CEO Message

Financial Challenges Persist, Jeopardize Access to Care

The lifesaving and lifechanging hospital care upon which all Californians rely continues to remain at significant risk. 

Recent data compiled over the past several months show a clear and troubling picture — despite some small improvements in hospitals’ financial conditions, the majority of California hospitals are still struggling — and sadly it is all Californians who will suffer if the challenges are not addressed. 

Nearly half continue to lose money every day delivering care for patients, and another 12% have such low operating margins that their ability to preserve services and remain viable remains in jeopardy. 

For patients and communities, what they are now experiencing is similar to the proverbial frog in boiling water. When Madera Community Hospital closed last year, it rocked California’s health care system and left thousands upon thousands without the critical care they need close to home.  

Now, like the frog in the pot that doesn’t realize it’s getting dangerously hot because it is accustomed to the slowly increasing temperatures, California is seeing a slow degradation of health care services that, if not taken seriously, will culminate in dangerous shortfalls in health services throughout the state.  

To offer a few recent examples: 

These are just a handful of the small ways California’s health care system continues to erode. The reasons are clear: 

  • Increasing costs – The growth in expenses, which hospitals have little to no control over, is outpacing growth in revenues. Over the past five years alone, wages and salary expenses have jumped 34%. 
  • Poor reimbursement – California pays just 75 cents for every dollar it costs to care for Medi-Cal patients in hospitals. 
  • New state mandates – New minimum wage laws will drive costs up even more, and health care spending growth limits by the Office of Health Care Affordability (OHCA) will further restrict reimbursement. 
  • Sicker patients – Patients are arriving at hospitals sicker and need more comprehensive care — hospital stays are 11% longer than just five years ago. 

If there’s a silver lining to these data, it’s that these problems are solvable. Insurance companies must reimburse hospitals for all costs, including rising labor expenses; Medi-Cal rates, which have not increased in over 12 years, can be raised; OHCA can and should consider additional room in the state growth cap for helpful or needed spending; and more. 

As CHA shares these new data with policymakers, we must always reinforce that the fight for hospitals is truly a fight to protect patients.