ORANGE COUNTY: Children’s Hospital Sees Financial Rebound
Having suffered over $43 million in operating losses since 1995, Children's Hospital of Orange County (CHOC) is on track to break even for the current fiscal year ending June 30, 2000, the Los Angeles Times reports. Officials attribute the turnaround to the hospital's new executive team and their three-year plan to toughen financial controls and improve marketing strategies. CHOC's financial situation started to deteriorate in 1995. By 1997, the hospital was not equipped to handle the health care shift toward a more competitive managed care market and suffered a $19.4 million loss. In addition to management problems, the county's CalOptima plan switched 200,000 of its Medicaid patients to managed care. Under managed-care, the duration of patient stays in the hospital decreased and many costly in-house procedures were moved to less-expensive outpatient facilities. Facing an increase in unoccupied beds, other area hospitals began to pursue the "lucrative pediatric care business." Children's Hospital CFO Kerri Ruppert said, "You have hospitals sitting with empty beds and there was a push put on by certain adult hospitals to look to pediatric services to fill the gap. We saw a loss in volume."
Rather than scaling back services, CHOC's board decided to reduce administrative inefficiencies and bolster its business. Led by newly appointed President and CEO Kimberly Cripe, hospital officials in 1997 unveiled a three-year plan that would keep their commitment to serve the community's uninsured and underinsured. As part of that strategy, CHOC established a program to help enroll the uninsured in a subsidized insurance plan like Medi-Cal and Healthy Families. Next, the hospital became more adept at writing contracts with insurers, to ensure that reimbursement for expensive procedures and medications were not capped. Officials also entered into contracts with more of the county's health plans and medical groups. CHOC now has an exclusive contract with Universal Care, which provides coverage for 10,000 of the county's children. The three-year plan has produced some degree of success, as CHOC ended fiscal 1998 with a $8.6 million dollar loss, less that half that of the previous year. Sam Roth, spokesperson for the Orange County Medical Association, credits the new CHOC team for the turnaround. "CHOC is well-run and very successful. They know how to leverage the unique services they provide in a very competitive way," he said (Warren, 12/13).