Medi-Cal Crunch Looms for Community Clinics

The budget is about seven weeks late now. Without a budget, the state can’t keep writing Medi-Cal checks to health care providers. And that budget crunch begins today, when the last Medi-Cal checks go out to community clinics throughout California.

Without that $43 million every two weeks, those clinics will be in big trouble, according to Carmela Castellano-Garcia, president and CEO of the California Primary Care Association (CPCA).

“That means clinics are not going to receive 50% to 80% of their revenue, so they’ll be in a challenging financial situation,” Castellano-Garcia said. “This budget stalemate is going to have significant impact on them.”

They’re facing the prospect of not being able to meet payroll and pay their employees, she said. Some might need to scale back hours and services. And if the budget stalemate continues unabated, there could be even more dire results, she said. “The longer this goes, the more likely it is that we could see clinics close,” she said.

This year is tighter than previous budget-delayed times, she said, because of recent budget cuts that eliminated any operating margin clinics they had. “We sustained a hit last year unlike anything we’d ever seen,” Castellano-Garcia said. “They’ve all been reeling from that, so right now this is a worse situation than we’ve seen in a long time.”

Clinics will need to rely on any reserve funds they might have, or take out loans either from local banks or from a $23 million emergency fund set up by the CPCA, Castellano-Garcia said. (One of the contributors to that fund, the California HealthCare Foundation, publishes California Healthline.)

“Beyond that,” she said, “clinics are on their own.”

A community clinic with an annual operating budget of $3 million would need about $200,000 a month to pay its employees, Castellano-Garcia said. And for the more than 800 California clinics represented by CPCA, the math doesn’t add up to anything good.

Clinics in the most precarious financial situations are the ones that would have the hardest time securing a loan from a bank, Castellano-Garcia pointed out. And even if they could get a loan, those clinics would be worst-hit by needing to pay the interest.

The CPCA staged an event earlier this week to draw attention to the problem. Volunteers delivered a slip of paper marked “U O Us” (rather than IOU) to lawmakers’ offices in the Capitol.

The state legislative session officially ends Aug. 31. Some political experts predicted the budget battle will end before that. But two years ago, the budget impasse lasted well into September, and no one knows if that might happen this year, as well.

“We should be able to expect a July 1 budget, but that’s not the reality, Castellano-Garcia said. “And that might not be reality by Aug. 31.”

 

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Capitol Desk Medi-Cal