Earlier this week, a federal judge voided the CDC’s mask mandate for airlines, and immediately the major air carriers announced to passengers that masks were no longer required. Uber and Amtrak quickly followed suit. At the same time, COVID-19 cases are rising in parts of the country, and experts are predicting another surge later this year.
As we struggle to define the status of this pandemic, one thing is very clear: the devastation COVID-19 has wrought upon California’s hospitals will be felt for years if not decades.
On a statewide media call (listen to the recording below) on Tuesday, we were able to share the latest study by national financial consulting firm Kaufman Hall. The findings are frightening:
- For the first time in recent history, more than half of California’s hospitals (51%) are operating in the red.
- California hospitals have collectively lost more than $20 billion in 2020 and 2021; even after accounting for the more than $8 billion in federal relief, hospitals saw a $12 billion loss.
- Overall, California hospital margins were 26% lower on average than prior to the pandemic.
- Higher expenses — including higher labor costs and medical supply chain shortages — are the key factor for these losses. In California these expenses rose 15% in 2021, outpacing the 11% national average, and in 2021 the contract hourly wage in California was $156 compared to a national average of $100.
Kaufman Hall Founder & Chair Ken Kaufman’s quote on the study speaks volumes: “The pandemic has continued to cause material and potentially damaging financial challenges for California hospitals,” he said. “Even as COVID-19 recedes, it is leaving dramatically higher costs in its wake that hospitals will likely feel for years.”
Also on Tuesday’s call, two guest speakers — Roger Sharma, President & CEO of Emanate Health and Karen Paolinelli, CEO of Madera Community Hospital — shared the very moving and very personal stories of the impact of COVID-19 on their organizations and the ongoing struggle to continue to provide health care services to their communities. Many thanks to Roger and Karen, whose case studies are available (Emanate and Madera).
The study has already been picked up by a few key media outlets. You can read coverage in Cal Matters and the San Francisco Chronicle. It was also covered on NPR stations across the state via The California Report.
This study underscores the need for rapid federal and state relief — both in the form of financial support and regulatory reform.
Prior to the pandemic, the staggering cost statewide of the 2030 seismic requirements — likely over $100 billion — was challenging for most hospitals. Today, meeting these requirements is simply impossible. Given the long-term financial burdens hospitals are facing because of the pandemic, it’s imperative for lawmakers to modernize the 2030 seismic standards in order to preserve access to high-quality, equitable care for all Californians — especially those in areas that rely heavily on Medi-Cal and Medicare for coverage.
State lawmakers also must update the payment rates that Medi-Cal pays those hospitals that treat high numbers of low-income, uninsured, and underinsured patients. These reimbursement rates have not increased in 10 years, and the pace of inflation, paired with the COVID-19-driven losses and expense increases, mean that the communities of color (two-thirds of Medi-Cal beneficiaries are non-white) hit hardest by the pandemic need even more relief.
We will continue to share this study with key federal and state lawmakers so they don’t lose sight of the fact that while many are done with COVID-19, the crushing impact it has had on California’s health care system — hospitals in particular — must be met with a response appropriate to counter the severity of the damage.