Financial Problems Create ‘Crisis’ at California Hospitals
Reduced funding and increasing costs are "shaping into a crisis for California's hospitals," the Contra Costa Times reports. According to the Office of Statewide Health Planning and Development, 141 hospitals closed down between 1991 and 2000, compared to 65 hospitals that were shuttered in the preceding decade. In addition, California hospitals' credit ratings have declined "at a faster pace than [hospitals in] the rest of the country," according to Standard & Poor's December 2000 report. Hospitals attribute their financial woes to a "litany of factors," including low Medi-Cal reimbursement rates, expensive seismic retrofitting, increased drug costs, expected increases in nurse staffing levels and the state's rising energy costs. In addition, California's managed care premiums are the lowest in the nation, and while premiums have risen over the past three years, they "still aren't enough to cover hospitals' needs."
To assuage the problem, Gov. Gray Davis (D) has included Medi-Cal reimbursement rate increases in his budget. In addition, the Legislature is considering several options to assist hospitals with seismic upgrade costs. However, some officials say that an infusion of funds will not solve hospitals' long term financial woes. Stephen Shortell, professor of policy and management at the University of California-Berkeley School of Public Health, said, "Just putting more money into the system is a Band-Aid," adding that hospitals "need to radically rethink the way they deliver health care." The Times reports that while hospital officials "don't disagree" with Shortell, they say "overall changes in health care policy" are also needed (Silber, Contra Costa Times, 4/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.