Valley hospitals feeling the pain

Economic crisis puts a strain on health care.

Published online on Saturday, Dec. 13, 2008

The nation's economic bad health is creating financial aches and pains for hospitals in the central San Joaquin Valley and across the state.

More patients without insurance are showing up in emergency departments for care, and more who have insurance are struggling to pay out-of-pocket medical costs, hospital officials say.

At the same time, hospitals have seen their investments shrink in the turbulent stock market, making it harder to turn a profit. And the tight credit market makes it almost impossible to borrow money to complete or start building projects or to purchase expensive new equipment.

A recent survey of California's 430 hospitals by the California Hospital Association showed that more than two-thirds had seen a moderate to significant effect on their finances from the faltering economy.

"It's a tough time, and the future looks pretty gloomy for the industry," said Stephen Walter, chief financial officer for Community Medical Centers.

Little optimism

There is little reason for Valley hospital executives to feel optimistic. Jobless rates -- 11.4% in Fresno County and 11.8% in Tulare County -- are only expected to increase in the coming year, leaving more people without health insurance.

People who are out of work are asking for help, said Chris Fontes, in charge of patient financial services at Kaweah Delta Medical Center in Visalia.

Requests for financial assistance to pay bills have jumped 40% in the last six months at his hospital, he said.

"We used to get 30 to 40 applications a week," Fontes said. "Now we're receiving 60 to 100 a week."

It's the same at nearby hospitals.

"We're finding there are more patients coming in asking to extend payments or skip payments," said DiAnn Spence, director of patient financial services for Adventist Health Services, which owns Hanford Community Medical Center, Central Valley General Hospital in Hanford and Selma Community Hospital.

Unpaid medical bills are up about 12% this year, Spence said. And the amount of charity care being written off each month is up 17% so far from last year to this year, she said.

Patients aren't paying medical bills because "they're trying to save their homes from going into foreclosure," Spence said.

Care isn't cheap

Treating patients without insurance is expensive for hospitals, said Gary Herbst, senior vice president and chief financial officer at Kaweah Delta.

Kaweah has seen a 3% increase in people without insurance in the past six months, from 6% of the total patient population to 9%, Herbst said. That increase alone means about a $3.5 million loss in revenue for the hospital, he said.

Saint Agnes Medical Center in Fresno has seen its bad debt expense increase by about 8%.

Some of the increase at Saint Agnes is driven by a rise in the number of uninsured patients in the emergency department, hospital officials said.

At Community Medical Centers, the largest health-care system in the Valley, emergency doctors are treating more patients without insurance. The company's charity care for the medically indigent and people unable to pay bills increased by $16 million from 2007 to 2008. But the hospital has noticed another trend: More people with insurance are unable to pay their part of the bills.

Employers are asking employees to be responsible for more of their health-care costs, Walter said. Some workers may have to pay $3,000 to $5,000 for health services before insurance begins to pay, he said.

And when workers are laid off, they're responsible for paying the premiums to continue their insurance coverage. Many can't afford to do so, Walter said. So Community has paid the premiums for unemployed workers who need surgery or are staying in the hospital, he said.