER ELEMENTS OF THIS
CONVERSATION. WE DIDN'T TOUCH ON
LABOR AND DELIVERY UNITS AND
SORT OF RURAL MATERNITY. I THINK
WE HAVE SOME PANELISTS LATER
TODAY. THAT PROBABLY WILL TOUCH
ON THAT. THAT IS ANOTHER ISSUE
THAT ABSOLUTELY NATIONALLY. UM,
HAS SOME TRACTION AND FOLKS ARE
WRESTLING WITH RIGHT NOW. WELL
THANK YOU SO MUCH. UH, WE'RE
GONNA GO AHEAD AND MOVE ON TO
OUR SECOND PANEL, WHICH WE'LL BE
SHARING EXPERIENCES AND
PERSPECTIVES OF PRIVATE
HOSPITALS. WE WILL HEAR FROM THE
FOLLOWING SPEAKERS. KAREN PANON
NELLI èC E Ó OF MADEIRA
COMMUNITY HOSPITAL DOCTOR ELAINE
BACHELOR, èC E Ó OF MARTIN
LUTHER KING COMMUNITY. HEALTH
CARE. TODD HUFF HNS I'M SORRY IF
I'M PRONOUNCING YOUR NAME
INCORRECTLY. COO OF ADVENTIST
HEALTH, JIM SE èC E Ó OF
RIDGECREST REGIONAL, AND SCOTT
EVANS èC E Ó OF SHARP REGIONAL
HOSPITALS. AND WE WILL BEGIN
WITH A MADEA COMMUNITY HOSPITAL.
CAN YOU HEAR ME? OK? HOW ABOUT
THERE? IS THAT BETTER? OK, HØI
HØI. GOOD AFTERNOON. MY NAME IS
KAREN PINELLI AND I AM THE èC E
Ó OF MADEA COMMUNITY HOSPITAL.
I WORKED AT THE HOSPITAL FOR OF
ALMOST 35 YEARS, BUT IT'S BEEN
THE èC E Ó FOR ABOUT FIVE
YEARS. UM MAYBE A YEAR AND A
HALF BEFORE THE PANDEMIC HIT,
BUT ANYWAYS, I WANNA THANK YOU
ALL FOR ALLOWING ME THE
OPPORTUNITY TO ADDRESS THIS
COMMITTEE HERE TODAY, AND I AM
HERE TO SPEAK ABOUT WHAT LED TO
THE CLOSURE OF THE COMMUNITY
HOSPITAL BACK IN 2022. TO JUST
GIVE YOU SOME BACKGROUND ON OUR
HOSPITAL. MADEIRA COMMUNITY
HOSPITAL IS 100 AND SIX BED
ACUTE CARE HOSPITAL LOCATED IN
THE CENTRAL VALLEY. UH AND, UH,
WE HAVE BEEN SERVING OUR
COMMUNITY PRIOR TO OUR CLOSING
FOR 51 YEARS. ALTHOUGH WE WERE
ABLE TO SURVIVE THE PAST 51
YEARS, IT WAS NOT WITHOUT
CHALLENGES. SOME HISTORICAL
CHALLENGES WE FACE. WE'RE NOT
HAVING REALLY ENOUGH MONEY TO
REALLY INVEST BACK INTO OUR
INFRASTRUCTURE. AH BUT IN 2018
AND 2019. UM, I'M TALKING ABOUT
THIS BECAUSE IT DID REALLY
AFFECT US AS WE AS A PANDEMIC
HIT, BUT WE MOVE FORWARD WITH,
UH, WITH THREE PROJECTS FOR OUR
HOSPITAL. IT WAS GREATLY NEEDED.
UM AND THEY WERE EXPENSIVE
PROJECTS, AND THE FIRST ONE WAS
A RELOCATION OF OUR PHARMACY AND
WE WERE DOING THAT BECAUSE THERE
WAS REGULATORY CHANGES THAT WERE
IN EFFECT THAT WE NEEDED TO DO
TO MEET THE NEW STANDARDS, AND
THE SECOND PROJECT WAS REPLACED
TO REPLACE ONE OF OUR AIR
HANDLERS. UM THIS AIR HANDLER.
WELL, ALL OF OUR AIR HANDLERS
WERE 51 YEARS OLD AS OLD AS A
HOSPITAL. IF YOU CAN IMAGINE
THAT WE HAD REPLACED ONE
ALREADY. WE WERE ON OUR SECOND
ONE. THEY WERE VERY COSTLY AND
THE THIRD PROJECT WAS A
RADIOLOGY REMODEL TO REPLACE A
VERY AGING UH èC Tð SCANNER,
AND IT WAS ALMOST 1415 YEARS OLD
AND A 25 YEAR OLD FLUOROSCOPY X
RAY UNIT AND SO AS YOU CAN SEE,
THESE ARE REALLY IMPORTANT, UH,
PROJECTS FOR A HOSPITAL, BUT WE
WENT FORWARD. WE HAD ENOUGH
MONEY AND RESERVES IN OUR BANK
TO DO THESE PROJECTS. AND UH, SO
I'M GIVING YOU THAT HISTORY
BECAUSE WHO WOULD HAVE KNOWN
THAT JUST THE NEXT YEAR THE
PANDEMIC WOULD HIT PRIOR TO THE
ONSET OF COVID-19 PANDEMIC. WE
MANAGED TO MAINTAIN A SEMBLANCE
OF FINANCIAL STABILITY WITH GOOD
RESERVES FOR HOSPITAL OF OUR
SIZE. WHEN WE USED TO DO OUR
COST REPORTS IT ALWAYS SAY HØI
COMPARED TO OTHER HOSPITALS.
MADEIRA IS DOING VERY WELL. OUR
PAIR MIX WAS MADE UP OF
PRIMARILY GOVERNMENTAL PAYERS
AND BEING A SMALL INDEPENDENT
FACILITY. WE WERE ABLE TO
SURVIVE IT, BUT IT WAS ALWAYS
REALLY TOUGH FINANCIALLY. PRIOR
TO THE PANDEMIC. OUR DEBT WAS
$5.6 MILLION. AND THE REASON WE
HAD THAT DEBT BECAUSE WE BUILT A
NEW FACILITY PLANT SOME YEARS
BACK, AND WE WERE STILL PAYING
FOR THAT, UM AND THEN 2020 CAME
AROUND. AND WITH IT, THE
PANDEMIC THAT CHANGED EVERYTHING
FOR MADEIRA. WE WERE AMONGST THE
FIRST IN THE VALLEY TO RECEIVE A
PATIENT WITH COVID. AND OUR
SMALL HOSPITAL WAS HIT VERY
HARD. AND THE FINANCIAL STORM OF
COVID FOLLOWED. REALLY THERE WAS
NOTHING THAT COULD HAVE PREPARED
OUR SMALL LITTLE HOSPITAL FOR
THE THREE YEAR DEVASTATION THAT
THAT FINANCIAL DEVASTATION THAT
COVID LEFT US WITH. I REALLY
SPEAK ABOUT COVID TODAY BECAUSE
THAT WHERE I SIT TODAY, THE
COVID IMPACT TO ME. UM HOW I SIT
TODAY HAS BEEN LONG FORGOTTEN.
ARE THERE SOME SORT OF A
DISCONNECT WITH HOW IT REALLY
AFFECTED HOSPITALS? BEFORE I GET
INTO OUR HOSPITAL GOT INTO
FINANCIAL RUIN. I WANNA TALK
ABOUT HOW IMPORTANT OUR HOSPITAL
WAS TO OUR COMMUNITY DURING THE
PANDEMIC. I BELIEVED ALL OF US
WHO WORKED THE FRONT LINES OF
COVID. WILL FOREVER BE CHANGED
BECAUSE OF THAT EXPERIENCE, AND
I HAVE NOTHING BUT PRAISE FOR
OUR FRONT LINE WORKERS, NURSES,
DOCTORS WHO SUPPORTED OUR
HOSPITAL AND OUR COMMUNITY
DURING THIS DIFFICULT TIME. OUR
HOSPITAL STEPPED UP DURING THE
PANDEMIC AND SERVED OUR
COMMUNITY AND ANY CAPACITY THAT
WE COULD, AND ALTHOUGH WE
RECOGNIZE THE FINANCIAL STRAIN
EARLY ON, WE CONTINUE TO DO WHAT
WAS NEEDED AND THAT WAS TO SAVE
LIVES. AS WE FINISH. AS WE
FINISH THE FIRST YEAR OF THE
PANDEMIC, THERE DID NOT SEEM TO
BE AN END INSIGHT IN THE VOLUME
OF PATIENTS COMING INTO OUR
HOSPITAL WITH COVID. AND IN THE
BEGINNING OF 2021, OUR BOARD OF
TRUSTEES PROACTIVELY MADE A
DECISION TO LOOK FOR A PARTNER.
WE KNEW WE WERE NOT GONNA
SURVIVE THIS. WE BEGAN WORKING
WITH ST AGNES ON AN AFFILIATION
THAT WOULD STAND FOR A LONG 13
TO 14 MONTH PROCESS. PART OF THE
AGREEMENT WITH SAINT AGNES WAS
TO MAINTAIN ALL OF OUR SERVICES
BECAUSE SURELY WE WOULD HAVE
CHANGED SOMETHING IF WE COULD
HAVE UH, BUT PART OF THAT
AGREEMENT WAS TO MAINTAIN THOSE
SERVICES AS WE WORKED THROUGH
THAT, UH UM AFFILIATION PROCESS
IN SAINT AGNES WORKED ON ITS DUE
DILIGENCE. SAINT AGNES AT THE
BEGINNING OF THE AFFILIATION
LONE MADEIRA COMMUNITY HOSPITAL
$15 MILLION WHILE THE PROCESS
PLAYED OUT 5 MILLION WAS TO PAY
OFF THE DEBT THAT WE HAD THE
$5.6 MILLION DEBT. AND WE WERE
NÓ LONGER, YOU KNOW, MEETING THE
COVENANTS OF THE LOAN, AND WE
NEEDED TO GET THAT PAID OFF. UH,
THE OTHER 5 MILLION WAS TO
FINISH THE PROJECT. SO THREE
PROJECTS THAT I TALKED ABOUT SO
THAT WE COULD GET THOSE
COMPLETED BECAUSE THEY WERE
IMPORTANT FOR ANY HOSPITAL. UH,
AND THEY WOULD BE IMPORTANT FOR,
UH, SAINT AGNES IN THE FUTURE.
AND THE OTHER 5 MILLION WAS
THERE JUST IN CASE. UH, JUST IN
CASE, MADEIRA NEEDED IT FOR
OPERATIONS, BUT THE AFFILIATION
PROCESS TOOK A VERY LONG TIME.
AND AS OUR FINANCIALS CONTINUE
TO DRAIN, UH, THE DEAL FELL
APART AND, UH, ST AGNES BACKED
OUT, WHICH LEFT MADEIRA WITH NÓ
ABILITY TO CONTINUE TO OPERATE,
AND WE HAD TO CLOSE OUR DOORS.
SO I JUST WANT TO GET INTO SOME
OF THE OTHER CHALLENGES BECAUSE
I MEAN, WE ALL KNOW THAT STORY.
IT'S BEEN ALL OVER THE NEWS. BUT
WHAT REALLY WERE THE CHALLENGES
FACED BY MADEIRA DURING THE
PANDEMIC, WHICH REALLY LED TO
OUR FINANCIAL TROUBLES? AS A
PANDEMIC RAGED ON, WE FOUND
OURSELVES INCREASINGLY RELIANT
ON TRAVEL NURSES A COSTLY BUT
NECESSARY MEASURE TO MEET THE
DEMANDS OF THE OVERWHELMED
HOSPITAL WITH ALL THE COVID
PATIENTS THAT WERE THERE. YOU
KNOW, CALIFORNIA HOSPITALS ARE
REQUIRE ARE REQUIRED TO MAINTAIN
NURSE PATIENT RATIOS AND THIS
WAS NOT WAIVED DURING THE
PANDEMIC. AND UH AND HONESTLY,
YOU KNOW, THE PATIENTS WERE SO
SICK. YOU KNOW, WE HAD TO HAVE
HIGHER RATIOS. I MEAN, WE NEED
MORE NURSES JUST TO TAKE CARE OF
THE PATIENTS AS THE YEAR 2020
ENDED, AND WE STARTED YEAR 2021
WITH A NEW VARIANT OF THIS
HORRIBLE VIRUS. OUR STAFFING
CRISIS CONTINUED ON AND I
SPECIFICALLY REMEMBER HOW
DIFFICULT IT WAS TO HIRE STAFF
AND ALMOST IMPOSSIBLE. THE
SECOND YEAR OF COVID, ALL THE
HOSPITALS WERE COMPETING WITH
ONE ANOTHER. THEY WERE ALL THEY
WERE ALL RAISING AND HAVING TO
HIRE, UH, OFFER HIGHER SALARIES
TO OUR NURSES, UM, AND HOSPITALS
. YOU KNOW, WE WERE COMPETING ON
HIGHER WE WERE EVEN COMPETING ON
HIRING TRAVEL NURSES. AND AGAIN
THE STAND. THE STATE STILL WAS
MANDATING THESE RATIOS WHICH WE
NEEDED. WE UNDERSTAND THAT AND,
UH BUT THEY DID ALSO UNDERSTAND
THE CHALLENGES WE WERE FACING.
WE WERE WE WERE REALLY
STRUGGLING TO FIND NURSES TO
EVEN HIRE EVEN TRAVEL NURSES AND
PAYING HIGH DOLLARS FOR THOSE
THE STATE DID COME IN TO HELP BY
CONTRACTING WITH SOME TRAVEL
AGENCIES. BUT WHEN THE NURSES
GOT SOLD BACK TO THE HOSPITALS,
THEY WERE AT IT 200 TO $250 AN
HOUR. AND WHEN THIS HAPPENED, IT
SEEMED LIKE LOTS OF OUR NURSES
STARTED LEAVING TO GO WORK FOR
TO BE A TRAVEL NURSE. UH, THEY
GOT COMFORTABLE WITH IT AFTER
THE SECOND YEAR IN COVID, AND
THEY LEFT AND WE WERE RELYING
PRETTY MUCH ALL ESPECIALLY IN
OUR VERY HIGH ACUITY AREAS AT
STATE CONTRACTED TRAVEL. UH,
NURSES I. I DO BELIEVE THE
TRAVEL NURSES SALARIES BY FAR
AFFECTED OUR HOSPITAL'S
FINANCIAL HEALTH. THE MOST. WE
HAD MORE THAN DOUBLED OUR
IMPATIENT AND TRIPLED OUR I èC
PATIENT LOAD. AND AT TIMES WE
HAD 30. I èC U PATIENTS, BUT
ONLY A 10 BED. I èC WE HAD
CLOSE SURGERY. NUMEROUS TIMES
AND WE USE THE PU FOR AN I èC U
AND OUR I èC U PATIENTS TOOK UP
THE MAJORITY OF OUR ER PATIENT
BEDS. MANY OF THESE PATIENTS
WERE ON VENTILATORS, AND THEY
WERE THERE FOR A LONG PERIOD OF
TIME. WE NEEDED MORE OF
EVERYTHING TO CARE FOR THESE
PATIENTS, AND OUR BIGGEST
INCREASE IN VOLUME WAS IN THE I
èC U AND THE ER. AND THESE ARE
THE COSTLIEST PATIENTS TO CARE
FOR. AND HOSPITALS WERE FULL
EVERYWHERE, AND THERE WAS NÓ
OPTION FOR TRANSFERRING A
PATIENT AND THERE WAS NÓ OPTION
TO SAY WE'RE FULL. WE DON'T HAVE
NURSES TO CARE FOR THESE
PATIENTS. YOU TOOK EVERYBODY
THAT CAME THROUGH YOUR DOOR. IN
FACT, THE STATE HAD A
REQUIREMENT THAT IF HOSPITALS
HAD AN EMPTY BED YOU KNOW, WE
HAD TO REPORT EVERY DAY. ANY
EMPTY BEDS. I èC OR MED SEARCH
BEDS. WE HAD TO TAKE PATIENTS
FROM OTHER HOSPITALS AND MADEIRA
DID GET TRANSFERS IN FROM AS FAR
AS WAY AS SAN DIEGO. THERE WAS A
SHORTAGE OF SUPPLIES, WHICH
CAUSED THE INCREASE OF THE COST.
IT WAS THREE TIMES OR MORE IN
EXCESS. I MEAN, IT WAS HARD TO
FIND ANYTHING. UH, YOU KNOW,
HEALTH CARE SUPPLIES AT THE TIME
MEDICATIONS THAT NEEDED TO TREAT
COVID WERE VERY EXPENSIVE AND
LABOR INTENSIVE, SO MORE NURSES
TO CARE FOR THOSE PATIENTS
BECAUSE OF THE SURGE OF PATIENTS
, WE NEEDED MORE EQUIPMENT, MORE
BEDS, MORE GURNEYS. MORE
RESPIRATORS. HEPA FILTERS TENTS
JUST TO NAME A FEW OF THE TYPES
OF EQUIPMENT. WE HAD TO GO OUT
AND BUY THAT WE WEREN'T
EXPECTING. SURGERIES WERE
CANCELED TO PROTECT PATIENTS AND
STAFF FROM COVID SURGERY AREAS
WERE CONVERTED INTO SEARCH
SPACES SPACES TO TAKE CARE OF
IMPLODING NUMBER OF COVID
PATIENTS. ON TOP OF ALL THIS, WE
HAD ISSUES WITH OUR STERILIZER
IN THE MIDST OF THE PANDEMIC.
OUR STERILIZER FAILED. WE HAD TO
REPLACE OUR STERILIZER. IT WAS
VERY COSTLY. IT SHUT OUR SURGERY
DOWN ONCE AGAIN. AND UH, ALL OF
OUR NON URGENT PATIENT.
OUTPATIENT CARE WAS POSTPONED.
WE WERE ALL DOING THAT TO YOU
KNOW. YOU'RE ACTUALLY USE THE
NURSES ON S¼ INSIDE THE HOSPITAL
AND ALSO TO KEEP PATIENTS SAFE.
AND OUR EMPLOYEES SAFE. SO OUR
HOUSE, OUR HOSPITAL, OUTPATIENT
AND INCOME DWINDLED. THE
INCREASED COST OF, UH THE
INCREASED COST IMPLODED. BUT
REIMBURSEMENTS REALLY DID REMAIN
THE SAME. WE DID NOT GET AN
INCREASE IN OUR REIMBURSEMENT
DURING THIS TIME. UM MADEIRA, I
HAVE BEEN TOLD IS ONE OF THE
LOWEST PAID HOSPITALS IN
CALIFORNIA WITH REIMBURSEMENT IN
REGARDS TO REIMBURSEMENT. WE
TALK ABOUT A LOT ABOUT EQUITY
AND HEALTH CARE. BUT IN ORDER TO
CONSIDER TO SERVE THE PEOPLE,
HOSPITALS NEED EQUITY AND
REIMBURSEMENT. THE COST OF
PROVIDING SERVICES TO THE
UNDERSERVED COMMUNITIES LIKE
MADEIRA REALLY DOES COST MORE.
SO WHEN YOU ASK, HOW DID WE GET
HERE TODAY AND A CHAPTER 11
BANKRUPTCY AND A CLOSED HOSPITAL
. I WANT YOU TO UNDERSTAND THAT
IF IT WASN'T FOR THE PANDEMIC,
MADERA WOULD NOT BE CLOSED
TODAY. IT COMES DOWN TO THIS
REIMBURSEMENTS DURING THE
PANDEMIC NÓ LONGER COVERED THE
COST OF PROVIDING THE CARE. WE
BEGAN THE PANDEMIC WITH A 5.6
MILLION DEBT AND AFTER CLOSURE
IN CHAPTER 11 BANKRUPTCY, WE
HAVE OVER $30 MILLION OF DEBT.
HOSPITALS BY FAR WERE THE MOST
IMPACTED BY THE PANDEMIC, AND IT
WILL TAKE YEARS FOR HOSPITALS TO
FINANCIALLY RECOVER AND WE'RE
STILL FILLING IT. I MEAN, IF WE
WERE OPEN, WE WOULD STILL BE
FILLING IT, BUT WE DEFINITELY
FELT IT IN 2022. WE NEED
FUNDAMENTAL CHANGES IN
REIMBURSEMENT SO THAT WE DO NOT
END UP HERE AGAIN. I AGREE WITH
MR PATTERSON AND TODAY THERE'S A
RENEWED HOPE WITH THERE IS NÓ
HOPE WITH AMERICAN ADVANCE
MANAGEMENT AND DOCTOR SINGH AND
HIS TEAM WHO STEPPED UP WHEN WE
REALLY LOST HOPE TO EVER HAVE
OUR HOSPITAL OPENED AGAIN. WE
ARE NOW ON A PATHWAY TO REOPEN
OUR HOSPITAL. I DO WANT TO SAY
THAT THIS WOULD NOT HAVE BEEN
POSSIBLE WITHOUT THE, UH WITHOUT
, UH, THE STATE'S HOSPITAL
DISTRESS LOAN PROGRAM. I CAN'T
SAY ENOUGH ABOUT AND HOW
GRATEFUL MADEIRA COMMUNITY
HOSPITAL IS FOR THIS PROGRAM,
AND I REALLY PERSONALLY WANT TO
THANK UH ESM DIS ORIA FOR ALL
THAT YOU'VE DONE, AND SENATOR
CABALLERO. I MEAN, WE ARE SO
VERY GRATEFUL. UH, WE DO FEEL
LIKE THIS PROGRAM IS GOING TO
ALLOW US TO REOPEN OUR HOSPITAL,
AND IT HAS AIDED I KNOW AND
PREVENTING OTHER HOSPITALS FROM
CLOSURE. SO I THINK I THANK YOU.
I REALLY WANNA THANK YOU NOW AND
, UH, AGAIN FOR ALLOWING ME TO
SHARE OUR STORY. I TOLD I WAS
TOLD TO TALK FOR ONLY FIVE
MINUTES AND I'M PROBABLY OVER
THAT, BUT I REALLY APPRECIATE
YOU ALLOWING ME TO BE HERE
TODAY. THANK YOU. WE WILL NOW GO
TO, UH, M OK COMMUNITY
HEALTHCARE. GOOD AFTERNOON
COMMITTEE MEMBERS. I'M DR ELAINE
BATCHELOR, èC E Ó OF MLK
COMMUNITY HOSPITAL AND HEALTH
SYSTEM. THANK YOU FOR THE
OPPORTUNITY TO SPEAK TO THE
COMMITTEE TODAY AND TO SHARE MY
HOSPITAL'S EXPERIENCE AND
PERSPECTIVES. AND I GUESS I
COULD SAY, YOU KNOW, JUST DITTO
TO THE COVID EXPERIENCE THAT, UM
, YOU SO ELOQUENTLY DESCRIBED
THAT WAS SIMILAR AT OUR HOSPITAL
AS WELL. AND L COMMUNITY
HOSPITAL IS A PRIVATE HOSPITAL
SERVING A PUBLIC MISSION. WE
WERE CREATED TO CARE FOR THE
HISTORICALLY UNDERSERVED
COMMUNITY OF SOUTH LOS ANGELES,
A COMMUNITY WHOSE LACK OF ACCESS
TO HEALTH CARE WAS AMONG THE
REASONS FOR THE 1965. WATTS
RIOTS. A UNIQUE PUBLIC PRIVATE
PARTNERSHIP WITH THE COUNTY OF
LOS ANGELES AND THE STATE OF
CALIFORNIA CREATED OUR HOSPITAL.
IN THE ORIGINAL PARTNERSHIP
AGREEMENT, THE COUNTY AND THE
STATE COMMITTED TO KEEP THE
HOSPITAL FINANCIALLY
SUSTAINABLE. THE PRIVATE PARTNER
, ML Kò COMMUNITY HOSPITAL
COMMITTED TO PROVIDE QUALITY
CARE AND TRAINING FOR NEW
CLINICIANS. OUR PATIENT
POPULATION IS APPROXIMATELY 60%
LATINO AND 40. AFRICAN AMERICAN.
96% OF OUR PATIENTS ARE EITHER
PUBLICLY INSURED OR UNINSURED.
ONLY 4% HAVE COMMERCIAL
INSURANCE. THIS GIVES AN OK
COMMUNITY HOSPITAL THE WORST
PARA MIX OF ANY PRIVATE,
INDEPENDENT FREESTANDING GENERAL
ACUTE CARE HOSPITAL IN
CALIFORNIA. SOME OF THE CAUSES
OF FINANCIAL DISTRESS FOR NLK
HOSPITAL ARE SHARED BY OTHER
HOSPITALS. CALIFORNIA'S LOW
MEDICAID PROVIDER PAYMENTS, HIGH
LABOR COSTS THAT WE JUST HEARD
ABOUT AND INFLATION. WITH THE
FAILURE OF REVENUES TO RISE IN
CONCERT. WITH FEW COMMERCIAL
PATIENTS TO SUBSIDIZE PUBLICLY
INSURED PATIENTS AND INADEQUATE
PAYMENTS FOR HIGH VOLUME
EMERGENCY CARE. ML Kò HOSPITAL
IS SIMPLY NÓ LONGER, FINANCIALLY
SUSTAINABLE. BY THE CLOSE OF
LAST YEAR WE WERE PROVIDING OVER
120,000 EMERGENCY DEPARTMENT
VISITS A YEAR. OVER THREE TIMES
THE VOLUME ORIGINALLY ENVISIONED
BY OUR PUBLIC PARTNERS. THE HIGH
VOLUME OF EMERGENCY DEPARTMENT
VISITS IS A CONSEQUENCE OF A
LACK OF ACCESS TO OUTPATIENT
SERVICES IN OUR COMMUNITY.
ADDING TO OUR CHALLENGE IS THE
FACT THAT OUR STATE FUNDING
METHODOLOGY DEVELOPED IN 2010
EXCLUDES I MILK FROM THE
DISPROPORTIONATE SHARE PROGRAM
THAT SUBSIDIZES OTHER SAFETY NET
HOSPITALS IN THE STATE. INSTEAD
MLK èC RELIES ON COUNTY AND
STATE MEDICAID SUPPLEMENTS
ESTABLISHED THROUGH A B 2599.
AND I'LL NOTE THAT OVER 50% OF
OUR REVENUES COME FROM
SUPPLEMENTS. UM MORE THAN A
DECADE LATER. WE KNOW THIS. THE
FUNDING MODEL THAT CREATED OUR
HOSPITAL HAS NOT KEPT PACE WITH
CHANGES IN OUR ENVIRONMENT.
DESPITE OUR CHALLENGES, WE
CONTINUE TO OPERATE TO THE
QUALITY STANDARDS WE PROMISED.
EVIDENCE INCLUDES CONSECUTIVE
FIVE STAR èC M S¼ QUALITY
RATINGS AND A RATING FOR PATIENT
SAFETY FROM THE LEAPFROG GROUP
AND SPECIALTY CERTIFICATION AND
DIABETES CARE FROM THE JOINT
COMMISSION. THE LOAN INSTITUTE
RANKS ML Kò èC HÌ, NUMBER THREE
IN CALIFORNIA AND NUMBER 12 IN
THE NATION FOR CHARITY CARE AND
COMMUNITY INVESTMENT. I'M
PARTICULARLY PROUD OF OUR NURSE,
MIDWIFE, OBSTETRICIAN,
COLLABORATIVE LABOR AND DELIVERY
MODEL THAT HAS EARNED ML Kò èC
HÌ SEVEN CONSECUTIVE YEARS ON
THE CALIFORNIA MATERNAL QUALITY
CARE HONOR ROLE. OUR COMMITMENT
TO OUR MOTHERS OF COLOR IS
NEEDED. NOW MORE THAN EVER. THE
CLOSING OF MATERNITY UNITS AT
NEARBY FOR PROFIT HOSPITALS HAS
RESULTED IN 40 FEWER BEDS FOR
LABOR AND DELIVERY IMPACTING
APPROXIMATELY 1800 WOMEN IN
SOUTH LOS ANGELES. IN A
COMMUNITY ALREADY LACKING
OBSTETRICIANS. THE SERVICES IN
ALL Kò èC HÌ CONTINUES TO
PROVIDE ARE CRITICAL. ML Kò èC
HAS INCURRED LARGE LOSSES FOR
THE PAST TWO YEARS, AND WE ARE
SURVIVING BY DRAWING DOWN
FINANCIAL RESERVES FROM EARLIER
YEARS. A STATE DISTRESSED
HOSPITAL LOAN ALLOWED US TO
REMAIN OPEN THROUGH THIS PAST
WINTER. A COMMITMENT FROM LOS
ANGELES COUNTY IS PROVIDING US
WITH LIMITED ADDITIONAL TIME.
WHILE THE MCO TAX HAS THE
POTENTIAL TO ADD FUTURE REVENUE
THROUGH INCREASED PAYMENT FOR
HOSPITAL SERVICES, THE TIMETABLE
AND ALLOCATION OF THESE FUNDS
HAVE YET TO BE ANNOUNCED. BY
TODAY'S CALCULATIONS WE
ANTICIPATE RUNNING OUT OF CASH
BY 2025. THE COMMITTEE HAS ASKED
WHETHER THERE'S A CORRELATION
BETWEEN THE NUMBER OF MEDICAL
PATIENTS AND FINANCIAL DISTRESS
DISTRESS IN PRIVATE HOSPITALS.
AND PERHAPS WHAT WE SHOULD BE
TALKING ABOUT INSTEAD OF THE
NUMBER IS THE PAYER MIX BECAUSE
YOU COULD HAVE A HIGH NUMBER OF
MEDICAL DISCHARGES. BUT IF YOU
HAVE A HIGH NUMBER OF COMMERCIAL
DISCHARGES, THEY OFFSET THE
LOSSES. THIS IS CERTAINLY TRUE
IN OUR CASE, WHERE WE HAVE VERY
FEW COMMERCIAL PATIENTS TO
SUBSIDIZE THE LOSSES FOR ME.
WITHOUT INCREASES IN MEDICAL
PAYMENTS, PARTICULARLY FOR
OUTPATIENT AND EMERGENCY
SERVICES. MY HOSPITAL WILL
DEPLETE ITS RESERVES AND BECOME
INSOLVENT WITHIN 12 TO 18 MONTHS
, POTENTIALLY LEAVING SOUTH LOS
ANGELES AGAIN DEPRIVED OF
QUALITY HEALTH CARE. THANK YOU.
THANK YOU. WE WILL NOW GO TO
ADVENTIST HEALTH, FOLLOWED BY
RICH REGIONAL AND WILL END WITH
SHARP REGIONAL HOSPITALS. THANK
YOU FOR THE OPPORTUNITY TO SPEAK
WITH YOU TODAY AND REPRESENT
PEACH AND MY HOSPITAL SAFETY NET
COLLEAGUES A LITTLE BIT ABOUT
ABOUT ADVENTIST HEALTH. WE ARE
INTEGRATED HEALTH SYSTEM WITH 22
HOSPITALS IN CALIFORNIA. 300
AFFILIATED CLINICS, COMMUNITY
CLINICS, HOSPITAL BASED CLINICS
AND RURAL HEALTH CLINICS. WE
HAVE A COMMITMENT TO PROVIDE THE
FULL CONTINUUM OF SERVICES TO
THE COMMUNITIES THAT WE SERVE.
WE'RE DRIVEN TO SERVE THE MOST
VULNERABLE COMMUNITIES IN THE
STATE. 60% OF OUR SYSTEM IS
RURAL. WE ARE OFTEN THE SOLE
PROVIDER IN THE COMMUNITIES THAT
WE SERVE. DUE TO OUR COMMITMENT
TO SERVE THE UNDERSERVED
POPULATION OVER 80% OR OVER 75%
OF OUR PATIENTS RECEIVE
GOVERNMENTAL FUNDING, EITHER
THROUGH METAL OR MEDICARE. AND
WE HAVE LESS THAN 20% THAT HAVE
COMMERCIAL INSURANCE. WE ARE
PART OF THE SAFETY NET HOSPITAL
SYSTEM. MY SAFETY NET COLLEAGUES
AND I HAVE DEDICATED OUR OUR
DEDICATED TO SERVING. THE STATES
EXPANDING MEDICAL POPULATION.
THE SAFETY NET. THE HOSPITAL
SAFETY NET INCLUDES
DISPROPORTIONATE SHARE HOSPITALS
. THESE ARE HOSPITALS THAT SERVE
MORE THAN 50% MORE THAN 50% OF
THE PATIENTS THAT THEY SERVE ARE
MEDICAL PATIENTS. THESE ARE THE
POOREST 35% OF THE HOSPITALS IN
THE STATE. 152 OUT OF 434
HOSPITALS. THESE HOSPITALS
INCLUDE COMMUNITY DISH HOSPITALS
, CHILDREN'S HOSPITALS, PUBLIC
HOSPITALS AND NON DESIGNATED
PUBLIC HOSPITALS. ADVENTIST
HEALTH HAS EIGHT
DISPROPORTIONATE,
DISPROPORTIONATE SHARE OF
HOSPITALS IN CALIFORNIA, SERVING
FROM LOS ANGELES. WILL IT? THE
HOSPITAL SAFETY NET ALSO
INCLUDES THOSE REMOTE AND RURAL
HOSPITALS THAT ARE OFTEN THE
ONLY HEALTH CARE PROVIDER FOR
MILES AND WITHOUT WHOM. THERE
WOULD BE LARGE AREAS OF OUR
STATE THAT DID NOT HAVE HEALTH
CARE COVERAGE. COMMUNITY SAFETY
NET HOSPITALS MUST SERVE THE
MOST VULNERABLE COMMUNITIES. AND
SAFETY NET HOSPITALS ARE THE
MOST VULNERABLE HOSPITALS IN OUR
STATE. IN 2022. THE SAFETY NET
HOSPITALS LOST $864 MILLION FROM
OPERATIONS. AND NEARLY TWO
THIRDS ARE OPERATING AT A LOSS
TODAY. THIS IS PARTICULARLY, UM,
DRIVEN BY A FEW REALITIES THAT
HAVE RECENTLY HIT NUMBER ONE
RISING COST AND INFLATION.
EXPENSES SINCE THE PANDEMIC HAVE
INCREASED BY AN ESTIMATED $2.8
BILLION DURING 2022. THIS IS DUE
TO AN INCREASE IN SUPPLY COST.
PHARMACEUTICAL COST AND LABOR
COST. PARTICULARLY DRIVEN BY THE
CONTRACT LABOR AS YOU'VE HEARD
FROM A NUMBER OF MY COLLEAGUES
TODAY. THESE LOSSES IN CU IN
INCURRED BY SAFETY NET HOSPITALS
ARE IN THE BILLIONS AND THERE IS
NÓ RELIEF IN SIGHT. IN THE
REPORT THAT WAS PROVIDED BY
CHRISTOPH IN THE IN THE
CALIFORNIA HEALTHCARE FOUNDATION
. THEY IDENTIFIED THAT THERE HAS
BEEN AN IMPROVEMENT FOR A GROUP
OF HOSPITALS ACROSS CALIFORNIA.
THAT MAY BE TRUE WHEN YOU LOOK
AT A BROAD GROUP, BUT WHEN YOU
CUT THAT UP AND REALLY LOOK DOWN
INTO THE DETAIL, IT WILL SHOW
THAT THE DISPROPORTIONATE
HOSPITALS HAVE A NEARLY $900
MILLION LOSS. IN BOLD CONTRAST
TO THE GROUP OF NON HOSPITALS,
THOSE WITH LARGER COMMERCIAL
BOOKS OF BUSINESS. HAVE A GRAIN
OF THREE $0.2 BILLION. AS A
GROUP. OUR SAFETY. NET HOSPITALS
ARE OUR SAFETY. NET HOSPITALS
HAVE NOT RECOVERED AND CONTINUED
TO STRUGGLE. INSUFFICIENT
REIMBURSEMENT 86% OF THE CARE
PROVIDED BY THE COMMUNITY SAFETY
NET HOSPITAL IS TO PATIENT
INSURED BY GOVERNMENTAL SOURCES.
AS YOU HAVE HEARD FROM US TODAY,
THESE RATES HAVE BEEN FROZEN AND
FAILED TO KEEP PACE WITH THE
GROWING COST OF PROVIDING CARE.
MEDICAL ENROLLEES HAVE INCREASED
BY MORE THAN 70% IN THE LAST
DECADE, YET THERE HAS BEEN NÓ
ADJUSTMENT FOR INFLATION OR FOR
THE COMPLEXITIES. FINALLY I WANT
TO TOUCH ON THE COMPLEX CARE THE
COMPLEXITY OF THE PATIENTS THAT
WE ARE SEEING. SAFETY NET
HOSPITALS CARE FOR OUR STATE'S
MOST VULNERABLE AND ARE
FREQUENTLY THEIR ONLY SOURCE OF
SOURCE OF CARE. STATE DATA SHOWS
THAT OVER HALF OF THE HOMELESS
PATIENT DISCHARGE ARE SEEN IN
CALIFORNIA'S SAFETY NET
HOSPITALS. WHEN THESE PATIENTS
ENTER OUR SAFETY NET HOSPITAL,
THEY REQUIRE CONSIDERABLY MORE
SOCIAL, EMOTIONAL, BEHAVIORAL
AND OTHER CARE SUPPORT. AND THE
REIMBURSEMENT DOES NOT COVER
THIS SUPPORT. THERE WERE A
COUPLE OF QUESTIONS THAT WERE
ASKED FOR US AND I WANT TO TOUCH
ON A COUPLE OF THOSE. WE WERE
ASKED WHETHER THERE IS
CONSISTENT CORRELATION BETWEEN
THE AMOUNT OF MEDICAL BUSINESS
AND THE FINANCIAL DISTRESS IN
PRIVATE HOSPITALS. THE ANSWER IS
YES. AND DATA WILL SHOW THAT IN
2021 AND 2022. THOSE HOSPITALS
THAT FILED BANKRUPTCY WERE ALL
SAFETY NET HOSPITALS. WITH A
MUCH HIGHER PROPORTION OF
MEDICAL THIS INCLUDE
WATSONVILLE. BEVERLY HOSPITAL,
MADERA PIPELINE AND HAZEL
HAWKINS. WE WERE ALSO ASKED IF
THERE IS A DIFFERENCE BETWEEN
THE FINANCIAL DISTRESS SCENE
WITH FOR PROFITS AND NOT FOR
PROFITS. WHAT I WOULD SUGGEST TO
YOU. IT IS NOT BASED ON THE TAX
STATUS OF THE HOSPITAL FOR
PROFIT OR NOT FOR PROFIT. IT IS
BASED ON THE CONSTITUENCY OR THE
MIX OF THE PATIENTS THAT THEY
ARE SEEING. THE HOSPITAL
STRUGGLING THE MOST TEND TO
SERVE THE HIGHEST LEVEL OF
MEDICAL AND MEDICARE
BENEFICIARIES. WITH VERY LOW
LEVELS OF COMMERCIAL. THE
HOSPITAL'S NOT EXPERIENCING
SIGNIFICANT LEVELS OF DISTRESS
ARE THOSE WITH HIGH LEVELS OF
COMMERCIAL COVERAGE. DEFINING
SAFETY NET HOSPITAL SHOULD BE BY
THOSE THAT THEY SERVE. IT'S A
CRITICAL STEP TO OUR PUBLIC
POLICY. WE'VE HEARD A COUPLE OF
THINGS TODAY AND A COUPLE OF
REFERENCES AS IT RELATES TO
LABOR AND DELIVERY. AS WE
EXPLORE WHY LABOR AND DELIVERY
SERVICES MAY CLOSE. WE WANT TO
HIGHLIGHT. THAT THIS IS A
SERIOUS PROBLEM FOR RURAL SAFETY
NET PROVIDERS. IF THE DELIVERY
VOLUME IS NOT ADEQUATE IS NOT
HIGH ENOUGH. IT IS UNSAFE FOR
THE HOSPITALS TO MAINTAIN THAT
CARE, AND THEY CANNOT MAINTAIN
THE PROVIDERS WITH THE SKILL SET
LEVEL TO DO SO. WE SIMPLY CANNOT
CONTINUE THE PROGRAMS THAT ARE
FALLING BELOW THAT FROM A VOLUME
PERSPECTIVE POLICY THAT SEEKS TO
ADDRESS LABOR AND DELIVERY MUST
KEEP THIS UNIQUE RURAL ISSUE. IN
MIND AS IT SEEKS TO SOLVE THAT.
THE CONTINUED STRUCTURAL FUNDING
OF ME HAS GREATLY IMPACTED OUR
FINANCIAL SAFETY NET. AND EVERY
TRUE SAFETY NET HOSPITAL IN THE
STATE. IT IMPACTS OUR ABILITY TO
DO MORE IN THE COMMUNITY TO
PROVIDE MORE STABILITY IN OUR
WORKFORCE TO ADDRESS THOSE
OUTSTANDING SEISMIC REQUIREMENTS
AND TO KEEP AND GROW OUR MUCH
NEEDED SERVICES. KEY RATES HAVE
BEEN FROZEN AS EXPENSES HAVE
SPIKED. LABOR AND SUPPLY COSTS
HAVE CONTINUED TO GROW. JUST IN
THE PAST TWO YEARS. WE HAD
ADVENTIST HEALTH HAVE REPORTED
$390 MILLION OF LOSSES DUE TO
THESE CONDITIONS. THIS ISN'T
SUSTAINABLE FOR US, AND IT ISN'T
SUSTAINABLE FOR THE SAFETY NET.
EVERY CALIFORNIAN DESERVES
ACCESS TO EQUITABLE CARE. THESE
THE COMMUNITIES THAT SUFFER FROM
UNEQUAL ACCESS TO CARE AND
HEALTH STATUS SHARE A COMMON
OBSTACLE TOWARD ACHIEVING AN
EQUAL CHANCE AT A HEALTHY LIFE.
THAT COMMON FACTOR IS A LACK OF
RESOURCES CAUSED BY UNDER
INVESTMENTS AND SYSTEMATIC
UNDERFUNDING OF HEALTH CARE. OUR
SAFETY NET HOSPITALS ARE
DEDICATED TO SERVING THESE
COMMUNITIES. WE ARE PART OF THE
COMMUNITIES. AS YOU CONTINUE TO
DO YOUR WORK AND BRING EQUITY TO
EVERY COMMUNITY IN OUR STATE. WE
HOPE THAT YOU WILL LOOK AT THE
SAFETY NET AS YOUR PARTNERS TO
SERVE THESE COMMUNITIES. THANK
YOU. GOOD AFTERNOON AND THANK
YOU FOR INVITING ME TO SPEAK
BEFORE YOUR COMMITTEE. I'M JIM
SUVA. I'M THE èC E Ó OF RO
CREST HOSPITAL. I'VE BEEN THERE
16 YEARS. UH I, UH, CAN VOUCH
FOR ALL THE OTHER STORIES. I'VE
HEARD ABOUT WHAT THESE HOSPITALS
WENT THROUGH DURING COVID ASHLEY
ARTEMIS STARTED WITH TWO
EARTHQUAKES IN 2019. AND
ALTHOUGH OUR BUILDING WAS FINE
THE LOSS IN REVENUE FROM BEING
SHUT DOWN WHEN WE MADE REPAIRS
DIPPED INTO ABOUT $4 MILLION OUR
RESERVES PRIOR TO THE EARTHQUAKE
WE HAD AROUND 100 DAYS CASH ON
HAND. TODAY AS I'M TALKING TO
YOU, WE HAVE AROUND 15 DAYS ON
CASH ON HAND WITH ALMOST 15 DAYS
OF CASH LOST BECAUSE OF THE
RECENT CYBER BREACH. AT UNITED
HEALTHCARE. AND WE ARE CERTAINLY
DOING WHATEVER WE CAN TO GET
THROUGH THIS. AND LIKE THE OTHER
HOSPITALS. I'VE BEEN VERY PROUD
WITH WHAT WE ACCOMPLISHED
THROUGH COVID. THE NEAREST
HOSPITAL IS 2.5 HOURS AWAY. AND
EVEN IF WE HAD WANTED TO
TRANSFER THERE WAS NÓ ONE THAT
HAD ANY BEDS. AND IF I CAN SHARE
WITH YOU ONE BRIEF STORY ABOUT
HOW EVEN A SMALL HOSPITAL HAD A
ROLE IN THIS IS WE HAD A 35 YEAR
OLD FATHER WITH THREE CHILDREN
COME TO OUR HOSPITAL WITH SEVERE
COVID. WE WERE UNABLE TO
TRANSFER THIS GENTLEMAN, SO WE
KEPT HIM FOR TWO WEEKS.
FORTUNATELY WE HAD ARRANGED AN
INTENSIVE SERVICE THROUGH
TELEMEDICINE. THERE WAS NOT A
REIMBURSABLE BUT THE RIGHT THING
TO DO FOR OUR COMMUNITY. AFTER
TWO WEEKS WE WERE ABLE TO GET
HIM TO A LOS ANGELES HOSPITAL.
HE HAD A LUNG TRANSPLANT. EVERY
MONTH. THIS FATHER OF THREE
SINCE THE HOSPITAL PICTURE OF
HIM WITH HIS FAMILY, CAUSE HE'S
DOING FINE. AND THIS LITTLE
TEENY HOSPITAL IN THE MIDDLE OF
THE DESERT. WAS ABLE TO DO THAT,
SO THE EARTHQUAKES DID TAKE OUR
RESERVES DOWN. UM BUT WE WERE
STILL DOING OK. AND AS MOST OF
THE OTHER SPEAKERS HAVE
MENTIONED ABOUT COVID, WE ARE
USING A LOT OF TRAVELING NURSES.
AND IN FACT, LAST YEAR, I, UH
I'M PROUD TO SAY WE WENT FROM 55
TRAVELING NURSES TO FIVE, BUT
THAT CAME AT THE EXPENSE OF
INCREASING WAGES. AND, IN FACT,
LOOKING AT MY WAGES OVER THE
LAST THREE YEARS, THEY'VE GONE
UP ROUGHLY 30. AND MUCH OF THE
PHENOMENA THAT, UM, WAS
MENTIONED TO YOU. I LOST SOME OF
MY, UM LONG TERM STAFF BECAUSE
TRAVELING BECAME VERY APPEALING
FINANCIALLY. WE'VE GOTTEN THEM
BACK. BUT ONE OF THE THINGS
THAT'S HAPPENED TO US IS WHAT I
CALL THE POST COVID WORLD OF
ECONOMICS. WAGES NEVER GO DOWN
AND I AM STILL PAYING
ESSENTIALLY THE WAGES THAT I HAD
TO DO TO GET THROUGH WITH COVID.
I'M PAYING PREMIUM FOR SUPPLIES
LIKE I WAS DOING THROUGH COVID.
BUT LIKE THE OTHER HOSPITALS
HAVE SPOKEN TO YOU, MY REVENUE
HAS ACTUALLY REVERTED BACK TO
2019 LEVELS. YES WE ARE COST
REIMBURSED FOR MEDICARE BUT WITH
SEQUESTRATION ADJUSTMENTS AND
OTHER COST REPORT ANOMALIES. WE
DON'T EVEN GET OUR COSTS FOR
MEDICARE. MEDICAL HAS ALREADY
BEEN DISCUSSED. UM AND WE SUFFER
FROM THAT ON ACTUALLY, TWO
FRONTS BOTH THE ACUTE CARE SIDE,
BUT MY HOSPITAL ACTUALLY
PROVIDES THE BULK OF AMBULATORY
THROUGH OUR RURAL HEALTH CLINICS
. SO THE MAJORITY OF PRIMARY
CARE IN TOWN PEDIATRICS,
OBSTETRICS AND MANY OTHER
SPECIALTIES ARE HOUSED IN MY
HOSPITAL BECAUSE ANY MEDICAL
GROUP THAT HAS TRIED TO COME IN
INTO OUR REMOTE COMMUNITY HAS
NOT MADE IT. IN THE PAST, WE
WERE ABLE TO HAVE A MARGIN ON
SOME BUSINESS THAT WOULD OFFSET
THE LOSSES ON ME. BUT WITH THE
EXPENSES SO HIGH, I FINALLY
REALIZED I DON'T HAVE A MARGIN
ON ANYTHING ANYMORE. NOT EVEN MY
SKILLED NURSING FACILITY IS
CONTRIBUTING ANYMORE BECAUSE WE
ACTUALLY WAIT TWO YEARS FOR OUR
RATES TO BE ADJUSTED BACK TO
COSTS WITH NÓ RETROACTIVITY. THE
NURSING HOME ALONE IS NOW GONE
FROM A $2 MILLION CONTRIBUTION
TO OVERHEAD TO OVER $3 MILLION
NEGATIVE. HIT AGAINST, UH
OVERHEAD. MANY OF OUR INSURANCE
CONTRACTS HAVE CAPS. SOME AS LOW
AS 1, WITH THE AVERAGE BEING
AROUND THREE PERCENT. EVEN IF I
ATTEMPTED TO RAISE RATES TO GET
MYSELF OUT OF THIS NÓ ONE WOULD
PAY MEDICARE WILL NOT PAY ME
MORE MEDICAL WILL NOT PAY ME
ANYMORE, AND I KEPT AND WHAT I
CAN GET FROM COMMERCIAL
INSURANCERS BEING A SMALL REMOTE
HOSPITAL. WE DON'T NECESSARILY
HAVE THE, UH LARGER POWER THAT
MAY BE A HEALTH SYSTEM WOULD
HAVE UM WE ARE, UM ACTUALLY IN
NEGOTIATIONS NOW, BUT I MADE ONE
OF THE MOST HORRIBLE DECISIONS
IN MY CAREER. LAST YEAR AND
EIGHT DAYS AGO, WE DELIVERED OUR
LAST BABY AT RIDGECREST
HOSPITAL. I COULD NÓ LONGER
AFFORD THE LABOR AND DELIVERY
UNIT BECAUSE IT WAS ACTUALLY
INTERFERING WITH MY ABILITY TO
KEEP THE EMERGENCY ROOM. OPEN.
AND I HAD TO WEIGH IMPACTING A
FEW VERY WELL DESERVING MOTHERS,
OF WHICH HALF ARE MEDICAL OR
HAVING AN EMERGENCY ROOM OPEN
FOR OUR COMMUNITY. WE HAVE AN
ADDITIONAL MISSION THAT WE
SUPPORT CHINA LAKE NAVAL BASE.
THE LARGEST RESEARCH INSTITUTION
, UH, FOR THE DEPARTMENT OF
DEFENSE IN THE COUNTRY. OUR
CLOTHES ARE LABORED. LIVERY HAS
EVEN IMPACTED THEIR ABILITY TO
RECRUIT AND RETRAIN SCIENTISTS.
I AM NOT SURE HOW WE'RE GOING TO
END UP AND AT ONE TIME I THOUGHT
I COULD MAKE IT THROUGH 2025 AND
WE WERE RECIPIENT OF THE
DISTRESS LOAN PROGRAM, AND I
APPRECIATE EVERYONE THAT WAS
INVOLVED IN THAT. WE WERE NOT
ABLE TO GET THE FULL AMOUNT WE
ASKED FOR, AND SO OUR
PROJECTIONS ARE OFF ABOUT HOW
LONG WE CAN DO IT. BUT THERE WAS
NÓ ONE BEHIND US ONCE OUR CASH
IS EXHAUSTED, AND WE, UM HAVE
TALKED TO OUR MORTGAGE. UM AND
LET THEM KNOW THAT WE ACTUALLY
PROBABLY MAY DEFAULT ON OUR
MORTGAGE. UM TO DO THAT WE'VE
SUSPENDED ALL OF OUR WORK ON THE
SEISMIC. UM, ITEMS THAT WE NEED
TO DO. HALF OF OUR HOSPITAL IS
NOT READY FOR 2032. AND THAT
PROJECT IS ANOTHER $45 MILLION
PRIOR TO THE EARTHQUAKE. I
ACTUALLY COULD HAVE WRITTEN A
CHECK FOR THAT NOW I'M VERY
GRATEFUL WHEN WE MAKE PAYROLL.
UM, I THINK YOU KNOW, THE
CHALLENGES THAT WE HAVE IN A
RURAL COMMUNITY IS OUR
POPULATION IS GROWING AT A VERY
SLOW RATE. AROUND 2% AT BEST.
WE'VE ALSO DONE SOME VERY
INNOVATIVE THINGS SUCH AS AN
ACCOUNTABLE, ARROGANT,
ACCOUNTABLE CARE ORGANIZATION
THAT IS ACTUALLY SPENT A LOT
MORE ON PREVENTION, SUCH AS
CALLING OUR FREQUENT FLYERS AND
MAKING SURE THAT THEY'RE TAKING
THEIR MEDICATION, ET CETERA TO
ACTUALLY KEEP THEM OUT OF THE
HOSPITAL. BUT OUR VOLUME IS ALSO
GOING DOWN AS WELL. AND IT'S NOT
A MARKET SHARE PROBLEM. IT'S
MUCH LIKE OUR CHALLENGES, UH,
THAT TODD MENTIONED THE LABOR
AND DELIVERY WHEN I STARTED AT
RIDGECREST, WE WERE DOING 60
DELIVERIES A MONTH. NOW WE'RE
DOING BETWEEN 25 AND 30. AND IT
DOESN'T HAVE TO. WE HAVE THE
SAME 99% MARKET SHARE. PEOPLE
ARE HAVING FEWER CHILDREN.
HOWEVER MY REIMBURSEMENT ON MANY
THINGS IT MY HOSPITAL ARE ON A
PER PATIENT BASIS. THE NATURE OF
A HOSPITAL IS TO BE THERE. 24 BY
SEVEN BY 365 HAVING THAT STAND
BY CAPABILITY. STANDBY
CAPABILITY, WITH THE EXCEPTION
OF MEDICARE. IS NOT PAID FOR AND
IF ANYTHING WE REALIZE DURING
THE COVID PANDEMIC THAT HAVING
HOSPITAL BEDS THAT WERE READY TO
TAKE PATIENTS WAS VERY, VERY
IMPORTANT EVEN IF THEY WEREN'T
BEING USED AT THE TIME. BUT
REALLY, IF I HAD TO EXPLAIN TO A
BUSINESS PROFESSOR, WHAT THE
PROBLEM IS MY HOSPITAL IS I AM
STAFF TO BE PROVIDING CARE ALL
OF THE TIME. AT A CONSTANT
LEVEL. BUT WHEN I AM PAID ON A
PER PATIENT BASIS, I HAVE A HUGE
GAP AND THAT IS DESTROYED OUR
BOTTOM LINE AND DESTROYED OUR
CASH FLOW. THANK YOU VERY MUCH.
OH, GOOD. GOOD AFTERNOON. THANK
YOU FOR ALLOWING ME THE
OPPORTUNITY TO, UH, DISCUSS
PATIENT ACCESS WITH YOU. AND
THANK YOU TO MY COLLEAGUES, UH,
WHO WERE SHARING THEIR STORIES
TODAY? ALL OF WHICH ARE TOO
FAMILIAR, UH, TO ALL OF US IN
HEALTH CARE. MY NAME IS SCOTT
EVANS. AND I'M SORRY TO HAVE MY
BACK. UH TO YOU, UH, THE, UH I
AM THE MARKET èC E Ó FOR SHARP
. A REGIONAL HOSPITALS. UH,
SHARP HEALTH CARE, UH, WHEN
PEOPLE THINK OF SHARP HEALTH
CARE, I THINK THEY THINK OF OUR
METROPOLITAN CAMPUS MORE. OFTEN
THAN NOT, UM I REPRESENT SORT OF
THE OTHER SIDE TO, UH, THE OTHER
STORY TO SHARP HEALTHCARE, WHICH
ARE REGIONAL HOSPITALS. WE HAVE
ABOUT, UH, WHERE WE SERVE ABOUT
TWO THIRDS OF OUR SHARP
HEALTHCARE PATIENTS. SHARP IS
THE LARGEST PROVIDER OF CARE IN
SAN DIEGO. WE HAVE ABOUT 30% OF
THE INPATIENT MARKET SHARE. BUT
WHEN YOU LOOK AT THE MEDI MARKET
SHARE, WE HAVE CLOSER TO 38% OF
THE MEDICAL MARKET SHARE, SO WE
ARE CERTAINLY PICKING UP OUR
FAIR SHARE OF, UH, THE
UNDERSERVED PATIENTS IN THE
MEDICAL, UH, MARKET. WE HAVE, UM
FOUR CAMPUSES AND SEVEN
HOSPITALS ON THOSE 44 CAMPUSES.
UH, MY REGION DOES INCLUDE TWO
SAFETY NET HOSPITALS. ONE IN DR
WEBER'S, UH, DISTRICT, UM IN THE
EAST COUNTY AND ONE IN THE SOUTH
COUNTY WITH WITH VERY HIGH, UH,
VOLUME OF MEDICAL PATIENTS. WE
ARE PROUD CERTAINLY OF OUR ROLE
AS A SAFETY NET PROVIDER. BUT
THERE ARE REALLY SOME, UM, VERY
STRONG HEADWINDS IN MAINTAINING
ACCESS TO CARE AS MEDICAL
REIMBURSEMENT CERTAINLY DOES NOT
COVER. UH, THE TO PROVIDE CARE.
AS A HEALTH SYSTEM. WE'VE BEEN
ABLE TO OFFSET THAT, UH, OVER
OVER THE 70 YEARS THAT WE'VE
BEEN, UH IN BUSINESS, IT
CERTAINLY IS BECOMING
INCREASINGLY HARDER AS EACH OF
OUR HOSPITALS ARE NOT FARING AS
WELL. AS THEY HAD WHEN WE LOOK
AT SHARP, GROSSMONT, IT IS THE
REALLY THE ONLY, UH, HOSPITAL
PROVIDER IN EAST COUNTY. IT IS A
PUBLIC PRIVATE PARTNERSHIP WITH
GROSSMONT HEALTHCARE DISTRICT
FOR MORE THAN 30 YEARS. UM OF
COURSE, SAFETY NET HOSPITALS
DEAL WITH, UH, THE MOST COMPLEX
OF PATIENTS WHEN IT COMES TO
DISCHARGING. AND UM AND I THINK
THAT, UH, WE FORGET ABOUT THAT
SOMETIME WHEN YOU LOOK AT SHARP
GROSSMONT HOSPITAL, A DISCHARGED
MORE THAN 1000 UNHOUSED PATIENTS
LAST YEAR. THAT'S 46% OF ALL OF
A SHARPS UNHOUSED, UH,
DISCHARGES ACROSS THE
ORGANIZATION. UH, IT IS A 542
BED HOSPITAL WITH 46 BEHAVIORAL
HEALTH BEDS, UH, IN IT AS WELL
WITH THE FULL RANGE OF SERVICES.
SO THESE ARE SAFETY NET. THIS IS
A SAFETY NET HOSPITAL THAT
LITERALLY PROVIDES, UH EVERY
SPECIAL THAT CAN BE PROVIDED. UM
WHICH WHICH CERTAINLY IS, UH,
COMES AT A COST TO US. UM IT IS
THE BUSIEST EMERGENCY DEPARTMENT
. SINGLE SINGLE, UH, SITE
EMERGENCY DEPARTMENT IN SAN
DIEGO AND ONE OF THE TOP, UH,
BUSIEST IN IN CALIFORNIA WITH AN
EMERGENCY ROOM PAIR MIX OF 51%
MEDI. OUR PATIENTS. UM AND WE
KNOW THAT PATIENTS ARE NOT JUST
ACCESSING THE EMERGENCY ROOM
CARE FOR, UM UH OR ACCESSING THE
E Dð FOR EMERGENCY ROOM OR
EMERGENCY SITUATIONS, BUT IT'S
ALSO BECAUSE THAT'S WHERE THEY
GO TO RECEIVE CARE THAT THEY CAN
GET NOWHERE ELSE THAT ACCESS TO
SPECIALTY CARE THAT THEY THAT
THEY CAN ONLY GET BY COMING INTO
THE EMERGENCY DEPARTMENT AND WE
SEE THAT TIME AND TIME AGAIN. WE
SPEND ACTUALLY MILLIONS OF
DOLLARS TO PROVIDERS, UH, TO
PROVIDE THAT SPECIALTY CARE
COVERAGE AND TO MAKE SURE THAT
OUR PATIENTS RECEIVE SPECIALTY
CARE IN THE EMERGENCY
DEPARTMENT. A SHARP CHULA VISTA.
UH, OF COURSE WE'RE A BORDER
CITY HOSPITAL, UH, WITH ABOUT 60
THREE AND A HALF PERCENT
HISPANIC PATIENT MIX, UH,
UNDERSERVED POPULATION AS WELL.
SMALLER HOSPITAL. UH, THREE 149
ACUTE CARE BEDS, UH, THERE AND
LIKE, UH, SHARP GROSSMONT
HOSPITAL. MORE ABOUT 50% OF THE
EMERGENCY DEPARTMENT DOES HAVE
MEDICAL, UH, COVERAGE. UH,
SPECIALTY CARE ACCESS IS EVEN
MORE CHALLENGING IN THE SOUTH
BAY. AND AS A RESULT, UH,
PATIENTS HAVE HIGHER COMPLEXITY
OF NEEDS, WHICH BECOMES
ESPECIALLY CHALLENGING AT
DISCHARGE AND WHAT YOU'LL SEE.
THERE IS EVEN A HIGHER LENGTH OF
STAY IN THOSE PATIENTS. UH THAT,
UH, THAT DO SEEK OUT SHARP CHULA
VISTA, UH, AS WE WORK TO CONNECT
THEM TO SPECIALISTS THAT CAN
ALSO FOLLOW THEIR NEEDS, UH,
POST DISCHARGE, WHICH IS A VERY
DIFFICULT AND CHALLENGING TO DO.
UM IN THE VERY NEAR FUTURE SHARP
. CHULA VISTA WILL BE THE ONLY
PROVIDER OF LABOR AND DELIVERY
SERVICES, UH, WITHIN THE SOUTH
BAY. UH, WITH UH, WITH, UH,
PENDING, UH, CONSOLIDATION, UM
OF ONE HEALTH SYSTEM AND, UH,
ENCLOSURE WITHIN THE LABOR AND
DELIVERY SERVICE OF ANOTHER. UH,
THIS IS AGAIN. UH A PARTICULARLY
CHALLENGING. WE THINK FROM A
CAPACITY STANDPOINT. UH, WE ARE
THERE TO MANAGE, UH, THOSE
PATIENTS AND SO WE'RE, UM, AS AS
FOLKS HAD SAID VOLUME HAS
DECREASED OVER TIME. WHERE ABOUT
60% OF FULL ON ON THE LABOR AND
DELIVERY FLOOR. AND SO WE
DEFINITELY HAVE SOME SOME
CAPACITY TO ABSORB, BUT, UH,
THIS WILL LEAD TO OTHER
SPECIALTY SERVICES THAT ARE
NEEDED TO BE, UH, THAT NEED TO
BE PROVIDED TO FAMILIES, UH, ET
CETERA, AND SO WE REMAIN
COMMITTED TO PROVIDING THAT FULL
GAMUT OF EXPERIENCES, BUT IT
CERTAINLY IS BECOMING
INCREASINGLY MORE DIFFICULT. I
JUST WANNA TOUCH ON ON ONE POINT
, UH, AS WELL, I WANT TO TALK
ABOUT WHAT WE DO WITH OPERATING
INCOME. CAUSE EVEN FROM THE
FIRST SESSION WHEN I HEAR, UH,
THE OPERATING INCOMES OF
HOSPITALS, AND IT SOUNDS QUITE
LARGE SOMETIMES, UH, NOT TO US.
BUT IT DOES SOUND QUITE LARGE.
WE JUST WANNA BE MINDFUL THAT IT
IS WITH THAT OPERATING INCOME
THAT WE HAVE TO BUY. ALL OF WE
HAVE TO SUPPLY ALL OF OUR
CAPITAL NEEDS. INCLUDING SEISMIC
WORK THAT NEEDS TO BE DONE, UH,
REPLACEMENTS LIKE, UM UH M UH
èC, Tð S¼ OR MRI, S¼ AND
STERILIZER AND ALL OF THOSE
THINGS, AND SO WHEN WE TALK
ABOUT AN OPERATING MARGIN OF A
HEALTH SYSTEM AS LARGE AS SHARP
HEALTH CARE BEING LIKE 1% WE
HAVE, UH HUGE, UH, CAPITAL NEEDS
THAT ARE REQUIRED JUST TO
MAINTAIN SERVICES AND
REPLACEMENT AND FACILITIES THAT
ARE MORE THAN 60 YEARS OLD, UH,
INCLUDING THAT SEISMIC WORK AT
GROSSMONT HOSPITAL AND AT CHULA
VISTA HOSPITAL. BOTH WILL
REQUIRE SIGNIFICANT SEISMIC WORK
. UH, THAT NEEDS TO BE DONE. AND
WHEN WE TALK ABOUT DOCTOR WEBER,
UH, DOC, UH, SHARP GROM, WHICH
IS IN YOUR DISTRICT, UH, THAT
THAT WORK WITH THE ADDITION OF
THE FACT THAT WE RUN AT ABOUT
95. P èC. THERE IS MORE THAN A
$700 MILLION PLAN. SO WHEN WE
TALK ABOUT A HOSPITAL THAT'S
MAKING, UH, A FEW MILLION
DOLLARS ON THE BOTTOM LINE. UM
WE STILL NEED TO PAY FOR THAT
CAPITALIZATION. AND SO I THINK
THAT'S JUST A ANOTHER IMPORTANT,
UM, AN IMPORTANT POINT, UH, TO
NOTE UM, FOR THE LAST FOUR
YEARS. UH, AS I'M SURE WITH ALL
OF MY HOSPITAL COLLEAGUES,
SHARP'S EXPENSES HAS FAR
OUTPACED OUR SYSTEM'S REVENUE
AND A WHILE, SHARP. UH, REVENUES
HAVE INCREASED, UM, BETWEEN 2019
AND 2023, AN AVERAGE OF ABOUT 6%
ANNUALLY. THE EXPENSES, UH,
INCREASED ABOUT 7% WITH LABOR
COSTS BEING THE PRIMARY DRIVER
OF EXPENSIVE INCREASES WITH 7%
ANNUALLY AND SO IT CERTAINLY IS
A CHALLENGE. BUT WE ARE, UM WE
ARE A COMMITTED TO PROVIDING
SERVICE AS PART OF A SYSTEM. UH
WHICH IS NOT ALWAYS. UH UH,
WHICH OTHER? UH STAND ALONE
HOSPITALS, UH, THAT THAT SERVE
THE SAME POPULATION THAT WE
SERVE? UH YOU KNOW, ARE NOT
ALWAYS ABLE TO HAVE THE BACKING
OF A HEALTH SYSTEM. BUT IT'S AT
THIS POINT WHERE WE CAN SEE THE
FUTURE WHEN WE LOOK TO OTHER
HOSPITALS, PROVIDING, UH, CARE,
UM, THAT ARE THAT ARE SAFETY NET
HOSPITALS AS WELL. THERE IS A
LIMIT TO THE RESOURCES. THAT'S
ALL. THANK YOU. THANK YOU TO ALL
OF MY PANELISTS, AND I KNOW UH
EVERYONE HAS QUESTIONS, SO I
WILL START WITH ASSEMBLY MEMBER
GIBSON. AND THEN, UM, UH SOME PA
AND THEN ASSEMBLY MEMBER PORIA.
THANK YOU VERY MUCH. UM I. I WAS
I GOT REAL DEPRESSED. UH, WE AND
IF I HAD TO HEAR THE FOLLICLES
WOULD HAVE ALREADY FALLEN OUT.
UM BUT, YOU KNOW, WITH YOUR WITH
EACH ONE OF YOUR REPORTS, I'VE
TRIED TO LISTEN ATTENTIVELY AND
TAKE A LOT OF NOTES, UM UP HERE
AND WANT TO ASK SOME QUESTIONS.
UM, BECAUSE I WANTED TO FIND OUT
IF THERE A CORRELATION. UM, IF
THERE CORRELATION BETWEEN THOSE
COMMUNITIES OR THOSE HOSPITALS
THAT RECEIVE, UH, MEDI UM, AND
COMMUNITIES OF COLOR. YES. THAT
I'M VERY CONCERNED WITH BECAUSE
IT SEEMS LIKE THAT'S WHY I WAS
GETTING UP AND ASKING QUESTIONS
TO FIND OUT. IS THERE A CORRE A
CORRELATION HERE WHERE YOU HAVE
A HOSPITAL LIKE MAR KING
COMMUNITY HOSPITAL? THAT SERVES
BLACK AND BROWN. UM AND LET ME
GO ON. RECORD IT, YOU KNOW, I
REMEMBER MARKING HOSPITAL.
NUMBER ONE. UM AND SO IT CLOSED.
UM SERVICE, MY FAMILY AND
COMMUNITY IN WHICH I GREW UP IN.
UM SO IT CLOSED. IT WAS
HEARTBREAKING. NOW IT'S OPENED
UP. IT'S LIKE THE PHOENIX RISE
FROM THE ASHES. NOT BE IF I'M
GONNA LET IT TO CLOSE AGAIN. I
DID SAY, DIDN'T I? I THINK SO,
YEAH. AND SO IT'S CONCERNING TO
ME BECAUSE I SAW PEOPLE DIE AS A
RESULT OF MART KING HOSPITAL AND
HAVE PEOPLE HAVING TO TRAVEL TO
THE NEXT CLOSEST HOSPITAL FOR
EMERGENCY SERVICES AND CARE.
RIGHT AND THIS QUESTION IS GONNA
BE THE DOCTOR BACHELOR AFTER I
FINISH MY STATEMENT, UM, YOU
KNOW, DOCTOR, BACHELOR
ARTICULATED, YOU KNOW THE AWARDS
AT THE HOSPITAL HAVE RECEIVED
AND WHY DO WE FIND OURSELVES? I
HEARD MO MODESTO HOSPITAL SAID
IF IT WASN'T FOR THE PANDEMIC
THEN WE WOULDN'T WHAT IS IT?
MADEA EXCUSE ME, MADERA. WE
WOULDN'T BE IN THIS SITUATION.
WELL, MY QUESTION IS LET ME ASK
HER FIRST. WHAT HAPPENED TO THE
P PE MONEY TO COME IN WHEN WE
WERE FACED WITH A PANDEMIC
BECAUSE YOU SAID THAT THE
PANDEMIC IF IT WASN'T FOR THAT,
THEN WE WOULDN'T BE IN A
SITUATION WE'RE IN RIGHT NOW,
AND A LOT OF MONEY WAS GIVEN, UM
, BOTH ON THE FEDERAL LEVEL AND
THE STATE. SO MY QUESTION IS.
HOW DID THAT NOT HELP PREVENT
THE HOSPITAL FROM CLOSING?
THAT'S MY FIRST QUESTION TO YOU.
AND THEN WHILE YOU THINKING
ABOUT THE RESPONSE UM UM DOCTOR
BAT IN TERMS OF WITH THE MONEY
THAT KAREN BASS WHEN SHE WAS
SPEAKER, BASS WHEN SHE
REPRESENTS WHEN SHE WAS A MEMBER
OF THE LEGISLATURE SET ASIDE FOR
MAR KING HOSPITAL. BUT THESE
VERY REASONS WHY IS THAT NOT
HELPING TODAY? AND THEN IF MART
KING HOSPITAL CLOSES, WHO'S
GONNA HELP THOSE LABOR? THOSE
MOTHERS AND LABOR AND DELIVERY
UM AND DELIVER THOSE CHILDREN?
AND THOSE BABIES. SO MADAME, IF
YOU MADAM CHAIR. I HOPE YOU
DON'T MIND ME ASKING. OK, SO I'M
GONNA TRY TO ANSWER EACH OF YOUR
QUESTIONS, AND I'M SURE MY
COLLEAGUE WILL HAVE SOME ANSWERS
, TOO. UM A LOT OF HOSPITALS
WERE IN DISTRESS DURING THE
COVID PANDEMIC BECAUSE OF ALL OF
THE UNEXPECTED EXPENSES
ASSOCIATED WITH COVID. FOR A
COUPLE OF YEARS, THE FEDERAL
GOVERNMENT PROVIDED SUPPORT, BUT
THEN THE GOVERNMENT SUPPORT
STOPPED. AND I THINK THAT'S WHEN
THE HOSPITAL STARTED DOWN THE
PATH THAT THEY ARE. THEY'VE GONE
DOWN. SO IT WAS AFTER THE CARES.
ACT MONEY STOPPED THAT HOSPITALS
BEGAN TO HAVE REALLY SERIOUS
FINANCIAL CHALLENGES. ONE OTHER
THING I'LL SAY ABOUT THE CARES.
ACT MONEY IS THAT THE MONEY DID
NOT GO PROPORTIONATELY TO THE
MOST DISADVANTAGED HOSPITALS SO
YOU'LL RECALL THAT IT WAS
STARTED UNDER TRUMP, AND IT WAS
ALLOCATED BASED ON HOSPITALS,
NET PATIENT REVENUES SO THAT
MEANS THAT MORE AFFLUENT
HOSPITALS GOT MORE MONEY. AND
LESS AFFLUENT HOSPITALS GOT LESS
MONEY, WHICH DOESN'T REALLY MAKE
SENSE. BUT THAT IS, YOU KNOW,
PART OF THE STORY THERE. UM,
YOU'RE ASKING ABOUT ASSEMBLY
BILL 2599, WHICH IS THE BILL
THAT KAREN CARRIED THAT
ESTABLISHED THE STATE MEDICAID
SUPPLEMENT FOR MLK COMMUNITY
HOSPITAL, AND I THINK THE MOST
SIMPLE WAY TO ANSWER THAT
QUESTION. IS THAT THE VOLUME OF
PATIENTS THAT WE ARE TAKING CARE
OF TODAY WAS NOT ANTICIPATED. AT
THE TIME THAT THE FINANCIAL
MODEL FOR THE HOSPITAL WAS
CREATED. SO WHEN THAT BILL WAS
CARRIED, THEY PROJECTED 35,000
EMERGENCY VISITS A YEAR. AND
THERE WAS NÓ SUPPLEMENT BILL.
FOR THOSE EMERGENCY VISITS, THE
SUPPLEMENTS WERE ALL ALLOCATED
TO INPATIENT CARE. FAST FORWARD.
WE ARE NOW TAKING CARE OF
120,000 VISITS A YEAR LOSING
MONEY ON EACH VISIT. AND THERE
THE MEDICAID STATE SUPPLEMENT
THAT WAS ESTABLISHED THROUGH
2599 DOES NOT SUPPLEMENT
EMERGENCY DEPARTMENT VISITS, SO
WE ONLY GET PAID THE VERY, VERY
LOW RATES THAT COME THROUGH THE
MANAGED CARE PLANS AND THE
MEDICAID FEE FOR SERVICE PROGRAM
. SO THERE'S A HUGE GAP THERE,
AND IT AMOUNTS TO TENS OF
MILLIONS OF DOLLARS A YEAR IN
LOSSES FOR OUR HOSPITAL, SO IT'S
NOT A DOLLAR FOR DOLLAR KIND OF
SYSTEM. AND ARE YOU GETTING PAID
ON TIME? BECAUSE YOU'RE PUTTING
OUT THE SERVICES AND YOU BILLING
AND WAITING FOR AM I
UNDERSTANDING? THAT IS AN ISSUE
AS WELL. THAT IS ABSOLUTELY AN
DO, TOO. SO THAT HAS TO DO WITH
MEDICAID MANAGED CARE AND ALL OF
THE STRUGGLES THAT WE HAVE IN
GETTING PAID IN A TIMELY MANNER.
IT'S BOTH, UM, A TIMELINESS
ISSUE AND A DENIAL ISSUE AND YOU
KNOW A LACK OF TIMELY
AUTHORIZATION FOR SERVICES AS
WELL. SO ALL OF THOSE, UM,
STRUGGLES WITH MANAGED CARE
PLANS ARE NEGATIVELY IMPACTING
HOSPITALS AND THEIR REVENUE.
THANK YOU. SHE PRETTY MUCH SAID
IT ALL. I THINK WE ALL CAN AGREE
WITH WHAT YOU JUST MENTIONED,
BUT, UH, FOR MADEIRA, YOU KNOW
THE CARES, ACT MONEY. WE DID GET
MONEY AND WE WERE VERY GRATEFUL
AT THE TIME WHEN WE GOT IT, BUT
IT FELL SHORT FOR WHAT? WE WERE
SPENDING, UH, DURING THE
PANDEMIC, SO IT JUST WASN'T
ENOUGH. UH, YOU KNOW, WE AGAIN I
THINK IT WAS, UH, THE WAY IT
WAS, UH, IT WAS JUST
PROPORTIONATE, UH, THE SHARED
WITH DIFFERENT HOSPITALS BASED
ON DIFFERENT FACTORS AS SHE SHE
MENTIONED AND YOU KNOW, SO WE
DID GET SOME. YOU KNOW, I, I DO.
REMEMBER TO JUST WAITING FOR
MORE MONEY TO COME IN, SO THAT
WE COULD, YOU KNOW, UH, SAVE OUR
HOSPITAL AND REMEMBER WAITING
FOR THE ARP F TO COME IN, AND NÓ
MONEY WAS ALLOCATED TO HOSPITALS
WITH THOSE ARPI FEDS. I REMEMBER
AT THAT TIME, YOU KNOW, CALLING
UP ANYBODY I CAN TALK TO FIND
OUT. YOU KNOW WHY WE'RE
HOSPITALS FORGOTTEN WHEN THAT MO
MONEY WAS ALLOCATED OUT, AND,
UH, YOU KNOW, NEVER REALLY GOT
AN ANSWER FOR THAT. BUT IT JUST
FELL SHORT. TO BE HONEST, WE
JUST DIDN'T IT JUST WASN'T
ENOUGH TO COVER THE LOSSES. OK
11 QUESTION. IF I MAY, DR
BASSETT, TELL ME. UM WHY ISN'T
MARTIN LUTHER KING HOSPITAL LIKE
A DISH HOSPITAL? CAN CAN YOU
EXPLAIN? YES SO THIS HOSPITAL
OPENED IN 2015. AND AT THAT TIME
, ALL OF THE DISH FUNDS HAD BEEN
ALLOCATED TO OTHER HOSPITALS.
AND THE, UM LEADERS. THE PUBLIC
LEADERS AT THE TIME WHO WERE
INVOLVED IN GETTING THE HOSPITAL
OPENED AND DEVELOPING THE
FINANCIAL MODEL DID NOT WANT TO
GET BOGGED DOWN IN A FIGHT WITH
ALL OF THESE OTHER HOSPITALS AND
TRYING TO TAKE SOME OF THEIR
DISH MONEY AWAY TO GIVE TO A NEW
HOSPITAL THAT WAS JUST OPENING,
SO THEY CAME UP WITH THIS IDEA
OF CREATING A SEPARATE PROGRAM
THAT WAS PUT INTO A B 2599 TO
PROVIDE SUPPLEMENTAL FUNDING FOR
THE HOSPITAL. THANK YOU VERY
MUCH. DID YOU HAVE A I WAS JUST
GONNA ADD, UM AND YOU RAISED A
GREAT POINT. THINGS WEREN'T
HEALTHY AND STABLE BEFORE IT WAS
A DELICATE SYSTEM BEFORE AND I
THINK THAT'S KIND OF WHAT YOU
HEARD A NUMBER OF US TALK
THROUGH. UM AND THERE WERE
SEQUESTRATION THERE WAS TRIMMING
AROUND THE REIMBURSEMENT BEFORE
THE PANDEMIC, THE PANDEMIC HIT
CARES ACT AND A COUPLE OF THOSE
THINGS CAME THROUGH TO HELP
THROUGH IN THAT PERIOD OF TIME,
BUT ALSO THINGS LIKE THE
MEDICARE ACCELERATED PAYMENTS
CAME THROUGH AS AN AD. BUT THEN
GOT TAKEN AWAY AT SOME OF OUR
MOST VULNERABLE TIMES. SO JUST
WHEN INFLATION HIT IN 2122. THEN
THE TAKE BACK OF THE ACCELERATED
PAYMENTS HAPPEN. SO YOU SAW
HOSPITALS GO THROUGH THIS
INCREASE OF EXPENSES WHEN THEY
NEEDED THE CASH AND FEELING LIKE
THEY WERE FALLING OFF OF A
CLIFF. AND SO WHAT WAS A
DELICATE SYSTEM GOT EXACERBATED
POST PANDEMIC, UM, WITH THE
INFLATION AND THAT'S WHAT'S
CAUSED A LOT OF THIS, BUT IT BUT
TO YOUR POINT THIS STARTED
BEFORE IT WAS A IT WAS A FRAGILE
SYSTEM BEFORE IN THE PANDEMIC,
AND THE INFLATION HAS JUST
EXACERBATED THE ISSUE. I JOIN MY
COLLEAGUE IN THE UH, HEARING THE
DIFFICULTY HERE. UM AND ALL
THROUGH THIS PERIOD OF TIME. UM
I HAVE THOUGHT. OVER THE YEARS
ABOUT PEOPLE. IN MY AREA. I WAS
MAYOR FRESNO FOR EIGHT YEARS. 11
YEARS UP HERE MY FINAL YEAR. AND
TO THINK ABOUT THOSE PEOPLE WHO
ARE NOT WELL. UM WE SAY WE CARE
ABOUT THE MOST VULNERABLE. AND
YET IT SOUNDS LIKE WE'RE KIND OF
STINGY WHEN IT COMES TO I KNOW
WE HAVE A SERIOUS UH, BUDGETARY
ISSUE HERE. BUT I'M GONNA TURN A
PAGE WITH RESPECT TO ME MADERA
HOSPITAL BECAUSE I THINK THERE
IS REAL POSSIBILITY HERE. AND
THE REASON I DO IS I IS SEVERAL
POINTS AND I WANNA LAY THEM OUT
ONE I THINK THAT THE JUDGE MADE
THE RIGHT DECISION WITH RESPECT
TO AMERICAN ADVANCED MANAGEMENT.
I REALLY DO. NOTWITHSTANDING
SOME OF THE, UH CONCERNS OVER
THAT DECISION. I SPENT ABOUT
THREE HOURS WITH THE EXECUTIVES
OF A IN MY OFFICE IN FRESNO.
PRESSING THEM HARD ON THEIR
PROPOSAL, AND THEIR PROPOSAL HAD
A LOT OF INFORMATION IN IT, AND
I ASKED VERY TOUGH QUESTIONS.
THEY DO HAVE A HISTORY IN OUR
AREA AND IN CALIFORNIA. OF
RESCUING AND REOPENING.
DISTRESSED HOSPITALS. AND I WAS
VERY, UH CLEAR ON THAT. UM, AND
SO I THINK THAT THERE IS BECAUSE
OF THE JUDGE'S DECISION. UH, A
REAL POSSIBILITY THAT WE HAVE
SOMEBODY THAT WILL HAVE THE
RESOURCES TO DO IT. THE HISTORY
TO BE ABLE TO DO IT AND GET IT
OPEN. AND WHY AM I OPTIMISTIC IF
WE CAN GET IT OPEN? THE MIX OF
PATIENTS. BECAUSE YOU KNOW, I'VE
HAD A RADIO STATION IN FRESNO
FOR 30 YEARS. II. I WAS THE
MAYOR I THIS AREA. THE CITY OF
FRESNO IS ONE OF THE FASTEST
GROWING CITIES IN THE STATE OF
CALIFORNIA. WE WILL HIT 600,000.
POPULATION. OUR AIRPORT JET IN
THE AFTER COVID. WE FLEW 2
MILLION PASSENGERS. IF YOU LOOK
AT THE AREA THAT IS BISECTED BY
THE SAN JOAQUIN RIVER. ON THE
SOUTH SIDE OF THAT RIVER. WHICH
IS FRESNO COUNTY. IS SOME OF THE
MOST POPULATED AREAS AND SOME OF
THE UH, MIDDLE TO UPPER MIDDLE
CLASS AND EVEN SOME HIGHER THAN
THAT. AND THE INTERESTING THING
IS THAT THEY'RE JUST A SHORT
DRIVE AWAY FROM MADEA. AND WE
ALSO HAVE THE VALLEY CHILDREN'S
HOSPITAL THAT IS RIGHT THERE. W,
WHICH WHICH DRAWS AND IF THEY
WERE HERE, THEY'D SAY THE SAME
THING THAT THEY HAVE A HIGH
VOLUME OF CHILDREN THAT THEY
CARE FOR ON ON ON PUBLIC
ASSISTANCE. BUT ALSO IF YOU LOOK
AT WHAT IS HAPPENING IN SOUTHERN
MADERA COUNTY UM YOU HAVE TO
RECOGNIZE THAT THE IT'S BECOMING
A BEDROOM COMMUNITY OF FRESNO.
SIGNIFICANTLY. LARGE NUMBERS OF
SOME OF THE BEST HOMEBUILDERS IN
OUR REGION. AND THEY ARE THAT
SELLING OUT FAST. UH, THEY ARE
UH, COMMUNITIES WHERE MY GUESS
IS A LOT OF THEM WILL BE
EMPLOYED IN FRESNO, BUT THEY'RE
JUST, YOU KNOW, THEY'RE RIGHT
ACROSS THE RIVER. I MEAN, YOUR
HOSPITAL IS 20 MINUTES FROM MY
FRONT DOOR. UM SO I, I THINK IF
WE CAN GET IT OPEN AND IF THE
HOSPITAL WOULD LOOK AT THE
PRIVATE INSURANCE MARKET AND HOW
IT IS GROWING. AND IT WOULD SEEM
TO ME THAT SOME OF THE MOST
SIGNIFICANT DEVELOPERS AND HOME
BUILDERS ARE RIGHT NEXT DOOR TO
YOU. I. I THINK THAT THERE WOULD
BE AN INTEREST IN IN GETTING
THAT HOSPITAL OPEN AND THEN
MARKETING IT TO THE THOUSANDS.
PERHAPS TENS OF THOUSANDS. I
DON'T KNOW WHAT THE HOUSING
POPULATION IS GONNA LOOK LIKE
THAT, BUT IT'S GOING TO BE
REALLY SUBSTANTIAL. BUT IT'S NOT
JUST THERE. I MEAN IT CLOSE BY
IN IN OTHER MADERA COUNTY AREAS
AND IN AND IN, UH, FRESNO
COUNTY, UM AND SO I THINK IF WE
CAN FIRST GET IT OPEN. SECONDLY
IF WE CAN JUST GET
REIMBURSEMENTS UP TO WHERE IF
YOU'RE NOT MAKING MONEY OUT OF
AT LEAST YOU'RE PAYING YOUR
BILLS. AT LEAST YOU'RE BREAKING
EVEN AND I REALLY THINK THAT
NEEDS TO BE SOMETHING THAT WE
CARRY, NOT JUST IN OUR NOTES AND
NOT JUST IN OUR BUDGETS, BUT
WE'VE GOT TO CARRY IT IN OUR
HEART. AND THEN I THINK IF WE
CAN GET IT OPEN AND IF, IN FACT
WE HAVE A NATURAL ACCUMULATION
OF PEOPLE WITH GOVERNMENT. UH,
INSURANCE. THERE'S ALSO A LARGE
AND GROWING PRIVATE SECTOR.
WITHIN 1015 20 MINUTES. THAT IF
YOU I DON'T KNOW IF YOU WANT TO
TALK TO, UH UH, MR MCCAFFREY. IF
YOU WANT TO TALK TO, UH, THE
OTHER BUILDERS THERE. THEY ARE
TALKING ABOUT. UH, THIS.
WONDERFUL PLACE WITH 14 MILES OF
TRAILS AND ALL OF THAT. SO I. I
GUESS I'M BASICALLY SAYING IF,
IN FACT YOU NEED ADDITIONAL
PRIVATE INSURERS. THERE'S A BIG
MARKET OF THAT GROWING IN
FRESNO. AND IN SOUTHERN MADERA
COUNTY. LET'S DO OUR PART OVER
HERE TO HELP BUT WHY DON'T WE
MARKET TO THE GROWING NUMBER OF
PEOPLE THAT ARE MOVING INTO
BRAND NEW HOMES. AND IF WE CAN
GET IT OPEN UM, I THINK IT CAN
BE COMPETITIVE IN DRAWING
PRIVATE INSURANCE. SO I'M
OPTIMISTIC. I WANNA ENCOURAGE. I
ALSO SPENT A GOOD DEAL OF TIME.
AS I SAID, WITH AMERICAN
ADVANCED MANAGEMENT AND ONE OF
THE THINGS THAT I AFTER I SPENT
TIME WITH THEM THAT I COMMITTED
TO DO WAS TO SEND THERE.
SPECIFIC PROPOSAL TO EACH MEMBER
OF THE BOARD OF SUPERVISORS AND
ADVOCATE. UH, FOR A BECAUSE I
REALLY FELT LIKE THEY HAD THE
DESIRE THE HISTORY AND THE
ABILITY FOR THIS FOR THIS TO
HAPPEN. SO INSTEAD OF, UM UH,
SORT OF BEING UNGRATEFUL. FOR A
AMS PARTICIPATION AND I KNOW WE
HAD A NUMBER OF ELECTED
REPRESENTATIVES SAY, WELL, WAIT
A MINUTE, YOU KNOW. UM BUT I
THINK THAT THE JUDGE HAD
SOMETHING TO SAY ABOUT THAT, UH,
IN THE IN THE CASE OF THE
BANKRUPTCY, AND HE REPEATEDLY
ASKED U èC S¼ F, WHERE THEY HAD
BEEN. IN THE PAST YEARS IN THE
HOSPITALS CLOSING AND ALSO
POINTED TO ADVENTISTS. UH
PREVIOUS INTEREST, AND THEY
THEIR WITHDRAWAL THERE. YOU'VE
GOT SOMEBODY THAT WANTS TO BE
THERE. THEY'VE GOT A GOOD
HISTORY. THEY'VE CONVINCED ME
THAT THEY ARE REALLY GOOD PEOPLE
AND THAT THEY THEY'RE NOT JUST
THERE. TO PROCESS AND COLLECT
AND SPEND MONEY. THEY REALLY
CARE ABOUT THEIR PEOPLE THERE. I
THINK IF YOU COMBINE HOSPITAL.
WITH A GROWING MARKETPLACE
AROUND IT. AND A WILLINGNESS I
THINK OF UH, NORTHERN CITY OF
FRESNO AND SOUTHERN MADERA
COUNTY. TO TALK ABOUT THE
POSSIBILITIES WHEN IT OPENS UP.
AND YOU COULD BE TALKING ABOUT
THE MADERA YOU COULD BE TALKING
ABOUT. COME ACROSS THE RIVER TO,
UH, BRING YOUR KIDS RIGHT TO
VALLEY VALLEY. CHILDREN'S AND I
KNOW COMMUNITY IS OPENING AS
PART OF IS IT AN EMERGENCY OR
NOT SURE IT IS A FULL SERVICE
HOSPITAL, BUT THERE WILL BE AAA
THIRD. HIGHLY REGARDED HOSPITAL.
I THINK THERE'S GONNA BE GROWING
DEMAND. I THINK THAT DEMAND
WOULD BE OF PEOPLE WITH
SIGNIFICANT NUMBERS WHO HAVE
PRIVATE INSURANCE ALONG WITH
THOSE THAT DON'T AND, UM THE
RISING TIDE IS COMING IN FRESNO.
OUR OUR S¼ M S¼. A IS A MILLION
THREE. NUMBER ONE OF THE FASTEST
CITIES OF THE FASTEST GROWING
REGIONS, SO NOW IS THE TIME TO
OPEN. AND OFFER AND I THINK
THERE'S AN OPPORTUNITY TO OPEN
AN OPPORTUNITY TO OFFER. UH, A
COMPETITIVE PLACE. A GOOD PLACE,
AND I THINK THAT, UH, A WILL
MEET THE WILL MEET THE
CHALLENGE, SO I WANT TO
ENCOURAGE. LET'S KEEP GOING
FORWARD. IT'S A MATTER OF MONTHS
. I THINK IF WE CAN OPEN UNDER
THE COURT'S EXPECTATION AND I
APPRECIATE THE FACT THAT, UH WAS
GIVEN A FAIR OPPORTUNITY TO MAKE
THEIR CASE AND I THINK THAT THEY
HAVE BEEN RIGHTFULLY RECOGNIZED
FOR THEIR ABILITY AND THEIR
HISTORY AND THEIR RESOURCES. SO
LET'S GET IT DONE. LET'S OPEN
IT. WE CERTAINLY ARE WORKING ON
IT, AND WE HOPE WITHIN 4 TO 6
MONTHS AND ONE OF THE
INTERESTING THINGS I WANTED TO
MENTION IS THAT BEFORE WE CLOSED
OUR HOSPITAL AND BEFORE THE
PANDEMIC HIT, WE WERE LOOKING AT
THAT MARKET AND WE HAD TO
ACTUALLY PLANS AND WE'RE WORKING
WITH MR JONES ON PUTTING AN
URGENT CARE OUT THERE. SO IT'S
FUNNY THAT YOU MENTION THAT SO
OF COURSE, YOU KNOW, WE'LL TALK
TO A AM ABOUT THAT AND SEE IF
THERE'S AN ABILITY TO DO
SOMETHING THERE. SO THANK YOU.
YEAH, UH, TIM OR TOM. 10 YEAH,
I'VE KNOWN HIM FOR A LOT OF
YEARS. HE'S GOT A VERY GOOD
HEART THERE. SO I THINK YOU
TALKED TO THE RIGHT FOLKS THERE
AND HE IS A MOVER AND IS A
DECISION MAKER, AND HE GETS
THINGS DONE. SO, UH, WHEN WE
FINISH HERE, AND I GO BACK TO
FRESNO, I'M GONNA CALL HIM UP
AND SAY I HEARD SOME GOOD THINGS
ABOUT IT. JUST GO DO THAT. OK GO
DO IT YOU BEFORE BEFORE YOU
BEFORE YOU CALL HIM. CAN I ASK
ONE QUESTION ABOUT SOLUTIONS?
WHAT DO YOU THINK THAT WE I'M
SORRY, MADAM CHAIR. WHAT DO YOU
THINK THAT WE NEED TO BE DOING?
I DON'T WANT TO DOMINATE THE
TIME BUT IN THE BACK OF YOUR
MIND BEFORE YOU CAN BEFORE WE
CONCLUDE, WHAT DO YOU THINK WE
SHOULD BE DOING OR ASKING FOR AS
A WAY OF TRYING TO RESOLVE THESE
GROWING ISSUES? SO WHENEVER. MR
GIBSON. WE NEED TO FIND THE
CREDIT OF THE BASEMENT. THE
PRINCIP RIGHT NOW. I'M GONNA
TURN IT OVER TO ASSEMBLY MEMBER
SO THANK YOU, MADAM CHAIR. UH I
THINK MY QUESTIONS HAVE BEEN
ASKED, UH, BY UH, MY COLLEAGUE
HERE. UH MISTER GIBSON. BUT I
DID WANNA JUST SAY THANK YOU
FOR, UM, BEING VERY HONEST. UH,
I. I DO TO SHARE KIND OF THE
SENTIMENT THAT IT IS A LITTLE
BIT OF A DEPRESSING STATE OF
AFFAIRS FOR OUR OUR, UM, REALLY
SAFETY NET HOSPITALS AS SOMEONE
THAT REPRESENTS A VERY RURAL
DISTRICT AND, UH, THE SAFETY
NET. HOSPITALS ARE THE LIFELINE,
UH, FOR FAMILIES, AND SO I AM
VERY CONCERNED. UM OBVIOUSLY,
WE'VE DONE WITH THE DISTRESS
HOSPITAL LOAN PROGRAM WHERE
WE'VE PLANNED TO KIND OF GIVE
THAT LIFELINE AND PROVIDE THAT
SUPPORT FOR THE NEXT COUPLE OF
YEARS. UM I THINK THAT WE DO
HAVE TO FIGURE OUT UM MAYBE
FLEXIBILITY IN OUR SYSTEM,
FIGURE OUT DIFFERENT SOLUTIONS
AND AGAIN BACK TO WHAT THE
CHAIRWOMAN MENTIONED, UM THAT A
ONE SIZE FITS ALL IS NOT, YOU
KNOW, ALWAYS, UH, THE ANSWER,
ESPECIALLY, YOU KNOW, SEEING
WHAT THE STATE OF AFFAIRS IS
ESPECIALLY WITH THESE, UH,
SAFETY NET HOSPITALS, AND SO,
UH, THANK YOU FOR SHARING THAT I
. I DO. UM, THE LAST THING THAT
I JUST WANNA SHARE AND I DON'T
KNOW IF YOU GUYS UH, MADE ANY
COMMENTS TO THIS, BUT I'D LIKE
TO SEE MAYBE IF ANY OF YOU GUYS
COULD SHARE YOUR REACTION TO THE
FIRST PANELIST, UH, WHO SHARED
IN TERMS OF THE LACK OF
CORRELATION? BECAUSE UH, THAT
REALLY, UM KIND OF STUCK WITH ME
. AND SO I'M JUST, UM, TRYING TO
FIGURE OUT OK, SO WHERE ARE WE
AT? IF THERE IS NÓ CORRELATION,
THEN WHAT IS I THOUGHT THE
STATEMENT WAS VERY PUZZLING, AND
I WAS WONDERING WHETHER HE WAS
REFERRING JUST TO THE NUMBER OF
DISCHARGES OR TO THE PAYER MIX
BECAUSE YOU KNOW THE PAIR MIX IS
REALLY IMPORTANT IN TERMS OF
FIGURING OUT THE FINANCES OF A
HOSPITAL. UM BUT YOU KNOW TO SAY
THAT IT THAT IT'S NOT CORRELATED
WITH MEDICAID JUST DIDN'T MAKE
SENSE TO ME. YEAH II. I WOULD
AGREE, AND IT'S NOT AN URBAN OR
A RURAL ISSUE. IT IS THAT
DISPROPORTIONATE AMOUNT OF
MEDICAL AND MEDICARE. UM WE HAVE
WHITE MEMORIAL BOYLE HEIGHTS.
UM, WE PICKED UP. UH, MONTEBELLO
. UM WE'VE GOT, UH, RIDE OUT
HOSPITAL IN THE UBA SUTER AREA
JUST OUTSIDE OF SACRAMENTO. BUT
THEN WE HAVE MENDOCINO COAST. WE
HAVE TULARE HOSPITAL AND TULARE
COUNTY. WE HAVE DAMRON AND
STOCKTON EVERY SINGLE ONE OF
THOSE HOSPITALS THAT I
MENTIONED. IS SIGNIFICANTLY
DISTRESSED BECAUSE OF THE
GOVERNMENTAL PAYER MIX THAT
THEY'VE GOT THE DISPROPORTIONATE
AMOUNT OF MEDICAL AND MEDICARE
AND SO IT ISN'T AN URBAN VERSUS
RURAL SETTING. IT IS A
DISPROPORTIONATE AMOUNT OF THOSE
GOVERNMENTAL PAYERS AND A VERY
VULNERABLE POPULATION IN EACH
ONE OF THOSE AREAS, WHETHER IT
BE URBAN OR RURAL IN THOSE
SETTINGS, SO I THAT DID NOT MAKE
SENSE TO ME. AT ALL, AND I
APPRECIATE IT. MR GIBSON'S
QUESTIONS OF HIM. AND I DON'T
KNOW IF YOU ALSO MENTIONED WHICH
IS VERY TRAGIC IS THAT LABOR AND
DELIVERY WILL BE CLOSING IN JUNE
, LARRY WHICH, UH, I WAS BORN
AND RAISED IN TULARE COUNTY,
SEEING LINDSAY HOSPITAL CLOSE
WHERE TWO OF MY YOUNGEST
SIBLINGS, UH, WERE BORN AND THEN
NOW 20 MINUTES AWAY FROM WHERE
MY FAMILY LIVES. UH, SEEN TALE
CLOSE. I'M LIKE WHAT IS LEFT
STANDING BY CELIA KA DELTA AND
I'M LIKE, I DON'T EVEN KNOW HOW
THEY'RE, YOU KNOW, DOING, GIVEN
THE FACT THAT, UH THEY'VE ALSO
JUST RECEIVED THE DISTRESS,
HOSPITAL LOAN. UM, SO VERY
CONCERNING. I THINK WE HAVE A
LOT TO DO. UM, CHAIRWOMAN, THANK
YOU SO MUCH. WELL ONCE AGAIN. I
WANNA THANK ALL OF OUR
PANELISTS. UM, YOU KNOW HOSPITAL
CLOSURES, LABOR AND DELIVERY
UNIT CLOSURES ARE EXTREMELY, UM,
CONCERNING BECAUSE AS WE TRY TO
IMPROVE THE HEALTH CARE AND
HEALTH CARE OUTCOMES OF ALL
CALIFORNIANS, AS WE, UH,
RECOGNIZE THE FACT THAT WE NEED
TO REALLY START FOCUSING ON
ELIMINATING MANY OF THE
DISPARITIES THAT WE SEE ALONG
RACIAL LINES ALONG SOCIAL
ECONOMIC LINES, THE CLOSURE OF
THESE HOSPITALS, THESE CLOSURE
OF THE MATERNITY WARDS ARE GOING
TO DO NOTHING BUT THE OPPOSITE
OF WHAT WE ARE. TRYING TO DO AND
SO AS WE TRY TO IMPROVE THINGS
WITHIN OUR EDUCATION SYSTEM, OUR
TRANSPORTATION OUR ENVIRONMENTAL
JUSTICE TO IMPROVE THE
CONDITIONS IN WHICH EVERYONE
LIVES TO ULTIMATELY IMPACT. UM
BETTER HEALTH OUTCOMES. WE ALSO
RECOGNIZE THAT IF PEOPLE DO NOT
HAVE ACCESS TO HOSPITALS, UH TO
A PLACE WHERE THEY CAN SAFELY
DELIVER THEIR BABIES, UM, WITH
QUALIFIED INDIVIDUALS, WE ARE
TRULY TRULY TAKING A STEP BACK,
SO I REALLY APPRECIATE ALL OF
YOU BEING HERE. I DO HAVE, UM A
FEW QUESTIONS THAT I I'LL I'LL
START AND I'LL START WITH. UH UM
MADEA COMMUNITY HOSPITAL. THANK
YOU SO MUCH FOR BEING HERE. I
KNOW THIS HAS BEEN A VERY
CHALLENGING FEW YEARS FOR YOU
ALL. UM BUT YOU STATED SOMETHING
THAT TALKED ABOUT EQUITY AND
REIMBURSEMENT. CAN YOU PLEASE
ELABORATE ON THAT A LITTLE BIT
MORE? WELL, AS YOU KNOW, I MEAN,
MAYBE YOU DON'T KNOW. BUT ALL
HOSPITALS ARE REIMBURSED
DIFFERENT. I MEAN, WE MAY SERVE
THE SAME PATIENTS LIKE LET'S
JUST SAY MADEIRA AND FRESNO AND
PATIENTS THAT WE MAY TAKE CARE
OF IN MADEIRA, AND IF THEY GO
GET SERVICES AT FRESNO. THEY MAY
AND I DON'T KNOW HOW MUCH THEY
REIMBURSEMENT IS, BUT WE DO KNOW
THAT IT'S HIGHER THAN MADEIRA
AND IT COULD BE UP UPWARDS OF
30% MORE FOR THAT SAME PATIENT
FOR THAT SAME SERVICE, SO IT
REALLY DEPENDS ON HOW MUCH
LEVERAGE YOU HAVE TO NEGOTIATE A
GOOD CONTRACT WITH THE PAYER AND
TO THAT DOESN'T QUITE SEEM FAIR
FOR THE SMALL RURAL HOSPITALS,
INDEPENDENT HOSPITALS. WE HAVE
NÓ LEVERAGE. WE HAVE NÓ OTHER,
YOU KNOW, BIGGER HOSPITAL TO
HELP US, UH, YOU KNOW, GET GOOD
CONTRACTS. WE REALLY DON'T EVEN
HAVE AN ABILITY TO HIRE SOME
PHYSIC SOPHISTICATED, YOU KNOW,
UM PEOPLE DO COME AND HELP US AS
CONSULTANTS TO GET BETTER. YOU
KNOW CONTRACTS BECAUSE THEY COST
A LOT OF MONEY, TOO, WHICH WE
DON'T HAVE. AND SO IT IT'S JUST
DOESN'T SEEM FAIR AND IT REALLY
OPENED MY EYES WHEN WE WERE
GOING THROUGH THE AFFILIATION
PROCESS. UH AND THE ATTORNEY
GENERAL STAFF WAS LOOKING AT OUR
RATES AND OUR REIMBURSEMENT AND
HE SAID, ARE HIS STAFF SAID, YOU
KNOW, WE'RE ONE OF THE LOWEST IN
CALIFORNIA. AND SO YOU KNOW THAT
YOU KNOW THAT THAT MATTERS THAT
MATTERED A LOT FOR US WHEN WE
WENT THROUGH THIS PANDEMIC, AND
LIKE I SAID PRIOR TO THAT WE HAD
IT WAS VERY HARD TO, YOU KNOW,
REINVEST INTO OUR INFRASTRUCTURE
, BUT WE MADE IT SOMEHOW WE MADE
IT AND IT WAS BECAUSE YOU KNOW,
WE WERE ALWAYS VERY TIGHT
CONSERVATIVE WITH HOW WE SPENT
MONEY BECAUSE WE HAD TO BE, UH
AND IT REALLY ISN'T THE WAY TO
RUN A HOSPITAL. TO BE HONEST,
YOU KNOW, YOU DO NEED TO HAVE
SOME MARGINS. YOU NEED TO BE
ABLE TO REINVEST. YOU NEED TO BE
ABLE TO PAY YOUR PEOPLE FAIRLY.
THE PEOPLE THAT WE SERVE, YOU
KNOW, WE DO SERVE A HUGE
HISPANIC POPULATION. WE ARE NOT
CONSIDERED A RURAL COMMUNITY AND
BUT OUR PATIENTS THERE DESERVE
TO GET THE CARE WHERE THEY ARE
BECAUSE WE WANT TO CARE FOR OUR
COMMUNITY AND WE HAVE A HUGE
HISPANIC POPULATION A LOT OF
MEDICAL AND WE EMBRACE THAT AND
WE LOVE SERVING OUR COMMUNITY.
WE HAD A LOT OF RURAL HEALTH
CLINICS AND WE WERE THE SAFETY
NET OF THAT COMMUNITY. WE HAD
OVER 23 DIFFERENT SPECIALTIES IN
OUR RURAL HEALTH CLINICS.
PATIENTS DIDN'T HAVE TO GO FAR.
AND IN FACT, WE HAVE PATIENTS
COMING, YOU KNOW, AS FAR AS
BAKERSFIELD TO MADEIRA TO GET
THEIR SPECIALTY CARE BECAUSE
THEY COULD NOT GET IT AND OTHER
PLACES BECAUSE THEY HAVE MEDICAL
, SO ACCESS TO CARE IS REALLY AN
ISSUE. AND SO I THINK THAT YOU
KNOW, WE UNDERSTAND HOW
IMPORTANT EQUITY IS, BUT WE ALSO
NEED TO UNDERSTAND TO SERVE THIS
POPULATION THAT WE SERVE. AND
MANY OF THEM ARE FARM WORKERS
WITH NO HEALTH CARE INSURANCE.
YOU KNOW, WE ALSO NEED TO HAVE
EQUITABLE REIMBURSEMENT AND I
THINK THAT WE NEED TO TALK TO
TALK ABOUT THAT MORE AND MORE.
BECAUSE I DO HEAR THAT. YOU KNOW
A PLACE LIKE SOMEBODY TOLD ME A
STORY ABOUT CEDAR SIDE NIGHT,
AND THEIR REIMBURSEMENT FOR
MEDICAL IS SO MUCH GREATER THAN
ANYBODY ELSE'S IN CALIFORNIA. I
DON'T KNOW IF IT'S TRUE, BUT YOU
KNOW, JUST FOR INSTANCE, IF IT
WAS ANY ANY DIFFERENCES IN THE
REIMBURSEMENT RATES FROM COUNTY
TO COUNTY REALLY MATTERS,
ESPECIALLY FOR THE PEOPLE THAT
YOU SERVE. FOR US, YOU KNOW LOTS
OF TIMES. WE NEED INTERPRETERS
THAT COST MORE MONEY. LOTS OF
TIME. WE NEED EXTRA SUPPLIES
BECAUSE PATIENTS COME AND THEY
DON'T HAVE ANY RESOURCES. THEY
DON'T EVEN HAVE A HOUSE TO LIVE
IN. AND SO WE'RE PROVIDING THEM
WITH EXTRA THINGS THAT ARE NOT
REIMBURSABLE. YOU KNOW, IT JUST
COST A LOT MORE MONEY. A LOT
MORE EDUCATION. YOU KNOW, WE
HAVE TO SEE THEM BACK MORE OFTEN
BECAUSE THEY DON'T UNDERSTAND
HOW TO CHANGE. MAYBE THEY'RE
DRESSING OR HOW TO TAKE THEIR
MEDICINE OR GIVE THEIR INSULIN
SHOT. SO THERE'S JUST SO MANY
MORE NEEDS. AND WE JUST ARE
ASKING THAT IF YOU CAN, REALLY,
YOU KNOW, CHANGE HAS TO BE.
THERE'S GOT TO BE CHANGED WITH
REIMBURSEMENT AND THE MODELS AND
HOW IT'S YOU KNOW, UH EXCEPT FOR
HOSPITALS TO GET PAID BECAUSE
IT'S JUST NOT WORKING. IT HASN'T
WORKED FOR A LONG, LONG TIME.
THANK YOU. AND ALONG THOSE LINES
OF META, UM MEDICAL AND
REIMBURSEMENT, YOU KNOW, WE
RECENTLY JUST EXPANDED ACCESS TO
MEDICAL YET WE HAVE AN INCREASED
REIMBURSEMENT RATES. UM ACROSS
THE SYSTEM. SO HOW ARE YOU, UH,
ALL ENVISIONING THIS EXPANSION
POTENTIALLY IMPACTING YOUR
INDIVIDUAL HEALTH CARE SYSTEMS.
MÀ I THINK YOU HIT ON THE
PRIMARY ISSUE THAT WE'RE ALL
CONCERNED ABOUT, AND THAT IS
CONTINUING TO ADD MORE PATIENTS
TO THE SYSTEM AND NOT EXPANDING
PARTICIPATION BY PROVIDERS OR
REIMBURSEMENT BY PROVIDERS. UM I
THINK I HEARD SOMEONE CALL
CALIFORNIA'S PROVIDER PAYMENTS,
THE MEDICAID SYSTEM, YOU KNOW
THE MISSISSIPPI OF PAYMENT, YOU
KNOW, SO WE ARE OUT IN FRONT IN
TERMS OF EXPANDING COVERAGE AND
EXPANDING THE SCOPE OF SERVICES
THAT ARE COVERED WITH THINGS
LIKE DOULAS AND HOUSING,
NAVIGATION AND OTHER IMPORTANT
SOCIAL SERVICES, BUT WE AREN'T
PROVIDING ADEQUATE REIMBURSEMENT
FOR YOU KNOW, MEDICAL CARE FOR
THE PROVIDERS, AND I THINK THAT
THE PROGRAM IS, UM YOU KNOW,
IT'S REALLY AN ILLUSORY BENEFIT
IF YOU HAVE AN INSURANCE CARD,
BUT YOU CAN'T GET ACCESS TO THE
SERVICES THAT ARE SUPPOSED TO
COME WITH THAT CARD, SO I THINK
WE REALLY DO NEED TO, UM, REFORM
THE STRUCTURE OF THE PROGRAM TO
PROVIDE EQUITABLE, YOU KNOW, SHE
USED THAT WORD, EQUITABLE
EQUITABLE PAYMENTS. UM IT REALLY
ISN'T JUSTIFIABLE TO PAY
PROVIDERS LESS FOR TAKING CARE
OF A MEDICAID PATIENT THAN
TAKING CARE OF A MEDICARE
PATIENT OR COMMERCIALLY INSURED
PATIENTS. AND AS ASSEMBLYMAN
GIBSON POINTED OUT, A
DISPROPORTIONATE PERCENTAGE OF
OUR COMMUNITIES OF COLOR ARE
DEPENDENT ON MEDICAL AND ARE
GETTING SEPARATE AND UNEQUAL
HEALTHCARE. AND I THINK AS A
STATE, WE CAN DO BETTER THAN
THAT. WE EXPANDED COVERAGE
WITHOUT EXPANDING ACCESS. AND I
THINK THAT'S REALLY WHAT WE'RE
SEEING IS. THE ACCESS IS EITHER
NOT BEING MET AT ALL, OR IT'S
COMING THROUGH THE EMERGENCY
ROOMS AT A MUCH MORE ACUTE
INCIDENT OR EPISODE. AND SO IT'S
STRESSING THE SYSTEM EVEN THOUGH
IT WAS AFTER THE RIGHT THING OF
GETTING THAT COVERAGE, BUT WE'RE
IT'S NOT WORKING AS INTENDED
BECAUSE OF THE ACCESS ISSUES.
WHAT IS IT THAT WE CAN DO? FROM
A LEGISLATIVE STANDPOINT TO KEEP
PATIENTS OUT OF THE HOSPITAL?
WELL I THINK ONE THING THAT CAN
BE DONE IS TO RAISE THE RATES
THAT MEDICAID PAYS FOR
OUTPATIENT CARE. SO YOU KNOW,
NOW I'M GOING TO TAKE OFF MY
HOSPITAL CEO HAT AND PUT ON A
PHYSICIAN MEDICAL GROUP HAT. UM,
HOSPITALS RECEIVE SUPPLEMENTAL
PAYMENTS FOR MEDICAID SERVICES.
WE HEARD ABOUT THAT. OUTPATIENT
PROVIDERS, PHYSICIANS AND
PRACTICE DON'T SO THEY LIVE OFF
OF THE INADEQUATE RATES THAT
MEDICAID PAYS FOR OUTPATIENT
CARE FOR PREVENTION FOR DISEASE
MANAGEMENT. FOR ALL OF THOSE
SERVICES THAT ARE NEEDED TO KEEP
PATIENTS OUT OF THE EMERGENCY
DEPARTMENT AND OUT OF THE
HOSPITAL, AND I THINK IN OUR
SYSTEM, WE'VE LEANED INTO THE
PATIENTS IN THE HOSPITAL AND THE
HOSPITAL SERVICES. BUT WE'VE
LEFT THAT OUTPATIENT AND
COMMUNITY BASED COMPONENT OF THE
HEALTH CARE CONTINUUM. SEVERELY
UNDERFUNDED IN MEDICAID. SO IN
MY COMMUNITY OF SOUTH L A. WE'RE
MISSING 1500 PROVIDERS, 800
SPECIALISTS AND 700 PRIMARY CARE
DOCTORS COMPARED TO YOUR AVERAGE
COMMUNITY, AND IT IS DRIVEN BY
THOSE LOW MEDICAID RATES WITH NO
SUPPLEMENTS, WHICH MAKE IT
FINANCIALLY UNFEASIBLE. FOR
PROVIDERS TO PRACTICE THEIR IF I
MIGHT ALSO ADD AS WELL. AND I
WHOLEHEARTEDLY AGREE THAT WE
MUST LOOK AT THE AMBULATORY SIDE
AS WELL. AS I MENTIONED. WE
PROVIDE THE MAJORITY OF THE
PHYSICIANS SERVICES IN MY
COMMUNITY THROUGH A RURAL HEALTH
CLINICS. YET A DECADE AGO, RURAL
HEALTH CLINICS WERE TAKEN OFF
COST REIMBURSEMENT AND PUT ON
PERSPECTIVE PAYMENT SYSTEM
THAT'S NOT KEPT UP WITH COST,
FOR EXAMPLE. WE'RE DOWN ALMOST
TWO THIRDS. AND I DON'T HAVE
QUITE THE NUMBERS YOU DO. WE'RE
DOWN ABOUT SIX PRIMARY CARE
DOCTORS OUT OF UNNECESSARY UH
PER ANY STATISTICAL OF 10
DOCTORS. BUT THE REALITY IS NO
ONE IS GOING TO MOVE TO TOWN. UM
AND BE ABLE TO EXIST ON MEDICAL
RATES. THE RURAL HEALTH CLINICS
HELPED US A LOT, BUT RPP S RATE
IS NOT GOING UP AND IN FACT
LOOKING AT SOME OF THE COSTS
THAT WE NEED TO PAY OR
COMPENSATION TO FAMILY PRACTICE,
DOCTORS THE LAST TWO YEARS,
THEY'VE GONE UP 9% PER YEAR. TO
GIVE YOU AN EXAMPLE. I KNOW THIS
IS A IMPORTANT TOPIC FOR YOU,
DOCTOR. WHATEVER IS RIGHT NOW,
WE WERE TWO YEARS AGO ABLE TO
RECRUIT AN O B G Y N FOR AROUND
425,000 A YEAR I'M BEING TOLD BY
RECRUITERS TO GET SOMEONE TO
EVEN INTERVIEW I'M LOOKING AT
$585,000 FOR NOBODY. G Y N BUT
WITH NO INCREASE IN MY PHYSICIAN
AH, OR PAYMENTS THROUGH OUR
RURAL HEALTH CLINIC. UM THAT'S
NOT GONNA BE POSSIBLE. THE OTHER
THING I WANT TO OUT IS EVEN THE
RURAL HEALTH CLINICS DO ARE ABLE
TO ALLOCATE SOME HOSPITAL COSTS
TO THE REIMBURSEMENT. WE STILL
GET THE MEDICAL RATES FOR
SPECIALTY SERVICES, WHICH IN
MANY CASES SUCH AS ORTHOPEDICS
ARE ABOUT EIGHT CENTS FOR EVERY
DOLLAR WE BUILT FOR SURGERY. THE
PHENOMENON THAT IS REALLY CAUSED
ME TO RETHINK IF I CAN OFFER
SPECIALTY SERVICES IN TOWN IS WE
DO HAVE OUT OF TOWN SPECIALISTS
THAT WILL HAVE A, UH, CLINIC IN
TOWN A COUPLE OF DAYS A MONTH
AND THEN TAKE THEM BACK TO A
SURGERY CENTER. THEY MAY HAPPEN
TO OWN, WHICH IS NEITHER HERE OR
THERE. THE REALITY IS THE OUT OF
TOWN SPECIALISTS DO NOT TAKE
MEDICAL BECAUSE THE
REIMBURSEMENT AND EVEN THOUGH MY
COMMUNITY IS MEDICAL, UM,
POPULATION SHOULD BE ABOUT 30%
OF WHAT I WAS SEEING MY CLINICS,
AND MANY OF MY SPECIALIST IS 80
TO 90% MEDICAL BECAUSE WE ARE
THE ONLY PROVIDERS FROM THE
PHYSICIAN SIDE THAT WOULD ACCEPT
THESE PATIENTS. AND THE SAME
THING WITH MY, UH, WILL BE
PROGRAMMED. MY MEDICAL PATIENTS
ARE HARD WORKING. A LOT OF THEM
HAVE JOBS. THEY JUST DON'T HAVE
HEALTH INSURANCE. AND I'M ALSO
IS ABOUT AS CLOSING. LABOR AND
DELIVERY IS I'M LOOKING AT
HAVING A CLOSE SPECIALTY CLINICS
AS WELL DUE TO THE SAME
PHENOMENON AS JUST THAT A
DISPROPORTIONATE AMOUNT OF
MEDICAL ON A VERY SMALL HOSPITAL
THAT THIS IS THE MONEY ON. AS I
SAID, EVERY SERVICE I DO. THANK
YOU. HOW FAR AWAY IS THE NEXT
LABOR AND DELIVERY FROM YOUR
HOSPITAL? HOW FAR THESE PATIENTS
GOING TO HAVE TO TRAVEL NOW? I'M
SORRY. TWO HOURS. TERRIBLE. MHM
AND JUST OUT OF CURIOSITY, SINCE
I JUST FOUND OUT ABOUT TWO LARRY
LABOR AND DELIVERY. WHERE IS THE
NEXT ONE IN THAT THOSE PATIENTS
ARE GOING TO HAVE TO TRAVEL.
DELANOE WOULD BE THE CLOSEST I
THINK. KOREA. YEAH, CELIA, AND
THAT'S PART OF MANY OF THE
MOTHERS ARE LEAVING. WE'VE TRIED
TO REMEMBER WE OPENED TO LARRY.
IT WAS CLOSED, AND SO WE OPENED
TILLERY AND TRIED TO REINSTITUTE
THE O. B AND WE HAVE NOT BEEN
ABLE TO GET MOTHERS TO STAY IN
TOWN. MORE OF THEM HAVE BEEN
LEAVING AND GOING TO VISALIA.
AND SO WE HAVEN'T BEEN ABLE TO
MAINTAIN A SAFE PROGRAM SO BY
CELIA'S WHERE THEY'VE BEEN GOING
WE WILL STILL BE ABLE TO HAVE A
LARGE PRIMARY CARE AND OBI RURAL
HEALTH CLINIC THERE SO WE CAN DO
PRENATAL CARE AND THOSE TYPES OF
THINGS. WE JUST WON'T BE ABLE TO
MAINTAIN A DELIVERY SERVICE. SO
THEY GO TO VISALIA FOR THAT. I
DO WANT TO MENTION AS WELL,
MADEIRA, ALTHOUGH WE HAD LABOR
AND DELIVERY SERVICES PRIOR TO
CLOSING, WE WERE LOSING LIKE
$4.5 MILLION ANNUALLY, AND A M
IS NOT GOING TO BE ABLE TO
INITIALLY OPENED THAT SERVICE AS
WELL. SO WE'RE MISSING THAT
SERVICE AS WELL. I KNOW HOW MUCH
THEY REALLY WANT TO. BUT AGAIN,
THE REIMBURSEMENT JUST DOES NOT
MAKE SENSE. AND SO IT'S
HAPPENING ALL OVER THE UNITED
STATES, NOT JUST IN CALIFORNIA.
BUT IT IS SOMETHING TO NOTE THAT
YOU KNOW, I DIDN'T KNOW ABOUT
HILLARY. BUT IT'S A IT'S VERY
CONCERNING RIGHT NOW. WOMEN HAVE
TO DRIVE IT AT, YOU KNOW, 2030
MILES TO FRESNO TO DELIVER AND
IN MADEIRA WE USED TO DELIVER
LIKE I SAID ABOUT 75. BABIES A
MONTH, SO THAT'S A SIGNIFICANT
NUMBER THAT PEOPLE ARE WITHOUT.
SO LAST YEAR, TILLERY LOST $22
MILLION.06 MILLION DOLLARS OF
THAT WAS THE OBI SERVICE LINE.
BASED WITH HOW DO WE KEEP THE
HOSPITAL OPEN IS PART OF WHAT
WE'RE TRYING TO FIGURE OUT HOW
TO MAINTAIN. AND SO IT WAS. IT
WAS A VERY TOUGH DECISION THAT
WE'VE HAD TO COME TO, AND WE'RE
STILL TRYING TO FIGURE OUT HOW
TO GET THE REST OF THE HOSPITAL
INTO PLACE THAT IT IS
FINANCIALLY SUSTAINABLE. OUR
HOPE IS THAT WE CAN GET TO A
POINT AND REOPEN IT, OBIE AT ONE
POINT, BUT WE RIGHT NOW WE CAN'T
SEE A PATH WITH IT AT WHERE IT
STANDS TODAY. WE LOSE MONEY ON
LABOR AND DELIVERY ALSO, AND IT
WAS. IT'S BEEN A DIFFICULT
DECISION TO KEEP IT OPEN. BUT
YOU KNOW, WE HAVE THAT
COMMITMENT TO OUR COMMUNITY. SO
EVEN THOUGH WE'RE LOSING MONEY,
WE WE'VE ARE STILL MAINTAINING
THAT SERVICE. AND I WANTED TO
JUST THANK THEM. OKAY, UH,
COMMUNITY HEALTH CARE FOR THAT
COMMITMENT. UM YOU KNOW, EVEN
FROM THE TIME I WAS RESIDENT,
YOU KNOW, LABOR AND DELIVERY
OFTENTIMES DOES NOT MAKE MONEY.
UNFORTUNATELY AND I DID NOT DO
MY RESIDENCY HERE IN CALIFORNIA.
I ACTUALLY DID IT AT COOK COUNTY
AND CHICAGO. SO THEY DEFINITELY
WERE LOSING MONEY. HOWEVER, UM
IT IS A VITAL COMPONENT OF
HEALTH CARE, AND IT IS EXTREMELY
DISHEARTENING TO HEAR WHEN, UM,
DECISIONS HAVE BEEN MADE TO
CLOSE OUR LABOR AND DELIVERY
UNITS. AND ON THAT NOTE, I WANT
TO THANK SHARP REGIONAL HOSPITAL
FOR, UM HAVING NO OPTION BUT TO
STEP IN IN THE SOUTH BAY AREA
WITH THE CLOSURE OR INTIMATE,
IMMINENT CLOSURE OF SCRIPTS.
LABOR AND DELIVERY UNION. UM MY
LAST QUESTION IS ACTUALLY FOR
YOU, MR EVANS. SO WHEN YOU'RE
DEALING WITH A HOSPITAL LIKE
THAT HAS A REGIONAL HOSPITAL
LIKE SHARP THAT HAS FACILITIES
IN MULTIPLE LOCATIONS. MULTIPLE
DIFFERENT PAIR MIXES. DIFFERENT
PARA MIX FROM GROSSMONT THAN
WHAT YOU HAVE IN LAHORE. YAH. UM
ARE YOU ABLE TO USE THOSE FUNDS
ACROSS YOUR SYSTEM? OR IS IT
JUST THE ONE IN LA HORA IS FOR
LA HOYA, THE ONE IN GROSSMONT
GROSS MONTH. THE ONE IN CHILE OR
SOUTH BAY IS FOR SOUTH BAY. SURE
WELL, LET ME LET ME START BY
SAYING WE DON'T HAVE A HOSPITAL
IN LA HOYA, SO ARE PROBABLY ARE
GOOD PAYER MIX WOULD BE KERNEY
MESA IS ABOUT AS AS GOOD AS IT
GETS. THE ANSWER IS, YEAH, THAT
IS HOW THE SYSTEM HAS EXISTED
FOR MANY YEARS. AND SO YOU GET A
HOSPITAL LIKE LIKE GROSSMONT.
GROSSMONT HAS A POSITIVE
OPERATING INCOME. DESPITE ALL OF
THESE CHALLENGES, CERTAINLY NOT
ENOUGH TO CAPITALIZE ITS NEEDS,
BUT CHULA VISTA HAS HAD A
NEGATIVE MARGIN FOR YEARS TO THE
TUNE OF MORE THAN 30 TO $40
MILLION A YEAR THAT IT LOSES.
THAT IS CERTAINLY OFFSET BY UM
BY SOME OF THE HOSPITALS THAT
ARE DO HAVE A POSITIVE OPERATING
INCOME SO THAT WE CAN, YOU KNOW,
REPLACE CAPITAL AND PAY OUR OUR
EMPLOYEES INVEST IN THEIR NEEDS,
ETCETERA. SO WE ARE ABLE TO
LEVERAGE THAT SOMEWHAT. THE
PROBLEM REALLY, IS THAT EVEN THE
HOSPITALS THAT WERE DOING QUITE
WELL ARE JUST NOT DOING AS WELL
AS THEY WERE DOING BEFORE, AND
SO IT MAKES IT EXTREMELY
CHALLENGING FOR US TO CONTINUE
TO, UH, SHIFT THOSE DOLLARS TO
THE ONES THAT ARE UNDER UNDER
PERFORMING FROM A FINANCIAL
STANDPOINT, UM, WHICH ALWAYS
CAUSES US TO LOOK AT EXAMINING
SERVICES. THAT THAT WE PROVIDE,
AND WE ARE COMMITTED TO
PROVIDING THOSE SERVICES. BUT I
THINK WHAT YOU'RE HEARING WITH
REGARDS EVEN TO LABOR AND
DELIVERY IS THAT THE HOSPITALS
THAT ARE THE SICKEST FINANCIALLY
, UM, WITH WITHIN THOSE
HOSPITALS WHEN YOU LOOK AT THE
DEPARTMENT'S LABOR AND DELIVERY
IS ONE THAT, UM YOU KNOW YOU YOU
OFTEN HAVE TO MAKE A, UH VERY
DIFFICULT DECISION ON BECAUSE
IT'S FOR THE HEALTH OF THE
ENTIRE HOSPITAL. AND SO WE SEE
THAT EVEN AT SHARP CHULA VISTA,
WHERE IT IS NOT DOING WELL,
FINANCIALLY, UM AND LABOR AND
DELIVERY WE DELIVER ABOUT 250
BABIES A MONTH. UM BUT BUT EACH
ONE OF THOSE COME AT A
SIGNIFICANT COST AS WELL. WELL,
THANK YOU. THANK YOU ALL. AND
YES, YOU'RE CORRECT. YOU'RE NOT
ALOHA. AND I SHOULD KNOW BECAUSE
I DELIVERED AT YOUR FACILITY IN
KEARNY MESA, BUT, UM, THANK YOU
ALL SO MUCH. WE REALLY
APPRECIATE. UM ALL OF THE
INFORMATION THAT YOU HAVE SHARED
THE TIME THAT YOU HAVE SPENT, UM
, ANSWERING ALL OF OUR QUESTIONS
. UM WE ARE NOW GOING TO MOVE TO
THE NEXT PANEL, WHICH WILL COVER
EXPERIENCES AND PERSPECTIVES OF
PUBLIC AND DISTRICT HOSPITALS.
WE'LL BE HEARING FROM ERICA
MURRAY, PRESIDENT AND CEO OF THE
CALIFORNIA ASSOCIATION OF PUBLIC
HOSPITALS AND HEALTH SYSTEMS.
GARY HER BEST CEO OF KAUAI
HEALTH, AND PATTY MEISSNITZER,
CEO OF U C SAN DIEGO. HELL. AND
MOST START WITH ERICA MURRAY.
YEAH. ERICA MURRAY. I'M THE
PRESIDENT AND CEO OF THE
CALIFORNIA ASSOCIATION OF PUBLIC
HOSPITALS AND HEALTH SYSTEMS
REALLY PLEASED TO BE HERE TODAY?
NEXT SLIDE. I THOUGHT I'D START
WITH A LITTLE BIT OF HISTORY.
BACK IN 1964, CALIFORNIA HAD 66
COUNTY HOSPITALS AND OVER TIME
MANY HAVE CLOSED OR WERE
PURCHASED. 21 STILL REMAIN. MOST
ARE COUNTY OWNED AND OPERATED
AND TO HAVE SEPARATE HEALTH
AUTHORITIES. OF THE FIVE
UNIVERSITY OF CALIFORNIA HEALTH
SYSTEMS, THREE USED TO BE THE
COUNTY HOSPITAL. THE OTHER TWO
ARE CONSIDERED DESIGNATED PUBLIC
HOSPITALS BECAUSE THEIR MEDICAL
AND UNINSURED SERVICES ARE
FINANCED SIMILAR TO COUNTY
HOSPITALS, AND SO THEY'RE
INCURRING THE SAME TYPES OF
LOSSES THAT WILL THAT HAVE BEEN
DISCUSSED HERE. NEXT SLIDE. THE
VALUE OF PUBLIC HEALTH CARE
SYSTEMS CAN REALLY BE
CATEGORIZED IN THREE WAYS. I
THINK THE FIRST IS TO THEIR
COMMUNITIES. COUNTY DESIGNATED
PUBLIC HOSPITALS HAVE THE
MISSION AND MANDATE TO PROVIDE
INDIGENT CARE, WHICH MEANS OUR
SYSTEMS PREDOMINANTLY SERVED.
MEDIC, AL, UNINSURED AND TRAUMA.
COLLOQUIALLY WE DON'T REFER TO
OURSELVES AS DESIGNATED PUBLIC
HOSPITALS. WE CALL OURSELVES
PUBLIC HEALTH CARE SYSTEMS
BECAUSE WE ARE MORE THAN JUST
HOSPITALS. WE PROVIDE THE FULL
CONTINUUM OF SERVICES PRIMARY
SPECIALTY. WE ARE CONSTANTLY
WORKING AS YOU NOTED CHAIR WEBER
TO KEEP PEOPLE OUT OF THE
HOSPITAL. NEXT SLIDE. WE ALSO
PROVIDE A TREMENDOUS VALUE TO
THE HEALTHCARE WORKFORCE. EACH
PUBLIC HEALTH CARE SYSTEM HAS A
TIE TO A TRAINING PROGRAM AND
STATEWIDE WE TRAIN HALF OF ALL
PHYSICIANS AND HOSPITALS. AND
BECAUSE OF OUR MISSION, AND
BECAUSE IMPORTANTLY, 60% OF OUR
PATIENTS IDENTIFY AS PERSONS OF
COLOR. WE ARE CONSTANTLY WORKING
TO ATTRACT AND RECRUIT AND
RETAIN A DIVERSE WORKFORCE THAT
CAN ADVANCE HEALTH EQUITY. NEXT
SLIDE. IMPORTANTLY PUBLIC HEALTH
CARE SYSTEMS ARE ALSO OF
ENORMOUS VALUE TO THE STATE. WE
WERE AT THE FOREFRONT OF THE
COVID PANDEMIC, PARTNERING WITH
LOCAL PUBLIC HEALTH DEPARTMENTS
ON RESPONSES. WE WERE ALSO THE
INNOVATORS OF WHOLE PERSON CARE
WHAT'S NOW CALLED CAL AIM,
LEVERAGING OUR EXPERTISE TO
CONNECT PATIENTS, ESPECIALLY
THOSE ON HOUSED TO BEHAVIORAL,
HEALTH AND SOCIAL SERVICES, SUCH
AS HOUSING SUPPORTS. SIMPLY PUT
WE STEPPED IN WHEN OTHERS HAVE
TO STEP BACK, WHETHER THROUGH
ABSORBING SERVICE LINES OR
PATIENTS BECAUSE OF REDUCED
SERVICE LINES RECENTLY,
ESPECIALLY ACQUIRING OR
PARTNERING WITH STRUGGLING
HOSPITALS AND BUILDING CAPACITY
TO MEET THE NEEDS OF COMMUNITIES
, ESPECIALLY NOTE THAT RECENTLY
SEVERAL SYSTEMS ARE CURRENTLY IN
THE PROCESS OF SIGNIFICANTLY
EXPANDING THEIR INPATIENT AND
OUTPATIENT. PSYCHIATRIC
SERVICES. AND WE DO THIS BECAUSE
WE MOSTLY SEE MEDICAL AND
UNINSURED PATIENTS COBBLING
TOGETHER FUNDING FOR WHICH WE
OURSELVES, PUT UP THE NON
FEDERAL SHARE OR STATE MATCH,
AND SO WE'RE INCURRING LOSSES
EVEN AS WE DO THIS WORK. NEXT
SLIDE. WHAT YOU THIS IS AN
OVERLY BUSY SLIDE. WHAT YOU NEED
TO UNDERSTAND FROM THIS SLIDE IS
THE BOTTOM TWO BLOCKS ARE BASED
PAYMENTS AND IT'S AND IT'S TOP
STRIPES ARE CONSIDERED QUOTE
UNQUOTE SUPPLEMENTAL PAYMENTS,
BUT YOU CAN SEE BECAUSE BASED
PAYMENTS ARE SO LOW THE CONCEPT
OF A SUPPLEMENTAL PAYMENT. IT'S
A MINUTE IT'S BECOME A MISNOMER
THAT WE HAVE SO MANY
SUPPLEMENTAL PAYMENTS. THEY THEY
SHOULDN'T EVEN BE CONSIDERED
SUPPLEMENTAL AND FOR EACH OF
THOSE SUPPLEMENTAL PAYMENTS
AGAIN. WE'RE PUTTING UP THE
MATCH. SO IF WE PUT UP A DOLLAR
IT GETS MATCHED TO $2. WE
RECEIVED $2. WE STILL PUT OUT
THAT FIRST DOLLAR. SO IT IS A
STRUCTURAL, UH, IT CREATES A
STRUCTURAL DEFICIT THAT I'LL
EXPLAIN. NEXT SLIDE. FOUR THINGS
ARE COMING TOGETHER FOR PUBLIC
HEALTH CARE SYSTEMS THAT RESULT
IN A LOOMING CRISIS, THE FIRST
AS HAS BEEN NOTED BY SO MANY
PANELISTS BASED PAYMENTS HAVE
REMAINED LOW, EVEN AS MEDICAL
MANAGED CARE HAS GROWN PUBLIC
HEALTH CARE SYSTEMS ARE OFTEN
NOT ABLE TO NEGOTIATE HIGHER
BASED PAYMENTS, AS OTHERS HAVE
NOTED. WE SIMPLY DON'T HAVE THE
LEVERAGE. WE'RE NOT GOING TO
LEAVE NETWORKS AND MANAGED CARE
PLANS HAVE LIMITED RESOURCES AND
OFTEN PUT THOSE ELSEWHERE.
SECOND ALTHOUGH WE DO PROVIDE
TRAUMA AND BURN, PAID SERVE
TRAUMA AND BURDEN PATIENTS,
UNLIKE MOST UNLIKE PRIVATE
HOSPITALS, WE CANNOT RECOUP
LOSSES WITH COMMERCIAL PAYMENTS
BY AND LARGE THIRD. AS I NOTED,
WE'VE CREATED A VARIETY OF
SUPPLEMENTAL PAYMENTS. ALL THOSE
MANY STRIPES YOU SAW IN THE
SLIDE BEFORE, BUT THEY HAVE NOT
KEPT PACE WITH OVERALL MEDICAL
EXPANSION. AND FINALLY, AS HAS
ALSO BEEN NOTED COSTS JUST LIKE
EVERYWHERE AND WITH EVERYONE
HAVE INCREASED BUT HAVE NOT BEEN
REFLECTED IN INCREASED REVENUE.
SO THAT HAS RESULTED AS YOU'LL
SEE IN THIS SLIDE A 3 TO $4
BILLION STRUCTURAL DEFICIT FOR
PUBLIC HEALTH CARE SYSTEMS.
THAT'S THE GREEN. HERE'S WHAT
WE'VE BEEN DOING TO TRY TO FILL
THAT DEFICIT. FIRST YOU CAN SEE
THAT SOME PUBLIC HEALTHCARE
SYSTEMS HAVE NEGOTIATED SOME
INCREASED BASED RATES WITH THEIR
PLANS. SECOND THERE'S $150
MILLION OF TAX REVENUE TARGETING
DESIGNATED PUBLIC HEALTHCARE
SYSTEMS, WHICH IS ENORMOUSLY
APPRECIATED, BUT YOU CAN SEE
FROM THE FROM THE AMOUNT THAT
PLUS WHAT WE EXPECT TO BENEFIT
FROM OTHER CO TAX BUCKETS
CONTRIBUTE, BUT IT'S CERTAINLY
NOT THE ONLY NEEDED PIECES OF
THE PUZZLE. FOURTH WE'VE BEEN
WORKING WITH THE DEPARTMENT TO
INCREASE EXISTING SUPPLEMENTALS,
WHICH WE BOTH AGREE COULD BUY A
MINIMUM INCREASED BY ABOUT A
BILLION DOLLARS. BUT AS YOU CAN
SEE, EVEN WITH ALL OF THAT WE
ARE STILL LOOKING AT A 1 TO $2
BILLION DEFICIT. AND IF A FUTURE
REPUBLICAN ADMINISTRATION, UH,
REFUSES TO RENEW ONE OF OUR
EXISTING PROGRAMS, WE COULD GO
BACK TO SQUARE ONE. SO I REALLY
APPRECIATE THE WORK THAT WE'RE
DOING WITH THE DEPARTMENT AND
THE ADMINISTRATION AND WITH YOU
TO THINK OF, UH, CREATIVE
SOLUTIONS TO AVOID THE PUBLIC
HEALTH CARE SYSTEMS BEING THE
NEXT GROUP OF DISTRESSED
HOSPITALS, THANK YOU. I
APPRECIATE IT AND I'LL LOOK
FORWARD TO ANSWERING YOUR
QUESTIONS. ALL RIGHT. THANK YOU,
MADAM CHAIR. AND UM I TOO WANT
TO THANK YOU AND THE COMMITTEE
MEMBERS FOR GIVING ME THE
OPPORTUNITY TO SHARE OUR STORY.
I WANT TO COMMEND YOU FOR YOUR
STAMINA AND YOUR ATTENTION
BECAUSE I WOULD LOVE TO TELL YOU
I'M GOING TO TELL A COMPLETELY
DIFFERENT STORY AND LET YOU TURN
THE CHAPTER IN THIS BOOK, AND
UNFORTUNATELY GOING TO HEAR A
LOT OF THE SAME THINGS YOU'VE
HEARD EARLIER BUT FROM A
DIFFERENT PERSPECTIVE. MY NAME
IS GARY HERBST. UM, IT MEANS
IT'S GERMAN FOR AUTUMN OR FALL,
AND I AM THE CHIEF EXECUTIVE
OFFICER AT QUEER HEALTH, WHICH
IS A STAND ALONE, UM PUBLIC
DISTRICT HOSPITAL FORMED IN
1961. LOCATED IN THE RURAL
AGRICULTURAL BASIN OF SALARY
COUNTY. WE ARE THE LARGEST OF
CALIFORNIA'S 33 DISTRICT
HOSPITALS. WE HAVE 613 LICENSED
BEDS IN WHICH WE PROVIDE ACUTE
MEDICAL SURGICAL ACUTE
REHABILITATION, ACUTE
PSYCHIATRIC, SKILLED NURSING AND
SUB ACUTE CARE. WE OPERATE
NUMEROUS OUTPATIENT CLINICS AND
OUTPATIENT SERVICES. WITH 5000
EMPLOYEES AND 700 PHYSICIANS AND
ADVANCED PRACTICE PROVIDERS. WE
ARE THE LARGEST EMPLOYER IN
TILLERY COUNTY. WE ARE A LEVEL
THREE TRAUMA CENTER. WE ARE A
TEACHING HOSPITAL WITH SIX
RESIDENCIES AND 130 DIFFERENT
RESIDENTS. WE WERE NAMED BY
HEALTHGRADES AS ONE OF THE TOP
250 HOSPITALS IN THE NATION FOR
FOUR YEARS IN A ROW, AND LAST
JANUARY, WE WERE NAMED IN THE
TOP 100 OUT OF 4500 HOSPITALS
ACROSS THE UNITED STATES. LIKE
MANY OF MY COLLEAGUES THAT HAVE
SPOKEN BEFORE ME, WE HAVE A
PAYER MIX OF APPROXIMATELY 80.
OF OUR PATIENTS ARE COVERED BY
EITHER MEDICARE OR MEDIC, AL
UNIQUELY, THOUGH, UM, 62% OF
ARTILLERY, COUNTY RESIDENTS ARE
ENROLLED IN MEDICAL. WE HAVE THE
HIGHEST MEDICAL ENROLLMENT OF
ANY OF THE 58 COUNTIES IN THE
STATE OF CALIFORNIA. AS SUCH, WE
ARE A DISH HOSPITAL FOR BOTH
MEDICARE AND MEDICAID. CAL WE
HAVE AN ANNUAL OPERATING BUDGET
OF ALMOST 900 MILLION. AND A
RECENT ECONOMIC DEVELOPMENT OR
IMPACT STUDY INDICATED THAT
QUEER HEALTH PROVIDES MORE THAN
A BILLION DOLLARS A YEAR IN
ECONOMIC VITALITY TO TULARE
COUNTY. AND CLEARLY WE ARE A
REGIONAL SAFETY NET HOSPITAL
OPERATING IN A VERY IMPOVERISHED
COUNTY WITH SOME OF THE WORST
HEALTH FACTORS IN THE STATE. SO
PRIOR TO THE PANDEMIC, WE WERE A
MODESTLY PROFITABLE HOSPITAL,
AND I WOULD DEFINITELY BE ONE
THAT ARGUES THAT THERE IS A
DIRECT CORRELATION. BETWEEN YOUR
PAYER MIX YOUR MEDICAL
PENETRATION AND PROFITABILITY OR
LACK THEREOF. BUT EVEN WITH THAT
2 TO 3% OPERATING MARGIN, IT WAS
SUFFICIENT TO COVER OUR ANNUAL
DEBT SERVICE IS ONE OF THE
PRESENTERS HAD INDICATED
EARLIER. DON'T JUST STOP AT THAT
NET INCOME, THAT BOTTOM LINE
THAT CHRISTOPH INDICATED BECAUSE
IT'S FROM THAT BOTTOM LINE THAT
YOU THEN FUND ALL OF YOUR
CAPITAL EQUIPMENT THAT NEEDS TO
BE REPLACED OR YOUR INVESTMENT
IN NEW TECHNOLOGY OR YOUR
INVESTMENT IN YOUR FACILITIES.
IT'S ALSO WHAT YOU USED TO REPAY
THE PRINCIPAL AMOUNT. AND THAT
YOU BORROWED FROM, UM UM
CREDITORS OVER THE YEARS, THE
FINANCE A LOT OF YOUR EXPANSION.
SO WE WERE PROFITABLE. WE
ACTUALLY WERE IN A THREE AERATED
HOSPITAL OR CREDIT RATING BY
MOODY'S INVESTORS SERVICES. WE
HAD A CREDIT OUTLOOK OF STABLE
BUT THAT ALL CHANGED IN MARCH OF
2020 WITH THE ARRIVAL OF COVID.
FROM MARCH 2022 JUNE 32,023 OUR
MOST IMMEDIATE FISCAL YEAR THAT
ENDED WE INCURRED A CUMULATIVE
OPERATING LOSS OF $157 MILLION.
THAT'S THE AMOUNT BY WHICH ARE
OPERATING EXPENSES. UM, LABOR
BENEFITS, SUPPLIES, DRUGS,
ENERGY, FOOD, EVERYTHING THAT
GOES INTO OPERATING A HOSPITAL
EXCEEDED ALL OF OUR REVENUES
FROM ALL SOURCES BY 100 AND 57
MILLION THAT REQUIRED THAT WE
START BURNING THROUGH OUR CASH
RESERVES. FORTUNATELY WE WERE IN
PRETTY GOOD FINANCIAL CONDITION
BEFORE THE ARRIVAL OF COVID WE
HAD ABOUT 160 DAYS CASH ON HAND,
WHICH IS A PRETTY HIGH LEVEL,
BUT IN A SHORT PERIOD OF TIME WE
SAW THAT DWINDLE ALL THE WAY
DOWN TO 62 AT MARCH 31ST 2023
THAT ESSENTIALLY PUT US IN
DEFAULT OF OUR DEBT COVENANTS,
AND WE REMAIN TO THIS DAY OUT OF
COMPLIANCE THAT REQUIRED THAT WE
HAD TO TAKE $18 MILLION OF OUR
CASH RESERVES AND MOVE IT INTO A
TRUSTED HELD ACCOUNT THAT WAS
ONLY AVAILABLE TO PAY INTEREST
AND PRINCIPAL ON OUR BONDS IN
THE EVENT THAT WE DEFAULTED ON
OUR DEBT. CREDIT RATING WAS
DOWNGRADED FROM AN A THREE
STABLE TO A BE A ONE WITH A
NEGATIVE OUTLOOK. SO IN A THREE
CREDIT IS CALLED INVESTMENT
GRADE BONDS. THERE'S A BIG
MARKET FOR THEM. PEOPLE WANT TO
BUY YOUR BONDS THAT YOU USED TO
HELP FUND YOUR GROWTH. BUT A B A
ONE BOND IS CONSIDERED JUNK
DEBT. AND PEOPLE STARTED SELLING
OFF THEIR QUERY BONDS AS FAST AS
THEY COULD, AND THERE'S NO WAY
THAT TODAY THAT WE COULD GO TO
THE BOND MARKET OR TO ANY BANK
AND CONVINCE IT TO LOAN US MONEY
. SO LIKE OTHERS WE'VE FOR THE
TIME BEING. WE HAVE SUSPENDED
ALL ACTIVITY ON COMING INTO
COMPLIANCE WITH SENATE BILL
1953. 206 OF OUR 435 ACUTE BEDS
THAT ARE MAIN DOWNTOWN CAMPUS
ARE IN NON SEISMICALLY
COMPLIANCE SPACE TO REPLACE
THOSE BEDS. IT WOULD COST $750
MILLION AND IT WILL WOULD NEED
TO BE FUNDED ENTIRELY BY US. SO
THESE LOSSES THAT WE INCURRED
OVER THAT PERIOD OF THE PANDEMIC
WERE LARGELY DRIVEN BY LOWER
REVENUES. UM, I STILL WILL NEVER
FORGET APRIL OF 2020. WHEN
GOVERNOR NEWSOM ORDERED ALL
CALIFORNIA HOSPITALS TO SHUT
DOWN ELECTIVE SURGERY. WE LOST
$12 MILLION IN ONE MONTH, THE
SINGLE LARGEST LOSS WE HAD
EXPERIENCE IN OUR 60 YEAR
HISTORY. YOU COMPOUND THAT WITH
DOUBLE DIGIT INFLATION, UM, A
POOR PAYER MIX AND PROBABLY MOST
SIGNIFICANTLY CRIPPLED WORKFORCE
. ALL OF THOSE CONTRIBUTED TO
THOSE SIGNIFICANT LOSSES. WE
SPENT MORE THAN $110 MILLION IN
CONTRACT LABOR OVER THE COURSE
OF THE PANDEMIC FROM THAT MARCH
2022 JUNE OF 2023. WE SPENT TENS
OF MILLIONS OF DOLLARS IN
OVERTIME AND EXTRA SHIFTS BONUS
BONUSES TO ARE EMPLOYED STAFF AT
ONE TIME WE HAD MORE THAN 240.
TRAVELER NURSES THAT WE WERE
PAYING MORE THAN $250 AN HOUR
TODAY WE HAVE 90. WE'RE PAYING
ABOUT $105 AN HOUR, SO THAT
DEFINITELY HAS HELPED CONTRIBUTE
TO A BIT OF A FINANCIAL
TURNAROUND. BUT IN PRE COVID
TIMES, WE MIGHT HAVE 10 OR 15
TRAVELER NURSES BUT TO STILL
HAVE 90. IS A STRONG INDICATION
THAT WE'RE STILL IN THE
AFTERMATH OF COVID. WE ENDED
THIS LAST FISCAL YEAR WITH THE
HIGHEST OPERATING LOSS IN OUR
HISTORY AT $59 MILLION THAT WAS
JUST EIGHT MONTHS AGO. SINCE
THAT TIME WE HAVE BEEN EXECUTING
ON A PAINFUL AND SOMETIMES HEART
WRENCHING FINANCIAL RECOVERY
PLAN THAT'S INCLUDED MORE THAN
200 EMPLOYEE LAYOFFS. WE FROZEN
WAGES TO OUR EMPLOYEES. WE'VE
CUT WAGES TO ALL OF OUR LEADERS.
WE'VE GONE YEARS WITHOUT
MATCHING OUR 401K PLAN. WE'VE
CLOSED SERVICES LIKE SKILLED
NURSING, OUTPATIENT NEUROSURGERY
AND DIABETES EDUCATION. BUT IT'S
DIFFICULT AS THESE DECISIONS
WERE. THEY ARE WORKING. FOR THE
SEVEN MONTHS ENDED JANUARY 31ST
2024. WE HAVE A CUMULATIVE
OPERATING LOSS OF ONLY 5.7
MILLION, BUT WE'RE CELEBRATING A
$5.7 MILLION LOSS BECAUSE THAT
IS FAR BETTER THAN THE $34
MILLION LOSS WE HAD INCURRED FOR
THE EXACT SAME TIME PERIOD THE
YEAR BEFORE. WE ALSO RECENTLY
HAD OUR CREDIT RATING OUTLOOK
UPGRADED FROM NEGATIVE TO STABLE
AND OUR CASH RESERVES HAVE GROWN
BACK TO 81 DAYS. BUT WE ARE FAR
FROM OUT OF THE WOODS. WE ARE
DEFINITELY NOT ON SOLID
FINANCIAL FOOTING. WE ARE
INCREDIBLY GRATEFUL TO THE
LEGISLATURE AND THE
ADMINISTRATION FOR CREATING THE
DISTRESSED HOSPITAL LOAN PROGRAM
AND FOR AWARDING QUEER HEALTH
$20.8 MILLION UNDER THAT
PROGRAM. BUT WE HAVE TO REMEMBER
IT IS ALONE ALONE THAT HAS TO
START BEING REPAID AND JUST 18
MONTHS FROM NOW. MANY HOSPITALS
ARE AFRAID TO SPEND THAT MONEY,
NOT KNOWING FOR CERTAIN THAT
THEY'RE GOING TO HAVE THE
ABILITY TO PAY IT BACK. SO WHILE
IT DOES PROVIDE US A BIT OF A
SHORT TERM, UM LIFELINE, SO TO
SPEAK. THIS INDUSTRY REALLY
NEEDS FUNDAMENTAL, SUSTAINABLE
LONG TERM, UM, REVOLUTION OF THE
FINANCING SYSTEM FOR THE HEALTH
CARE INDUSTRY. WE TRULY NEED
FUNDAMENTAL CHANGE FOR HOSPITALS
LIKE US THAT TODAY. MEDICAL
LITERALLY REIMBURSES US PENNIES
ON THE DOLLAR. LAST FISCAL YEAR.
WE LOST 16.2 MILLION, PROVIDING
OUTPATIENT SERVICES TO THE
MEDICAL PROGRAM. SO I AM VERY
HOPEFUL THAT THE CEO TAX, WHICH
WILL ALLOCATE A SIGNIFICANT
AMOUNT OF FUNDING TO HOSPITAL
SERVICES, IS LARGELY BEING
TARGETED TO THE AREA THAT
HOSPITALS ARE LOSING THE MOST,
AND THAT IS IN THE EMERGENCY
DEPARTMENT AND IN THEIR
OUTPATIENT SERVICES. DR WEBBER
YOU TALKED ABOUT, YOU KNOW, HOW
DO WE KEEP PATIENTS OUT OF THE
EMERGENCY DEPARTMENT? WE PROVIDE
TIMELY PREVENTATIVE CARE. WE
PROVIDE TIMELY COLONOSCOPIES AND
BREAST CANCER SCREENINGS. WE
ALLOW PATIENTS TO GO GET THAT
IMAGE, UM TO RECEIVE PHYSICAL
THERAPY BEFORE THEIR CONDITION
EXACERBATES FROM THE POINT WHERE
THEY HAVE TO GO TO THE EMERGENCY
DEPARTMENT. I WAS TALKING TO MY
CEO COLLEAGUE AT CIA REVIEW
HOSPITAL IN PORTERVILLE THE
OTHER DAY, ANOTHER DISTRICT
HOSPITAL, SHE TOLD ME THAT THEY
GET PAID $14 PER PHYSICAL
THERAPY VISIT FOR A MEDICAL
PATIENT. UM THIS LAST YEAR AGAIN
? THAT'S 16.2 MILLION. WE
RECEIVED 74 CENTS ON THE DOLLAR
74% OF THE DIRECT COST OF
PROVIDING THAT AL PATIENT CARE
WHEN THEY SAY DIRECT COSTS THAT
THE STAFF SALARY THE NURSE THE
DRUGS, THE SUPPLIES. IT DOES NOT
INCLUDE A HOSPITAL'S OVERHEAD
FOR HOUSEKEEPING AND DIETARY AND
FINANCE. AND I S S AND ALL OF
THOSE SERVICES THAT ARE
NECESSARY TO OPERATE A HOSPITAL.
WE AREN'T EVEN COVERING 0% OF
THOSE DOLLARS. WE AREN'T EVEN
COVERING THE CURRENT
REIMBURSEMENT RATES ARE DIRECT
DOLLARS, AND OVER THE PAST 10
YEARS, SEVEN DISTRICT HOSPITALS
HAVE EITHER CLOSED OR FILED
BANKRUPTCY. SOME HAVE SINCE
REOPENED, BUT NONE OF THEM AS A
DISTRICT HOSPITAL. OTHER
DISTRICT HOSPITALS WOULD HAVE
MET THE SAME FATE BUT ENDED UP
BEING ACQUIRED BY ANOTHER
HOSPITAL OR HEALTH SYSTEM BEFORE
THEY CLOSED OR FILED BANKRUPTCY.
IN 2021 18 DISTRICT HOSPITALS
OPERATED LABOR AND DELIVERY
PROGRAMS. SINCE THEN, FOUR HAVE
CLOSED AND LIKE YOU, I RECEIVED
A LETTER LAST WEEK FROM THE
SALARY, LOCAL HOSPITAL DISTRICT
BOARD INFORMING ME THAT, UM, THE
SALARY L AND D PROGRAM WAS GOING
TO BE CLOSING INDEFINITELY. UM I
AM PLEASED AND PROUD TO SAY THAT
THE QUEER HEALTH MATERNAL CHILD
HEALTH PROGRAM IS GOING STRONG.
WE DELIVER ALMOST 5000 BABIES A
YEAR. WE HAVE FULL PRENATAL CARE
PRE, ACTUALLY MATERNAL, FETAL
MEDICINE OR PERI NATAL CARE,
MATERNAL FETAL MEDICINE
PHYSICIANS ON STAFF THROUGH A
PARTNERSHIP WITH VALLEY
CHILDREN'S HOSPITAL. WE OPERATE
AT 23 BED, NEONATAL INTENSIVE
CARE UNIT, A LEVEL THREE AND THE
REASON THAT WE CAN CONTINUE TO
OPERATE IS HAVING THAT KIND OF
CRITICAL MASS HAVING THAT BROAD
CONTINUUM OF CARE AND HAVING
SUFFICIENT VOLUME TO BE ABLE TO
OPERATE IT PROFITABLY SO YOU CAN
REST ASSURED WE WILL BE THERE
FOR THOSE TO LARRY RESIDENTS
THAT WILL BE DELIVERING BABIES.
SO LASTLY, MADAM CHAIR AND
COMMITTEE MEMBERS AGAIN. THANK
YOU FOR GIVING ME THIS
OPPORTUNITY. UM I REALLY AM
EXCITED ABOUT THE CEO TAX. I
LOOK FORWARD TO HEARING HOW YOU
INTEND TO ALLOCATE THAT I ALSO
THANK YOU FOR CONSIDERING THE
SUPPORT, UM ASSEMBLY BILL 2098
THAT WILL GIVE DISTRICT
HOSPITALS A LITTLE BIT MORE
BREATHING ROOM. AND HAVING TO
PAY BACK THE BRIDGE LOANS THAT
YOU SUPPORTED THROUGH CHE FA TO
HELP US TRANSITION FROM THE
PRIME PROGRAM THE Q I P. I KNOW
THERE'S CONSIDERATION BEING
GIVEN TO SCHEDULE THE MATURITY
DATE OF THAT BRIDGE LOAN TO
COINCIDE WITH THE REPAYMENT OF
THE DISTRESSED HOSPITAL LOAN
PROGRAM. SO I WOULD REALLY
APPRECIATE YOUR CONSIDERATION OF
THAT. AND I WANT TO THANK YOU
AGAIN FOR THIS TIME TODAY.
GREAT. GOOD AFTERNOON, DR WEBBER
AND COMMITTEE MEMBERS. THANKS SO
MUCH FOR HAVING ME HERE. I'M
PATTY MASON. I'M THE CEO OF U C.
SANTA GO HEALTH SYSTEM. UH WE
ARE A PROUD HIGH DISH PROVIDER
IN SAN DIEGO COUNTY, WHERE AN
ACADEMIC MEDICAL CENTER. UM THAT
ALSO SUPPORTS, UH, THE TEACHING
OF THE NEXT GENERATION OF
PHYSICIANS AS WELL AS, UM
RESEARCH. I WANT TO TAKE ALL OF
YOU TO FOR YOUR DEEP COMMITMENT
TO THE CARE FOR THE VULNERABLE
AND YOU'RE ASKING THE HARD
QUESTIONS RIGHT NOW, UM, IS
REALLY APPRECIATED BY ALL OF US
IN THE FIELD WHO ARE WORKING SO
HARD TO MAKE SURE THAT WE CAN
STABILIZE HEALTHCARE ACROSS OUR
REGIONS. I WON'T REALLY HASHED
THE STORIES. I THINK YOU'VE GOT
A PRETTY GOOD IDEA OF WHAT'S
HAPPENING WITH RESPECT TO
REIMBURSEMENT AND COSTS. UM, I
DO WANT TO SAY THAT YOU KNOW THE
HOSPITAL'S SERVING HIGH MEDICAL
AND MEDICARE. DON'T LET MEDICARE
OFF THE HOOK HERE, UM PATIENT
POPULATIONS ARE FACING
PARTICULAR STRUGGLE. SO IF
YOU'RE AT 80 85% OF GOVERNMENT
PAYERS BETWEEN MEDICARE AND
MEDICAL BOTH OF WHICH DON'T EVEN
COVER YOUR COSTS FOR UC SAN
DIEGO HEALTH. I'M AN ANNUAL
BASIS WE SUBSIDIZE MEDICARE AND
MEDICAL BY $550 MILLION. SO YOU
WERE TALKING ABOUT THE MARGINS
EARLIER. UM THERE'S A LOT OF, UM
SUPPORT FOR THOSE THE GOVERNMENT
PROGRAMS IN THE GOVERNMENT
PAYERS, SO IT'S A REALLY HARD,
UH IT'S A REALLY HARD, UH
CALCULATION TO WORK. UM I WANTED
TO EXPRESS THAT. UM YOU SEE,
SANDY GO. HEALTH IS DOING ALL WE
CAN IN OUR REGION TO HELP
SUPPORT AND SUSTAIN. UH JUST
EAST OF SAN DIEGO IS IMPERIAL
COUNTY, THE POOREST COUNTY IN
THE STATE. UH, EXPERIENCE. A
MAJOR HEALTH CRISIS HAS BEEN
OVER. THE LAST ACTUALLY WAS
BEFORE BEFORE THE PANDEMIC, BUT
COMING OUT OF THE PANDEMIC
REALLY, REALLY STRUGGLING. AH
OVER 80% OF THE PATIENTS CARED
FOR IN THOSE HOSPITALS, THE TWO
HOSPITALS AND AN IMPERIAL VALLEY
OVER 80% OR MEDICARE. MEDICAID
UH AND IT'S JUST NOT ENOUGH TO
SUSTAIN THE HEALTHCARE SYSTEM
OUT THERE. SO LOW REIMBURSEMENT
RATES FROM MEDICARE MEDICAL
COUPLED WITH THE FINANCIAL
LOSSES, BOTH BEFORE AND DURING
COVID AND THE NEED TO TAKE OUT
DEBT, CENTRO IS DIFFERENT THAN A
LOT OF HOSPITALS IN THE STATE
BECAUSE THEY ACTUALLY HAD 2020
SEISMIC REQUIREMENTS. BECAUSE OF
AN EARTHQUAKE THEY ACTUALLY HAD
TO GET SEISMICALLY COMPLIANT,
YOU KNOW, 10 YEARS EARLIER THAN
EVERYONE ELSE THAT RESULTED IN
THEM NEEDING TO TAKE DOWN DEBT.
UM, QUITE A BIT EARLIER. AND SO
AS A RESULT OF THAT MEETING ALL
THE REQUIREMENTS THEY WERE
REALLY AT THE END OF 2022 AT THE
BREAK OF CLOSURE. THEY DECIDED
AT THAT POINT LEADERSHIP DECIDED
THAT THAT POINT TO CLOSE THE
OBESE SERVICES AND MOVE IT TO
THE OTHER HOSPITAL IN THE REGION
, UH AND REALLY, TO PREPARE FOR
CLOSURE. UM FAST FORWARD TO THE
BEGINNING OF 2022 2023. AND TO
PREVENT THAT CLOSURE YOU SEE,
SANDY GO HEALTH AGREED TO ASSUME
DAY TO DAY OPERATIONAL CLINICAL
AND FINANCIAL MANAGEMENT OF THE
HOSPITAL. SINCE THEN, AND WITH
GREAT SUPPORT. IT WASN'T JUST US
GREAT SUPPORT FROM THE STATE
SECRETARY GALLEY HIMSELF.
DEPARTMENT OF HEALTH CARE
SERVICES CITY OF CITY OF EL
CENTRO, IN A REALLY STRONG
MANAGEMENT TEAM THAT WE WERE
ABLE TO PUT IN PLACE. CENTRO IS
NOW ON TRACK TO ACHIEVE A
POSITIVE CASH FLOW BY THE END OF
THE FISCAL YEAR. CENTRAL
REGIONAL MEDICAL CENTER TEAM
COULD NOT HAVE ACCOMPLISHED THIS
TURNAROUND WITHOUT THE $28
MILLION DISTRESSED HOSPITAL LOAN
DOLLARS THAT CAME TO IT. THESE
FUNDS WERE USED TO LEVERAGE THE
COMPLETION OF THE CONSTRUCTION
REQUIRED TO ACHIEVE THE 2020
SEISMIC REQUIREMENTS. TO PAY
DOWN DEBT, PRINCIPAL AND
INTEREST AS THEY HAVE BEEN IN
DEFAULT THERE. THEY STILL REMAIN
IN TECHNICAL DEFAULT OF THAT
DEBT TODAY, BASED ON THEIR DAYS
CASH ON HAND AND TO HELP FUND
NECESSARY INVESTMENTS IN IN THE
LIKE ELECTRONIC MEDICAL RECORD,
THERE WAS NO ELECTRONIC MEDICAL
RECORD IN IMPERIAL VALLEY AND
OTHER CAPITAL EQUIPMENT AND
PAYROLL. WE BELIEVE BY THE END
OF THIS YEAR, ALL CENTRAL WILL
HAVE A FULLY SEISMICALLY
COMPLIANT HOSPITAL. AND WE'LL BE
ON THE PATH TO FINANCIAL
SUSTAINABILITY. THAT SAID THE
FUTURE OF THE HOSPITAL
HEALTHCARE IN GENERAL IMPERIAL
COUNTY. DEPENDS ON NEEDED
ADDITIONAL INVESTMENTS GOING
FORWARD AND CLINICAL PROGRAM
DEVELOPMENT, PHYSICIAN AND
WORKFORCE RECRUITMENT AND
DEVELOPMENT AND OTHER
INVESTMENTS SO PATIENTS DON'T
HAVE TO LEAVE IMPERIAL COUNTY TO
RECEIVE CARE, SUCH AS CANCER
TREATMENTS, WHICH IS A DAILY
REQUIRED, YOU KNOW, DAILY
TREATMENT REGIMEN, CRITICAL CARE
, CARDIAC AND THAT, UH,
INTERVENTIONS KNOWN FORGIVENESS.
OR TURNING THE LOAN INTO A GRANT
WILL HELP US CENTRAL MAINTAIN
FINANCIAL SUSTAINABILITY AND
BEGIN TO MAKE THE NEEDED
INVESTMENTS IN THE COMMUNITY
THAT WILL ALLOW IT TO START
GROWING PROGRAMS IN PARTNERSHIP
WITH UC SAN DIEGO HEALTH, SO
WE'RE COMMITTED TO BUILD THOSE
PROGRAMS IN THE VALLEY WITH WITH
THE WHOLE DISK WITH THE WHOLE
REGION, BUT PARTICULARLY WITH EL
CENTRO. UH AND THEY WILL
HOPEFULLY BE AN IMPOSITION WHERE
THEY CAN SUPPORT AND SUSTAINING
GAINS SCALE SO THAT THEY CAN
PROVIDE THOSE PROGRAMS. AT THE
SAME TIME IN SAN DIEGO, PROPER
TRI CITY MEDICAL CENTER AND
OCEAN SIDE. HAS BEEN STRUGGLING
FINANCIALLY FOR YEARS. POST
PANDEMIC MADE SOME DRASTIC
DECISIONS TO CLOSE PROGRAMS SUCH
AS LABOR AND DELIVERY, UM, IN
ORDER TO KEEP THEIR HOSPITAL
DOORS OPEN, BUT THEY KNEW THEY
WERE RUNNING OUT OF MONEY, AND
THEY WENT THROUGH A PROCESS THIS
HEALTH DISTRICT UM, HAD THE
FORESIGHT TO SEE THAT IF THEY
COULD PARTNER THEY COULD KEEP
THEIR DOORS OPEN, POTENTIALLY,
AND SO WENT THROUGH A PROCESS
THAT SUBSEQUENTLY RESULTED IN
CHOOSING YOUR SISTER SAN DIEGO
HEALTH AS THE PARTNER AND WE ARE
IN THE MIDDLE OF BUT DILIGENCE
AND THE CREATION OF A JOINT
POWERS AGREEMENT THAT WOULD MOVE
ALL THE ASSETS. AND ALL THE
LIABILITIES OVER TO U C. SAN
DIEGO HEALTH AS WE AS WE, UH,
TAKE OVER AND TRY TO BOLSTER
THAT THAT HOSPITAL THAT WILL
ALSO NOT BE ENOUGH. TRY CITY DID
RECEIVE. UM UH, SORRY. SIZEABLE
UH, DISTRESSED HOSPITAL ALONE.
THAT HELPED THEM TO PAY DOWN
VENDORS AND TO KEEP THEIR DOORS
OPEN. UH BUT IT WILL BECOME A
REAL SOURCE OF STRAIN ON THE
SYSTEM AS WE MOVE FORWARD. SO
WE'RE WORKING ON ON CREATING
THAT SHARED VISION OF
STABILIZING COURSE SERVICES,
REOPENING LABOR AND DELIVERY.
I'M SAYING. THAT'S PARTICULARLY
DO YOU, DR WEBBER? UH, AND
COMPLYING WITH SEISMIC
REQUIREMENTS. THEY THEY HAVE
2030 SEISMIC REQUIREMENTS. AND
WE HOPE TO SIGN AND ENTER INTO
THE JOINT POWERS AGREEMENT SOON.
èC SANDER. GOOD HEALTH IS DOING
ALL WE CAN TO ENSURE THAT
HOSPITALS SERVING OUR MOST
VULNERABLE, VULNERABLE
POPULATIONS DO NOT CLOSE WHILE
WE WORK HARD TO MAINTAIN OUR OWN
FINANCIAL SUSTAINABILITY. UM AS
I SAID, WE'VE WE'VE FOUND MUCH
OF THE ACADEMIC, UH, MISSION
WERE DISTRESSED HOSPITAL WHERE
WE ARE JUST A DISH HOSPITAL.
WE'VE PROVIDED $550 MILLION A
YEAR OF SUPPORT TO THE
GOVERNMENT PAYERS. UH IT'S A BIG
STRAIN ON OUR SYSTEM. UM, WE'VE
CREATED AN ENVIRONMENT WHERE OUR
PHYSICIANS ARE. OUR PAY OR BLIND
, MEANING THEY DON'T NEED TO
WORRY ABOUT WHO THEY'RE SERVING
IN TERMS OF THEIR PAYERS. WE
KEEP THEM UP TO MARKET RATES.
BUT IT'S A STRAIN ON OUR SYSTEM.
IT'S A STRAIN ON ALL OF THE
PUBLIC HOSPITAL SYSTEMS, AND
EACH YEAR WE ARE FACING AS AS
ERICA POINTED OUT THREE OR $4
BILLION OF PROJECTED DEFICITS
ACROSS THE STATE, DO THE VOLUME
OF MEDICAL WE PROVIDE THE UCS IN
TOTAL PRESENT 1.5 BILLION OF
THAT 3 TO $4 BILLION DEFICIT.
AND WE NEED YOUR HELP TO KEEP
HOSPITALS OPEN AND TO MAINTAIN
OUR SUSTAINABILITY. FIRST AND AS
YOU'VE HEARD, WE NEED THE M C O
TAX TO PROVIDE THE MINIMUM OF
$150 MILLION OF PUBLIC. HOSPITAL
SUPPORT. PROPOSED IN THE
GOVERNOR'S JANUARY BUDGET AND
ENSURE THAT THE PUBLIC, UH
PUBLIC HEALTH SYSTEMS BENEFIT
FROM OTHER PROPOSED M C O TAX
BUCKETS. THE OTHER LITTLE
SECTIONS OF ERICA'S SLIDE THAT
REFLECT OUR BROAD FOOTPRINT
ACROSS THE DELIVERY SYSTEM.
SECOND WE REALLY NEED THOSE
THOSE LOANS TO THOSE DISTRESSED
HOSPITALS, NOT JUST IN SAN DIEGO
AND IMPERIAL VALLEY, BUT I'M
SURE ACROSS THE STATE FORGIVEN
TURNED INTO A GRANT. UM THIRD,
WE NEED MORE TIME TO COMPLY WITH
THE SEISMIC REQUIREMENTS. WE'VE
SOLVED THAT PROBLEM AND IMPERIAL
VALLEY AND ALL CENTRAL REGIONAL
MEDICAL CENTER. WE HAVE NOT
SOLVED THAT PROBLEM FOR OUR OWN.
UM MOTHERSHIP HOSPITAL, THE
COUNTY HOSPITAL THAT WE TOOK
OVER IN THE LATE SIXTIES
HILLCREST HOSPITAL AS WELL AS
TRI CITY. AH AND FINALLY, WE
NEED TO CONTINUE TO WORK TO
INCREASE MEDICAL REIMBURSEMENT
RATES AS YOU'VE HEARD THIS
AFTERNOON. SO WITH THAT, I WOULD
JUST SAY, UM WITH A LOT OF
GRATITUDE TOWARDS UM ALL OF OUR
LOCAL, STATE AND FEDERAL
OFFICIALS AND PROVIDERS. I THINK
THE ANSWER IS THIS IS A TEAM
EFFORT AND IT HAS TO BE ALL OF
US WORKING TOGETHER, UH, TO PUT
PUT TOGETHER THE PACKAGE THAT'S
GONNA TRY TO RELIEVE THIS
DISTRESSED SITUATION. THANK YOU.
THANK YOU SO MUCH TO EVERYONE ON
THE PANEL. I'M GOING TO
ASSEMBLYMEMBER'S STORY HAS ANY
QUESTIONS. OKAY PERFECT. THANK
YOU. WELL, I DO HAVE A QUESTION.
FOR MISS MURRAY. SO YOU KNOW,
PUBLIC HOSPITALS, UM ARE ARE NOT
THE HOSPITALS THAT ARE CLOSING
THESE DAYS. THEY WERE MAYBE IN
THE PAST, BUT NOT NOW. SO WHAT?
WHAT ARE YOU ALL DOING?
DIFFERENT WHAT LESSONS CAN WE
ALL LEARN FROM YOUR MODEL? I
WISH THERE WAS A POSITIVE ANSWER
TO THAT QUESTION. UNFORTUNATELY
IT'S NOT THAT WE'RE DOING
SOMETHING PARTICULARLY
INNOVATIVE OR CREATIVE IN TERMS
OF FINANCING. IN FACT, WE
BECAUSE OF OUR PAYER MIX WERE IN
, UH MORE HURT THAN THAN MANY
OTHERS. THE REALITY IS BECAUSE
OF OUR FINANCING STRUCTURE. WE
HAVE DELAYS IN PAYMENTS. SO WE
ARE. WE'RE JUST NOW COLLECTING
2122 PAYMENTS FOR ALL OF THOSE
SUPPLEMENTALS, SO WE'RE IN AND
WE DID RECEIVE A FAIR AMOUNT OF
COVID RELIEF FUNDS, P R F FUNDS,
WHICH HELPED KEEP US AFLOAT,
STARTING IN THE PANDEMIC. SO
WE'RE JUST NOW. UM THAT THE
CHICKENS ARE JUST NOW STARTING
TO COME HOME TO ROOST. BUT IT'S
NOT A FUNCTION OF AH, ANY
PARTICULARLY. UH, INNOVATIVE
FINANCING STRUCTURE. IN FACT,
IT'S PROBABLY THE OPPOSITE THAT
WE ARE. WE'RE VERY UNDERWATER,
AND IT JUST HASN'T RESULTED IN
SERVICE REDUCTIONS ARE CLOSURES
YET BUT IF WE DON'T SOLVE THAT 1
TO $2 BILLION DEFICIT WITH
ADDITIONAL REVENUES, AND THAT
VERY WELL MIGHT HAVE TO BE, UH,
FEDERAL DOLLARS THAT WE FIND,
AND WE'VE DONE THIS BEFORE, WITH
1115 WAIVERS OR OTHER
SUPPLEMENTAL PAYMENTS, WE FIND
WAYS TO PUT UP A STATE MATCH AND
DRAW DOWN FEDERAL FUNDS. WE'RE
GOING TO NEED TO DO THAT AGAIN
TO THE TUNE OF 1 TO $2 BILLION
MORE. IF WE'RE GOING TO AVOID
THOSE SERVICES CLOSURES, AND
THAT WILL PROBABLY START
HAPPENING IN THE NEXT YEAR OR
TWO. IF WE DON'T WELL, WHATEVER
YOU ALL HAVE BEEN DOING, PLEASE
KEEP IT UP, BECAUSE, UM MAYBE,
YOU KNOW PARTS TO IT AND
WORKING, ESPECIALLY IN WHO IS
THE ONE THAT ACTUALLY MAKES
THOSE REQUESTS TO THE FEDERAL
GOVERNMENT? SO IT'S A IT'S A
VERY, VERY IMPORTANT PARTNERSHIP
FOR US. WELL YOU KNOW, AS WE'VE
DISCUSSED PUBLIC HOSPITALS
REALLY ARE THE LIFELINE TO THE
COMMUNITY. THEY REALLY ARE THE
PLACES WHERE PATIENTS CAN GO
WHEN THEY ARE NOT ABLE TO GO TO
SOME OF THE PRIVATE HOSPITALS.
AND SO WE REALLY, REALLY, REALLY
NEED TO MAKE SURE THAT WE CAN
HELP YOU AND WHATEVER WAYS TO
KEEP YOUR DOORS OPEN. UM I
REALLY WANT TO COMMEND, UM U C.
S D. AND IT'S NOT BECAUSE YOU'RE
IN SAN DIEGO. IT'S NOT BECAUSE I
USED TO WORK THERE AND YOU KNOW
IN YOUR O B. G. Y N DEPARTMENT,
BUT UM YOU KNOW, I WAS ON
FACULTY WHEN THE SITUATION IN EL
CENTRO STARTED HAPPENING, AND
SOME OF OUR PARENTS PATHOLOGISTS
ARE, UM AH! CANCER SPECIALISTS
ARE TINY ONCOLOGIST STARTED
GOING OUT THERE. UM AND REALLY
HELPING THAT SYSTEM AND THEN THE
SITUATION WAS TRI CITY AND YOU
ALL STEPPING UP AND HELPING THEM
KEEP THEIR DOORS OPEN AND
HOPEFULLY REESTABLISHING THEIR
LABOR AND DELIVERY. UM
DEPARTMENT THERE. MY QUESTION
FOR YOU IS WHAT DROVE YOU ALL TO
DO THAT. TO STEP UP LIKE THAT. I
THINK OUR CULTURE IS SUCH THAT,
UH, WE SAY YES. UH I THINK I GOT
THE FIRST CALL FROM AS THE FIRST
PLANES WERE COMING FROM WUHAN,
CHINA, FEBRUARY 5TH AND I
THOUGHT, DO I WANT TO BE THE
FIRST HOSPITAL TO TAKE COVID
PATIENTS AND I'M AN ENVIRONMENT
WHERE I CAN SAY YES. YOU KNOW, I
GOT THE CALL FOR HOW DO YOU GET?
HOW DO YOU GET SHOT IN THE ARMS?
HOW TO GET WASTEWATER TESTING,
AND WE'RE JUST IN AN ENVIRONMENT
WHERE WE CAN SAY YES, IT'S PART
OF OUR CULTURE AND OUR MISSION.
BIG PART OF WHO WE ARE, AND, UM
SO WE JUST TRIED TO SAY YES.
WELL THANK YOU FOR THAT. AND
THANK YOU, UM, TO EVERYONE ON
OUR PANEL. I AM GOING TO MOVE.
IT IS GETTING A LITTLE LATE, SO
WE'RE GONNA MOVE ON TO OUR NEXT
PANEL ON THE DISTRESS HOSPITAL
LOAN PROGRAM AND THIS SMALL AND
RULE HOSPITAL RELIEF PROGRAM. WE
HAVE THREE SPEAKERS ON THIS
PANEL AS WELL. ELIZABETH
LANDSBERG. DIRECTOR OF THE
DEPARTMENT OF HEALTH CARE,
ACCESS AND INFORMATION. JP
MARIANNE, DEPUTY DIRECTOR FOR
HEALTH FACILITY LOAN INSURANCE
AT THE DEPARTMENT OF HEALTH
CARE, ACCESS AND INFORMATION.
AND CAROLINE, I'M WITH YOUR
ACHARA, EXECUTIVE DIRECTOR OF
THE CALIFORNIA HEALTH FACILITIES
FINANCING AUTHORITY. THANK YOU
TO OUR PANELISTS AND I WILL
START WITH ELIZABETH. THANK YOU
MUCH, MADAM CHAIR AND
ASSEMBLYWOMAN. SORRY. ELIZABETH
LANDSBERG WITH HK A DEPARTMENT
OF HEALTH CARE, ACCESS AND
INFORMATION HERE TO GIVE UP,
GIVE A HIGH LEVEL OVERVIEW OF
SOME OF OUR HOSPITAL FINANCING
PROGRAMS. SO AMONG OUR PROGRAMS
WORKING TO EXPAND EQUITABLE
ACCESS TO QUALITY, AFFORDABLE
HEALTH CARE FOR ALL CALIFORNIANS
, H KIND MINISTERS. THE CAL
MORTGAGE PROGRAM, WHICH OFFERS
LOAN INSURANCE TO NONPROFIT AND
PUBLIC HEALTH FACILITIES FOR THE
DEVELOPMENT AND EXPANSION OF
HEALTHCARE SERVICES IN
CALIFORNIA, AND WE HAVE BEEN
ADMINISTERING THAT PROGRAM THAT
THAT PROGRAM HAS EXISTED SINCE
1968. UM ALSO HAVE NOTICED. H
GUYS LONG TIME WORK, COLLECTING
AND DISSEMINATING HOSPITAL
FINANCIAL DATA. SO YOU HEARD THE
FIRST SPEAKER FROM THE
CALIFORNIA HEALTHCARE FOUNDATION
WHO IS USING HK DATA. WHICH OF
COURSE, IS OUR GOAL IS TO HAVE
THAT FINANCIAL DATA BE BE USEFUL
AND BE ACTIONABLE. SO WE HAVE
HAD THAT HOSPITAL FINANCIAL DATA
FOR 50 YEARS. UM SO MOVING ON.
I'LL START WITH THE SMALL AND
RURAL HOSPITAL RELIEF PROGRAM,
WHICH IS YOU KNOW, IS CREATED
THROUGH SB 395 AND 2021. SO THIS
ESTABLISHED THE EXCISE TAX ON
ELECTRONIC CIGARETTES AND 10% OF
THAT GOES TO THIS SMALL AND
HOUSE SMALL AND RURAL HOSPITAL
RELIEF PROGRAM. SO WE DID AN
ANALYSIS AND BELIEVE THERE ARE
102 POTENTIALLY ELIGIBLE
ELIGIBLE HOSPITALS THAT MEET THE
CRITERIA UNDER THE STATUTE. AS A
SMALLER RURAL HOSPITAL RELIEF
PROGRAM. 35 OF THOSE HAVE
INITIATED APPLICATIONS WITH US
26 HAVE SUBMITTED UPDATED
SEISMIC COMPLIANCE PLANS, AND WE
HAVE APPROVED OUR FIRST TWO
GRANTS. UM THUS FAR, WE REALLY
WELCOME THIS PROGRAM. UM, AND TO
HAVE THE ABILITY TO GIVE
TECHNICAL ASSISTANCE TO THE
HOSPITALS. TO TRY TO WORK WITH
THEM TO UNDERSTAND THE MOST COST
EFFECTIVE WAYS THAT THEY CAN BE
SEISMICALLY COMPLIANT. SO WE DO
ENCOURAGE THE REMAINING 67
FACILITIES TO ENGAGE WITH US IN
TECHNICAL ASSISTANCE FOR
POTENTIAL FUTURE GRANTS. SITS
SINCE THE INCEPTION, THIS EXCISE
TAX ON THE CIGARETTES OF THE 10%
THAT'S COME TO US HAS PRODUCED
$3.7 MILLION AND WITH THE
ADDITIONAL 50 MILLION RECENTLY
MADE AVAILABLE FROM THE KOTEX
WILL REALLY BE ABLE TO SCALE UP
THAT PROGRAM. UM, SUBSTANTIALLY.
MOVING TO THE DISTRESSED
HOSPITAL LOAN PROGRAM, WHICH, AS
YOU KNOW, WAS CREATED LAST YEAR
THROUGH URGENCY LEGISLATION
PROVIDED THE $300 MILLION TO THE
TO IMPLEMENT THE FINANCIAL TURN
AROUND PROGRAM, SO WE HAVE HAD A
WONDERFUL PARTNERSHIP WITH WITH
TAFA. I'M HERE WITH THE
CALIFORNIA HEALTH FACILITIES
FINANCING AUTHORITY. THEY'RE
HANDLING THE LOAN SERVICING
COMPONENT. AND THEN OUR TEAM DID
THE WORK AROUND THE HOSPITAL.
FINANCIAL ANALYSIS. UM, AND THE
LOAN AWARD DETERMINATIONS, SO WE
RECEIVED APPLICATIONS FROM 30
HOSPITALS WANTING THE DISTRESSED
HOSPITAL LOAN. UM THE
APPLICATIONS WERE EVALUATED ON
FORMING CRITERIA. ONE IT WAS
AROUND THEIR LIQUIDITY SITUATION
. ONE WAS AROUND THE PROFIT LOSS
ANALYSIS. WE DID RECEIVE A
TURNAROUND PLAN FROM EACH OF THE
HOSPITALS AND, UM, ANALYZE THOSE
TURNAROUND PLANS AND THEN LOOKED
AT COMMUNITY NEEDS FACTORS SUCH
AS PEAR MIX AND HOW CLOSE THE
NEXT CLOSEST HOSPITAL WAS. SO
BASED ON THOSE CRITERIA WE DID
MAKE 17 LOAN AWARDS. UM ONE
HOSPITAL DECLINED TO ACCEPT ITS
$5 MILLION LOAN AWARD DUE TO AN
IMMINENT SALE. UM, AND THE 5
MILLION LOAN AWARD WAS RE
ALLOCATED TO MADEIRA COMMUNITY
HOSPITAL WHICH IS STILL PENDING.
SO WE HAVE AGAIN APPRECIATED THE
WORK OF CHE FA. THEY'VE BEEN
WORKING WITH AWARDEES ON
EXECUTION OF THE LOAN
TRANSACTION DOCUMENTS TO
DISTRIBUTE THE LOAN PROCEEDS. SO
WITH THAT VERY PLEASED TO TURN
IT OVER TO OUR DEPUTY DIRECTOR
OF OUR FINANCING PROGRAMS JP
MARIAN TO SHARE. UM A CURRENT
STATUS OF THE DISTRUST HOSPITAL
LOAN PROGRAM AND ALSO SOME OF
THE FINDINGS THAT WE'VE HAD
DURING THAT PROCESS. THANK YOU,
ELIZABETH. SO AS OF TODAY, 13 OF
THE 16 HOSPITALS THAT THAT HAVE
LOAN AWARDS HAVE COMPLETED THEIR
LOAN TRANSACTION AND RECEIVED
THEIR DISBURSEMENTS TOTALLING
222.4 MILLION OF THE REMAINING
THREE LOANS IN PRAGUE IN
PROGRESS. ONE IS ON TRACK TO BE
CLOSED IN A COUPLE OF WEEKS. UM,
THE REMAINING TWO TRANSACTIONS
FOR MADEIRA COMMUNITY HOSPITAL
AND HAZEL HAWKINS INVOLVED
HOSPITALS THAT ARE CURRENTLY IN
BANKRUPTCY. ONE IS A CLOSED
HOSPITAL. WE'RE CURRENTLY IN THE
MIDDLE OF THE FINAL STEPS OF
EVALUATING THEIR REOPENING PLAN.
AND UM, GIVEN THAT THOSE WILL
NEED SOME APPROVAL THROUGH THE
BANKRUPTCY COURT PROCESS,
THEY'RE GOING TO TAKE A LITTLE
MORE TIME TO CLOSE. UM BUT
WANTED TO SHARE WITH YOU SOME
COMMON OBSERVATIONS THAT WE HAD
FROM THE APPLICATIONS THAT WE
RECEIVED. SO ALL THE APPLICANTS
WERE VERY LOW IN CURRENT
LIQUIDITY. UM AND THEY WERE ALL
EXPERIENCING NEGATIVE OPERATING
MARGINS COMMON THEME THAT YOU'VE
HEARD THROUGHOUT TODAY. UM ALL
THE HOSPITALS HAD EXHAUSTED ALL
OUTSIDE OPTIONS POSSIBLE FOR
LINES OF CREDIT OR WORKING
CAPITAL LOANS OR GETTING, UH,
ADVANCES FROM THEIR MANAGED CARE
CONTRACT PARTNERS. UM THEY WERE
BURNING CASH ON A MONTHLY BASIS.
ALL WERE EXPERIENCING STAFFING
CHALLENGES THAT YOU'VE HEARD
ABOUT TODAY. I WON'T. I WON'T
DIVE INTO THAT TOO MUCH BECAUSE
YOU'VE ALREADY HEARD IT. BUT AND
THEN, LASTLY, THE GLOBAL
INFLATION UM, THAT THAT WE'VE
TALKED ABOUT TODAY, UM, SUPPLIES
, VENDOR CONTRACTS, PROFESSIONAL
SERVICES, ALL THE THINGS THAT IT
TAKES ON A DAY TO DAY BASIS TO
OPERATE A HOSPITAL. UM INCREASES
IN REVENUES HAVE LAGGED BEHIND
THE INCREASES IN THESE EXPENSE
RATES. AND, UH, AS KRISTOF
EVALUATED IN HIS FIRST PRESENT,
AS HE ALLUDED TO IN HIS FIRST
PRESENTATION, EACH HOSPITAL HAD
SOME SORT OF ONE OFF.
EXTRAORDINARY THING GOING ON.
THAT WAS JUST ADDING TO THE
CHALLENGES. SOME WERE UNEXPECTED
LEADERSHIP CHANGES. THERE WERE
GLITCHES AND PAYMENT DELAYS FROM
THIRD PARTY MANAGED CARE PLANS.
UH BANKS, NOT RENEWING LINES OF
CREDIT, JUST EXITING THE
HEALTHCARE SECTOR NO LONGER
WANTING TO BE IN THAT BUSINESS.
SITUATIONS LIKE THESE WITH
ALREADY FINANCIALLY FRAGILE
HOSPITALS WERE CAUSING THEM TO
MAKE DECISIONS TO POSSIBLY NOT
PARTICIPATE IN IN BUSINESS
OPPORTUNITIES FOR THEM. THEY
HAVE TO LOOK AT. YOU KNOW WHAT?
HOW MUCH CASH DO I HAVE ON HAND?
DO I WANT TO TRY TO PARTICIPATE
IN THIS PROGRAM OR OPEN THIS
LINE OF SERVICE, OR AM I GOING
TO NEED THAT MONEY TO MAKE
PAYROLL SO THEY'RE HAVING TO, UH
, TAKE THAT INTO ACCOUNT ON A
DAY TO DAY BASIS. SOME COMMON
THEMES THAT WE SAW IN THE
TURNAROUND PLANS THAT WAS
RECEIVED. UM WE'RE CATCHING UP
ON PAST DUE BILLS NEGOTIATING
NEW RATES WITH HEALTH PLANS.
REVENUE CYCLE ENHANCEMENTS, UH,
STAFF AND PROVIDER WAGE
INCREASES TO IMPROVE EMPLOYEE
RETENTION AND REDUCE THAT THAT
RELIANCE ON THESE TRAVELING
NURSE ORGANIZATIONS. INITIATIVES
TO PRODUCE A NEW REVENUE
GENERATING SERVICE TO TRY AND
HELP CREATE A PROFIT CENTER FOR
THE HOSPITAL. UM REPLACING
EQUIPMENT THAT IS NEAR THE END
OF LIFE, BUT IT'S STILL NEEDED
EVERY DAY FOR PATIENT CARE. AND
THEN, UH, USING LOAN PROCEEDS AS
AN ALTERNATIVE TO A LINE OF
CREDIT. THEY MAY HAVE LOST THEIR
LINE OF CREDIT BUT STILL NEED
SOME SORT OF ACCOUNT TO BE ABLE
TO GO IN AND OUT OF ON A DAY TO
DAY BASIS. AND THEN, LASTLY
SEEKING SALE, AFFILIATION OR
PARTNERSHIP OPPORTUNITIES WITH
OTHER HOSPITALS. NOW THERE WERE
13 HOSPITALS THAT APPLIED THAT
DIDN'T GET A LOAN AWARD THE
CHARACTERISTICS OF THOSE
APPLICANTS. UM THEY HAD
RELATIVELY HIGHER CASH RESERVES
OR POSSIBLY HAD INVESTMENT
PORTFOLIOS THAT THEY COULD RELY
ON IN THE EVENT THAT THEY NEEDED
TO SUBSIDIZE OPERATIONS. SOME
HAD POSITIVE OPERATING MARGINS
OR WERE ACTUALLY POSITIVE ON NET
INCOME. UM SOME HAD FINANCIAL
FORECAST THAT WERE NOT REALLY
SHOWING TURNAROUND PLAN
INITIATIVES, BUT THEY HAD A
CAPITAL PROJECT OR SOMETHING
THAT THEY WANTED TO TAKE ON AND
USE THE PROGRAM TO HELP FINANCE
THAT. AND THEN LASTLY, SOME JUST
HAD CIRCUMSTANCES THAT MADE THEM
INELIGIBLE WITH THE STATUTES. SO
IN CONCLUSION. WITHIN THE
HOSPITALS THAT RECEIVED LOAN
AWARDS. THERE WERE 8 TO 9 THAT
CLEARLY DEMONSTRATED A CONCERN
OF POSSIBLY NEEDING TO FILE FOR
BANKRUPTCY PROTECTION OR FACING
CLOSURE WITHIN THE NEXT TWO
YEARS. AT THESE HOSPITALS. LOAN
PROCEEDS ARE GOING TO BE USED
FOR A COMBINATION OF URGENT
NEEDS LIKE PAYROLL ASSISTANCE
AND PAYING PAST DUE BILLS, ALONG
WITH THE IMPLEMENTATION OF
LONGER TURNAROUND INITIATIVES.
THE REST MAY NOT HAVE BEEN ON
THE VERGE OF MISSING PAYROLL OR
BEING LATE ON VENDOR PAYMENTS,
BUT CLEARLY DEMONSTRATED THE
FINANCIAL DISTRESS AND A NEED
FOR THE PROGRAMS ASSISTANCE TO
BE ABLE TO REMAIN FINANCIALLY
VIABLE IN THE LONG TERM. WE
BELIEVE THAT THIS PROGRAM MET
ITS INTENT TO ASSIST THE
HOSPITALS FACING THE HIGHEST
DEGREE OF FINANCIAL DISTRESS,
AND WE'RE OPTIMISTIC THAT WITH
THE HARD WORK ON THEIR
TURNAROUND PLAN INITIATIVES AND
THE INJECTION OF WORKING CAPITAL
THAT THEY WILL HAVE AN
OPPORTUNITY TO REVERSE THIS
DOWNWARD SLIDE THAT THEY'VE BEEN
EXPERIENCING SO WITH THAT, I'LL
NOW TURN IT OVER TO CAROLINE FOR
A COUPLE OF UPDATES FROM CHE FA.
YES, THANK YOU. CAROLINA BOO
BISHARA, EXECUTIVE DIRECTOR OF
THE CALIFORNIA HEALTH FACILITIES
FINANCING AUTHORITY, ALSO KNOWN
AS CHAFF TO WERE HOUSED WITHIN
THE TREASURER'S OFFICE, AND WE
PROVIDE A NUMBER OF DIFFERENT
FINANCING TOOLS FOR HEALTH
FACILITIES THROUGHOUT THE STATE
OF CALIFORNIA, MAINLY FOR
INFRASTRUCTURE PROJECTS. WE HAVE
A NUMBER OF BOND LOAN AND GRANT
PROGRAMS THAT WE, UM PARTICIPATE
IN AND ONE OF THOSE IS THE
DISTRESSED HOSPITAL ON PROGRAM.
WE'VE BEEN WORKING VERY CLOSELY
WITH THE H CHI TEAM ON THE
IMPLEMENTATION OF THE PROGRAM
AND AS JP MARIANNE PREVIOUSLY
MENTIONED, THERE HAVE ALREADY
BEEN DISBURSEMENTS TO 13 OF THE
16 APPROVED HOSPITALS AND WE
HAVE ALREADY ENTERED INTO, UM
LEGAL AGREEMENTS WITH THESE 13
HOSPITALS. OBVIOUSLY THESE ARE
LOANS, SO THERE'S LEGAL
AGREEMENTS WHICH HAVE COMMITTED
CHA FATOU ONGOING WORK FOR THE
NEXT SIX YEARS. THEY ARE TO BE
REPAID IN 17 MONTHS TO 72 MONTH
TERM. SO WE HAVE NOW ENTERED
INTO LONG DOCUMENTS WITH
REPAYMENTS TO BE DONE BACK IN
SIX YEARS. UM SO BASICALLY,
THERE'S A LOT OF ONGOING
COMPLIANCE WORK THAT CHOPHEL
WILL BE WORKING ON AND WORKING
CLOSELY WITH HK AND SHARING
INFORMATION WITH H. CHI. UM AND
THOSE ONGOING COMPLIANCE INCLUDE
COLLECTING AND TRACKING MONTHLY
PAYMENTS AFTER THE 18 MONTH
DEFERRAL PERIOD IS OVER. ALL THE
HOSPITALS THAT GOT ALONE AWARD
DO NOT HAVE TO MAKE ANY PAYMENTS
IN THE 1ST 18 MONTHS, BUT AFTER
THE 18 MONTHS IS OVER, THERE
WILL BE A MONTHLY DEBT SERVICE
PAYMENT, WHICH INCLUDES
PRINCIPLE. OVER THE NEXT PERIOD
OF TIME UNTIL 72 MONTHS IS OVER.
THEN WE WILL BE COLLECTING AND
TRACKING AND SHARING OVER 16
REPORTS ANNUALLY PER HOSPITAL TO
HK I WILL BE COLLECTING. I'M
SHARING THEM WITH H I WHICH
INCLUDE ANNUAL FINANCIAL AUDITS,
BOARD APPROVED ANNUAL BUDGETS
UTILIZATION STATISTICS OF
HOSPITAL SERVICES. UM ANNUAL
FINANCIAL RATIO, CALCULATIONS
AND A LOT OF QUARTERLY REPORTS
WILL BE GETTING FROM THE
HOSPITALS, INCLUDING PROGRESS
UPDATE ON THEIR TURNAROUND PLAN
THAT THEY HAD SUBMITTED AT THE
TIME OF THE APPLICATION THAT
WILL SHOW THAT THEY'RE GOING TO
BECOME FINANCIALLY VIABLE IN THE
FUTURE. AND ALL OF THIS IS TO
ASSESS THE HOSPITAL'S PROGRESS
ON ACHIEVING FINANCIAL VIABILITY
AND BECOMING SUSTAINABLE AND
CONTINUING TO OPERATE IN THE
FUTURE. WE ALSO WILL NEED TO
CONTINUE ENGAGING WITH OUR
SPECIAL OUTSIDE COUNSEL THAT WE
HAD HIRED. UM A LOT OF THE
BORROWERS ARE IN A UNIQUE
SITUATION THAT TAFA HAD NOT
PREVIOUSLY ENGAGED WITH, YOU
KNOW, HOSPITALS AND BANKRUPTCY
ARE AT THE VERGE OF BANKRUPTCY
SO THERE COULD BE A NEED TO
CONTINUE TO ENGAGE WITH THE
SPECIAL COUNSEL ON SPECIAL
ISSUES THAT COULD ARISE. UM THAT
AFFECT EITHER THE LOAN ITSELF,
REPAYMENT OF THE LOAN OR THE
SECURITY THAT'S SUPPOSED TO
SECURE THE LOANS, WHICH IS
MEDICAL 20% OF MEDICAL PAYMENTS.
SO UM, WE ARE GOING TO CONTINUE
WORKING WITH H GUY ON THE
IMPLEMENTATION OF THE PROGRAM
AND IN YOUR MATERIAL, YOU HAVE
PROPOSED TRAILER BILL LANGUAGE
THAT WOULD EXTEND THE DEADLINE,
UM, TO UTILIZE THE
ADMINISTRATIVE COSTS OR THE
ADMINISTRATIVE FUNDS THAT WERE
ALLOCATED TO BOTH STAFF AND H
CHI FROM 2026 TO 2031 TO JUST
ALIGN UM, THE USE OF THE FUNDS
WITH THE SUNSET OF THE PROGRAM.
AND THAT IS IT, SO I'M HAPPY TO
ANSWER ANY QUESTIONS. THANK YOU
VERY MUCH TO OUR PANEL TO SEE IF
THERE ARE ANY QUESTIONS FROM
ASSEMBLYMEMBER'S SORIA. THANK
YOU. SO JUST REAL QUICK. UM FOR
THE TRAILER BILL LANGUAGE. YOU
ARE PROPOSING THAT 7.5 MILLION
BE STRETCHED OUT. NOT THAT WE'RE
ASKING FOR MORE MONEY JUST FOR
MORE TIME TO UTILIZE THOSE FUNDS
CORRECT. YEAH EXACTLY. NO MORE
FUNDS, JUST ALIGNING THE DATES
AND THE STATUTE TO USE THE ADMIN
FUNDS WITH THE SUNSET OF THE
PROGRAM. THANK YOU, UM SO SAYING
THAT, UM THESE HOSPITALS WERE
CLEARLY IN SIGNIFICANT FINANCIAL
NEED IN ORDER TO RECEIVE THESE
LUNS LEAVES LOANS. UM DO YOU
THINK THAT THEY ARE GOING TO BE
ABLE TO ONE REPAY THEM? IN THE
TIME FASHION THAT HAS BEEN
DESIGNATED TO THAT THEY'LL BE
ABLE TO KEEP THEIR DOORS OPEN.
UM AS THEY'RE REPAYING THESE
LOANS, YOU'VE LOOKED AT THEIR
FINANCIALS UNDER THE STATUTE. UM
WE, THERE IS A PROVISION THAT
ALLOWS FOR LOAN FORGIVENESS AND
SO H GUYS DEVELOPING WORKING
WITH OUR CALIFORNIA HEALTH AND
HUMAN SERVICES AGENCY AND THE
DEPARTMENT OF FINANCE ON SOME
LOAN FORGIVENESS, BUT THE
TURNAROUND PLANS DID SHOW
REPAYMENT GENERALLY, AND ALSO
LET JP MARIAN AD IN TERMS OF THE
YOU KNOW OUR ANALYSIS OF THE
TURNAROUND PLANS. YEAH YOU KNOW,
MOST THEY'RE GOING TO BE SOME
THAT ARE GOING TO STRUGGLE. UM
MOST, UH, IF EVERYTHING GOES AS
THEIR TURNAROUND PLAN WAS
PROJECTED THEY SHOULD HAVE THE
CAPABILITY TO DO THAT. BUT IF
SOMETHING EXTRAORDINARY HAPPENS
BETWEEN NOW AND UM, YOU KNOW, 72
MONTHS. UH IT'S POSSIBLE THAT,
UH, THEY MAY STRUGGLE AND NEED
SOME SORT OF LOAN MODIFICATION
OR LOAN FORGIVENESS ON SOME
LEVEL, SO WE'RE TRYING TO WORK
ON THIS LOAN FORGIVENESS PROCESS
ON SOMETHING, UH, THAT MAKES
SENSE AND THE HOSPITALS WILL
WILL BE FAIR TO THE HOSPITALS.
THANK YOU FOR THAT. AND WHEN YOU
WERE LOOKING THROUGH THEIR
FINANCIALS, UM IT SOUNDED TO ME
LIKE THERE WERE A VARIETY OF
DIFFERENT FACTORS THAT KIND OF
LED THEM TO BE WHERE THEY ARE
FINANCIALLY. UM SO DO YOU FEEL
LIKE THIS LOAN IS A ONE TIME
THING AND THEY'LL BE BACK ON
THEIR FEET AND RUNNING, OR DO
YOU THINK THAT THIS IS SOMETHING
THAT WE NEED TO CONTINUE TO LOOK
AT IN ORDER TO ALLOW FOR THESE?
HOSPITALS TO KEEP THEIR DOORS
OPEN. THERE THERE WERE SOME
STRUCTURAL PROBLEMS. AND AS
WE'VE INDICATED, SOME HOSPITALS
WENT BACK TO THEIR MEDICAL
MANAGED CARE PLANS AND THEIR
COMMERCIAL MANAGED CARE PLANS TO
RENEGOTIATE CONTRACTS. SOME OF
THEM ARE LOOKING AT ADDITIONAL
REVENUE STREAMS. UM, WE DO THINK
THAT YOU HEARD FROM A NUMBER OF
THE HOSPITAL CEOS EARLIER THAT
THEIR RELIANCE ON ON TRAVELING
NURSES AND THE LIKE IS
DECREASING TO SOME EXTENT. AND
UM, PAYING NURSES SOME MORE SO
THAT WE RETAIN THEM CAN BE A
GOOD THINGS IN THE LONG TERM, SO
I THINK THE JURY IS OUT AS TO AS
TO WHAT THE NEED WILL BE
ONGOING. WE FELT THAT WE WERE
ABLE TO MEET A LOT OF THE NEED
WITH THE $300 MILLION THAT THE
LEGISLATURE APPROPRIATED FOR
THIS FOR THIS PURPOSE. ONGOING
CONCERN TO ADDRESS THANK YOU.
AND WHAT ABOUT YOU SAID YOU HAD
30 APPLICANTS. WHAT ABOUT THOSE
THAT DID NOT RECEIVE THE 13TH
THAT DID NOT RECEIVE, UM, ANY
FINANCIAL ASSISTANCE DO YOU
BASED ON WHAT YOU WERE LOOKING
AT? AS FAR AS THEIR ISSUES? DO
YOU SEE THEM BEING ABLE TO TURN
THINGS AROUND FOR THEMSELVES OR
WILL THEY? POTENTIALLY NEED
SOMETHING LIKE THIS IN THE
FUTURE. AH, GIVEN THE RATIONALE
THAT THAT WE DID NOT APPROVE
THEM FOR SOMETHING, IT'S LIKELY
THAT THEY WEREN'T IN DANGER OF
CLOSURE WITHIN THE NEXT 2 TO 3
YEARS. SO, UM THE JURY IS STILL
OUT LONG TERM. BUT IT WASN'T ANY
SORT OF IMMINENT CATASTROPHE ON
THE HORIZON. WELL, THANK YOU SO
MUCH. THANK YOU FOR WHAT YOU
HAVE DONE AND COMING HERE TODAY
TO DISCUSS THIS AND ANSWER OUR
QUESTIONS. WE'LL NOW MOVE TO OUR
NEXT PANEL, WHICH COVERS MEDICAL
FINANCING OF HOSPITALS FOR THIS
PANEL. WE HAVE MICHELLE BASS
DIRECTOR AND LENDING HARRINGTON,
ASSISTANT STATE MEDICAID
DIRECTOR, BOTH WITH THE
DEPARTMENT OF HEALTH CARE
SERVICES. AND WE WILL START WITH
DIRECTOR BOSS YEAH. GOOD
AFTERNOON CHAIR. REMEMBER
MICHELLE BOSS, DIRECTOR OF THE
DEPARTMENT OF HEALTH CARE
SERVICES JUST WANTED TO PROVIDE
A BRIEF OVERVIEW OF MEDICAL
HOSPITAL FINANCING. UM AS
DISCUSSED EARLIER, IT REALLY IS
A COMPLEX WEB OF REIMBURSEMENT
STREAMS THAT ARE IMPACTED BY
MANY, MANY FACTORS. ONE CRITICAL
REIMBURSEMENT STREAMS FOR MANY
HOSPITALS AS MEDICALS WAS
DISCUSSED TODAY. I MET THE MOST
BASIC LEVEL HOSPITALS. REVENUE
CONSISTS OF REVENUES FROM
INPATIENT ADMISSIONS AND
REVENUES FROM OUTPATIENT
SERVICES, WHICH MAY INCLUDE
EMERGENCY ROOM CARE, ESPECIALLY
CARE, PRIMARY CARE AND ANCILLARY
SERVICES. UM AND WE HEARD TODAY
THAT A HOSPITAL LOOKS AT THEIR
PARA MIXED COMMERCIAL, MEDICARE
AND MEDICAL AS THEY REALLY
CONSIDER THEIR THEIR KIND OF
THEIR OVERALL FINANCIAL
SITUATION. AND THERE ARE
DIFFERENT WAYS THAT THE MEDICAL
SYSTEM REIMBURSES OUR HOSPITALS.
WE HAVE FREE FOR SERVICE
PAYMENT, WHICH IS A PAYMENT FOR
EACH DISTINCT TYPE OF SERVICE.
WE HAVE CAPITAL CAPITATED
PAYMENTS, WHICH REALLY ARE FOR
ASSIGNED MEMBER TO THE HOSPITAL,
SO THESE ARE BUNDLED OR EPISODIC
PAYMENTS. AND THEN WE HAVE
PERFORMANCE BASED INCENTIVE
PAYMENTS OR OTHER KIND OF VALUE
BASED ALTERNATIVE PAYMENT
ARRANGEMENTS. FOR MEDICAL, YOU
KNOW, 99% OF THE MEDICAL
POPULATION NOW IS IN MANAGED
CARE. SO MANY OUR HOSPITALS ARE
ABLE TO NEGOTIATE WITH THEIR
MEDICAL MANAGED CARE PLANS THEIR
RATES. THIS IS A SIGNIFICANT
SHIN OVER THE SHIFT OVER THE
LAST DECADE OR SO, WERE MANY
MORE INDIVIDUALS WERE IN FEE FOR
SERVICE. SO A SIGNIFICANT
PORTION OF OUR MEDICAL MEMBERS
ARE IN MANAGED CARE. IN ADDITION
TO THESE RATES OF THE CAPITATED
OR THE FIFA SERVICE RATES, WE
HAVE BASE AND SUPPLEMENTAL
PAYMENTS AS DISCUSSED EARLIER.
THIS IS REALLY THAT DIFFERENCE
BETWEEN RATES AND TOTAL REVENUE
TO OUR HOSPITALS. MEDICAL
PAYMENTS TO HOSPITALS INCLUDE
BOTH BASED AND SUPPLEMENTAL
PAYMENTS, AND THE SUPPLEMENTAL
PAYMENTS ARE SEPARATE, AND IN
ADDITION TO THE BASE PAYMENTS
RENDERED FOR SERVICE TO OUR
MEDICAL MEMBERS. SUPPLEMENTAL
PAYMENT PROGRAMS UTILIZE
FEDERALLY APPROVED FINANCING
MECHANISMS TO INCREASE DURING
BURST MINTS TO HOSPITALS. FOR
INPATIENT SERVICES, THE BULK OF
MEDICAL PAYMENTS TO HOSPITALS
ARE IMPATIENT AND HOSPITALS ARE
REIMBURSED VIA COMBINATION OF
BASE AND SUPPLEMENTAL PAYMENTS
IN BOTH FEE FOR SERVICE AND
MANAGED CARE AND THE FEE FOR
SERVICE DELIVERY SYSTEM. BOTH
THE BASE AND SUPPLEMENTAL
PAYMENTS ARE DEVELOPED AND
PROPOSED BY DHC S. THE
DEPARTMENT. YOU DON'T UTILIZES
THE FULL FEDERAL UPLOAD PAYMENT
LIMIT, WHICH LIMITS MEDICAL
REIMBURSEMENT FOR INPATIENT
FACILITIES TO WHAT ONE OF OTHER
BEEN REIMBURSED UNDER MEDICARE.
UM THE STATE IS ABLE TO RAISE
FEVER SERVICE RATES IS LIMITED
BY THE FACT THAT PEOPLE SERVICE
RATES ARE ALREADY SET OR ALREADY
AT NEAR THE UPL OR THE FEDERAL
UPPER PAYMENT LIMIT. IN THE
MANAGED CARE DELIVERY SYSTEM.
THE BASE PAYMENT IS TYPICALLY
DETERMINED BY THE NEGOTIATED
CONTRACT BETWEEN THE HOSPITAL
AND THE MANAGED CARE PLAN. THE
SUPPLEMENTAL PAYMENTS ARE
DEVELOPED AND PROPOSED BY DHC S
AND APPROVED BY THE FEDERAL CMS.
THE TOTAL PAYMENT AMOUNT,
INCLUDING BASE AND SUPPLEMENTAL
PAYMENTS, IS SUBJECT TO A
VARIETY OF CONSIDERATIONS,
INCLUDING HARD CAPPED AT THE
AVERAGE COMMERCIAL MARKET RATE.
HOSPITALS CAN SEEK INCREASES TO
THEIR BASE REIMBURSEMENT THROUGH
NEGOTIATIONS WITH MANAGED CARE
PLANS WHILE THE DEPARTMENT WORKS
WITH THE FEDERAL GOVERNMENT TO
SEEK APPROVAL OF APPROPRIATE
INCREASES TO SUPPLEMENTAL
PAYMENTS. AH MEDICAL PAYMENTS
ARE MADE WHEN A STATE GENERATED
SHARE OF THE PAYMENT IS PASSED
UP TO THE FEDERAL GOVERNMENT,
WHICH THEN MATCHES THESE
PAYMENTS BASED ON FEDERAL
MEDICAL ASSISTANCE PERCENTAGE
AND WHICH RETURNS TO THE STATE
OF FULL PAYMENT THAT IS THEN
PROVIDED TO HEALTH PLANS OR
HOSPITALS. THESE STATE GENERATED
PAYMENTS, ALSO KNOWN AS THE NON
FEDERAL SHARE TO BE GENERAL
FUND, OR LOCALLY GENERATED
DOLLARS. THE NON FEDERAL SHARE
OF BASE PAYMENTS TO HOSPITALS IS
FINANCE PRIME PRIME MONTH.
PREDOMINANTLY EXCUSE ME, USING
STATE GENERAL FUND AND WITH SOME
EXCEPTIONS IN THE FIFA SERVICE
DELIVERY SYSTEM. JUST TO SPEAK A
LITTLE BIT ABOUT PAYMENT LEVELS,
THE MAJORITY OF MEDICAL PAYMENTS
TO HOSPITALS ARE FOR INPATIENT
SERVICES AS JUST DISCUSSED AND
IN THE MANAGED CARE DELIVERY
SYSTEM. AT A STATEWIDE LEVEL
GROSS MEDICAL MANAGED CARE
PAYMENT LEVELS TO HOSPITALS
MATCH OR EXCEED MEDICARE
REIMBURSEMENT RATES ON AVERAGE,
AND ARE ROUGHLY 50% OF THE
AVERAGE COMMERCIAL RATES. IN
COMPARISON, THE FOR SERVICE
FINANCING IS MORE COMPLEX AND
VARIABLE BY HOSPITAL TYPE.
PAYMENT LEVELS ARE OFTEN VERY
DIFFERENT FROM ONE HOSPITAL TO
ANOTHER, AND REIMBURSEMENT FOR
OUTPATIENT SERVICES IS GENERALLY
LOWER THAN FOR INPATIENT
SERVICES. IN GENERAL DE HCS
INCREASES THE VALUE OF HOSPITALS
SUPPLEMENTAL PAYMENTS IN THE
MANAGED CARE DELIVERY SYSTEM
EVERY YEAR. INCREASES MAY BE
LINKED TO GROWTH AND CONSUMER
PRICE INDEX OR OTHER
INFLATIONARY INDEXES.
PROGRAMMATIC CHANGES SUCH AS
BENEFIT OR ELIGIBILITY,
EXPANSIONS, EXPANSIONS AND OTHER
POLICY CONSIDERATIONS, SUCH AS
THE IMPLEMENTATION OF QUALITY
BASED PAYMENTS OR THE TRANSITION
OF SUPPLEMENTAL PAYMENTS. IN
RECENT YEARS IN PARTNERSHIP WITH
THE HOSPITALS. WE'VE MADE A
CONCERTED EFFORT TO INCREASE
HOSPITAL SUPPLEMENTAL PAYMENTS
IN THE MANAGED CARE DELIVERY
SYSTEM IN THE LAST THREE YEARS
OF THE INCREASE HAS BEEN ABOUT
3.2 BILLION ANNUALLY FOR PRIVATE
HOSPITALS, 900 MILLION ANNUALLY
FOR DESIGNATED PUBLIC HOSPITALS
AND ABOUT 225 MILLION FOR
DISTRICT AND MUNICIPAL PUBLIC
HOSPITALS. A PORTION OF THESE
INCREASES OFFSET DECREASES TO
FEVER SERVICE SUPPLEMENTAL
PAYMENTS AND, AS PREVIOUSLY
NOTED THE NET BENEFIT OF THESE
INCREASES TO HOSPITAL IS LESS
THAN THE TOTAL AMOUNT OF THE
INCREASE IS DUE TO THE SELF
FINANCING. IN TOTAL ACROSS THE
FEVER SERVICE AND MANAGED CARE
DELIVERY SYSTEMS. WE MAKE
APPROXIMATELY 13 TO 15 BILLION
IN NET BENEFITS. SUPPLEMENTAL
PAYMENTS TO HOSPITALS EAST YEAR
IN ADDITION TO THEIR BASE
PAYMENTS. WITH REGARD TO THE
MANAGED CARE TAX PROVIDER RATE
INCREASES THAT ARE RELATED TO
HOSPITALS WE HAVE IN AS PART OF
PHASE TWO, THE RATE INCREASES
THAT WOULD BE EFFECTIVE JANUARY
1 2025. WE ARE INCREASING BASED
PAYMENTS FOR MATERNITY CARE TO
100% OF THE GEOGRAPHICALLY
ADJUSTED MEDICARE RATE. PLUS,
PLUS THE ADDITIONAL EQUITY
ENHANCEMENTS THAT WE SPOKE ABOUT
AT THE LAST HEARING. INCREASING
BASED PAYMENTS FOR EMERGENCY
PHYSICIAN SERVICES TO 90% OF THE
GEOGRAPHICALLY ADJUSTED MEDICARE
RATE, INCREASING ANNUAL
REIMBURSEMENT FOR OUTPATIENT
SERVICES BY 490 MILLION TOTAL
FUNDS AND FOR EMERGENCY
DEPARTMENT FACILITY SERVICES BY
725 MILLION TOTAL FUNDS. AND
THEN THE TRANSITION OF THE BASE
PAYMENTS FOR THESE SERVICES TO
AN OUTPATIENT PERSPECTIVE
PAYMENT SYSTEM. WE ARE PROPOSING
AN INVESTMENT OF 150 MILLION OF
THE M C O TAX FUNDS OR THOSE ARE
JUST THE STATE PORTION OF THE
FUNDS ANNUALLY INTO MODERNIZING
THE REIMBURSEMENT METHODOLOGY
FOR OUR DESIGNATED PUBLIC
HOSPITAL SYSTEMS, AND THAT IS IN
ADDITION TO THE ABOUT 2.4
BILLION TOTAL FUNDS OF INCREASES
RELATED TO PRIMARY CARE AND
ESPECIALLY CARE, WHICH, AS
DISCUSSED, EARLIER REALLY DOES
ALSO BENEFIT THAT THE HOSPITAL
SYSTEM. WITH REGARDS TO THE
QUESTION ABOUT MAINTAINING
ADEQUATE ACCESS TO LABOR AND
DELIVERY, AND SOME OF OUR
HOSPITALS WOULD START BY SAYING
THAT THIS IS REALLY A KIND OF A
LENS BY ALL PAYER SOURCES, NOT
JUST MEDICAL BUT REALLY
RECOGNIZING THE IMPORTANCE OF
LABOR AND DELIVERY AND
PARTICULARLY RURAL AREAS IN
CERTAIN KIND OF URBAN HEALTH
DESSERTS AS WELL. THE DEPARTMENT
ACTIVELY MONITORS NETWORK
ADEQUACY OF OUR MANAGED CARE
PLANS TO UNDERSTAND, UNDERSTAND
THE IMPACTS OF ANY TYPES OF
THESE CLOSURES WE REQUIRE ARE
MANAGED CARE PLANS TO PROVIDE
TRANSITION PLANS TO THE
DEPARTMENT. IDENTIFY UM, NETWORK
ADEQUACY WERE SERVICES THE NEXT
CLOSEST AVAILABLE SERVICES AND
WE WORK WITH ARE MANAGED CARE
PLANS TO UNDERSTAND KIND OF THE
IMPACT AND KIND OF YOU KNOW IS
IT IS A RESULT OF, UM YOU KNOW,
LOSSES, NATE RATE NEGOTIATIONS,
ETCETERA TO HAVE A BETTER
UNDERSTANDING FOR THE IMPACT AND
KIND OF WHAT THE DEPARTMENT CAN
DO TO ASSESS WITH THAT, I THINK,
UH, OPEN IT UP FOR QUESTIONS
HAVING OUR EXPERT HERE ON HEALTH
HOSPITAL FINANCING. WELL THANK
YOU SO MUCH FOR COMING. YOU
KNOW, TO OUR HEARING TODAY TO,
UH TO SHED SOME LIGHT. UM A
COUPLE OF QUESTIONS. DO YOU
AGREE THAT PUBLIC HOSPITALS ARE
FACING A STRUCTURAL DEFICIT?
LINDY HARRINGTON, ASSISTANT
STATE MEDICAID DIRECTOR. I THINK
BECAUSE OF THE SELF FINANCING
THAT HAS HISTORICALLY BEEN DONE
WITH OUR DESIGNATED PUBLIC
HOSPITALS, THERE IS A BROADER
CHALLENGE IN THAT, AS WE BRING
IN, UM THOSE DOLLARS, THEY ARE
PUTTING UP THE NON FEDERAL SHARE
SO THAT THE NET BENEFIT TO THEM
IS GENERALLY SMALLER. SO WE HAVE
CONTINUED TO WORK WITH THEM YEAR
OVER YEAR TO TRY TO ADDRESS THAT
ISSUE. BUT YES, THERE IS A THERE
IS AN ISSUE WITH THE SELF
FINANCING. AND THEN YOU KNOW. DO
YOU AGREE? OR WHAT IS YOUR, UM
STATEMENT WITH THE CONCERN THAT
PUBLIC HOSPITAL TO HAVE THAT
THEY MAY ACTUALLY LOSE MONEY. AS
A RESULT OF THE CURRENT TR I
PROPOSAL THAT WAS NOT OUR INTENT
. THE 150 MILLION THAT WE PUT IN
IS TO IS TO CHANGE THE
MECHANISMS THAT THEY ARE NOT
SELF FINANCING. OUR INTENT WAS
NEVER TO HAVE THAT PHASE OUT OF
THE SUPPLEMENTAL PAYMENT BE A
NEGATIVE OR A COST. TO THOSE
HOSPITALS. WE CONTINUE TO HAVE
ADDITIONAL DISCUSSION SO THAT WE
CAN ENSURE WHATEVER GOES FORWARD
DOES NOT HAVE A NEGATIVE IMPACT
ON THE PUBLIC HOSPITALS. THAT
WAS NOT OUR INTENTION. BUT YOU
UNDERSTAND HOW THEY'RE NOW
CONCERNED. WE'VE HAD THE FURTHER
CONVERSATIONS WITH THEM. THAT'S
WHY WE'RE CONTINUING TO HAVE
CONVERSATIONS TO ENSURE THAT WE
CAN FINALIZE A PROPOSAL THAT
DOES NOT INCLUDE ANY NEGATIVES
FOR THEM. PERFECT I'M VERY HAPPY
TO HEAR THAT. UM WELL, THANK YOU
ALL SO MUCH FOR BEING HERE AND
WE'RE GOING TO MOVE TO OUR FINAL
PANEL NOW. UM, WHICH IS GOING TO
FOCUS ON THE ROLE OF COMMERCIAL
AND PUBLIC MANAGED CARE PLANS.
WE HAVE DR ROBERT MOORE, CHIEF
MEDICAL OFFICER FOR PARTNERSHIP
HEALTH PLAN OF CALIFORNIA LINE
OF COOP MINT, CEO OF LOCAL
HEALTH PLAN OF CALIFORNIA, AND
JED HAMPTON, DIRECTOR OF
LEGISLATIVE AFFAIRS FOR THE
CALIFORNIA ASSOCIATION OF
HEALTH. PLAN THANK YOU TO OUR
LAST AND FINAL PANEL. AND WE'LL
START WITH DR MORE GREAT. THANK
YOU VERY MUCH. MADAM WEBBER. DR
WEBBER. MY NAME IS ROBERT MORIN,
THE CHIEF MEDICAL OFFICER AND A
FAMILY PHYSICIAN AT PARTNERSHIP
HEALTH PLAN, WHICH IS A NON FOR
PROFIT, COUNTY ORGANIZED HEALTH
SYSTEMS SERVING 24 COUNTIES,
MOSTLY RURAL COUNTIES IN
NORTHERN CALIFORNIA. IN OUR
SERVICE AREA, WE HAVE 50,
CALIFORNIA INDIAN TRIBES 18
RURAL TRIBAL HEALTH CENTERS.
WHICH HAVE THE DOUBLE RISK OF
BEING IN A RURAL AREA AND HAVING
A LOT OF HISTORIC DISCRIMINATION
, WHICH HAVE IMPACTED THEIR
THEIR HEALTH OUTCOMES GREATLY.
OUR REGION ALSO HAS 50 NON
KAISER HOSPITALS, 25 OF WHICH
DON'T PROVIDE OBI CARE AT THE
CURRENT TIME, AND IN THE LAST
NINE YEARS IN OUR OR LEGACY
COUNTY, SEVEN HOSPITALS STOPPED
PROVIDING OBESE SERVICES AND
THEN THE COUNTIES. WE JUST TOOK,
UM RESPONSIBILITY FOR THE 10
COUNTIES NORTH OF SACRAMENTO. AN
ADDITIONAL THREE COUNTIES IN THE
LAST NINE YEARS HAVE STOPPED
PROVIDING OBESE SERVICES LOSS OF
ABOUT ONE HOSPITAL PER YEAR IN
THE IN THAT REGION. WE'VE TAKEN
A DEEP DIVE INTO THE CAUSES OF
THE CLOSURES OF THE FACTORS THAT
WERE BROUGHT UP VERY ELOQUENTLY
BY THE CEO OF I THINK RIDGECREST
ARE LARGELY TRUTH. I WON'T
REITERATE AND ALL THE FINDINGS
THAT HE HAD. I THINK THAT HE HIT
ON MANY OF THEM. THERE ARE
FINANCIAL MARGINS, AND THE
MEDICAL MIX DEFINITELY ARE
FACTORS AND THE NEXT SPEAKER
LINEAR WILL TALK MORE ABOUT HOW
THAT'S RELATED TO HOW D HCS
FUNDS TO MANAGED CARE PLANS, SO
I'M GOING TO FOCUS ON THE
NONFINANCIAL JUST BRIEFLY. THE
FIRST IS THE LOW VOLUME IS IT
WAS A KEY COMMON FACTOR. ALL ALL
THE HOSPITALS THAT CLOSED IN OUR
REGION WERE HEAD UNDER 300
DELIVERIES A YEAR. AND THE
RELATIVE RATES DOESN'T MATTER IF
YOU PAY HIGHER RATES. IF YOU
CAN'T COVER YOUR MARGINAL COSTS,
WITH THAT LOWER VOLUME AND THE
LOWER THE VOLUME, THE HARDER IT
IS TO COVER THOSE MARGINAL COSTS
IN PARTICULAR IN THE MOST RURAL
HOSPITALS, UM KEY FACTOR WAS THE
REQUIREMENT FOR CONTINUOUSLY
HAVING 2 TO 3 NURSES, OBI
TRAINED NURSES AT A TIME. EVEN
IF THEY ONLY ARE DELIVERING LESS
THAN ONE PATIENT PER DAY, AND
THAT WAS A GIANT EXPENSE. SOME
OF THE OTHER HOSPITALS ALSO ARE
SUSTAINING HIGH COSTS OF
REQUIRING OBSTETRICS, PEDIATRIC
COVERAGE FOR IN CASE THERE'S
SOME NEED FOR A PDF PEDIATRICIAN
TO COME IN AND HELP WITH THE
BABY AND THEN ALSO, UM THE NEED
FOR ANESTHESIA COVERED SO ALL OF
THOSE COVERAGE, IT BECOMES A
FIXED COST THAT THEY HAVE TO
MAINTAIN, AND THOSE WERE SOME OF
THE MAJOR FACTORS. THAT WE FOUND
TO BE IN PLACE. ONE THING I WILL
DIFFER FROM A PREVIOUS SPEAKER
TALKING ABOUT THE IDEA BELOW 300
DELIVERIES BEING UNSAFE. I WE
REALLY BELIEVE THAT SAFE
OBSTETRICAL CARE CAN BE PROVIDED
IN LOW VOLUME SETTINGS. THE KEY
IS TRAINING, UM AND USING
SIMULATORS AND CROSS TRAINING
THE NURSES SO THAT THEY CAN
PROVIDE THAT CARE SAFELY. IF YOU
TAKE AWAY OBSTETRICS IN A VERY
RURAL AREA COMPLETELY BECAUSE
IT'S LOW VOLUME. YOU'RE NOT
MAKING CARE SAFER. YOU'RE MAKING
IT UNSAFE BECAUSE YOU HAVE A
LARGER DISTANCE TO TRAVEL AND
STUDIES AROUND THE WORLD. SHOW
THAT AFTER ABOUT 60 MILES, 60
MINUTES OF TRAVEL, THE MATERNAL
AND NEONATAL OUTCOMES START TO
GET WORSE. AND THEY GET WORSE,
WITH EACH ADDITIONAL HOUR IN
SOME REGIONS AND PARTNERSHIPS,
PLANT PARTNERSHIPS AREA RIGHT
NOW IT'S UP TO A THREE HOUR
TRANSPORTATION TO THE NEAREST
HOSPITAL, PROVIDING OBSTETRIC
SERVICES. THE OTHER. THE OTHER,
UH, PROPOSAL IS TO CONSIDER
REOPENING HOSPITALS WITH A
DIFFERENT MODEL PLUMAS DISTRICT
HOSPITAL, WHICH IS IN A RURAL
AREA THAT OF NORTH OF NORTHERN
SIERRAS. CLOSED ABOUT TWO YEARS
AGO. THEY'RE PROPOSING OPENING
UP A, UM AH BIRTHING CENTER IN
COMBINATION WITH A NEW
DESIGNATION THAT THEY'RE
PROPOSING STANDBY PERINATAL
SERVICES NO LONGER NEEDING SOME
OF THE REQUIRED 24 7 NURSING
COVERAGE, BUT TO HAVE IT
AVAILABLE ON A STANDBY BASIS,
WHICH WE THINK IS A MODEL WORTH
CONSIDERING, AND WE HOPE THAT
THE REGULATORY FLEXIBILITY WILL
BE CONSIDERED BY THE LEGISLATURE
. THERE'S OTHER NON FINANCIAL
LEVERS. WE CAN TALK ABOUT
ANOTHER SETTINGS, BUT I'D LIKE
TO TURN OVER TILL THE NEA TO
TALK MORE ABOUT THE COMPLEXITY
OF THE OF THE FUNDING THAT
MANAGED CARE PLANS HAVE
AVAILABLE TO PAY FOR THE
HOSPITALS. ALL RIGHT. GOOD
AFTERNOON, MADAM CHAIR, LINEA A
KOOPMANS. I AM THE CEO FOR THE
LOCAL HEALTH PLANS OF
CALIFORNIA, WHERE THE TRADE
ASSOCIATION THAT REPRESENTS THE
LOCAL NOT FOR PROFIT MEDICAL
MANAGED CARE PLANS ACROSS THE
STATE IN 51 TO 58 COUNTIES,
INCLUDING PARTNERSHIP HEALTH
PLAN, UM, THAT COLLECTIVELY
SERVE OVER 70% OF ALL MEDICAL
MANAGED CARE BENEFICIARIES. UM
SO AS YOU'VE HEARD JUST ONE
EXAMPLE. LOCAL PLANS HAVE A LONG
HISTORY OF BEING GOOD PARTNERS
TO THE PROVIDERS IN THEIR
COMMUNITY, INCLUDING THE
HOSPITALS, AND IN FACT, THE
GENESIS OF THE LOCAL PLANS IS
DIRECTLY LINKED TO THE MISSION
OF SERVING THE MEDICAL
POPULATION AND PROVIDING SUPPORT
FOR THE MEDICAL SAFETY NET TO
IMPROVE ACCESS FOR MEDICAL
BENEFICIARIES. WHILE BOLSTERING
THE SAFETY NET IS A PART OF OUR
HISTORY. IT ALSO INCLUDES
SUPPORT PROVIDED IN RECENT YEARS
AND DURING THE PANDEMIC DURING
THE PANDEMIC. LOCAL PLANS WERE
THE EXEMPLARS IN PER SUPPORTING
HOSPITALS THROUGH ADVANCING
CAPITATION PAYMENTS OR INCENTIVE
PAYMENTS AND PROCURING PPE.
HOWEVER THE ISSUE OF HOSPITAL
FINANCING AS YOU'VE HEARD THIS
AFTERNOON IS COMPLEX, UM,
INCLUDING THE ROLE OF MEDICAL
FUNDING OF THE FINANCING OF OUR
HOSPITALS. UM IT'S NUANCED IN
LOCAL SO I WILL BRIEFLY
ADDRESSED HOW LOCAL PLANS ARE
SUPPORTING THEIR HOSPITAL
PARTNERS. UM, OUR ROLE IN
FINANCING OF HOSPITALS AND
MEDICAL AND CONSIDERATIONS FOR
ADDITIONAL FUNDING TO SUPPORT
CONTINUED OR EXPANDED ACCESS.
AND SO FIRST IN THEIR IN THEIR
PARTNERSHIPS WITH HOSPITALS AND
THROUGH THE CAPITATION RATES
PAID BY D. H. C S TWO LOCAL
PLANS, UM FIRST AND FOREMOST
NEGOTIATING SUSTAINABLE RATES AS
A PART OF THAT RELATIONSHIP, SO
WE NEED TO ENSURE THAT THE RATES
THAT ARE PAID TO HOSPITALS ARE
FAIR AND WILL SUPPORT ACCESS TO
THE MEDICAL POPULATION. AND
THOSE RATES ALSO NEED TO BE
SUSTAINABLE FOR THE MEDICAL
PROGRAM BASED ON HOW DID SEE S
PAYS PLANS AND I'LL COME BACK TO
THAT IN JUST A MOMENT. LOCAL
PLANS ARE ALSO TIMELY WITH
AUTHORIZATIONS AND PAYMENTS TO
HOSPITALS AND THEN WE ALSO LOOK
AT OTHER OPPORTUNITIES TO
PARTNER WITH HOSPITALS TO
IMPROVE QUALITY AND MAKE CARE
MORE EFFICIENT, AND THAT
INCLUDES THINGS LIKE
COORDINATING CARE TO SUPPORT
TRANSITIONS FROM THE HOSPITALS
TO OTHER LEVELS OF CARE AND
FUNDING HOSPITAL PAY FOR
PERFORMANCE PROGRAMS. IN FACT,
I'LL JUST NOTE THAT JUST LAST
WEEK, THE HCS CONVENED PLANS AND
HOSPITALS TO DISCUSS BEST
PRACTICES. FOR SUPPORTING MEMBER
TRANSITIONS, AND AT THAT
CONVENING SEVEN LOCAL PLANS WITH
THEIR HOSPITAL PARTNERS TALKED
ABOUT HOW THEY'RE WORKING
TOGETHER TO DO THAT LOCALLY. UM
SO TO MORE SPECIFICALLY TALK
ABOUT THE ROLE OF LOCAL PLANS
AND FINANCING THE HOSPITALS. SO
D HDS SPOKE TO SOME OF THE
DIFFERENCES BETWEEN HOW MEDICAL
PIECE HOSPITALS IN FIFA SERVICE
VERSUS MANAGED CARE, SO I'LL
JUST ELABORATE A LITTLE BIT SO
OVERALL THE RATES THAT LOCAL
PLANS PAY TO THEIR HOSPITALS ARE
REFLECTIVE OF WHAT THE LOCAL
PLANS RECEIVING THEIR CAPITATED
RATES FROM D. H. C S SO WHILE
LOCAL PLANS DO CONSIDER REQUESTS
FOR RATE INCREASES AND HAVE IN
RECENT YEARS OFTEN GRANTED THOSE
REQUESTS, PARTICULARLY GIVEN THE
IMPACT OF INFLATION AND
WORKFORCE CHALLENGES. WE MUST
ALSO SURE THAT THE RATES
CONTINUE TO BE CONSIDERED A
REASONABLE BY THE STATE AND ITS
ACTUARIES. SO IF THE RATES ARE
NOT CONSIDERED REASONABLE
THROUGH THE COURSE OF SETTING
THE CAPITATION RATES, WHICH THE
STATE USES AN ACTUARY TO DO, UM,
THOSE RATES WON'T BE FULLY
FUNDED IN OUR CAPITATION RATES,
MEANING THERE THEN UNSUSTAINABLE
GOING FORWARD. SO MANY PLANS DO
PAY AT THE MEDICAL ÁP ARE DRG
RATE OR THE SET RATE. SO ONE
TIME FUNDING OR PAYING
SIGNIFICANTLY MORE THAN THAT
RATE IS REALLY NOT A VIABLE
SOLUTION, UM AND ONGOING BECAUSE
IT WON'T SHOW UP IN THE PLANS
RATES. UM AS THERE HAS BEEN
DISCUSSED BY THE OTHER
PANELISTS, THE RATES PAID TO
HOSPITALS BY PLANS ARE, OF
COURSE, ONLY ONE SOURCE OF THE
TOTAL MEDICAL REVENUE PROVIDED
HOSPITALS. UM THE SUPPLEMENTALS
HAVE BEEN THE TOPIC OF A LOT OF
DISCUSSION BUT REPRESENT AS THE
BACKGROUND PAPER DISCUSSES 13 TO
$15 BILLION ANNUALLY, IN
ADDITION TO THE BASE RATES PAID
BY PLANS AND LASTLY, WE'LL HAVE
GIVEN YOU THE BIG PICTURE OF
LOCAL PLANS ROLE IN SUPPORTING
THE HOSPITALS. IT'S IMPORTANT TO
NOTE AS OTHER SPEAKERS HAVE ALSO
SAID THAT EACH SITUATION IS
UNIQUE. UM AND THAT ANY FUNDING
SOLUTION I THINK SHOULD CONSIDER
THOSE UNIQUE CHALLENGES LOCAL
ISSUES AND ENSURE THAT THE
SOLUTION IS A SUSTAINABLE IN THE
LONG TERM, SO AS THE LEGISLATURE
CONSIDERS IDEAS TO ADDRESS
CONCERNS REGARDING DISTRESSED A
RURAL HOSPITALS. WE BELIEVE THE
FOLLOWING SHOULD GUIDE THOSE
DECISIONS FIRST IN ENSURING THAT
NEW FUNDING GOES TO MAINTAINING
ACCESS TO CRITICAL SERVICES,
INCLUDING MATERNITY CARE AND
ACCESS TO PEDIATRIC BEDS OR
STRATEGIES FOR REOPENING THOSE
SERVICES IN AREAS WHERE THEY'VE
BEEN DISCONTINUED. AND THEN ANY
ADDITIONAL DOLLARS, FOR EXAMPLE,
THROUGH THE CEO TAX, WHICH I
KNOW HAS COME UP IN DISCUSSION
THIS AFTERNOON SHOULD EXAMINE
THE NEEDS ACROSS THE ENTIRE
CONTINUUM, INCLUDING NON
HOSPITAL BASED CARE. SHOULD
FUNDING BE DEDICATED TO
HOSPITALS. ADDITIONAL FUNDING BE
DEDICATED TO HOSPITALS. WE
BELIEVE THERE SHOULD BE A WAY TO
ENSURE THAT THE FUNDING GOES TO
HOSPITALS THAT ARE SERVING A
HIGH VOLUME OF MEDICAL PATIENTS
OR HAVE A HIGH PERCENTAGE OF
MEDICAL BENEFICIARIES WHOSE
DISTRESS IS DRIVEN BY
GEOGRAPHICAL CHALLENGES OR AN
IMBALANCED PARAMEDICS. AND THAT
THE FUNDING BE DIRECTLY LINKED
TO INCREASING ACCESS TO CARE AND
IMPROVING QUALITY OF CARE FOR
MEDICARE BENEFICIARIES. UM,
THANKS FOR INVITING ME TO SPEAK
TODAY AND HAPPY TO ANSWER ANY
QUESTIONS. AH GOOD EVENING,
MADAM CHAIR AND MEMBERS OF THE
COMMITTEE JED HAMPTON WITH
CALIFORNIA ASSOCIATION OF HEALTH
PLANS CAP REPRESENTS 43 KNOCKS
SKIN LICENSED HEALTH PLANS THAT
COVER NEARLY 28 MILLION
CALIFORNIANS THROUGHOUT THE
STATE. CALIFORNIA'S HEALTH PLANS
ARE DEEPLY COMMITTED TO WORKING
WITH THE HOSPITAL COMMUNITY TO
MEET THE NEEDS OF ALL PATIENTS
IN THE COMMUNITIES THAT WE
SERVE. AND HEALTH BANDS ARE
PROUD OF THE FACT THAT WE HAVE
DEVELOPMENT MANY CONTRACTUAL
RELATIONSHIPS THROUGHOUT THE
STATE WITH THESE HOSPITALS TO
SERVE THEIR ENROLLEES IN A WAY
WHERE THEY CAN RECEIVE THESE
VITAL SERVICES. IN THE INTEREST
OF TIME I AM GOING TO TRUNCATE
MY TESTIMONY A LITTLE BIT TODAY
TO ENSURE THAT I HAVE ANSWERED
THE QUESTIONS THAT THE COMMITTEE
HAS PROPOSED. UM SO TO THAT END,
YOU KNOW, RELATIVE TO THE
QUESTION ABOUT, UM, YOU KNOW,
MEDICAL AND COMMERCIAL MANAGED
CARE RATES PAID TO HOSPITALS IN
TERMS OF WHAT THAT LOOKS LIKE
RELATIVE TO FINANCIAL DISTRESS.
I'LL JUST EXPLAIN REALLY BRIEFLY
IN THE COMMERCIAL MARKET HEALTH
PLANS AND HOSPITALS TYPICALLY
AGREE ON A CONTRACT. AND THE
HEALTH PLAN IS OBLIGATED TO PAY
THE HOSPITAL. THE CONTRACT RATE
AGREED UPON BY THE TWO PARTIES.
PAYMENT TO AN IN NETWORK
HOSPITAL CAN TAKE A FEW
DIFFERENT FORMS. BUT A MAJORITY
OF HOSPITALS WERE PAID UNDER A
CAPITATED ARRANGEMENT. WHICH
TYPICALLY INCLUDES A PER MEMBER
PER MONTH TYPE OF PAYMENT. THESE
PAYMENTS ARE NOT TIED TO PATIENT
VOLUME AND PROVIDE AN IMPORTANT
AND CONSISTENT FUNDING SOURCES
OF FUNDING SOURCE TO KEEP
HOSPITALS OPERATING IN A
CONSISTENT MANNER. OVERALL IN
THE COMMERCIAL MARKET HEALTH
HEALTH PLAN TO PAY ON AVERAGE OF
224% OF WHAT MEDICARE WOULD HAVE
PAID FOR THE SAME SERVICE THE
SAME FACILITY. THIS EQUATES TO
APPROXIMATELY $4.5 BILLION PER
MONTH FROM THE HEALTH PLANS TO
PROVIDERS AGAIN, REGARDLESS OF
PATIENT VOLUME. IT'S IMPORTANT
TO NOTE THAT HEALTH PLANS ARE
REQUIRED BY LAW TO PROMPTLY
REIMBURSE HOSPITALS FOR SERVICES
AND TIMELY MAIN MANNER. STUFF.
FOURTH IN THE NOC SKIN HEALTH
CARE ACT OF 1975. AND THAT
FAILURE TO COMPLY WITH THE LAW
SUBJECTS. HEALTH PLANS TO
INTEREST IN FINANCIAL PENALTIES.
UM SO I THINK WE BELIEVE IT'S
FAIR TO SAY THAT YOU KNOW, YOU
KNOW, PARTICULARLY ON THE
COMMERCIAL SIDE. UM, YOU KNOW
THAT WE ARE, YOU KNOW, DOING OUR
SHARE IN TERMS OF, UM YOU KNOW,
HOSPITAL RATES IN TERMS OF WHAT
WE'RE PAYING. IN FACT, I WOULD
NOTE THAT THE AGENDA POINTS OUT
AS WELL. THAT EVEN UM CALIFORNIA
HOSPITAL ASSOCIATION AND
MENTIONED THAT IN THE COMMERCIAL
SPACE THAT THOSE RATES ARE
SUBSTANTIALLY HIGHER, UM, YOU
KNOW IN THE COMMERCIAL MARKET AT
NUMBER TWO. IN TERMS OF WHAT
CHALLENGES. THERE ARE TWO
INCREASING RATES. I THINK YOU
KNOW THAT'S BEEN HIT ON QUITE A
BIT TODAY, PARTICULARLY AROUND
HOW COMPLEX THESE, UM YOU KNOW
THESE THESE FINANCIAL STRUCTURES
ARE, YOU KNOW, I THINK MY
COLLEAGUE FROM THE LOCAL HEALTH
AND CALIFORNIA HAD MENTIONED
THAT IT IS VERY COMPLEX PROCESS
WHEN IT COMES TO, YOU KNOW,
INCREASING RATES. UM, YOU KNOW,
I WOULD MENTION THAT THAT SINCE
2020 YOU KNOW, HOSPITALS HAVE
RECEIVED ABOUT $170 BILLION IN
DIRECT GOVERNMENT AID SINCE THE
PANDEMIC BEGAN. UM AND RECEIVED
AN ESTIMATED 100 BILLION IN LOW
INTEREST LOANS AND 20% BOOST TO
MEDICARE REIMBURSEMENTS FOR
INPATIENT COVID ADMISSIONS
DURING THAT TIME, SO I THINK YOU
KNOW WHEN WE'RE LOOKING AT THIS
PROBLEM, THIS THIS SITUATION,
YOU KNOW, WE DO SEE, OBVIOUSLY,
CERTAINLY HOSPITALS THAT ARE IN
FINANCIAL DISTRESS. WE SEE SOME
THAT ARE THAT ARE DOING JUST
FINE. AND I THINK IT REALLY GOES
TO THE FIRST SPEAKER ARE ON
PANEL NUMBER ONE TODAY ABOUT
IT'S REALLY, REALLY TOUGH TO PIN
DOWN. AH YOU KNOW, IT MUST ON A
CASE BY CASE BASIS, YOU KNOW
WHICH WHICH HOSPITALS ARE
STRUGGLING. AND WHAT WHAT
FACTORS GO INTO THE REASON WHY
THEY'RE STRUGGLING. UM SO YOU
KNOW, WE REALLY BE THE
LEGISLATURE, YOU KNOW, MUST LOOK
AT WAYS. UM YOU KNOW, AND
EXAMINE SOME OF THE EXISTING
FUNDING STREAMS FOR HOSPITALS
AND REALLY UNDERSTAND AND FIGURE
OUT. YOU KNOW WHY SOME HOSPITALS
OR OR DOING WELL AND WHY SOME
ARE NOT SO YOU KNOW? LASTLY I
WILL SAY, YOU KNOW OTHER WAYS
THAT HEALTH PLANS CAN SUPPORT
AND STABILIZE HOSPITALS JUST
WANT TO POINT OUT THAT HEALTH
HANDS ARE ARE COMMITTED AND WILL
CONTINUE TO OUR PARTNER WORKING
WITH THE HOSPITAL COMMUNITY TO
MEET THE NEEDS OF THE PATIENTS
THAT WE SERVE. UM CALIFORNIA
HEALTH PLANS HAVE STEPPED UP TO
THE PLATE NUMEROUS TIMES OVER
THE PAST COUPLE OF YEARS, UM TO
SUPPORT AND STABILIZE HOSPITALS,
INCLUDING PROVIDING STABILIZING
GRANTS, UM, IN ADVANCING
CAPITATED PAYMENTS LIKE MY
COLLEAGUE HAD MENTIONED TO
HOSPITALS IN THE MIDST OF THE
COVID 19 PANDEMIC. HEALTH PLANS
WERE STEPPED UP WHEN SEVERAL
HOSPITALS LAST YEAR BEGAN
SIGNALING FINANCIAL DISTRESS.
SPECIFICALLY, YOU KNOW, AS IT
RELATES TO MADEIRA HOSPITAL, UM
YOU KNOW, I WOULD ALSO POINT TO,
YOU KNOW OUR HEALTH PLAN EFFORTS
TO SUPPORT THE ATTACKS AND
ENSURE THAT THAT YOU KNOW, AS AN
INDUSTRY, YOU KNOW, TAXING
OURSELVES AS AN INDUSTRY TO
ENSURE THE FINANCIAL VIABILITY
INSTABILITY, THE MEDICAL PROGRAM
AND THAT ACCOUNT PROVIDERS MOVE
FORWARD HAS ALSO BEEN YOU KNOW
WHERE THAT WE HAVE CONTINUED TO
SUPPORT AND STABILIZE THESE
HOSPITALS MOVING FORWARD, SO WE
REMAIN COMMITTED TO WORKING WITH
THE PROVIDER COMMUNITY ADDRESSED
THE SOLVENCY ISSUES. UM WHAT TO
THANK YOU FOR THE TIME AND FOR
THE INVITATION TO SPEAK HERE
TODAY AND HAPPY THAT ANSWER ANY
QUESTION TO BE ASKED. I REALLY
WANT TO THANK YOU ALL FOR COMING
AND BEING A PART OF THIS PANEL
AND RECOGNIZING THE ROLE THAT
YOU ALL PLAY IN THE FINANCIAL
HEALTH OF OUR HEALTHCARE SYSTEM,
UM YOU KNOW THEY'RE YOU KNOW,
EARLIER. I THINK IT WAS ONE OF
THE FIRST PANEL. SOMEONE TALKED
ABOUT EQUITY AND REIMBURSEMENT,
AND WHEN I ASKED HER TO
ELABORATE, SHE SPECIFICALLY
TALKED ABOUT NEGOTIATIONS WITH,
UM HEALTH PLANS AS FAR AS
REIMBURSEMENT AND HOW THAT CAN
DIFFER BASED ON YOU KNOW WHERE
YOU ARE THROUGHOUT THE STATE,
AND ESSENTIALLY, YOU'RE
NEGOTIATING POWER, RIGHT? BUT UM
, IF A HOSPITAL CLOSES THAT'S
ACTUALLY MORE EXPENSIVE IN THE
LONG RUN FOR HEALTH PLANS.
BECAUSE WHAT YOU'RE DOING IS
YOU'RE CREATING AN ENVIRONMENT
WHERE PEOPLE ARE UNABLE. TO GO
AND GET EARLY PREVENTATIVE CARE,
EARLY ACCESS, AND SO WHEN THEY
DO SHOW UP AT THE HOSPITAL
THERE, SICKER LONGER STAYS MORE
INFECTIONS INCREASED RISK OF
SURGERIES THAT ARE NOT NEEDED.
UM AND SO IT REALLY IS MORE
EXPENSIVE TO OUR HEALTHCARE
SYSTEM OVERALL, UM, WHEN WE'RE
NOT ENSURING THAT THESE
HOSPITALS ARE ABLE TO STAY OPEN
AND AFLOAT AND PROVIDE ALL CARE
TO THOSE PATIENTS THERE, SO
THANK YOU FOR BEING HERE AND
RECOGNIZING THAT YOU DO HAVE A
TREMENDOUS ROLE TO PLAY IN THIS
ONE QUESTION THAT I HAVE, UM IS,
YOU KNOW WHAT ARE SOME OF THE
OTHER WAYS THAT YOU WALK AND
HELP SUPPORT AND STABILIZE OUR
MATERNITY CARE AND IN OUR
HOSPITALS UP AND DOWN THE STATE.
UM YOU KNOW, IT SEEMS LIKE EVERY
DAY I'M HEARING ABOUT NEW
MATERNITY WARDS THAT ARE CLOSING
, OR LIKE TO JUST SAY LABOR AND
DELIVERY WARDS THAT ARE CLOSING,
WHICH IS AH, VERY CONCERNING.
FOR ME. SO IN WHAT WAYS, CAN YOU
ALL HELP STABILIZE THAT. SO IT'S
A PARTNERSHIP WE BECAUSE OF
THESE ALL THESE CLOSURES, WE
CONVENED A CONFERENCE ABOUT TWO
WEEKS AGO TO BRING TOGETHER
NATIONAL EXPERTS TO REALLY LOOK
AT LOOK AT THE ISSUE. IT'S I
THINK THERE ARE A SERIES OF
POLICY LEVERS SEPARATE FROM
FINANCING, WHICH WHICH CAN HELP.
ONE IS, I MENTIONED THAT THE
NURSING STAFFING RATIO THAT THE
REGULATORY INFRASTRUCTURE THAT
OVERSEAS HOSPITAL IS CONTROLLED
BY THE STATES THROUGH THE
CALIFORNIA DEPARTMENT OF PUBLIC
HEALTH, SO LOOKING AT SOME OF
THOSE POLICIES AND REALIZING
THAT THEY WERE BUILT WITH AN
URBAN LENS IN MIND. THEY'RE SORT
OF STRUCTURAL URBANISM IF YOU
WILL, RATHER THAN WHAT WHAT?
WHAT CAN WORK IN A IN A RURAL
AREA, SO IN PARTICULAR THE IDEA
OF HAVING A STANDBY PERIOD NATAL
SERVICE COMBINED WITH A BIRTHING
CENTER IS ONE AND THEN THE OTHER
IS THE WAY WE TRAINED NURSES NOW
WHEN NURSES ARE COMING THROUGH
TRAINING PROGRAMS AND DO THEIR
INITIAL TRAINING, THEY'RE VERY
SPECIALIZED IN THE IDEA OF
TRAINING, GENERALIST NURSES IS A
POTENTIAL OTHER AREA OF POLICY
CHANGE TO TRY TO REALLY PROMOTE
WHETHER IT'S FIRST RIGHT IN THE
INITIAL TRAINING IN NURSING
SCHOOL, BUT ALSO FELLOWSHIPS
THAT FOCUS ON RURAL NURSING, SO
THEY'RE ABLE TO BE CROSS TRAINED
TO WORK IN MANY AREAS OF THE
HOSPITAL IN A RURAL SETTING. I
THINK THAT WOULD THAT WOULD THAT
WOULD HELP A LOT BECAUSE THE
HOSPITALS TO THE HOUSE THE MOST
RURAL HOSPITALS THAT CLOSED
COMPLETELY NURSES, WE WERE
OFFERING EXTRA HIGHER RATES, BUT
THEY JUST COULDN'T FIND THE
NURSES TO STAFF THAT HOSPITAL
WITH WITH THAT AMOUNT OF NURSING
AND SO, UM, SO THAT'S I THINK A
KEY IS TO BE ABLE TO HAVE THE
NURSES DO THE OTHER WORK. WHEN
THERE'S NOT PEOPLE IN LABOUR'S
THEY DON'T HAVE TO, YOU KNOW,
JUST SIT THERE AND BE PAID IN
THAT WORK DURING THAT TIME, SO
AND WHAT EXACTLY DO YOU MEAN BY
STANDBY? PERINATAL SERVICES, SO
THE IDEA OF A STAND BY THEIR
STEREO STANDBY EMERGENCY
SERVICES MEANS THAT YOU HAVE AN
EMERGENCY PHYSICIAN AND OTHER
STAFF THAT ARE VERY NEARBY. AND
WHEN A PATIENT COMES INTO THE
EMERGENCY ROOM, THEY ALL
CONVERGED. TAKE CARE OF THAT
PATIENT, BUT THEY DON'T HAVE TO
BE SPECIFICALLY IN THE HOSPITAL.
SO STAND BY PERRY NATAL SERVICE
FOR WOMEN IS IN LABOR AT A AT A
IN A BIRTHING CENTER, AND SHE
NEEDS TO HAVE AN OPERATIVE
OPERATIVE DELIVERY. LET'S SAY
THAT THE HOSPITAL LISTS THAT ARE
COVERING NEED TO BE HOSPITALISTS
THAT ARE USUALLY THEY'RE F
POBLACIÓN ARE CAPABLE OF
STEPPING IN AND DOING AN
OPERATIVE DELIVERY IF NEEDED.
THERE ARE ALREADY WORKING DURING
THEIR HOSPITALISTS WORK ON A
ROTATING BASIS. UM AND SO THERE
SO THEY HAVE THAT PIECE. THEY
ALREADY HAVE A SURGEON ON CALL.
THEY HAVE AN ANESTHESIA AND CALL
AND THEN THE KEY IS THE THAT
USUALLY THE MIDWIFE AND IN A
STANDBY NURSE CAN COME IN AND
PROVIDE THE NURSING SUPPORT. SO
THE IDEA IS, YOU CAN PROVIDE A
SAFE ON UNEXPECTED EMERGENCY
DELIVERY AND A LOW RISK PERSON,
UM, WITHOUT HAVING TO HAVE THE
NURSES AND THE REST OF THE STAFF
SORT OF PHYSICALLY IN THE
BUILDING, NOT DOING ANYTHING.
THE VERY INTERESTING MODEL. WE
CAN PROBABLY TALK OFFLINE ABOUT
THAT. IT ALWAYS MAKES A LITTLE
NERVOUS BECAUSE I DIDN'T HEAR
ANY OBI IN THERE AND, UH YOU
KNOW, WHEN I HEAR EMERGENCIES,
THAT'S WHEN YOU REALLY NEED THE
SPECIALIZED. POSITIONS IN THAT
PARTICULAR AREA TO HANDLE THAT.
UM BUT I AM GOING TO STOP RIGHT
NOW. AND THANK ALL OF OUR
PANELISTS. UM AND I AM GOING TO
OPEN IT UP FOR PUBLIC COMMENT.
YOU ANYONE WITH PUBLIC COMMENT
CAN COME TO THE MIC AND YOU WILL
HAVE ONE MINUTE.
GO AHEAD, MADAM CHAIR MARK
FAROUK ON BEHALF OF THE
CALIFORNIA HOSPITAL ASSOCIATION.
FIRST, I WANT TO THANK YOU FOR
HOLDING THIS HEARING AND HAVING
THIS DISCUSSION THAT WE HAD HERE
TODAY TO TALK ABOUT THE
FINANCIAL DIFFICULTIES FACING
HOSPITALS, UM, AS WE'VE TALKED
ABOUT BEFORE OVER 50% OF
CALIFORNIA'S HOSPITALS OPERATE
IN THE RED, ONE IN FIVE ARE AT
RISK OF CLOSURE. I THINK YOU
HEARD THAT TODAY YOU HAD EIGHT
HOSPITAL LEADERS, ALL COMING
FROM DIFFERENT GEOGRAPHIC
REGIONS. DIFFERENT PATIENT MIXES
BUT ALL FACING SIGNIFICANT
CHALLENGES DUE TO HIGH MEDICAL
PAYER MIXES HIGH GOVERNMENT
DECAL AND MEDICARE. UH, PEAR
MIXES. YOU CAN TRACK THERE WAS A
CONTENTION MADE AT THE VERY
BEGINNING OF THE HEARING THAT
SOMEHOW THERE'S MONEY TO BE MADE
IN THE MONEY MEDICAL SYSTEM. I
THINK IF YOU TRACK THE PAYER
MIXES OF HOSPITALS THAT HAVE
HIGH GOVERNMENT PAYER MIX IS YOU
ARE GOING TO SEE HOSPITALS THAT
ARE IN DISTRESS. SOMEONE EARLIER
NAMED THE DIFFERENT HOSPITALS
THAT HAVE BEEN IN BANKRUPTCY AND
THAT TRACKS EXACTLY WITH THOSE
HIGH PAIR MIXES. THAT ALSO LIKE
TO END ON SOMETHING WE DIDN'T
TALK ABOUT TODAY BECAUSE THERE
PROBABLY WASN'T ENOUGH TIME BUT
ARE CRITICAL ACCESS HOSPITALS
THAT ARE IN RURAL AREAS IN
CALIFORNIA THAT ARE AT LEAST 35
MILES FROM ANOTHER MEDICAL
CENTER. TWO THIRDS OF THOSE
HOSPITALS CURRENTLY OPERATE IN
THE RED AND SIGNIFICANTLY MORE
SIGNIFICANT RISK OF CLOSURE, AND
THAT THAT IS WOULD BE A DISASTER
FOR OUR RURAL COMMUNITIES. SO
ANOTHER ISSUE TO KEEP IN MIND.
THANK YOU. MADAM CHAIR. GOOD
EVENING, I WOULD KILL DONNY HAVE
THE PLEASURE OF REPRESENTING THE
CALIFORNIA CHILDREN'S HOSPITAL
ASSOCIATION. DEFINITELY WANNA
ALIGN OUR SENTIMENT AND WORDS
WITH OUR COLLEAGUES FROM THE
HOSPITAL ASSOCIATION. UM IN
ADDITION TO THANKING THE
LEGISLATURE FOR THE EFFORTS WITH
THE CEO TAX, WHICH, OF COURSE,
IS GOING TO HELP WHEN IT'S
IMPLEMENTED. UM THE SPECIALIZED
CARE OF OUR EIGHT FREESTANDING
HOSPITALS ADDS TO THE
COMPLEXITIES THAT MY COLLEAGUE
JUST MENTIONED. UH WE HAVE GENE
THERAPY THAT IMPACTS AND THAT
SEEKS TO MITIGATE SICKLE CELL IN
MANY OF OUR REGIONS, NOT JUST
ONE THAT ADDS TO THE COST, MADAM
CHAIR IS, YOU KNOW, TREATING A
PEED AS MUCH DIFFERENT BEEN
TREATING AN ADULT. DIFFERENT
COMPLICATIONS, DIFFERENT COSTS
AND WHAT WE ASKED FOR. IN
ADDITION TO THANK YOU FOR
THANKING YOU FOR HAVING THIS IS
CONTINUING TO BE AT THE TABLE
THROUGH THESE VERY DIFFICULT AND
DETAIL ORIENTED CONVERSATIONS.
THANK YOU VERY MUCH. GOOD
EVENING. MAGNESIUM BAFFERT, STU,
CALIFORNIA THANK YOU FOR HOLDING
THIS HEARING AND GREATLY
APPRECIATE THE COMMITTEE'S
WILLINGNESS, HOLD ANOTHER
HEARING TO BRING IN MORE DIVERSE
VOICES DID WANT TO APPRECIATE
THE FIRST PANEL FROM THE
CALIFORNIA HEALTHCARE FOUNDATION
TO REALLY TALK ABOUT THE OVERALL
PICTURE, AND OVERALL, MANY
HOSPITALS ARE DOING VERY WELL
BUT DID WANT TO ECHO THE
CONCERNS BY THE PUBLIC HOSPITAL
ASSOCIATION WITH THEIR LONG TERM
SYSTEMIC DEFICITS THAT WE NEED
TO TRY TO ADDRESS ALSO WANT TO
JUST REALLY MAKE SURE THAT, UH
AS WE'RE LOOKING AT SOME OF
THESE LOANS ARE POTENTIALLY
TURNING INTO GRANTS THAT REALLY
MAKING SURE AND FOCUS ON THOSE
HOSPITALS MEETING THEIR
PERFORMANCE IMPROVEMENT PLANS
THEIR PLANS TO MAKE SURE THAT
THEY'RE FINANCIALLY UNSTABLE
FOOTING BECAUSE, AS WE HEARD
FROM H CHI, WE THINK THAT A LOT
OF THOSE ARE GOING TO PUT THEM
ON THE RIGHT SHIP. UM UH,
IMPORTANTLY, AS WE'RE LOOKING AT
THE LONG TERM FINANCES FOR
HOSPITAL DID WANT TO FLAG THAT
YOU KNOW, FROM LARGELY THE DROP
IN REVENUE FROM 2022 HAD TO DO
WITH THINGS THAT WERE NOT
RELATED TO NATE. PATIENT NET
PATIENT OPERATIONAL INCOME AND
HAD TO DO WITH OTHER FACTORS
THAT MANY OF THE ECONOMIES HAD
THE FACE SUCH AS, LIKE
INVESTMENT INCOME THAT DRAGGED,
UM, THE OVERALL FINANCIALS DOWN.
I ALSO WANTED TO FLAG THAT THE
REAL IMPORTANCE OF INVESTING IN
THE WORKFORCE. I THINK WE HEARD
EARLY ON IN THE PANEL HOW
THEY'RE PAYING EXORBITANTLY HIGH
RATES TO TRAVEL NURSES WHERE
THAT INCOME REALLY IN THAT GRANT
DOLLARS LARGELY FROM THE FEDERAL
GOVERNMENT COULD HAVE GONE TO
THE WORK FORCE TO TRY TO RETAIN
THAT WORKFORCE. UM AND SO THAT
WAS WHAT WE HEARD FROM THE
WORKERS DURING THE PANDEMIC OF
WHY SHOULD I STAY? IF THEY'RE
INVESTING SO MUCH IN TRAVEL
NURSES AND SO REALLY APPRECIATE
THE WORK BY THE LEGISLATURE TO
INVEST IN RETENTION BONUSES. AND
THEN, OF COURSE, INVESTING
STANDING IMPACT TO TRY TO RETAIN
OUR HEALTHCARE WORKFORCE AND
ADDRESS SOME OF THESE SYSTEMIC
ISSUES. UM AND THEN, LASTLY, UH
OR TWO THINGS, UH, JUST TO
FINISH JUST ON THE SEISMIC
REQUIREMENTS. I WAS BROUGHT UP A
NUMBER OF TIMES TODAY. JUST
WANNA STRESS AS WE'RE TALKING
ABOUT HOW IMPORTANT THESE
HOSPITALS ARE. I THINK IT REALLY
DOES UNDERSCORE HOW IMPORTANT IT
IS TO MAKE SURE THAT THOSE
HOSPITALS ARE ALSO OPERATIONAL
AFTER A MAJOR EARTHQUAKE, LIKE
THE 2030 SEISMIC STANDARDS WOULD
REQUIRE. AND THEN, UM, FINALLY,
UH, JUST AS WE'RE CONSIDERING,
UH ADDITIONAL MONEY. POTENTIALLY
FOR, UH, DISTRESSED HOSPITALS
WOULD URGE THE LEGISLATURE TO
REALLY THINK ABOUT THE $500
MILLION IN PROPOSED CUTS FOR, UH
COW WORKS AND CHILD WEAR WELFARE
BEFORE CONSIDERING ADDITIONAL
FUNDING FOR HOSPITALS. THANK YOU
VERY MUCH. THANK YOU, MADAM
CHAIR HERE ON BEHALF OF TWO
CLIENTS TODAY FIRST AND SARAH
BRIDGE. SORRY UH, HERE FIRST ON
BEHALF OF THE ASSOCIATION OF
CALIFORNIA HEALTH CARE DISTRICTS
. WE REPRESENT THE 33 DISTRICT
HOSPITALS IN THE STATE OF
CALIFORNIA. THERE WAS A LOT OF
TALK TODAY ABOUT A DESIGNATED
PUBLIC HOSPITALS, BUT JUST WANNA
UNDERSCORE THE CONTINUED NEED ON
THE NON DESIGNATED PUBLIC
HOSPITAL SIDE, UH, EIGHT OF THE
17 HOSPITALS THAT RECEIVED THE
DISTRESSED HOSPITAL LOAN WHERE
DISTRICT HOSPITALS. I THINK TO
REALLY PUT A FINE POINT ON THAT
THERE IS A NEED FOR DESIGNATED
PUBLIC HOSPITALS IN PARTICULAR.
WANT TO POINT OUT THAT IS
INDEPENDENT HOSPITALS. THEY HAVE
A REALLY DIFFICULT TIME
NEGOTIATING WITH THEIR
COMMERCIAL PLANS. THEY LACK THE
LEVERAGE THAT THE LARGER PUBLIC
HOSPITAL SYSTEM HAS SO REALLY
WANNA CEMENT THAT POINT IN FRONT
OF THE COMMITTEE. UH, IN
ADDITION, CERTAINLY LOOK FORWARD
TO WORKING WITH HÌ Kò ON LOAN
REPAYMENT TO ENSURE THAT OUR
DISTRICT HOSPITALS CAN REPAY
THOSE LOANS. UM ONE FACTOR IN
CONSIDERING THAT IS MANY OF THEM
DO STILL HAVE TO MEET THEIR 2030
SEISMIC REQUIREMENT AND
DESPERATELY WANT TO, THEY JUST
SIMPLY DON'T HAVE THE CASH
CAPITAL TO DO IT AT THIS CURRENT
JUNCTURE ON BEHALF OF PLUMS
DISTRICT HOSPITAL. UH THEY ARE
ONE OF THE CRITICAL ACCESS
HOSPITALS IN THE STATE WANT TO
UNDERSCORE THE POINTS MADE BY
THE CALIFORNIA HOSPITAL
ASSOCIATION? UH, THEY HAVE
RECENTLY HAD TO SHUTTER THEIR
LABOR AND DELIVERY, UH, MOSTLY
DUE TO WORKFORCE BUT LARGELY
ALSO DUE TO FINANCIAL
CONSTRAINTS. WANNA REALLY TAKE A
LOOK AT THE PAYMENT METHODOLOGY
THAT ARE CRITICAL ACCESS
HOSPITALS HAVE, UH, IN THE
MEDICAL SYSTEM TO ENSURE THAT
LABOR AND DELIVERY CAN REMAIN
OPEN, AS WELL AS OTHER IMPORTANT
ACCESS TO CARE ISSUES. THANK YOU
SO MUCH. GOOD EVENING. I'M MADAM
CHAIR. UM I'M GOOD, EVEN
INVITING WITH HEALTH ACCESS
CALIFORNIA. UM HEALTH ACCESS HAS
SUPPORTED EFFORTS AND DEPRIVED
SUPPORT TO DISTRESSED HOSPITALS
IN ORDER TO PREVENT DISRUPTION
OF SERVICE TO CONSUMERS AS LONG
AS THOSE EFFORTS ARE STRATEGIC,
TARGETED AND TIME LIMITED
TOWARDS HOSPITALS THAT ARE IN
THE MOST NEED AND ARE MOST
UNDERSERVED COMMUNITIES. HOWEVER
TO PROTECT ACCESS TO CARE IN THE
LONG TERM, WE MUST KEEP WORKING
TOWARDS SUSTAINABLE SOLUTIONS
THAT WILL CONTROL THAT OUT OF
POCKET COST FOR CONSUMERS, SUCH
AS THE OFFICE OF HEALTH CARE
AFFORDABILITY. WE ALSO MUST
CAREFULLY WATCH HEALTHCARE
MERGERS THAT DRIVE UP HEALTH
CARE COSTS WITHOUT IMPROVEMENTS
OF QUALITY IN ORDER TO PREVENT
INCREASES IN COST TO CONSUMERS,
AS WELL AS LOSS OF SERVICES AND
COMMUNITIES, INCLUDING LABOR AND
DELIVERY. ASMAA SEEKS A
POTENTIAL PARTNER TO REOPEN AND
THAT BIG HOSPITAL CHAINS AND
PRIVATE EQUITY ARE HIRING, UM,
DIFFERENT HEALTH CARE FACILITIES
. UM WE ARE GONNA CONTINUE TO
SUPPORT EFFORTS FOR THE
OVERSIGHT OVER HEALTH CARE
MERGERS TO PREVENT THOSE
INCREASES IN COSTS AND PRODUCT
ACCESS TO SERVICES FOR
COMMUNITIES. YOU MUST ALSO
PURSUE INNOVATIVE SOLUTIONS THAT
WE CONSIDER HOW WE PAY HOSPITALS
, NOT JUST HOW MUCH UM INCLUDING
GOLD BUDGETING AND OTHER PAYMENT
REFORMS, UM, TO ENCOURAGE
INNOVATION AND SUSTAINABILITY IN
THE HEALTHCARE SYSTEM TO ENSURE
THAT WE'RE PRIORITIZING
PREVENTION AND PATIENTS, UM,
OVER PROFITS. AND WE LOOK
FORWARD TO, UM, CONVERSATIONS AT
THE NEXT PANEL. UM AND HEARING
AND APPRECIATE THE HEARING
TODAY. THANK YOU. WELL, THANK
YOU ALL AND SEEING NÓ OTHER
PUBLIC COMMENT. I WANT TO THANK
ALL OF OUR SPEAKERS. THE
ADMINISTRATION, THE HOSPITALS,
UM, AND THE PUBLIC FOR YOUR
PARTICIPATION TODAY. IN THIS
HEARING, WE ARE ADJOURNED.