UCI Hospital Gets Regents’ Support as Deficit Mounts

Despite a budget report that shows the UCI Medical Center is building a deficit this year at a faster rate than expected, the UC Board of Regents said Thursday that it strongly supports the financially strapped hospital complex in Orange.

“We (the regents) want to keep this hospital,” said Frank W. Clark Jr., chairman of the regents’ hospital governance committee. Addressing the UCI officials in attendance, he added, “We’re with you and we’re going to work with you all the way through.”

Clark’s encouragement to beleaguered UCI Medical Center officials came despite the latest spending figures that showed the hospital complex to be losing almost $9 million in just seven months.

While the regents, meeting on the UCI campus, said they were understanding of the medical center’s problems, they said the red ink cannot be tolerated indefinitely.

UC officials said each of the university’s five hospitals--including the UCI Medical Center--ultimately must be profitable.

UC President David Gardner said the fate of the UCI Medical Center thus largely hinges on special aid proposed in the 1985-86 state budget of Gov. George Deukmejian. The governor is asking the Legislature to make available $25 million to help UCI Medical Center and the hospitals at UC Davis and UC San Diego.

“If this were not in the governor’s budget, and if there was not some prospect for relief (of the hospital deficit), we would have a different agenda item on the table today,” Gardner told the regents. He did not elaborate, but he apparently referred to a UC administrative report given to the regents last June that said UC hospitals might have to stop serving poor patients unless government reimbursements are increased.

Unreimbursed costs of caring for needy patients are the main reason that the Orange facility is unable to balance its budget, UCI Chancellor Jack Peltason told the regents.

According to its recently released annual report, the UCI Medical Center has the nation’s highest percentage of publicly financed patients of any university hospital in the nation, with 71% of its “patient days” paid for by Medicare, Medi-Cal or other tax-supported programs.

Peltason said the budget losses would continue for several more years unless UCI Medical Center attracts more insurance-paid patients and fewer poor patients whose care is only partially paid for by state, county and federal governments.

Critical to Survival

“A change in the patient mix at these former county hospitals is critical to their financial survival,” said Dr. Cornelius L. Hopper, the UC system’s vice president for health affairs.

The regents learned Thursday that the UCI Medical Center, as of Jan. 31, already was $8.6 million in the red, with five months remaining in the fiscal year. Just last month, Peltason told the regents that the medical center’s deficit for the full fiscal year ending next June 30 would total about $9 million.

Leon Schwartz, a UCI vice chancellor who is now serving as acting director of the medical center, said after the morning session that “the best case says we can come in at $9 million, but the best case seldom happens . . . and it looks as if it will be over $9 million.”

Schwartz took over the medical center helm last week when William Gonzalez, the center’s director for the past seven years, unexpectedly resigned. Peltason, in comments to regents Thursday, praised Gonzalez’s long service.

The chancellor in February made a plea to the regents for $30 million in renovation money for the medical center. Peltason said the proposed $30-million modernization would enable the hospital to attract more private-pay patients.

No Action on Proposal

But the regents took no action Thursday on the $30-million proposal. UC officials, however, noted that the amount requested by Peltason exceeds the entire $25 million in special aid proposed by Gov. Deukmejian for three UC hospitals. UC officials also pointed out that the Legislature may or may not accept Deukmejian’s recommendation for that special aid.

Gardner said the UC system is strongly working for passage of the $25 million in special aid for the UC Irvine, UC Davis and UC San Diego hospitals. All three, Gardner noted, are former county hospitals that historically have had large percentages of poor patients.

“The (governor’s special aid) proposal consists of two parts,” Gardner said. “There would be a $15-million subsidy for operating expenses and $10 million for capital outlay expenses. That capital outlay money would be used to make these three former county hospitals more cost effective and more attractive to private-paying patients.”

Gardner added: “The governor has included this (special money) in his budget, and what we have to do now is get it through the Legislature.”

‘Doing Its Job’

Despite the severity of the financial problems, Peltason said, “I want to stress that . . . the hospital is doing its job. Medical students are being educated, research is being done, and patients are being cared for. Those are our primary responsibilities . . . .

“The fiscal problems are based primarily on the lack of reimbursement for the publicly sponsored patients . . . . We are doing what we can in that context.”

While the medical centers at UCLA and UC San Francisco will turn a profit this fiscal year, Hopper said they will not come close to matching the deficits of UCI, UC San Diego and UC Davis.

“There has been a suggestion that somehow that outcome (profit) should be diverted to the other hospitals, and we feel strongly that is not the approach. Each of these hospitals needs to stand on its own base,” Hopper said.

Regent Sheldon W. Andelson said he and his colleagues believe that patient care has not deteriorated because of financial problems.

“But my concern is that, given the current trend, something’s going to have to give. We’re in danger of not being able to maintain that care for those patients who come to our hospitals,” he said.