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Madera Community Hospital warns of disaster as pandemic-related financial losses continue

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Madera Community Hospital
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The worst of the pandemic may be over, but hospitals all over the state are still reeling from financial losses.

In March 2020, Madera Community Hospital was the first in the Valley to receive a COVID-positive patient. Since then, according to hospital CEO Karen Paolinelli, it’s endured blow after financial blow.

“The pandemic has taken its toll with the expensive therapeutic drugs, the increased costs of the PPE, the purchasing of new equipment such as ventilators, the canceling of elective surgeries to make more room for inpatients, and the continual increased costs for travel nurses,” said Paolinelli during a press conference earlier this week.

“There has been nothing to offset the increased costs of care during the pandemic. Our costs have increased but our reimbursement has not changed,” Paolinelli said, referring to state and federal funding to reimburse providers for caring for patients that fall under public insurers like Medicare and Medicaid (known in California as Medi-Cal). According to Paolinelli and other hospital administrators, those reimbursements have remained static throughout the pandemic.

Madera Community Hospital is not the only ailing facility. According to a new report commissioned by the California Hospital Association (CHA), a majority of hospitals across the state are now operating in the red. Even after receiving emergency pandemic aid from the federal government, California’s hospitals in total lost nearly $4 billion in 2021, adding to losses of more than $8 billion in 2020. “The pandemic has dealt a particularly crushing blow to the healthcare delivery system and especially to California’s hospitals,” said CHA CEO Carmela Coyle.

In response, Coyle announced that the CHA is requesting that the state increase its Medi-Cal reimbursement for patient care. The association also supports the $1.7 billion included in Newsom’s latest budget proposal to bolster the state’s healthcare workforce.

Without any change to the status quo, hospital administrators warn the consequences could be dire. “A lot of people have the thinking that the pandemic is gone, so economically the hospitals should start getting better, but the causes of why we are losing money have not gone away,” said Roger Sharma, CEO of Emanate Health, a health system serving the San Gabriel Valley. “The inflation on medical supplies and drugs – the prices are not coming down, they’re still there, in fact going up. The cost of labor is still very challenging and way above background rate.”

Each month, Sharma said the system is pulling millions of dollars from its savings. For now, he said, patient care is not being affected, but that could change. “We are internally evaluating particularly the behavioral health services, which are primarily funded by Medi-Cal,” he said. “This is a very serious issue for us because we are the last hospital in the region to keep it. Everybody else got out of behavioral health because it is very difficult to sustain.”

Karen Paolinelli also warned that the hits to Madera Community Hospital will likely continue. “The pandemic has caused us devastating financial losses that are not recoverable,” she said. “If options to save or get additional funding for hospitals don’t materialize, the hospital could close its doors permanently.”

Kerry Klein is an award-winning reporter whose coverage of public health, air pollution, drinking water access and wildfires in the San Joaquin Valley has been featured on NPR, KQED, Science Friday and Kaiser Health News. Her work has earned numerous regional Edward R. Murrow and Golden Mike Awards and has been recognized by the Association of Health Care Journalists and Society of Environmental Journalists. Her podcast Escape From Mammoth Pool was named a podcast “listeners couldn’t get enough of in 2021” by the radio aggregator NPR One.