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Hospitals Are Resilient, Not Invincible

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There’s a widely held misconception about California’s hospitals that their proven resilience in the face of challenges over decades upon decades means they can withstand anything thrown their way. 

As someone who has worked closely with hospitals for nearly 35 years, it’s sad and sobering to say, out loud, that this common belief simply isn’t true. 

As far back as 1989, renowned health care futurist Jeff Goldsmith, PhD, wrote the following in Harvard Business Review

“Except for major regional institutions, the acute-care hospital as we know it will probably not survive … In the future, acute care will be concentrated in a small number of high-tech regional centers treating traumatic and chronically ill patients …” 

It’s frightening to think about the fact that Goldsmith’s prediction, spurred by a global pandemic that has wreaked unprecedented havoc throughout the health care system, is on its way to becoming a reality. 

Here are the facts as they stand today: 

  • More than half of California’s hospitals are losing money every day on the patients they care for; reserves and relief funds are rapidly dwindling; and hospitals are grappling with difficult decisions about whether they can tolerate cuts to vital services just to remain viable. 
  • Sadly, among the first cuts will likely be obstetric services — especially in more rural areas — but it is happening in troubled urban communities as well; according to a Modern Healthcare article this week, maternity care deserts are growing as more hospitals cut obstetric services. 
  • Hospitals, often among the largest employers in their counties, are being forced to trim staff — which account for nearly 60% of all costs — to make ends meet; California cut more than 28,000 positions in June alone
  • The Centers for Medicare & Medicaid Services is proposing what amounts to a cut in Medicare inpatient hospital payments, which cover nearly 6.5 million Californians. 
  • California’s Medi-Cal program, which covers low-income Californians (a third of the state’s 40 million people), has not increased rates in a decade, despite skyrocketing inflation. 

All of this comes at a time when there is significant pressure on hospitals and other components of the health care system to hold costs in check. At the same time, we all know that massive investments — not cuts — are needed to help people with behavioral health needs, many of which are driven by the effects of the pandemic, and to reduce health disparities among diverse populations.  

It is tantamount to an impossible task to, all at once, reduce cost growth, provide higher wages for health care workers, expand behavioral health services, reduce health disparities, and continue to provide for the needs of a growing older population.  

In the end, it is Californians who will suffer. Moms-to-be who must drive miles and hours to reach a hospital to deliver a baby. Even longer wait times to get appointments for pediatric mental health care. Emergency departments that are overflowing as staffing is cut to the bone.  

As bad as things are nationally, California has it even worse. By 2030, all hospital buildings must meet an enhanced seismic standard that they be fully operational, including buildings that house non-emergency units like dietary services, or they will be forced to close. The price tag for this work is north of $100 billion, a cost that simply cannot be absorbed given the current state of affairs. 

Something has to give.  

Hospitals and their reputation for being survivors create a perception that is doing them a disservice as aid from federal and state legislators has fallen far short of what’s needed to rebuild this deeply fractured health care system.  

This is not hyperbole. These are the facts, and unless action is taken, California will see an ongoing and accelerating degradation of the health care services that so many rely on to live their best lives.