Supervisors ok multimillion-dollar loan to cover hospital shortfall
The Riverside County Regional Medical Center willreceive a $40 million cash infusion to cover its bills in the current fiscalyear, thanks to action today by the Board of Supervisors, but the hospital’stroubles are not behind it.
“This is $40 million to keep it alive,” said Supervisor Kevin Jeffriesprior to joining his colleagues in a unanimous vote for the allocation. “Wedon’t have a choice.”
According to the county Executive Office, the medical center will haveto slash services and implement measures to make it run more efficiently, orits financial woes will only worsen in the next fiscal year.
The board voted 5-0 to provide a loan — using funds left over to payworkers’ compensation insurance claims — to the Moreno Valley facility totemporarily rectify its structural budget deficit.
The red ink could swell to $52 million in the 2014-15 fiscal yearwithout remedial action, the Executive Office said.
“This is at the forefront of my attention,” said county CEO Jay Orr.“We understand the (hospital’s) business model needs to change, and we aremoving forward with that.”
The loan must be repaid, with interest, by June 30, 2014. If it isn’t,the county will have to absorb the loss in its general fund, according tocounty officials.
The hospital has been plagued with a deepening shortfall over the lastcouple of years as the county engaged in a deficit reduction strategy thatrequired all agencies to focus on cost-cutting. RCRMC serves a large number ofindigent patients, and “receivables,” or ongoing payments for services, havebeen slow to arrive, if at all, according to medical center Director DougBagley.
Bagley has also attributed losses to low Medi-Cal reimbursements fromthe state, rising costs in other programs and county agencies effectively beingsubsidized by the hospital, which provides health care services to theDepartments of Mental Health and Detention Health.
The county has hired a consultant to scrutinize operations and proposestrategies for how the hospital can run more efficiently.
More than 90 percent of the medical center’s budget originates fromfederal and state sources. Supervisor Jeff Stone today wondered how well thefacility would be able to compete for business after full implementation of thePatient Protection & Affordable Care Act — better known as Obamacare — nextyear, when previously uninsured individuals will have access to medical carevirtually anywhere.
“This situation could cause some significant financial misery for thecounty if we are not careful,” Stone said. “My prediction is things are goingto get worse before they get better. This could be a major liability to thecounty if we don’t approach it right.”
Stone questioned whether the hospital should not be partially privatized– or sold outright.
According to Orr, the consultant will review all options and report backto the board in the next 60 days.
