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Kaweah Health CEO pens pleading letter to governor over pandemic-related ‘financial devastation’

 Kaweah Health Medical Center in Visalia.
Courtesy Kaweah Health
Kaweah Health Medical Center in Visalia.

Kaweah Health Medical Center in Tulare County is in major need of funding from the state. That was the message CEO Gary Herbst sent to Governor Gavin Newsom in apleading letter in early November. Herbst says the 613-bed public hospital is facing a severe cash crunch due to increased costs associated with the COVID-19 pandemic.

In his letter, Herbst calls on the governor to reform the Medi-Cal reimbursement system, saying district hospitals like Kaweah haven’t seen increases in reimbursements from the state, despite the skyrocketing cost of care during the pandemic. According to Herbst, 60 percent of Kaweah’s patients are on Medi-Cal. Medicare and private insurance reimbursements also haven't caught up with the cost of care, he writes.

Hospital leaders are currently weighing which Medi-Cal elective surgeries the hospital will stop offering or limit on a case-by-case basis, which will impact local residents' care opportunities in a region already struggling with low doctor-patient ratios and access to medical services.

“Without your help, it will soon be virtually impossible for Medi-Cal patients to receive anything but emergency medical care in the State of California,” Herbst writes.

The governor had not received the letter as of Friday, according to a press spokesperson.

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

Cost-cutting measures are underway

Herbst worked as the CFO of the hospital for 25 years before becoming CEO five years ago. He knows the hospital’s condition is serious. Between July and October of this year, he says the hospital lost $34 million dollars and has less than 90 days of operational funds in cash reserves.

Hospital leadership has already begun implementing cost-saving measures. The skilled nursing facility will close by the end of the year. Hospital staff are trying to find care for two long-term residents and the rest of the patients will be discharged to families. The Neurosciences Clinic will close on December 22. One hundred employees have been laid off and 100 open positions will not be filled, Herbst said. Executives are taking a 20 percent pay cut and directors will take a 10 percent pay cut. Neither will receive raises this year.

“We’re turning over every single stone,” Herbst said. “We’re doing everything we can. It’s gut wrenching. It’s painful. These are our colleagues, our friends, our neighbors and there’s never been anything harder.”

A nursing crisis, and a potential solution

Travel nurses and contract workers have become a major expense for the hospital. The nursing industrychanged drastically during COVID-19, as many nurses left the industry or became travel nurses. Currently, 20 percent of nursing jobs are vacant at Kaweah according to Chief Nursing Officer Keri Noeske.

“We have about 1,000 nurses total, so with 220 positions open right now, it is a significant number of people that are missing from the team,” Noeske said.

Last week Kaweah announced it is partnering with Unitek College in Bakersfield to create a nursing school at the hospital. The first cohort of 25 students will begin in March with plans for two cohorts per year. It will be two to three years before graduated students are eligible for full-time employment. In the meantime, the hospital will continue to rely on contracted help as it tries to fill vacancies.

Moving forward, Herbst said his task is to balance services, staff morale and fighting for the needs of the hospital.

“[Kaweah] is a phenomenal organization. It has a rock solid foundation. There are some cracks in it that need to be shored up,” Herbst said. “We will never sacrifice quality or safety for our patients. We will get through this.”

Elizabeth Arakelian is the host of All Things Considered. A Valley native, Elizabeth earned her bachelor's degree in English Language Literatures from the University of California, Santa Cruz and her master's degree in journalism from New York University. She has covered a range of beats. Her agriculture reporting for the Turlock Journal earned her a first place award from the California Newspaper Publishers Association. While in graduate school she covered the New Hampshire Primary for NBC Owned Television Stations and subsequently worked as a television ratings analyst for the company's business news network, CNBC. Upon returning to California, her role as a higher education public relations professional reconnected her to the Valley's media scene. She is happy to be back to her journalism roots as the local host of All Things Considered.