California hospitals seek Sacramento lifeline; Kaweah Health could see $75M in aid

California hospitals seek Sacramento lifeline; Kaweah Health could see M in aid

Kaweah Health’s photo

published on 04 April 2023 – 15:20
Written by John Lindt

The California Hospital Association and local hospital district Kaweah Health are asking the Governor and Legislature to include a $1.5 billion, one-time appropriation in the fiscal year 2024 budget as a financial rescue tool for California hospitals.

News of a decision by Governor Newsom will come in a few weeks when he releases his “May Review” budget that comes around this time every year.

Kaweah Health CEO Gary Herbst said the distribution of these funds will be proportional to the level of service an individual hospital or health system provides to its Medi-Cal population. Tulare County has the highest Medi-Cal enrollment of any county in California at more than 60%. Kings County’s rate is lower, but not by much.

In addition, the hospitals are asking the state to overhaul its Medi-Cal program and significantly increase the reimbursement rates offered to doctors and hospitals. CHA estimates that Medi-Cal reimbursement for hospitals covers only 74% of the cost of providing care — one of the lowest reimbursement rates in the country.

Kaweah’s Herbst said the hospital has lost $135 million since the start of the pandemic through Oct. 31, 2022. About $61 million in federal COVID relief funds helped, but the remainder “came out of our cash reserves and put us in financial the predicament we are in now.”

Since the start of the current fiscal year in July 2022, the district has lost an additional $43 million, including $3.5 million in February alone, Herbst reported recently. The hospital has laid off more than 200 employees and cut salaries for senior staff.

Herbst estimates that Kaweah could gain $75 million if the Governor includes the line item in his budget.

In addition to high costs to operate, the hospital has experienced lower-than-expected enrollment in recent months — a trend seen elsewhere, Herbst said. Operations have decreased as well as outpatient visits.

In Tulare County, other hospitals are also being damaged, Herbst said, including Sierra View in Porterville and Tulare County Hospital operated by Adventist Health.

Herbst gave a presentation to the Tulare County Board of Supervisors a few weeks ago and asked if the state doesn’t help, if the County could step in to help, perhaps with a sales tax proposal or some of the $90 million American Rescue . The Plan Act funds the district that received from the government.

Herbst said long-term reform is needed to make a difference. The state has expanded its qualifications for who can receive Medi-Cal, including those who are undocumented, but has not offered reimbursement increases.

Herbst put the situation in grave terms.

“We need help to save us from collapse,” he said, pointing to the closing of Madera Hospital and tough times for all rural hospitals.

California’s Medicaid program – Medi-Cal – is designed to support essential health care services for 1 in 3 low-income people. This includes more than 40% of children, 50% of disabled people and 1 million elderly people. To serve the more than 13 million Californians who are covered, the Medi-Cal program partners with 400 hospitals, 1,500 community health clinics and more than 100,000 professionals.

While Medi-Cal coverage extends to all 58 counties in California, coverage is highest in 17 counties—including most rural counties—where enrollment reaches 40% of the population. In these counties, providers rely heavily on Medi-Cal reimbursements to serve as the non-federal portion of Medi-Cal payments.

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