SACRAMENTO — University of California officials face a critical test Wednesday when they make their first plea to legislators for approval of a $25-million bail-out of UCI Medical Center and two other financially beleaguered public teaching hospitals.
The budget proposal--a $15-million subsidy, plus $10 million for capital improvements--will be discussed at a joint hearing of two seven-member Assembly subcommittees on health and education.
UC officials are depending on winning the funds, proposed in Gov. George Deukmejian's budget, to rescue the medical centers at UC Irvine, UC Davis and UC San Diego. All three are former county hospitals which are losing money, largely because a disproportionate number of their patients are government-funded.
Of the three hospitals, UCI's is in the worst financial shape, with a deficit of $10.2 million so far this fiscal year. The projected deficit next year for all three is $21 million. (The two remaining UC hospitals, at the Los Angeles and San Francisco campuses, are reported to be on more solid financial footing.)
The budget proposal was being described as a "lifeline" by one UC official. The subsidy is necessary to keep the hospitals running so that they can continue to train doctors and treat the communities' sick, while the capital improvement fund will go toward renovating the buildings and buying medical equipment in an attempt to woo more private patients, according to the UC argument.
But it could be a difficult task to win the Legislature's approval.
While the bail-out funds have the backing of many Orange County and other key legislators, the state legislative analyst has recommended against awarding funds, saying the proposed subsidy "does not provide a short-term solution or a comprehensive long-term solution to the teaching hospitals' financial problems."
And some legislators say they are troubled by the "inequity" of pumping millions into three former county hospitals while other teaching hospitals and dozens of county hospitals are struggling with similar financial problems.
A legislator says the problems of the UC hospitals are symptomatic of those facing county hospitals throughout the state.
Debate on the bail-out could boil down to whether the legislators see the financial crunch as an education issue or a health care issue.
Assemblyman Burt Margolin (D-Los Angeles), a member of the Ways and Means subcommittee on health and welfare, sees it as primarily a health care issue.
He said he will suggest at the hearing that the $15-million proposed subsidy be applied, not toward the three UC hospitals, but toward a bill he has introduced that would increase funding to hospitals throughout the state that treat a disproportionate number of indigents.
Margolin said he is "sympathetic" to the situation of the three UC hospitals, "but their problems are symptomatic of problems facing county hospitals throughout the state."
Hospitals treating a large number of poor patients are suffering because state programs for Medi-Cal and medically indigent adults generally reimburse hospitals below the actual treatment costs. Those hospitals --such as county hospitals and the three UC medical centers--are reaching a point of financial crisis because they do not attract enough privately insured patients to offset the losses, health officials have said.
"The $15 million is the first time in the history of this Administration that they acknowledge there is a desperate need for support for indigent care," Margolin said. "I'm grateful that it's been acknowledged, but I question whether it's appropriate to deal with only three hospitals."
Margolin's bill would put a total of $25 million in state money into a special Medi-Cal fund, where it would be matched with federal dollars and grow to $50 million. That money then would supplement Medi-Cal payments to hospitals that treat a disproportionate number of poor patients, he said.
The hospitals operated by UCI, UC Davis and UC San Diego would benefit from the fund, Margolin said, but he admitted that the three would receive a much smaller share than they would if the governor's $15-million budget proposal is approved intact.
Assemblyman Bruce Bronzan (D-Fresno), the chairman of the health and welfare subcommittee, said he, too, wonders if the UC hospital bail-out proposal is equitable.
"I am sympathetic to the problems of UC Irvine, but anybody in my position has to be aware that you've got a much bigger system (county hospitals) with much bigger needs. How can you justify one and not the other?" he asked.
"County hospitals are required to be the providers of last resort. They can't say no," Bronzan said, adding that he has not decided how he will vote on the UC proposal. The UC hospitals "essentially are still county hospitals, but they're run by the university," he pointed out.