California hospitals cite $14 billion in losses, seek aid

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DON THOMPSON
Associated Press
SACRAMENTO (AP) — California hospitals have suffered as much as $14 billion in losses by postponing elective surgeries and other procedures to clear space in anticipation of a flood of coronavirus patients that never occurred, the hospital association said Monday in asking state lawmakers to immediately approve $1 billion in financial aid.
“We emptied California’s hospitals to make way,” California Hospital Association President and CEO Carmela Coyle told a budget subcommittee, as most state Assembly members returned to the state Capitol for the first time during the pandemic.
The decision on halting some procedures was “the right thing to do,” Coyle said. “But as we begin to access the damage, the toll is enormous.”
The request for aid came as California expects to exhaust its record budget reserves and cut programs to pay for its extraordinary response to the pandemic. Gov. Gavin Newsom recently allowed hospitals to again schedule elective surgeries, and witnesses at the hearing said the situation may one day return to normal.
Ben Johnson of the nonpartisan Legislative Analyst’s Office said some dentists are reporting up to a 90% drop in services and are among providers reporting “a fairly dire situation.”
Johnson said governments and private entities have already taken steps “to begin to alleviate some of the financial hardship,” including the allocation of nearly $3 billion in federal aid money for California providers.
“This funding, we believe, will help providers’ cash flows as well as their bottom line,” particularly for those who have a large Medicare patient base, Johnson said.
Health providers also are taking out loans or making other changes to keep money flowing and protect their networks, he said, while furloughed health care workers can also take advantage of federal and state assistance. Stanford Health Care, for instance, is requiring its workers to take pay cuts or use paid vacation time.
Still, California Medical Association chief executive officer Sarah Summer warned that “the physician workforce is facing an acute crisis.”
She said some medical practices have lost more than half their revenue, and she predicted that as many as 15% of practices could close their doors, particularly those that are small or in remote areas.
Hospitals have suffered average losses between 20% and 30%, Coyle told the subcommitee on health and human services, with an even higher percentage loss for smaller and rural hospitals.
That equates to as much as $14 billion in losses, she said.
The “bottom line is hospitals are desperate for cash,” she said.
That $3 billion in federal assistance is not enough to bridge the gap until some normalcy resumes, she said.
“We need to do what we can to stop the financial bleeding,” Coyle said. “There is no question we will need the state’s help.”
For the vast majority of people, coronavirus causes mild or moderate symptoms. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.
The back-and-forth came as committee members and employees wearing surgical-style masks sat the required six feet apart to avoid infection in the Assembly’s largest committee room. It remained largely empty, with witnesses and members of the public testifying by telephone.
“I know it’s going to be a very different way of doing business, but I think it was important for us to be here to start thinking about the great challenges that we have ahead,” said Assemblywoman Blanca Rubio, a Democrat from Baldwin Park.
State senators will return next week as Newsom prepares to present his revised budget. Lawmakers will then have about a month until a June 15 deadline to craft a new spending plan that will look radically different from the upbeat, surplus-fueled proposal the governor outlined in January.