Amid rising health care costs in the wake of the COVID-19 pandemic, many California hospitals are struggling to stay afloat, especially hospitals that treat patients on Medi-Cal, Medicare, Medicaid, and other government assistance, according to a former hospital executive.
A widespread shortage of doctors, nurses, and supplemental providers is contributing to the problem, said Genaro Grajeda, CEO of Healthpact, a California-based healthcare group.
Mr. Grajeda said most hospitals struggling today are those operating under very slim margins, namely public-serving hospitals that on average only make a profit margin of about one percent. The former hospital CEO said such models are no longer sustainable.
“Hospital systems are very expensive. Every time we access a service within a hospital, it’s going to cost more, because we have to pay for the facility, and the administrative personnel who manage it, those who clean it, the providers [and all who operate it],” he said. “It all just expands the cost there.”
Increasing the problem, he said, is the growing number of patients covered through government assistance, such as Medi-Cal. Under such plans, hospitals treating Medi-Cal patients are only reimbursed around 50 percent of the treatment cost from the government, leaving the hospital liable for the remaining costs, according to Mr. Grajeda.
Hospitals then bill patients who have health insurance at higher rates to cover the costs of patients being treated through government assistance, he said.
According to Mr. Grajeda, these hospitals rely on federal and state funding, which he said is not enough to cover their costs with inflation. To make ends meet, the former hospital executive said such hospitals often cut services, like reducing primary care physicians on staff or canceling non-emergency surgery.
“When hospital systems start struggling financially, what happens is you have to shift your resources and you have to find out what services you’re going to continue to provide,” Mr. Grajeda said. “In communities where there’s already a shortage, there’s not much you can do.”
Now, he said, access to primary or specialty physicians takes far longer, with appointment wait times stretching as far as eight months due to cost-cutting.
Unable to wait such extended periods, Mr. Grajeda said many patients on government assistance seek out alternative care through urgent care clinics and emergency rooms, where providers offer same-day care for typically more pressing issues.
However, such services don’t provide adequate preventative and follow-up care for patients, Mr. Grajeda said, increasing the overall cost to the system.
“Now these patients leave the emergency room with a diagnosis for the problem, but no doctor to actually [provide] a treatment plan,” he said.
“The real cost of this crisis—if help does not arrive soon—will be borne by the people of California, whose health care services will erode, slowly in some areas, and all at once in others,” Ms. Coyle said.
According to Mr. Grajeda, while California has helped more people access health care coverage and provided a lot of funding to improve quality of care, the state can improve by making sure the money is going where it’s needed the most and providing transparency to the community regarding how the money is spent and what are the results.
