UCI’s Chancellor Urges Upgrading of Medical Center : $30-Million Program Needed to Stem Red Ink, Peltason Tells UC Regents

UC Irvine Chancellor Jack Peltason told a glum-looking UC Board of Regents Thursday that UCI Medical Center in Orange will lose up to $9 million this fiscal year and will remain awash in red ink indefinitely unless there is a $30-million modernization of its aging facilities.

Peltason also told the regents--who govern all nine University of California campuses--that the medical center will lose millions of dollars more over the next three years.

“We have unique problems,” Peltason said, speaking to a regents’ committee meeting at UCLA.

Peltason said the central problem of the medical center is that it has a very high ratio of poor patients--70% of the total. Government subsidies no longer reimburse hospitals to pay the actual cost of health care for the poor, Peltason said.

The regents took no vote or formal action, but several voiced their concern about the financial hemorrhaging of the UCI Medical Center. But unlike prior monthly meetings, where some regents had acidly questioned UCI officials about the medical center’s financial problems, questions and comments of the regents at Thursday’s meeting were subdued and generally sympathetic.

$30 Million Sought

The regents, however, gave no clue as to whether they would be willing or how they might raise money for Peltason’s proposed long-term solution.

The key to Peltason’s proposed solution to the problem would be about $30 million in redevelopment and modernization. His proposal includes having the university build, and then rent out, doctors’ offices and other private-practice medical buildings on unused ground at the medical center. He said this would attract more private doctors, who, in turn, would bring more paying patients to UCIMC.

UC President David Gardner praised Peltason’s “forthright” presentation of the bleak fiscal facts. But Gardner added, “We should not be sanguine, it seems to me, about the outcome. It should be clear that the present conditions, unchanged, are not sustainable.

“Chancellor Peltason has suggested how, under changed circumstances, it (the medical center) might be sustainable. How to get from here to there is not yet clear.”

More Paying Patients Needed

The “changed circumstances” that Peltason said would bring the medical center closer to breaking even essentially involve attracting more patients able to pay. Peltason, however, stressed that UCIMC, in the process, would not turn its back on the poor. He said that state and county policies are already changing to help divert more of the poor to hospitals closer to their homes rather than centralizing care of the poor into one hospital like UCIMC.

In the meantime, Peltason said, UCIMC must act to be attractive to more patients whose insurance or incomes make them able to pay their hospital bills.

“We are in the midst of discussion with local authorities (in Orange County) on the redevelopment of the UCIMC site in such a fashion so as to acquire much-needed facilities and add revenues to our bottom line,” Peltason said.

“Our priority projects include a private-practice building for faculty, continuation of the modernization of patient care rooms from four- and five-bed wards to single and semi-private rooms, and the renovation of the adult intensive care units.”

May Turn to Sacramento

He added, “I would estimate that $20 to $30 million is needed to put into place a state-of-the-art university medical center.”

Gardner, in his brief talk to the regents, said that UCI might get some help from items proposed in Gov. George Deukmejian’s budget for the next fiscal year. Gardner mentioned no specific dollar amounts. He also cautioned: “We shouldn’t rely solely on our being successful (in raising money) with Sacramento.”

In an interview prior to his meeting with the regents, Peltason said that the $30 million for modernization might be raised by revenue bonds. The bonds would be paid off, he said, by income from the proposed new structures to be built on vacant land around the medical center.

“That land is valuable,” Peltason said. “We have a total of 33 acres at the medical center, and it’s in a prime location. Fortunately, it’s in a redevelopment area, and local officials are eager to help the university with its plans.”

Study Panel Appointed

Peltason, in his presentation to the regents, noted that he had appointed a special committee last fall to study the medical center’s problem. In addition, a consulting firm was hired to analyze staff productivity at the medical center.

The studies, he said, concluded that, overall, the hospital is being managed very well and that exceptionally fine care is given to the patients.

Peltason said that some staff cuts have been made, primarily through attrition. And he said that some programs at the medical center, which he did not disclose, may be reduced in the future.

“We shall make these reductions,” he said. “Nonetheless, we are nearing the point beyond which additional expense reductions will begin to infringe upon the quality of our services . . . and our ability to continue to meet licensure and accreditation requirements.”

Peltason noted that UCI in 1976 was persuaded to take over Orange County’s old “county hospital” at the Orange site. The takeover was proposed by legislative leaders, Peltason said, rather than having the state build a new medical center for the then-brand-new UC Irvine campus.

When it took over the county hospital, UCI agreed to care for the county’s charity patients. A few years later, the university and the Orange County Board of Supervisors became embroiled in disputes over paying the costs for the rising number of poor patients.

UCIMC, while reducing its charity load from 85% of all patients to 70% in recent years, still continues to be the only university teaching hospital in the nation with such a top-heavy load of indigents, Peltason said.

Peltason said that since no level of government now pays the full cost of a charity patient, the end result is that “the medical center becomes an arm of welfare . . . we pay the costs.” He said that inadequate government reimbursement amounts to “an average loss of $196 per day per patient” at UCIMC.

Gardner, in his address to the regents, said that Orange County government must be among those trying to find solutions to the UCIMC financial crisis.