Perfect Financial Storm Rattles Hospitals Throughout California
Hospitals in California are eliminating services and reducing emergency department capacity as they work to address a jump in the number of patients who cannot pay their share of medical bills, tightening in the credit market and the prospect of the state suspending payments to hospitals, the Los Angeles Times reports.
Hospitals' financial problems are being underscored by the state budget deficit and low reimbursements from Medi-Cal, California's Medicaid program (Girion/Medina, Los Angeles Times, 1/14).
In the most recent budget proposal from Gov. Arnold Schwarzenegger (R), he called for a 10% reduction to Medi-Cal reimbursements to hospitals (California Healthline, 1/5).
An upswing in the number of people with high-deductible health plans also is affecting hospitals' finances, as more members of high-deductible plans cannot cover their share of medical costs.
Hospital industry leaders and health care advocates are voicing concerns that the current economic situation could push more California hospitals to close.
Jan Emerson, spokesperson for the California Hospital Association, said, "We've got a number of hospitals that are absolutely on the brink."
According to the Times, the prospect of California suspending payments to hospitals because of the budget deficit raises more concerns because many hospitals likely would be unable to get loans to cover their operating expenses in the tightened credit market (Los Angeles Times, 1/14).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.