Analysis suggests only a 'sliver' of California's hospitals are truly in crisis

Headlines abound about California's hospitals being in financial difficulties, but a large majority of them don't need bailouts, according to a May 25 CaliforniaHealthline report.

Hospitals in the state have asked for an emergency infusion of $1.5 billion, but, the report said, some of the wealthier systems benefit unequally from a program that allows hospitals to tax themselves in return for federal money to support patients on Medi-Cal, the state's version of Medicaid. 

While hospitals that serve a larger proportion of poor patients pay more in tax dollars through the program, they also get more money back, and they in turn  donate some of their tax income to wealthier ones like Los Angeles-based Cedars Sinai in return for political support for the tax system. Cedars Sinai benefited to the tune of $28 million from the program in 2022, according to the report.

Such programs need to be more targeted to help the hospitals, analysts say. Examples include the recent signing into law of a $150 million loan program for financially distressed hospitals

"They are big fans of these giant bailouts, where the relatively rich hospitals benefit as well as the ones who really need it," said Glenn Melnick, PhD, a health economist at the University of Southern California. "A big chunk of the hospitals, even if they're losing money, don't need taxpayer money to help them through this crisis."

Conversely, only a "sliver" of California's 368 hospitals are in financial crisis, Dr. Melnick and others have said.

"I'm not a big fan of writing everybody a check," said Democratic Assembly member Jim Wood, chair of the Health Committee, who says hospitals ought to be more transparent about their finances before state taxpayers give them any more money. "If you're a hospital system that's doing well, I don't believe you should be getting any additional resources from the state."

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