Hospital Faces Financial Losses : UCSD Medical Center Needs Bailout Money

UC San Diego Medical Center could go several million dollars into the red starting next year if the state Legislature doesn’t approve passage of a $25-million bailout for it and two other financially beleaguered university hospitals, a UCSD official said Wednesday.

New federal payment plans are taking a bite out of UCSD Medical Center’s revenue and have already forced cutbacks in administrative and clerical services, finance director Thomas Astengo said.

And unless the Legislature backs an Assembly subcommittee’s vote Monday to endorse a $25-million bailout for the hospitals operated by UC Irvine, UC San Diego and UC Davis, “future years look very bleak, beginning with next year,” Astengo said. He is also associate director of hospital and clinics at UCSD Medical Center, which is in Hillcrest.

Considering “the changes in Medicare (payments and) inflationary pressures . . . we’re projecting a rather significant loss for next year: several millions of dollars,” Astengo said. Meanwhile, “we don’t see any of the (health-cost) reimbursers (such as Medi-Cal) increasing reimbursement.”

So far the hospital has weathered the financial squall by cutting costs, and “the main cuts have frankly come in the administrative areas and basic clerical kinds of support.”

He said it was “premature” to say what areas might have to be cut if the hospital--currently in the black--falls severely into the red.

Astengo declined to say if salaries might be affected. “That will be the subject of negotiations” with unions, he said. “Laying off (employees) would certainly be a last resort.”

It hasn’t been determined how much of the $25 million would actually go to the UCSD hospital.

“We’re looking at this as a challenge,” Astengo said. “Certainly the managers and the supervisors are looking at ways in which we can enhance our revenue, looking at ways we can reduce our costs through additional efficiencies. This is not a problem that’s unique to our hospital or any hospital. The (medical) literature is full of these kinds of problems.”

On Monday, 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 stated that the study should address whether the University of California needs to own the hospitals in order operate its medical schools at those campuses.

The 7-0 vote by the Assembly Ways and Means Committee’s subcommittee on education was a special victory for UC Irvine Medical Center, the most financially troubled of the three hospitals. UC officials have estimated that the Orange County hospital will be $12.5 million in debt by June 30, and it is expected that the bulk of the bailout money would spent there.