Taking the hits

Tina Torres is getting nervous. She’s the chief of operations at Riverside Convalescent Hospital, in Chico, and the California Legislature’s record-long budget stalemate is wreaking havoc on her own budget.

“If it continues, and there isn’t a [state] budget in place by the end of September, I don’t know what we are going to do,” Torres said.

For now, she added, everything is being managed day-to-day at Riverside, a facility where “the bulk” of its income comes from the state-administered Medi-Cal program, which hasn’t made any payments to vendors for at least two months.

The nursing home is one of several local medical establishments—and thousands statewide—feeling the pinch while lawmakers can’t seem to agree on a solution to close the state’s $15.2 billion budget deficit.

Torres said Riverside had to take out a loan to cover its payroll. But that money was just enough to protect a 45-day gap, in anticipation that the Legislature would solve the problem. That 45-day mark will arrive in the third week of September, she said, and the skilled nursing facility might be forced to explore other options.

“Eventually vendors will start saying they can’t deliver,” she continued. So far, she said, vendors for the facility have been understanding, but that could change when they start feeling the brunt and are not able to pay their own employees.

Andrew Morrissey, interim executive director of Northern Valley Indian Health Center, is also feeling the pinch. “Hopefully it is just temporary, but apparently the state can’t seem to get together on issues impacting the lower- and the middle-income communities,” he said.

The nonprofit was forced to lay off 10 of its employees at the beginning of August due to a lack of funding, Morrissey said. Some 60 percent of the hospital’s third-party funding comes from state agencies.

“It’s heart-wrenching,” he continued. “We’re having to get loans to bridge the gap, and then pay the interest. … There are a lot of people who rely on our services. … To completely stop paying 60 percent is traumatic.”

Morrissey hopes the layoffs are temporary, but he knows money must start trickling down from the state before the situation will improve.

Besides laying people off and borrowing money, Morrissey said, his center is holding off on acquiring certain equipment needed for its medical and dental offices in the hope that delaying them will bridge the state-funding gap.

Torres said she anticipated the budget crisis could force some clinics in the industry to close their doors, especially smaller facilities. Christine Sarrico, chief financial officer at Enloe Medical Center, agreed. Sarrico said Enloe had a large enough cash reserve to “weather the storm,” but she said this crisis “threatens the entire fabric of health care in the state.”

Sarrico said late state budgets, and the resulting delayed checks, are not unusual, but this year is much worse.

Sarrico sees a larger problem developing: the 10 percent cuts the state has proposed for the Medi-Cal program. She said the cuts would cost Enloe about $3.5 million yearly, and could possibly affect services offered by the hospital. Sarrico anticipates an increasing number of physicians will refuse to accept Medi-Cal, resulting in overcrowded emergency rooms.

California’s Medi-Cal program is one of the worst payers compared to other Medicaid programs in the nation. For instance, Sarrico said, Medi-Cal pays only 48 percent of the actual cost for outpatient services and 87 percent for inpatient services at Enloe. Lowering those amounts by 10 percent would create the worst funding situation she has seen in 30 years working in the medical industry.

“While California is one of the lowest paid [state-funded programs] in the nation, now we are talking about cutting it further, and that puts a burden on the entire medical profession.

“The insured patient is really making the difference, rather than the government carrying its full share,” she continued. “It’s not just people who are covered by Medi-Cal who will be affected, it is all people.”