Poor Patients Could Bankrupt UCI Medical Center, Official Warns

UCI Medical Center could go bankrupt and close within 2 years if it continues to be flooded with indigent patients, UC Irvine Vice Chancellor Walter Henry said Wednesday.

In the first of what is to be a series of news conferences on health care, Henry proposed creating a new public hospital in the county as one way of dealing with the volume of indigent care that he said threatens to overwhelm UCI.

“That’s a 1- to 2-year window” in which UCI Medical Center might close, Henry said. “I don’t think that’s a 10-year window. Now if that happens, the entire burden of indigent care is going to fall on all the county.”

In a brief statement released later Wednesday, UCI Chancellor Jack Peltason said there are no plans to close the hospital but he believed that Henry was trying to underscore the severity of the problems. Henry said the medical center’s problems in “underfunded” care are part of a national crisis in health care that has put pressure on hospitals across the country. Many hospitals in Orange County have complained that Medicare, Medi-Cal and Orange County’s Indigent Medical Services program do not begin to reimburse them for treatment costs they incur.

In March, UCI officials told the University of California Board of Regents that they might quit the Medi-Cal program if they could not obtain a better reimbursement rate for their services. UCI officials are negotiating a new contract with Medi-Cal.

Henry on Wednesday described rapidly escalating deficits at the 493-bed teaching hospital, a renovated county hospital in the city of Orange that contains 6% of Orange County’s hospital beds, performs some of the most sophisticated procedures in modern medicine, but also cares for more than half the county’s poor.

Only One to Post a Loss

Of five UC hospitals, UCI Medical Center was the only one to post a loss in the 1987-88 fiscal year, recording a deficit of $13.1 million.

Henry reported Wednesday that that deficit was expected to rise to $17 million by 1988-89, $27 million by 1989-90, $38 million by 1990-91 and, by a “conservative” analysis, to $100 million by 1997-98.

But, Henry warned, UC regents are no longer willing to accept continued losses.

“I can tell you, the University of California is not going to pick up these accelerating deficits. And at some point the medical center will be in very serious jeopardy of being closed,” he said sternly. “I really believe that.”

Dr. Tierso del Junco, a UC regent who chairs its committee on hospital governance, said that Henry had stated the regents’ views correctly and that the medical center might be in danger of closing.

“I concur that if something is not done . . . it will eventually bankrupt the institution. . . . The question is how far do you expect this institution (UC) to continue to bail out the medical center?” del Junco said. “The second question is: What is the obligation of the local community, the county, the cities and the state to the institution?”

Del Junco added, “I can assure you the university will continue to make every effort . . . to maintain the center open to the community and to take care of the indigent population. But it seems to me we cannot be left with the lone responsibility of taking care of these patients by ourselves.”

State Formula Blamed

Thomas F. Riley, chairman of the Orange County Board of Supervisors, said he was concerned with the medical center’s plight and blamed some of the problems on an unfair state formula that gives Orange County the second lowest reimbursement level for health care in the state.

But Riley doubted that the county would be able to start a new public hospital.

“I am sure we would have the same difficulty finding funding for it as we do other things,” he said.

A proposal to funnel indigent care to other hospitals in the county drew fire from Ronald R. diLuigi, assistant director of the Orange County Health Care Agency.

“What’s he talking about--giving it back to us? What’s he got in mind?” diLuigi wondered. Orange County sold its hospital to UCI for $8 million in 1976.

But diLuigi was sympathetic to Henry’s concerns, agreeing that “underfunding” by state contracts and Medicare is “a national issue.”

At the California Medical Assistance Commission, the Sacramento agency that negotiates Medi-Cal rates, executive director Michael Murray said that if Henry had complaints about Medi-Cal rates, “he should be addressing that to the state Legislature and the governor.” Other hospital administrators expressed concern that if UCI Medical Center goes out of business, the burden of indigent care would, as Henry predicted, fall on them.

Impact on Hospitals

“There would be an impact on our hospital,” said George M. Rooth, administrator of Fountain Valley Regional Hospital Medical Center. “All hospitals in Orange County would have to deal with their (poor patients). How we would respond to it I don’t know.”

Already about 20% of Fountain Valley’s patients are Medi-Cal or indigent patients, Rooth said. Adding more such patients might force his hospital to reduce services, Rooth said.

At Martin Luther Hospital in Anaheim, Betty Bartley, director of public relations, agreed that if UCI Medical Center closed, “there’s no question that it could have a negative impact on the rest of the county. It would just cause us to have to take care of more indigent and Medi-Cal patients than we already have.”

The history of UCI Medical Center is complex, but its 33-acre site once housed the county Poor Farm and Hospital, which began in 1913.

According to the official history of the medical center, the predecessor hospital was used primarily as a sanitarium for patients with diseases such as tuberculosis. In the Depression the Poor Farm was phased out but the hospital remained on 33 of the original 72 acres. After a protracted debate in the early 1970s, UCI in 1976 bought the County Hospital to use as its teaching hospital.

The old hospital has since been extensively renovated and turned into a research institution that offers “tertiary” care--the most sophisticated level of medical care.

The medical center and its 1,250 attending physicians care for complex medical cases in its neonatal intensive care unit, at the county’s only burn center, in a cancer center and a top-level trauma center. The hospital also offers the only regional poison center for Orange, Riverside, San Bernardino, Mono and Inyo counties.