From the Los Angeles Times
Financial woes jeopardize area hospitals
Nearly two dozen are at risk. Losing even a few would mean greater strain on the region's healthcare network.
By Daniel Costello and Susannah RosenblattLos Angeles Times Staff Writers
September 23, 2007
excerpts:
Nearly two dozen private hospitals in Los Angeles and Orange counties, accounting for up to 15% of beds in the region, are in dire financial straits and in danger of bankruptcy or closure, according to hospital administrators, industry experts and state data.
The troublesome development follows the closure of community clinics and hospitals in recent years that has left the healthcare system seriously overburdened.
If even a few other hospitals close or reduce costly critical-care services, it could mean longer ambulance rides to hospitals, additional delays in emergency rooms and less access to care, especially for poor and uninsured people.
Among the hospitals in poor financial health, according to industry analysts, are Downey Regional Medical Center, Centinela Freeman Health System in Inglewood, Brotman Medical Center in Culver City, Century City Doctors Hospital and four Orange County hospitals owned by Santa Ana-based Integrated Healthcare Holdings Inc. including Chapman Medical Center in Orange and Western Medical Center in Santa Ana, one of three trauma centers in the county.
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The financial woes result from a multitude of developments:
* An increasing load of uninsured and low-income patients has resulted from overcrowding and the shutdown of public facilities. The number of uninsured patients visiting private hospitals, particularly in poor areas, has increased by one-third in Los Angeles County since 2002. California's Medi-Cal program for the poor reimburses hospitals at one of the lowest rates in the country.
* The closure of Martin Luther King Jr.-Harbor Hospital in Willowbrook last month left half a dozen nearby hospitals to absorb most of the 47,000 patients who used the public hospital's emergency room last year.
* Smaller community hospitals are drawing fewer patients as a few larger facilities attract a growing share of doctors and insured patients.
* As insurers have consolidated in recent years, they've squeezed many smaller facilities. Private insurance companies generally pay higher rates to larger hospitals with greater bargaining power.
* New, stricter state mandates on nursing ratios have raised labor costs, and a 2013 deadline to retrofit all hospitals to better withstand a major earthquake is estimated to be costing medical facilities $110 billion statewide.
Since 1996, more than 70 community hospitals have closed across the state, with a disproportionate share -- more than 50 -- in Southern California. Regionally, 14 emergency rooms have closed in the last five years, including 10 in Los Angeles County.
That's why experts say a new wave of closures would be so destabilizing.
"In many areas, you have had enormous consolidation, and there's very little breathing room left," said Kirby Bosley, director of California healthcare consulting for Watson Wyatt, a company that advises employers on health plans.
Many agree, however, that it's been years since so many hospitals have been in such dire financial straits at the same time.
In a few years' time, it's inevitable our community's already horrendous statistics of heart disease, cancer and diabetes will rise even more," she said.
The most immediate concern is how to best address the fallout from the closure of King-Harbor, which was shut down last month when the federal Medicare and Medicaid agency pulled half the hospital's funding after nearly four years of failed attempts to reform the troubled institution.
"Regardless of what everybody's trying to do, there's not enough money," said Carol Meyer, director of governmental affairs for the L.A. County Department of Health Services.
"We're talking about a system that is already in crisis," she said. "I think this is a tipping point for a couple of hospitals in the immediate area."
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