Michael L. Wall, president of Northridge Hospital Medical Center, sums up the pressures of operating a hospital in today’s San Fernando Valley with a simple statistic: Five hospitals closed since 1995. It’s no accident, Wall said. “What we’re seeing right now are the strong getting stronger and mission kinds of hospitals those that serve the poor, the indigent that don’t necessarily have most reimbursements are struggling more and more,” he said. “You’ve got two different types of classes: those in the right neighborhood with the right market and the right mix and do well and those mission-driven hospitals that are struggling.” Such daunting concerns are among the hundreds of challenges facing Valley hospitals, which employs more than 80,000 people, according to the 2006-2007 San Fernando Valley Economic Report. Among the most pressing issues is the state legislation requiring medical institutions to meet certain seismic standards before 2008. The law, passed in the wake of the 1994 Northridge earthquake, has hospitals scrambling to retrofit existing facilities or build wholly new structures from the ground up. Budgets, however, have skyrocketed and hospital officials report there are few contractors or engineers versed in the complex process of building a heavily regulated hospital building. Another state regulation still affecting hospitals is the one signed in 1999 by then-Gov. Gray Davis setting minimum staffing levels in hospitals. The rule, which didn’t go into effect until 2004, requires a certain number of nurses per patient in California hospitals. Nursing shortage While heralded by patient groups, the regulation has triggered a pervasive shortage of nurses in the state, and especially in Southern California. To keep staffing at the level required by the state, hospitals have resorted to offering new nurses signing bonuses, sponsoring visas for foreign nurses, contributing funds to college nursing programs and paying thousands of dollars for traveling nurses. Another major issue is how to care for those without health insurance, said Cathy Casas, director of hospital operations for Kaiser Permanente, which has hospitals in Woodland Hills and Panorama City. “Within the valleys, we continue to grapple with the issue of access to healthcare for the underinsured (and) uninsured population,” she said. “The system is really challenged with meeting the needs of the uninsured.” Challenging because Medi-Care and Medi-Cal reimbursements continue to dwindle, leaving hospitals to foot the bill and pass fees onto customers. “The fact is, the government, particularly Medi-Cal, does not pay at full cost of caring. So hospitals are forced to cost shift,” said Albert L. Greene, president and CEO of Valley Presbyterian Hospital in Van Nuys. “It’s all about location. If it’s a well-insured community, you’re going to do well versus if it’s not a well-insured community and you’re dealing with government pay,” Greene said. Hospitals are also facing escalating competition from outpatient clinics, locations operated by doctors that offer simple medical procedures, such as cardiac checkups or colonoscopies. Because clinics are often geared toward a designated set of procedures that don’t require overnight stays, overhead can be kept low. Patients like that they can determine where and when they have a procedure, which often happens much faster than a traditional hospital. The result is that outpatient clinics are drawing patients away from hospitals in droves, further damaging the bottom line. Deficit spending The amount Valley hospitals spend continues to outstrip how much they earn. The collective operating loss in 2005 was a daunting $35 million, according to the most recent Valley Economic Report. “Southern California is a tough healthcare market. It’s a tough financial healthcare market,” said Scott Reiner, president and CEO of Glendale Adventist Medical Center. All of this is happening as the bulk of the baby boom populace nears the beginning of their twilight years. The state’s senior citizen population around 4 million today is expected to double by 2020, according to the California Assembly Committee on Aging and Long-term Care. With that many sophisticated issues afflicting a single industry, it begs the question: is the time-honored hospital model a dinosaur? Greene of Valley Presbyterian said the current model has to evolve to meet new standards. Thirty years from now, “I think we’re going to find ourselves in a much more integrated role,” he said. “If we’re going to deal with cost containment, if we’re going to deal with quality issues, all of these have to be aligned and the only way you’re going to do that is through some form of integrated system.”
