SANTA BARBARA: Lompoc Hospital Reports Red Ink
Lompoc Hospital reported losses of $1.4 million in fiscal 1997, "a big puddle of red ink" when compared to the $1.2 million in profits the hospital reported the previous year. CEO Scott Rhine said "[t]he big-dollar losses stem from reduced reimbursements from health insurance companies, health plans and Medicare and Medi-Cal." The Santa Barbara News-Press reports that "new prepaid payment methods that make local hospitals responsible for all hospital and home health care claim costs for HMO patients" also contributed to 1997 losses. Lompoc CFO Robert Baden said the "hospital has to absorb much of the cost of providing patient service," noting that Medi-Cal "kicks in only 20 to 25 cents for each $1," while Medicare pays "only about 45 cents for every dollar of care." An audit of the hospital's finances showed that actual operating losses for 1997 were $2.4 million, but that amount was offset by "$977,000 of investments, interest and donations."
Stay The Course
Despite the losses, Lompoc "is proceeding with enhancing its quality of care and does not anticipate raising its fees." Thirty-eight new beds were recently installed and will soon "be outfitted with a computerized call system for nurses." The hospital also will keep its home care program. Administrators are taking steps to turn finances around, such as "postponing nonessential purchases," developing cost-effective standards of care and renegotiating the senior HMO contract with Secure Horizons. Rhine said the hospital projects it will "break-even ... by June." "We feel it's realistic to project a break-even position because from July to November we did not experience the same extent of losses from the prepaid plans, and that is very encouraging," he said.
California Medical Association President-elect Dr. Robert Reid said low reimbursement rates paid by Medi-Cal and other payers "is hitting many hospitals hard." Reid, who is also the director of medical affairs for Santa Barbara-based Cottage Health System, said, "It's a tremendous challenge to hospitals, especially the smaller ones, like Lompoc. Medicare is going to significantly cut back further on its payments to hospitals and it's hard to get increases in patient care contributions from any managed care organization" (Van De Kamp, 1/22).