UCI Included in $25-Million Plan : Assembly Panel Endorses Bail-Out for UC Hospitals

An Assembly subcommittee Monday night unanimously endorsed a $25-million bail-out for the financially beleaguered hospitals operated by UC Irvine, UC San Diego and UC Davis.

The legislators also tagged on $450,000 for a management study of the three medical centers, all former county hospitals that continue to draw large numbers of poor patients. One legislator said the study should address the matter of whether the University of California needs to own the hospitals in order tooperate its medical schools at those campuses.

The action approved the governor’s budget proposal, appropriating a $15-million subsidy to offset operating deficits for the hospitals, plus $10 million in building funds for renovations designed to entice greater numbers of privately insured patients to the hospitals.

The 7-0 vote by the Assembly Ways and Means subcommittee on education was a victory particularly for UCI Medical Center, the most debt-ridden of the three hospitals. University of California officials have estimated that the hospital in Orange will be $12.5 million in debt by June 30, and it is expected that the bulk of the bail-out money would be spent there.

“We’re very pleased,” Dr. Cornelius Hopper, vice president for health affairs of the UC system, said after the vote. The university has spent much effort trying to convince the legislators of the medical centers’ needs, “to have them understand the magnitude, and their reception shows they agree.”

“This was not the university crying wolf. We have a very real problem,” he said.

However, the money is not yet in the university’s wallet. Crucial votes are still needed from Assembly and Senate committees, as well as by the entire Legislature.

There could be problems when it reaches the full Assembly Ways and Means Committee. Three weeks ago, at a joint session of the education and health subcommittees, several legislators questioned whether it was equitable for the state to bail out three UC hospitals when dozens of county hospitals are suffering the same financial ills.

Three-Hour Hearing

Like the three UC medical centers, county hospitals are in debt because federal Medicare, state Medi-Cal and county programs for the poor do not fully pay for the patients’ costs, legislators were told during a three-hour hearing.

Members of the health and welfare subcommittee, who raised the equity issue, could pose the same questions when it comes time for a committee vote.

Assemblyman Burt Margolin (D-Los Angeles), a committee member, had suggested that the bail-out money would be more efficiently and equitably spent if it were used to start a special Medi-Cal fund for hospitals that treat a large number of poor patients. The state money would be matched by federal funds and would have twice the spending power, he said.

Different Senate Version

But a consultant to the Assembly subcommittee Monday said Margolin’s proposal was “not legally possible.”

Two weeks ago, a Senate finance subcommittee on education also endorsed the UC medical centers’ bail-out but adopted a slightly different version. The Senate group increased the building funds to $11.6 million and specified three projects on which the money was to be spent.

The Assembly subcommittee Tuesday rejected that plan--proposed by the state legislative analyst’s office, which earlier had opposed the bail-out entirely. UC officials applauded the action.

Hopper said the university preferred the $10-million building fund because it leaves the spending decisions to UC officials.

He said UC does not object to the management study tagged on by the subcommitee but added that each campus medical center, as well as the UC five-hospital system, has had management studies.

“I think we have been studied thoroughly,” he said. But if that is a condition of obtaining the bail-out, “we can’t argue with it,” he said.

“The thing I feel best about,” Hopper said, “is that we haven’t gotten into a rock-throwing contest with the county hospitals.”

Hopper said a possible obstacle was overcome when the subcommittee consultant determined that Margolin’s proposal to put the UC money in a Medi-Cal fund for county hospitals was technically not legal.

Teaching Mission Cited

The university does not want to minimize the county hospitals’ dilemma but believes the teaching mission carried out at the UC medical centers warrants the special funding, he said.

The key Assembly subcommittee vote was taken Monday after virtually no discussion. Assemblyman Bill Leonard (R-Redlands) insisted that the management study look into whether UC has to own the hospitals--a point he also raised three weeks ago--but he did not elaborate.

The medical centers operated by UC Irvine, UC San Diego and UC Davis are expected to tally up a deficit of $26 million by June 30, with UC Irvine accounting for nearly half of the red ink.

Two other UC medical centers, operated by the Los Angeles and San Francisco campuses, are expected to turn a profit this year.