Some Health Officials Fear More Will Do the Same : 3 Hospitals Say They Intend to Drop Medi-Cal

In a move that could limit where poor people may receive care, three Orange County hospitals have said they intend to drop their Medi-Cal contracts. Some local health officials fear that an increased burden on the 14 others still in the system could prompt some of those hospitals to drop out too.

Saying that they are losing from $200 to $400 for each Medi-Cal patient they treat, Chapman General Hospital in Orange, Western Medical Center in Santa Ana and Western Medical Center in Anaheim have refused to renew their Medi-Cal contracts for the next year.

However, state officials who handle Medi-Cal contracts suggested that the termination notices are just a negotiating ploy by the three hospitals to win better contracts. The hospitals could still decide to renew before the end of January or early February, when their contracts expire, the officials said.

The terms of Medi-Cal contracts vary and are confidential.

“I’m not alarmed. . . . We still have time to negotiate,” said John Rodriguez, a deputy director at the California Department of Health Services.

Fears of Domino Effect

But Angelo Doty, director of financial assistance for the County Social Services Agency, said he is worried that the three hospitals’ action could produce a domino effect. His sentiment was shared by other local hospital administrators.

“We may not be in a position to absorb the increased volume of patients,” said George Rooth, administrator of Fountain Valley Regional Hospital and Medical Center. “I think you’ll see other hospitals dropping out of the system.”

State Medi-Cal negotiator Jim Ringrose said he does not believe that services to the 103,000 Medi-Cal patients in the county will be hurt if the three hospitals do terminate their contracts.

“We don’t want anybody to leave the program, but we still have ample hospitals under contract” in Orange County, Ringrose said.

Ringrose and Rodriguez denied that the hospitals are being grossly underpaid for their services to Medi-Cal patients. They said that the large number of patients a hospital receives with its Medi-Cal contract should offset any discount in rates.

“After Christmas when the Broadway has a sale, does that mean they’re losing money?” Ringrose asked.

Hospital Officials Defend Action

Officials at the three hospitals vehemently disagreed.

Wayne D. Schroeder, president of the two Western Medical centers, said his hospitals racked up $25.2 million in Medi-Cal charges last year and collected about 25 cents on the dollar.

Chapman General Hospital administrator John Kramar said that under the contract his hospital receives only $500 a day, “whether the patient was in the intensive-care unit or in surgery,” and that its actual costs are $700 to $800 a day.

Kramar said that state Medi-Cal negotiators offered his hospital an increase of $6 a day per patient; he was seeking an increase of $225 a day.

Kramar also said that the Medi-Cal contract has been bad for the hospital’s image. “The fact is we were starting to be labeled the Medi-Cal hospital. . . . You got dumped your unfair share of indigent care for the area by having that label.”

Proportion of Indigent Patients

John Cochran, president of La Palma Inter-Community Hospital in La Palma, expressed a similar concern. He said that La Palma’s Medi-Cal load quadrupled after a Los Angeles County hospital nearby quit taking Medi-Cal patients 3 years ago. Three years ago, he said, 2% of its patients were on Medi-Cal, contrasted with 8% last year. “We expect it to go to 12% this year,” Cochran said.

La Palma recently renewed its Medi-Cal contract, receiving “a significant rate increase,” Cochran said. “But it’s still so far below anything that’s real.”

He said, however, that if any more local hospitals drop out of the Medi-Cal system, La Palma would consider dropping out too.

At UCI Medical Center in Orange, where more than 40% of the patients receive Medi-Cal, administrator Mary Piccione expressed concern about the three hospitals’ dropping their contracts. It is a difficult situation that “can only get worse,” she said.

The hospital’s Medi-Cal contract contributed to the $14-million deficit UCI Medical Center had last year, she said. Piccione said that if the three hospitals leave the system, the UCI Medical Center deficit could grow by several million. The hospital is operating at capacity, and, she said, some of its paying patients would have to be turned away.

“The mission of the hospital, which is teaching and research, will be compromised if we can’t afford to keep the doors open,” Piccione said. “It isn’t that we don’t want to take care of poor people, but we think the burden should be shared by many hospitals.”