Los Angeles Business Journal

State Hospitals Hopeful for Funding Shot in Arm

HEALTH CARE & BIOTECH By Los Angeles Business Journal Monday, October 5, 2009

Officials at Daughters of Charity Health System last week were keeping a nervous eye on Gov. Arnold Schwarzenegger as he decides whether to sign legislation that could boost Medi-Cal payments to hospitals around the state.

When statewide health care reform was being considered a few years ago, the California Hospital Association convinced most of its members to pay a new fee that would help the state qualify for an increase in federal Medicaid matching funds.

While the statewide reform package fell victim to the state budget deficit, the provider fee idea didn't die. Assemblyman Dave Jones, D-Sacramento, resurrected the idea this year with his AB 1383, which passed both houses of the Legislature and is awaiting action by the governor.

Daughters of Charity, a Catholic hospital system based in Los Altos Hills that operates downtown L.A.'s St. Vincent Medical Center and South L.A.'s St. Francis Medical Center, is co-sponsoring the bill. The other sponsors are the CHA and the California Children's Hospital Association.

California ranks last in the nation in per-capita Medicaid payments to hospitals; last year, the state's hospitals estimated they lost more than $4.2 billion in unpaid Medi-Cal costs. For the nine months ended March 31, St. Francis reported losses related to Medi-Cal services of $8.2 million; St. Vincent reported losses of $5 million.

While AB 1383 would only result in a $2 billion net benefit to hospitals given the new fee they will have to pay, Conway Collis, Daughters of Charity's Pasadena-based government relations director, said that cutting the deficit in half could keep some hospitals from reducing services to Medi-Cal recipients. Daughters of Charity is expected to see a $44.5 million net gain annually in Medi-Cal payments to its five hospitals.

"We think national health care reform will get passed and regardless of the version, it eventually will be a positive for California hospital as more people are insured," Collis said. "But a lot of hospitals are in a life-and-death situation now, and this is legislation that can help them a lot quicker."

Higher Profile for St. John's

Last week's announcement that billionaire biotech entrepreneur Dr. Patrick Soon-Shiong would locate his new family foundation and several medical institutes at St. John's Health Center was a further boost to the hospital's reputation.

Previously, Soon-Shiong, the founder of West L.A. cancer drug developer Abraxis BioScience Inc., and his wife, Michele Chan, donated more than $35 million to complete the reconstruction of the Santa Monica hospital to meet new earthquake codes. The gift, the hospital's largest single donation, also funded a new research and clinical care facility reflecting Soon-Shiong's interest bringing cutting-edge treatments to patients sooner.

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