California hospital CEO asks Newsom for financial aid

The CEO of Kaweah Health in Visalia, Calif., penned an op-ed with the local daily newspaper to ask Gov. Gavin Newsom for a one-time injection of funding for public hospitals to avoid "gut-wrenching and agonizing" service cuts and layoffs. 

"The COVID-19 pandemic, and its aftermath, have brought district hospitals to the brink of financial collapse. Without your help, it will soon be virtually impossible for Medi-Cal patients to receive anything but emergency medical care in the State of California," Gary Herbst, CEO of Kaweah Health, wrote in his open letter to the governor published Nov. 10 in the Visalia Times Delta.

Kaweah Health was established in 1963 as a district hospital and is operated by the Kaweah Delta Care District Board, a political subdivision of the state that is governed by an elected board of directors. Today it is the largest of the 33 district hospitals still operating in California and includes eight hospital campuses and the largest medical center in its Tulare County. 

Kaweah Health lost $29 million in the first three months of its fiscal year, and its cash reserves fell from 130 days cash on hand at the start of the pandemic to 84 days cash on hand, among other troubling financial benchmarks Mr. Herbst outlined in his letter. 

The chief attributed the financial trouble to repeated closure of elective surgeries throughout the pandemic, declines in patient volumes, treatment of severely ill COVID-19 patients "with virtually zero increase in reimbursement rates" from governmental and commercial insurers, high inflation rates, spending on employee bonuses and overtime, and reliance on contract labor — $81 million spent since March 2020 with 500 vacant jobs currently.

"Sadly, with virtually no hope for further COVID relief funds from either the federal or state government, we are faced with no choice but to begin laying off staff (likely in the hundreds), closing services (we just announced to staff that we are closing our skilled nursing unit and our neurosciences clinic), stopping elective surgeries and procedures that are provided at a loss (largely affecting the Medi-Cal population), and taking any and all other steps necessary to stem our losses," Mr. Herbst wrote. "It is gut-wrenching and agonizing, to say the least.

"As a further result of our current financial crisis, our plans to achieve the State's mandated seismic compliance by 2030 have evaporated. We do not have the funds to build the $730 million, 10-story patient tower to replace over 200 non-compliant acute care inpatient beds, surgical suites, and our pharmacy, dietary/cafeteria, and PACU, all located downtown Visalia in a building built in 1969."

Mr. Herbst concludes his open letter to Mr. Newsom by stating his delight with California's record-breaking $97.5 billion budget surplus and a suggestion for the use of funds. 

"Still, I implore you [to] please remember the 'good soldiers' of your state's district hospitals. In appreciation of their selflessness, please dedicate one-time funding to help assist district hospitals in their financial recovery efforts and reform Medi-Cal reimbursement so that we can avoid disparities in the care of your poorest Californians."

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