Poor Patients May Put UC Hospitals in Red, Regents Told

Growing numbers of indigent and Medi-Cal patients will force UCI Medical Center into deficit for the fourth time in six years and may soon do the same to the entire University of California hospital system, one of the state’s leading health-care providers.

That was the assessment presented Thursday to the university system’s Board of Regents at a special meeting held to study the continued hemorrhage of money from some university teaching hospitals.

UCI Medical Center, one of the five teaching hospitals, will be $5 million in the red when this fiscal year ends June 30 and is projecting an $11-million deficit for the next fiscal year, UCI Chancellor Jack W. Peltason has said.

If nothing is done to stem the losses, he said, programs will have to be cut back and the medical center’s academic programs could be put in jeopardy.

“We simply cannot continue to operate with these kinds of losses,” Peltason said earlier this week as he was preparing a presentation for the regents meeting.

UCI Medical Center is now negotiating with the county to renew a contract for the medically indigent that expires June 30.

Under the current contract, the medical center is receiving about $15 million from the county, including an $8.4-million block grant that it has been receiving for two years to treat the medical emergencies of people with no medical insurance, mostly undocumented aliens.

The medical center is seeking to have the total amount increased to about $18 million, Peltason said.

The negotiations are continuing, but the county has said it will give the block grant to the Southern California Council of Hospitals next year to distribute to 30 hospitals in Orange County that are under contract to treat the poor, according to Peltason.

Thomas E. Uram, director of the county health care agency, has declined to comment on the negotiations.

The meeting here was mainly to update the regents and stimulate debate. No action was proposed, although Regent Roy T. Brophy and others speculated that the university may someday be forced to restrict the number of poor people admitted to its hospitals.

“Someday we are going to have to take that bold step because we cannot keep going on like this,” he said.

First, however, hospital officials were advised by UCLA Chancellor Charles E. Young to “manage the patient mix”--that is, attract more privately insured and Medicare patients who can make up for others unable to pay their bills.

Regents were told by a variety of doctors and educators that UC’s hospitals at UCLA, San Diego, Orange and San Francisco, plus a UC Davis center in Sacramento, are treating an increasing number of poor and under-insured patients.

These patients add a burden of unpaid or partially paid bills to the costs of teaching and research already shouldered by those facilities.

Peltason said earlier this week that UCI Medical Center has done much in recent years to change its patient mix, but that the problem stems from the government’s refusal to reimburse hospitals at current costs.

The medical center in this fiscal year was under-reimbursed by $35 million he said, $11 million of that attributable to underpayments by the Orange County Health Care Agency.

“What we have seen,” Peltason said, is a shifting of the responsibility for the care of the poor from the county to the university.

The UCI center now cares for 35% of the county’s poor, he said, with the remainder receiving care at about 30 other hospitals in the county.

About 60% of the medical center’s population, he said, is made up of “public patients.”

“The consequences of our handling this largely indigent population is large and growing,” Peltason said at the meeting Thursday. “The problem of providing indigent care puts in jeopardy not only the quality but in some cases the survival of our university medical centers.”

Despite such dire talk, no one suggested that any medical center is in imminent danger of closing. But David P. Gardner, president of the statewide system, said the state Legislature may have to increase the financial aid it had cut when university hospitals began treating patients covered by Medicare and other government programs.

Much of the current problem was blamed on Medi-Cal, the federally and state-funded health insurance program for the poor, which university officials said fails to adequately reimburse the hospitals for the actual cost of caring for patients.

“The chronic underfunding of indigent patients, now totaling $150 million a year (at the UC hospitals), will require new collaborative efforts with the state,” the normally soft-spoken Gardner said with audible emphasis. “That is as pleasantly as I can put it.”

Three sources of aid were discussed: increased Medi-Cal reimbursements, direct subsidies for some university hospitals and increased spending to modernize some hospitals in hopes of attracting more affluent patients.

Without some help, the administrators said they cannot honor their twin obligations to both serve the poor and train new doctors.

“I think we have an obligation to take care of (the indigent),” Peltason said when Regent Yori Wada questioned the idea of limiting service to poor people. “But we can do it only as long as we have the resources to do so. We are running out of those resources.”

In the past, said Dr. Cornelius L. Hopper, the system vice president for health affairs, profits at the UC San Francisco and UCLA medical centers have more than covered deficits at the other centers, all of which are former county general hospitals taken over by the university system as an inexpensive way to expand its health-care curriculum in the late 1960s and 1970s.

But, he said, that cushion will drop from $16 million in the current fiscal year, ending June 30, to a projected $3 million next year. Even that net, slim for a $960-million-a-year operation, comes only if the university does not allow for capital improvements. Modest growth or modernization would push the system $30.5 million in the red, the UC budget notes.

Much of that systemwide turnaround will be attributable to renewed and growing losses at UC Irvine. William B. Baker, vice president for budget, said the deficit at UC Irvine will grow from an estimated $8 million this year to between $9 million and $11 million in fiscal year 1988-89.

University medical centers in San Diego and Sacramento, which also have been troubled by deficits in recent years, are projected to break even or show a small “gain,” or profit.

In the coming year, the UC budget projects that the Davis hospital will also slip into the red, for about $5 million to $7 million.

Although profits at other facilities should more than cover these expected losses, the regents were told that the overall trend is toward a net deficit, and administrators emphasized that the entire network will not be sound until all five hospitals can stand on their own.

The university system’s five acute-care hospitals have a combined capacity of 2,671 beds, making it one of the state’s largest health-care delivery systems, Hopper said.

UCLA Medical Center, established in 1955, is by far the largest, with 711 beds. The hospital at UC San Francisco, the system’s first medical school and its only campus devoted exclusively to the health sciences, has 560 beds.

The other three facilities, all former county hospitals, are smaller--from 493 beds at UCI Medical Center to 470 beds at UC Davis Medical Center in Sacramento to 437 beds at UC San Diego Medical Center.

Mark Stein reported from San Francisco and Andrea Ford from Orange County.