Hospital facing Medi-Cal cuts

Hospital facing Medi-Cal cuts

Michele Ellson
Alameda Hospital

Alameda’s financially ailing hospital is preparing to take another hit to its finances, in the form of a retroactive $450,000 payment for Medi-Cal cuts imposed in 2011 as a state budget-balancing move. The cuts are slated to go into effect in January 2014.

The cuts will be painful for Alameda Hospital, its chief executive officer said this week, though not as troublesome as they may have been for some of the state’s rural hospitals and facilities in San Francisco that would reportedly struggle to stay open due to the funding cuts.

“Well, $450,000 is somewhat of a big deal in terms of net revenue. But it certainly wasn’t as Earth-shattering for us as it was for other organizations,” Alameda Hospital’s chief executive officer, Deborah E. Stebbins, said.

Hospital managers expect to run a deficit of $1.1 million for the final six months of 2013, a budget approved this month showed.

In 2011, state lawmakers cut Medi-Cal payments to hospitals that operate nursing homes by 10 percent for the care provided there, which Stebbins said nets out to a 25 percent reduction in revenue. Hospitals had been receiving higher Medi-Cal payments for long term care than private operators because it was believed to cost more to provide the service in a hospital.

A group of medical associations sued the state in an effort to reverse the cuts, but the state ultimately prevailed in court.

Long-term care is a major business line for the hospital, which signed an agreement to lease and operate the 120-bed Waters Edge nursing home, which it took over in 2012. The cuts will hit Waters Edge and the hospital’s South Shore nursing facility, which has 26 beds.

Even with the cuts – which were blunted by a rate reduction the hospital experienced when it added the Waters Edge beds to the fold – long-term care, and Waters Edge in particular, have been a major contributor to Alameda Hospital’s bottom line. Last year, the nursing home added $3.4 million to the hospital’s bottom line.

The state recently announced that it will provide an exemption to the cuts for rural hospitals the run nursing homes, following concerns that some would be forced to shutter services if the rates were cut. And Stebbins said the loss of those care beds could have pushed patients into higher-cost care.

The San Francisco Chronicle reported in June that the cuts could have a devastating effect on San Francisco’s Laguna Honda Hospital and Rehabilitation Center and Jewish Home of San Francisco, which provide long-term care.

But Stebbins said money has long been set aside to cover the cuts and that they won’t prompt the Alameda Hospital to close any services.

“In our case, it would not cause us to think about shutting the service now,” Stebbins said. “Long term care has become major, important service line for us.”

A bill sponsored by state Assemblyman Luis A. Alejo, D-Salinas, would restore Medi-Cal funding rates for hospital-based nursing homes. The bill passed the Assembly unanimously in May and is being considered by the Senate.