The Press Democrat
April 6,2023
Rural hospitals on edge
Hospital closures, cuts in services loom for some communities. How California may step in to help
Legislative proposals on the table include a bill that would offer emergency loans for hospitals facing closure or those trying to reopen. A second bill involves Medi-Cal, the health insurance program for low-income people. It proposes funneling more money to hospitals by boosting Medi-Cal payments to providers by reinstating a tax on health insurance plans.
In California, six rural hospitals are at heightened risk of closing, according to the Center for Healthcare Quality and Payment Reform. The center does not release the names of at-risk hospitals because a hospital’s situation can change quicker than data may reflect, said Harold Miller, the center’s president. The California Hospital Association said a few hospitals in metro areas are also struggling, but the organization has not publicly named every hospital it deems at risk, noting that when a hospital announces its perilous financial situation it can prematurely begin to lose workers and patients.
Among hospitals that have publicly talked about their troubles or attributed reductions in services and staff to their finances: Hazel Hawkins and Mad River Community Hospital in Arcata have both suspended their home health services programs; Kaweah Health Medical Center in Visalia has laid off at least 130 employees; El Centro Regional Medical Center in Imperial County cut its maternity ward, forcing local families to travel about 25 minutes to the only other hospital in the county.
Most recently, in mid-March, Beverly Hospital, a 202-bed hospital in Montebello, said that in June it will suspend its maternity, pediatric and outpatient radiology services. In a January letter to the state attorney general, the hospital noted its “dire financial circumstances” and said it would be canceling its plans to affiliate with the health care system Adventist Health because “Beverly Hospital does not have the resources to remain operational during the pendency of the attorney general review.” Under state law, the attorney general must approve the sale of nonprofit hospitals.
The California Hospital Association is asking for $1.5 billion from the state for struggling hospitals, and its request is being supported by a bipartisan group of lawmakers. But even supporters acknowledge this is a challenging request when the state is projecting a budget deficit.
“Does the government want to have a facility that could get them through this rough patch? What you don’t want is to hand out a billion and half dollars to hospitals that may not need it.”
glenn melnick, health economist at the university of southern california
Health economists interviewed by CalMatters said state help should be targeted so that any financial aid goes to hospitals in actual need.
“Most of the hospitals in California are in big systems and those systems have financial resources to get their members through. But there are a few that genuinely appear to be at risk if this cost surge continues,” said Glenn Melnick, a health economist at the University of Southern California. “The question is: Does the government want to have a facility that could get them (hospitals) through this rough patch? What you don’t want is to hand out a billion and half dollars to hospitals that may not need it.”
Providing aid to hospitals in trouble is warranted and different from helping other types of businesses because the goal is to protect patients, said Chris Whaley, a health economist with RAND Corp., a think tank.
“When businesses go out of business, even if it is no fault of their own, we accept that as part of capitalism, but in health care, if a hospital goes out of business that usually means a vulnerable patient population has lost access to care,” he said.