Should taxpayers fund a hospital in Madera County? Why there are bigger problems
While Madera County searches for healthcare solutions, the recent hospital and clinic closures highlight a bigger financial crisis for hospitals.
MADERA, Calif. — Madera county and city officials are working closely with consultants to find a healthcare solution after losing the county’s only general hospital.
Discussions have hinged on a possible taxpayer-funded healthcare district that might be able to operate a community hospital. The discussions come nearly a month after Madera Community Hospital and its clinics all shut down.
Madera County Administrative Officer Jay Varney said the consultants he’s spoken with have suggested some first steps: “The first thing we need to do is determine what kind of ongoing revenue sources Madera County has access to for any kind of healthcare provision,” Varney said.
By looking at how many patients utilized Madera Community Hospital services in the past, Varney can estimate potential revenue for an independent healthcare district. But right now, the revenue projections are not enough to fund a community hospital.
“If there was a [county] parcel fee of $250 a parcel, that would be about $5.5 million a year,” Varney said. “Those numbers are not a recommendation, they’re just an example.”
The Madera City Council approved up to $60,000 to help pay for consultants who are helping explore solutions. A more detailed report is expected to be presented to the Board of Supervisors in February.
‘It just wasn’t sustainable’
The closure of Madera’s hospital and clinics have brought bigger lessons about California’s healthcare system.
The rising costs of care in recent years at Madera Community Hospital were too much to keep up for the low rates offered by Medi-Cal insurance reimbursements – ultimately helping to doom the hospital, said Rob Poythress, county supervisor and member of the hospital’s board.
Those hospitals dependent on these government programs that are paying less than cost, they are being hardest hit.Carmela Coyle, CEO of the California Hospital Association
A majority of patients who used the hospital were on Medi-Cal insurance, which provided a large source of revenue for the hospital.
Health experts say under the Affordable Care Act, California increased the number of people covered under Medi-cal. But the increase of new enrollments came without additional revenue to cover the costs at hospitals, they say. According to the state’s Department of Health Care Services, the number of eligible enrollees to Medi-Cal increased by more than 2.7 million between September 2020 - September 2022.
Additionally, Poythress said the hospital never recovered the staff lost at the height of the pandemic. That forced the hospital to hire traveling nurses, a segment of the workforce that can charge more than nurses on staff. Poythress estimates 40 percent of the hospital’s nursing staff were traveling nurses when it closed. The hospital was losing roughly $2.5 million a month.
“I had to communicate to my board members that it just wasn't sustainable,” Poythress said.
Poythress said it could have been difficult for federal aid given to counties for COVID-19 relief to temper the hospital’s costs long-term.
“It would have been a blood transfusion into somebody who's already bleeding out. At some point, they're going to expire and so it's really a systemic issue,” he said.
An ‘unprecedented financial shock’
The hospital problems in Madera are indeed indicative of the situation across the state, said President and CEO of the California Hospital Association Carmela Coyle.
“Those hospitals dependent on these government programs that are paying less than cost, they are being hardest hit,” she said.
Coyle said the California Hospital Association, a group representing more than 400 hospitals across the state has lobbied Gov. Gavin Newsom’s office for immediate financial relief for hospitals.
The group has made a verbal request of $1.5 billion in one-time funding to be distributed to the most financially burdened hospitals serving a large share of Medi-Cal or Medicare patients.
Coyle noted that Kaweah Health Medical Center in Visalia, which has also been experiencing financial troubles, might benefit from the one-time funding.
In addition to a funding request, Coyle said the California Hospital Association has asked to work with the state legislature over the next several years to increase reimbursement rates, which she said have not been increased in more than a decade.
“That is creating this unprecedented financial shock,” she said. “It is very difficult if we lose even one hospital.”