Californian Hospitals Reeling Under Financial Meltdown

The ongoing financial meltdown has begun to take a toll of the hospitals in California. Number of paying patients coming down and the hospitals are losing money on investments.

The ongoing financial meltdown has begun to take a toll of the hospitals in California. The number of paying patients is coming down and so the number of the profitable elective procedures too. At the same time, the hospitals are losing money on investments. Besides they are also starved of funds as the credit markets are all but frozen.

The latest complications follow a dozen years during which more than 70 hospitals closed in California, and there is concern that some may not pull through this downturn.

"We've got a number of hospitals that are absolutely on the brink," said Jan Emerson, spokeswoman for the California Hospital Association.

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Financial analysts and insiders expect the turmoil to accelerate a shakeout.

"The weaker hospitals will continue to get weaker in a bad economy, and the stronger hospitals will find a way to survive and build market share," said Chris Van Gorder, chief executive of Scripps Health, a nonprofit chain of five hospitals in San Diego County.

Hospitals are facing a "triple whammy," said Anthony Wright, executive director of Health Access California, a patient advocacy organization. "You have the healthcare safety net seeing more uninsured people in the system at the same time employers are scaling back coverage. At the same time, the state is seeking to further cut healthcare programs."

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Just about every hospital is affected in one way or another.

At Cedars-Sinai Medical Center in Los Angeles, financial counselors are dealing with a surge in patients with high-deductible health insurance who are unable to pay their share of the bill.

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In Oceanside, Tri-City Medical Center is struggling to plug a reported $400,000-a-month hole blown in its budget by the sudden escalation of the cost of its debt.

And in Northern California, NorthBay Healthcare closed a $15-million projected shortfall by shuttering a pediatric hospital unit and an outpatient pediatric rehabilitation program with a waiting list of 100 children.

"It was a tearful closing, but we only saw more cuts coming down the line," said Steve Huddleston, director of public affairs for NorthBay of Fairfield, Calif. "We didn't see any light at the end of the tunnel."

Two-thirds of hospitals nationwide report experiencing a decline since July in elective procedures, which tend to be profit centers, according to a recent survey by the American Hospital Assn. Overall admissions also are down at more than a third of hospitals, reversing a long upward trend.

The care patients are putting off might be elective, but it isn't trivial.

At Cedars, for instance, "we have seen people putting off elective but important procedures, such as colonoscopies," hospital spokeswoman Elise Anderson said.

Jon Marcus, a self-employed San Francisco resident, said he postponed surgery for sleep apnea last month because he faced a $5,000 deductible.

"If the deductible wasn't so high, I would have done it right away," he said.

Hospitals are big business, Lisa Girion and Mark Medina reported for Los Angeles Times.

The nation's hospitals treated 121 million people in emergency rooms in 2007. And they employ 4.7 million people, nearly twice as many as those in U.S. automotive manufacturing and sales, government figures show.

So even a hiccup in the hospital sector can reverberate through the economy. And this is no hiccup. Half the hospitals responding to the national survey said they were reconsidering or had postponed new construction and renovation projects. Kaiser Permanente, for instance, said it was delaying the openings of hospitals in Vacaville and Vallejo.

Broad losses in stocks are shrinking hospitals' rainy day funds.

Many hospitals are trying to hang on by dropping or reducing service lines. Pediatrics, obstetrics and psychiatric wards are common targets, and many hospitals are reducing emergency-room capacity.

Hospitals nationwide also are laying off workers, recording more mass layoffs in 2008 than in any other year in a decade, government figures show.

Hospital layoffs hurt patient care, said Rose Ann DeMoro, executive director of the California Nurses Assn. She said hospital systems also were beginning to ask for concessions, such as cuts in retirement and sick leave benefits, from organized labor.

"There's been a crisis for quite a while, but it's escalating with the downturn of the economy at a very rapid rate," DeMoro said. "What the nurses see is that it is tragic in the lives of patients and their families."

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