By Lisa Rapaport, The Sacramento Bee, Calif. Knight Ridder/Tribune Business News
Feb. 14--UC Davis Medical Center in Sacramento will eliminate 300 jobs and scale back its Life Flight program in anticipation that it will lose untold millions of dollars in revenue due to federal, state and county health care cuts, hospital executives said Thursday.
Hospitals statewide are bracing for a triple threat: payment cuts from the federal Medicare program that insures elderly and disabled Americans; eligibility restrictions for the Medi-Cal program that covers low-income Californians; and county cutbacks in funding for clinics that care for the uninsured.
So far, UC Davis is the only Sacramento-area hospital to disclose plans to trim its payroll or patient services to cope with budget deficits that touch every level of government. But UC Davis also draws more revenue from public health programs than the other hospitals in the region.
'This is probably the tip of the iceberg,' said Joanne Spetz, a professor with the UCSF Center for Health Workforce Studies. 'I would expect many hospitals that depend heavily on state and county money to take similar steps.'
Over the next few weeks, department managers at UC Davis will identify 100 jobs to cut and an additional 200 vacant positions to eliminate. Medical center officials did not elaborate on which jobs would be touched, but said they hoped to retain some employees by retraining them for different work.
In addition, the teaching hospital will halt all trips for one of two helicopters used for the Life Flight program, an air transport service for the region's most critical trauma patients. The remaining helicopter would pick up some of the 300 annual flights done by the one taken out of service, hospital officials said.
While UC Davis did not elaborate on further cuts at its hospital or school, medical center chief financial officer William McGowan said, 'there is no area or program in our organization that isn't going to see real and substantial changes as a result of the budget cuts.'
Hospital budgets are always subject to revenue fluctuations that come with changes to government programs and payment rates negotiated with private insurers, but this year is shaping up to be more uncertain and more financially devastating than most, many say.
'To have programs at all three levels of government that account for more than half of most hospitals' revenue all talking about major cuts at once is rare, if not unprecedented,' said Robert David, regional vice president of the Hospital Council of Northern and Central California.
The federal government, which estimates a budget shortfall of at least $200 billion this fiscal year, is weighing several changes to Medicare that will come on top of payment cuts to doctors and teaching hospitals already effective this year.
Of all the proposed changes the biggest wildcard u and the greatest potential revenue loss for UC Davis u could be an overhaul of Medicare's 'outlier' payment system, a supplemental fee program that was designed to compensate hospitals for unusually complex, costly care.
In light of allegations in recent months that Tenet Healthcare and other hospital chains manipulated their charges and collected millions more than they should have in extra 'outlier' fees, Medicare officials will soon announce plans to dramatically cut those payments.
That could penalize UC Davis and other hospitals that perform exceptionally expensive trauma, burn and transplant services.
'They are really tossing out the good apples with the bad apple,' said McGowan, the UC Davis executive.
Medicare changes alone could add up to at least $20 million in revenue losses for the medical center, he said.
At the same time, California Gov. Gray Davis has proposed $2.5 billion in cuts to Medi-Cal to help close a budget deficit that he estimated at $34.6 billion.
Besides reducing Medi-Cal eligibility, which could leave more uninsured patients to seek care at hospital emergency rooms, state health officials are mulling cuts in supplemental payments to hospitals that treat a disproportionate share of Medi-Cal and uninsured patients. UC Davis is the only hospital in Sacramento county that receives these funds.
Sacramento County, meanwhile, faces an expected $69.5 million budget shortfall and could make cuts to its clinic system as well as to its medically indigent adult program, which compensates hospitals for care for some low-income patients who would otherwise be uninsured.
'We may not know what all the cuts look like, but they are coming and they are going to hit clinics and hospitals and probably compromise our health care safety net,' said Amerish Bera, both medical director of primary care services for Sacramento County. 'You just can't keep passing the hot potato from one government budget to the next and expect nobody to get burned.'
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(c) 2003, The Sacramento Bee, Calif. Distributed by Knight Ridder/Tribune Business News.
