CA hospitals continue closing: a quality crisis? Some factors may spread across the nation

HealthCare Benchmarks and Quality Improvement, Nov, 2004

Key Points

* The trend of hospital closings, now at eight, is expected to continue for the rest of the year.

* Uninsured patients, unfunded mandates are among key causes behind closings.

* Organization estimates more than half of all hospitals in California are operating in the red.

With at least eight California hospitals closed in 2004 and more closings expected before year's end, the nation's quality managers could not be blamed for hoping that this time the adage that "Everything starts in California" does not prove true.

In fact, there are some California-specific issues involved in this disturbing trend, but that doesn't necessarily mean the problem will remain isolated on the West Coast.

"In the past two years, our cost of providing quality services increased 23%, but payments for those services increased only 4%," notes Jan Emerson, a spokeswoman for the California Healthcare Association. "Hospitals in California have reached a tipping point."

She identifies key causes for the closings:

* An unrelenting number of uninsured patients.

In fact, one in five patients seen in the state is uninsured. "In 2003, hospitals spent $5.1 billion in uncompensated care--uninsured and [underinsured] Medicaid patients," Emerson explains.

* Unfunded state mandates.

There are two major unfunded mandates in California: A new nurse-to-patient ratio law, which took effect in January, and a state law addressing the retrofitting of hospital buildings to meet seismic standards.

"According to the state, it will cost an additional $1 billion per year in salaries and benefits to meet the staffing ratios, and $24 billion to meet the earthquake requirements, which take effect in three years," she notes.

"That's more than the depreciated value of all the hospitals in California."

* Medicaid reimbursement.

"California ranks dead last," Emerson asserts. "For example, New York pays $7,600 per Medicaid enrollee; Medical pays $2,069. The environment in California can't continue to operate as is and expect to have hospitals stay open."

What, us worry?

That may be true, but are there any issues in play in California that should concern quality managers in other states? "Yes, other than the earthquake requirements, and Medicaid in certain states," she says. "Uninsured patients is certainly a national issue, and as for nurse-to-patient ratios, unions are trying to take this across the country."

How do these ratios affect hospitals? First of all, the ratios vary between units, Emerson explains.

For example, in California emergency departments, the ratio is one nurse to every four patients. In trauma centers, it's 1-to-1; in med/surg, it's 1-to-6, which may drop to 1-to-5 in January.

"Conceptually, you'd think more nurses means better patient care, but if you do not have enough nurses in the work force, you run into the exact opposite of what you intended," she says.

"There are not enough nurses in California; you have to hire out-of-state travelers nurses, who are not part of the staff, and who don't know the culture." (For more on quality issues related to nurses who are not part of permanent staff, see Healthcare Benchmarks and Quality Improvement, October 2004, p. 109.)

Emerson says California hospitals would love to have all their shifts covered by on-staff nurses--it's less expensive, and the quality of care is superior.

"But quality care requires that we have enough staff, and we have the worst nursing shortage in the country," she adds.

That's not the only impact these trends are having on quality, Emerson continues. "If you are barely keeping your doors open--an estimated 51% of all hospitals in California are operating in the red--it's hard to focus on quality," she asserts. "A lot of quality involves investing in new technology, for example."

Quality professionals in California, she says, are doing the best they can by seeking creative solutions, "but what we are facing is beyond what any individual in a hospital or a system can solve; these are public policy issues and public money issues," she emphasizes.

"We are now where the meltdown is happening, but if some broader public discussions are not held and serious discussions about getting people coverage are not held, this will affect every single state in the country," Emerson adds.

Need More Information?

For more information, contact:

* Jan Emerson, California Healthcare Association. Phone: (916) 552-7516. E-mail: jemerson @calhealth.org.