Kaweah Health photo

The California Hospital Association and local district hospital Kaweah Health is asking the Governor and the Legislature to include a $1.5 billion, one-time line item in the fiscal year 2024 budget as a financial lifeline to California hospitals.

News of a decision by the Gov. Newsom will come in a few weeks when he releases his “May Revise” budget that comes each year at this time.

Kaweah Health CEO Gary Herbst said the distribution of these funds will be in proportion to the level of service an individual hospital or health system provides to its Medi-Cal population. Tulare County has the highest Medi-Cal enrollment of any county in California at more than 60%. Kings County’s rate is lower, but not by much.

In addition, the hospitals are asking the State to overhaul its Medi-Cal program and to significantly boost reimbursement rates provided to doctors and hospitals. CHA estimates that Medi-Cal reimbursement to hospitals only covers 74% of the cost of providing care — one of the lowest reimbursement rates in the country.

Kaweah’s Herbst said the hospital has lost $135 million dollars since the start of the pandemic through Oct. 31, 2022. About $61 million dollars in federal COVID relief funding helped, but the remainder “came out of our cash reserves and put us in the financial strait we’re in right now.”

Since the start of the existing fiscal year in July 2022, the district has lost an additional $43 million, including $3.5 million in the month of February alone, Herbst announced recently. The hospital has laid off more than 200 employees and cut pay to top staff.

Herbst estimates Kaweah could see $75 million if the Governor includes the line item in his budget.

Besides high costs to operate, the hospital has experienced a lower-than-expected census in the past months — a trend seen elsewhere, said Herbst. Surgeries are down as well as outpatient clinic visits.

In Tulare County, other hospitals are hurting too, Herbst said, including Sierra View in Porterville and Tulare’s district hospital operated by Adventist Health.

Herbst gave a presentation to the Tulare County Board of Supervisors a few weeks ago and asked in the event the state does not help, if the County could step-up to help, possibly with a sales tax proposal or some of the $90 million American Rescue Plan Act funds the County received from the government.

Herbst said longterm reform is needed to make a difference. The State  has expanded its qualifications for who can receive Medi-Cal, including to those who are undocumented, but has offered no increase in reimbursement.

Herbst put the situation in dire terms.

“We need help to rescue us from collapse,” he said, pointing to the closure of the Madera hospital and tough times for all rural hospitals.

California’s Medicaid program — Medi-Cal — is designed to support essential health care services for 1 in 3 low-income people. This includes more than 40% of children, 50% of disabled people and 1 million seniors. To serve the more than 13 million Californians who are covered, the Medi-Cal program partners with 400 hospitals, 1,500 community health clinics and more than 100,000 professionals.

While Medi-Cal’s coverage extends across all 58 counties in California, coverage is higher in 17 counties — including most rural counties — where enrollment tops 40% of the population. In these counties, the providers rely greatly on Medi-Cal reimbursements to serve as the non-federal share of Medi-Cal payments