20% of California hospitals at risk of closure: 4 leaders react

Healthcare leaders in California warned more hospitals in the state will be forced to close or significantly reduce services without immediate financial relief from the state legislature.

The California Hospital Association held a press call April 12 with the group's CEO and leaders from three hospitals in response to a new Kaufman Hall report that details the "staggering" financial blows hospitals have faced since the start of the pandemic. One in 5 California hospitals are at risk of closure, according to the report. In 2022, total expenses for California hospitals were $23.4 billion higher than prepandemic levels and outpaced increases in revenue. 

After federal COVID-19 relief, the state's hospitals still lost more than $20 billion in the last three years, Carmela Coyle, president and CEO of the California Hospital Association, said during the call. More than half of the state's 400 hospitals also lose money each day, Ms. Coyle said. One of the largest financial challenges for many hospitals is dependence on state and federal programs such as Medicare and Medicaid, which don't reimburse providers nearly as much as commercial insurers. 

"The healthcare math no longer adds up," she said. "Every single day that passes without action is a day that more and more hospitals in the state are taking the next step toward the edge of their survivability and toward the edge of access to care for their communities." 

MLK Community Hospital in southern Los Angeles began losing money in 2021 and is now tapping reserves and borrowing money to cover costs. The small hospital has been running between 20 percent and 50 percent above capacity, which reflects the unmet demands for basic care in the communities it serves, according to CEO Elaine Batchlor, MD. 

"Providers can't afford to practice in our community," she said. "The result is our community lacks access to doctors so our hospital is taking care of patients with very basic untreated medical conditions like diabetes, high blood pressure, heart disease and kidney disease." 

Service cuts are looming for MLK Community Hospital. Sans financial support, it might have to close its wound center and end labor and delivery services, Dr. Batchlor said. 

"The impact on our patients when we need to begin reducing services and cutting back is going to be devastating," she said. 

Donna Hefner, BSN, RN, president and CEO of Sierra View Medical Center in Porterville, and Patty Maysent, CEO of UC San Diego Health, echoed those same challenges and concerns. 

Sierra View Medical Center provides acute and outpatient services to a community of 62,000 residents and a greater area that spans 115,000 residents. Eighty percent of its patient revenue comes from government payers, according to Ms. Hefner. That's the same proportion of patients who were publicly covered at Madera Community Hospital, which closed its doors at the end of December.

Ms. Maysent of UCSD described the pressures hospitals in Imperial County are facing, including El Centro Regional Medical Center. UCSD announced it would assume full operational, clinical and financial management to try and stabilize the hospitals' finances in February, but it's become clear that under "no scenario" is there enough leverage for the hospital to remain sustainable on its own. 

"This is just one scenario where hospitals are within two, three, four months of running out of cash, and they're going to close without some kind of major intervention," she said. 

With Madera's closure, the county's 160,000 residents face at least a half-hour drive to hospitals in neighboring Fresno County, which have struggled to keep up with the influx of patients. 

Some 50 miles south of Fresno in Visalia, Kaweah Health Medical Center is another hospital on the verge of closure. In March, its CEO, Gary Herbst, warned it "will not continue to exist" without outside financial support. 

While the CHA has asked Gov. Gavin Newsom for $1.5 billion to be distributed to the most financially burdened facilities, it's not the long-term fix, healthcare leaders said. 

"Expenses are simply outpacing those government payments. The only sustainable fix here is an increase in those reimbursement rates," Ms. Coyle said. 

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