Brian Bucklew, president and CEO of the Northern California Hospital Council, recently shared some stark concerns about the health care industry with the Fresno Rotary Club. Photo by Ben Hensley

The Nov. 6 Fresno Rotary Club meeting featured a presentation by Brian Bucklew, president and CEO of the Northern California Hospital Council, who shared some stark concerns about the health care industry.

Representing 50 of the 58 counties in California, Bucklew was named president of the 219-member council in 2018. He formerly led the Greater Dayton Area Hospital Association in Ohio for more than a decade before relocating to California.

Bucklew addressed key financial issues for a system that many see on the verge of decline, comparing hospitals to operating a business.

“Imagine knowing that you’re going to go in and that 73-80% of the people walking through your door are going to demand services and products that you serve that you know you’re going to lose money on,” Bucklew said. “That’s what our hospitals are dealing with every day.”

The Infinite Game

According to Bucklew, 56% of hospital expenses come from labor, with an additional 14% dedicated to supplies. An additional 15% of expenses are dedicated to purchased services, including contracting organizations that serve the hospital.

“This is 85% of the cost of hospitals,” Bucklew said. “And it’s 85% of the cost drivers for the hospitals that the hospitals really have no control over.”

Citing Simon Sinek’s book “The Infinite Game,” which dives into the differences between finite games – defined by a set of rules, timeframe and structure, to infinite games.

“It’s what we see every day; it’s football, it’s baseball, it’s basketball, it’s very finite games,” Bucklew said.

“The infinite games are known and unknown players that can come in and out at any point in time. There are no time limits, the rules are ever changing and the goal is just to continue playing the game,” Bucklew said, comparing the “infinite” game to what hospitals go through constantly.

“Nobody wins health care,” Bucklew said. “You are always striving to get better; you are always striving to get better. But it’s the infinite game.”

Inflation

As with any business, inflation hits hospitals just as hard; Bucklew said that inflation within the hospital system has increased anywhere from 19-41%, leading more than half of California hospitals to lose money in the long run.

“When you have 80% of your patients that are going to get reimbursed – not what the hospital says, but what the federal government and state government says you’re going to get reimbursed for – regardless of how much it costs to treat an individual it makes it very challenging to continue to provide health care services in the area.”

As it stands, 52% of California hospitals are either losing money or breaking even. An additional 21% report only a 0-3% income, a level which Buckley said “is not sustainable in order to make sure that we maintain those health care services for everyone.”

Bucklew questioned whether or not legislators understand the general operations of a hospital system in a state with more than 155,000 square miles, pointing out that what works in one part of the state does not work in another.

Despite his claims and the agreement of many hospital administrators and local politicians, the state government, as a whole, seemed to have missed the mark on their understanding of the statewide health care system.

“I think that our legislators thought that hospitals were too big to fail,” he said. “Behind that facade you have service lines going away, you have OBGYN going away. People are traveling further for needed health care because it’s too expensive.”

Bucklew also stressed the continued effects of the COVID-19 pandemic on the hospital system, which not only forced a change in the way they operated, but also changed the way patients were handled.

“We had a governor that said ‘no more elective surgeries,’ not understanding that just because something’s an elective surgery doesn’t mean it’s not necessary,” Bucklew said. “We’re still seeing impacts today; we’re seeing people show up at our hospitals with more acuity — their sicker, they’ve delayed care. It’s a very challenging environment.”

Bucklew said that a large number of conditions dealt with are symptoms of chronic conditions that went untreated for long periods of time.

Seismic compliance and minimum wage

Despite 2020 seismic compliance standards having been met at all California hospitals, the 2030 standards set by the State of California present an entirely new challenge to the already struggling industry.

“What the 2030 standards require is, not only does the hospital have to survive that earthquake, they have to remain operational — have the entire hospital campus operational,” Bucklew said. “That’s regardless of whether the water lines or sewage lines are not compliant outside of the campus.”

According to Bucklew, the improvements rest entirely on the hospitals.

Bucklew said that he spoke with a California Senator who said that the Assembly did not even consider the cost of the infrastructure improvement requirements.

“He said we didn’t even give the cost of the 2030 standards a thought, because we just thought all of the hospitals would be built new by then,” Bucklew said.

In addition to seismic compliance, Bucklew also expressed concern over minimum wage laws, specifically citing not the hospital minimum wage increase, which recently increased California health care employees to $25/hr, but the fast food minimum wage law. Taking effect in April 2024, it will bump the minimum wage for fast food workers to $20/hr, with the potential to continue increasing for years to come.

That will force employers in all sectors to raise their wages to remain competitive — a sentiment echoed by many local leaders in the full-service restaurant industry.

Bucklew said that, interestingly enough, Gov. Newsom’s main concern regarding the recently passed health care minimum wage was the impact on nursing homes.

“A lot of nursing home funding comes from the MediCal budget, which is part of the general revenue fund,” Bucklew said, adding that Newsom was concerned about the additional cost affecting the state budget.

“This is exactly the same conversation we’ve been having for the last five years, six years, seven years with the governor and it wasn’t until it impacted his budget that at least some concern was brought up,” Bucklew said.