HEALTH SYSTEMS: Rely on Investments to Offset Costs
Plagued by "deep" operating losses, many California health systems are relying on other sources of income to offset their financial troubles, the Sacramento Bee reports. In particular, hospitals are turning to the stock market, according to Martha Marsh, COO for UC Davis Health System. Although hospitals typically invest conservatively, the resulting income "is an important factor for many, many hospitals," she said. For instance, the "vast majority" of 1999 net income for Sutter Health, which announced this month a $4 million operating surplus for 1999, came from investment returns. But "investment bounty can't always compensate for sagging operations," Barbara Jones, vice president of finance and economics for the California Healthcare Association, said, noting that even after figuring in millions of dollars in investment returns, 49% of California hospitals were still in the red last year. And about 62% of hospitals predict an operating loss when the current budget year ends. Hoping to maintain UC Davis' $21.9 million operating surplus, Marsh said she will institute "systemwide belt-tightening efforts, including staff reductions." She concluded, "I'm constantly telling employees these issues are never going to go away. It used to be one year it's easier, one year it's harder. Now, constantly pushing to be innovative and cost-effective is a way of life" (Fisher, 5/14).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.