Monitor Hospitals’ Financial Health

California counties, including Los Angeles, have struggled to keep up with health care demands and are thinking about privatizing public hospitals and trauma centers. The aim is to save money and expand access to care for the indigent, but two reports issued independently last week should give the counties pause.

The first study, sponsored by the California Medical Assn., illustrates how the state has lost 12% of its emergency rooms since 1990 and how most of its existing private trauma facilities are increasingly cutting services, forcing patients to wait for hours and diverting ambulances because of frequent bed shortages.

The CMA used the report to rally support for a bill by state Sen. Joe Dunn (D-Santa Ana) to allot $200 million a year from the state to struggling hospitals and $100 million annually to doctors who care for the uninsured. Emergency departments and the physicians who staff them reported losses topping $416 million in 1998-99, the year profiled in the report, and they deserve the additional funding the Dunn bill would provide. To save taxpayer dollars, however, Gov. Gray Davis should also use the state’s hefty and mostly unspent federal allocation for the Children’s Health Insurance Program to ease the financial burden on counties caring for the indigent.

The second report--sponsored by the Service Employees International Union, which represents hospital workers--also details an erosion of access to health care in the state. However, the SEIU is lobbying for something less tangible than money: vigorous state leadership that gives communities more say over whether their hospitals will close and that aggressively audits nonprofit hospitals to ensure that they are providing the charity care that is the price for tax breaks they receive.

The SEIU report contends that Catholic Healthcare West, the state’s largest private nonprofit hospital chain, broke state laws by under-funding charity care and closing hospitals in Long Beach and south of San Jose without giving community leaders a chance to take them over. Health analysts say the chain spends just 1.1% of net patient revenue on charity care, compared to a national average for nonprofit hospitals of 3% The study is hardly neutral--it was prepared by Julio Mateo, a member of Atty. Gen. Bill Lockyer’s hospital charity care task force--but it establishes a basis for Lockyer’s continuing investigation of whether Catholic Healthcare West violated its contractual obligations.

Access to health care is likely to keep diminishing, with dozens of city hospitals facing costly seismic upgrades slated to shut their doors in the next few years, according to the California hospital industry. Many of the remaining hospitals deserve the sort of funding increases the California Medical Assn. has proposed. But as the SEIU report makes clear, hospitals need not just more money, but sharper oversight too.