Roundtable: UC San Diego Health steps in to run Imperial County's largest hospital

S1: Imperial County's largest hospital turns to UC San Diego Health to help it stay afloat. I'm Matt Hoffman and this is KPBS Roundtable. The largest hospital and a lifeline for Imperial County residents is in a financial crisis. This week , UC San Diego Health announced it's stepping in to help save the El Centro Regional Medical Center from potentially closing. Its meant to be a stopgap until the hospital can become financially stable , but there's questions about how to get there. And El Centro Regional's financial issues are not unique to Imperial County. They do highlight disparities in health care across California's rural communities. Joining us to talk more about what's been happening in El Centro are Julio Morales. He's a reporter with the Calexico Chronicle. Jennifer Bowman is back with us. She's an investigative reporter with Eye source. And Ana Ibarra covers health policy for Calmatters is here with us. Julio , we're going to start with you. If you could , you know , kind of paint a picture for us here.

S2: It's located in the city of El Centro , which is the county seat and which itself is centrally located here in the county. A while back , the city of Calexico had their hospital closed , so a lot of patients from the city of Calexico come to El Centro Regional because it's closer. A closure of the hospital , I guess would present quite a hardship because it would mean just more travel time for patients , you know , especially in cases of an emergency , which could prove pretty serious.

S1: And Julio , do we know how community members there are reacting to all this news , all this restructure news ? Oh , it's been a big thing.

S2: You know , immediately after the news came out that they wanted to consolidate services with the other local hospital Pioneers Memorial , which is located in the city of Brawley , kind of created quite a scare where people started wondering what other closures at the El Centro Regional might be forthcoming. You know , jobs , were there , any job losses were going to result that consolidation as well as any maybe other potential closure of departments ? So you did see quite a bit of reaction , you know , up to the point where there was public community members , hosted meetings , rallies , if you want to call them that , where a lot of physicians were invited to speak and talk about what their concerns were.

S1: And let's bring in order from Cal matters on a generally , why are rural hospitals important ? I mean , what sort of role do they play in those types of communities ? Yes.

S3: So rural hospitals really are sort of a lifeline in a community , if you will. Without these rural hospitals , people would have to travel even further distances for care. And we know that in the case of an emergency , every minute matters. There is actually research that has linked rural hospital closures with an uptick in deaths for things like strokes and sepsis. Also , in many cases , they these rural hospitals provide much more than just emergency care. They often also operate community clinics that people rely on for primary routine care. And in small communities , like Julio said , they tend to be significant employers. So when you lose a hospital , not only are you eliminating care , but you're also losing jobs.

S1: So , Julio , many San Diegans , they're familiar with UC San Diego Health. They operate two hospitals here. And soon that organization will run day to day operations at El Centro Regional Medical Center.

S2: It comes a little bit or a few months after these financial troubles were initially disclosed to the public. It was a few council members , the current board president of the El Centro Regional , who kind of brought it to light that this hospital was struggling and some serious action needed to be taken. One of those initial actions was for the El Centro City Council , of which two members had sat on the hospital board. The council itself decided to disband the hospital board and then kind of insert themselves as the majority. And since then , you know , they've just been trying to inform the public of what's going on to the best of their ability. They do deserve credit for that and and even for bringing it to the public's attention as well.

S1: And it sort of sounds like what you're saying.

S2: And that was , I think , part of some of the physicians. Concerns as well as the community members concerns is that there was no no kind of advance warning that something like this consolidation was going to take place or or even that the hospital's finances were in such a position that that kind of action had to be taken.

S1: But CEO Patty Mason says they felt a responsibility to do more here and keep it from potentially shutting down.

S4: That was our concern , is that if if we couldn't create some breathing room to get to something that makes sense long term , that the hospital would be at risk at closing.

S1: Let's bring in Jennifer Bowman from my news source. Jennifer , without you see San Diego stepping in. In your reporting , you found that El Centro Regional would have run out of cash either this month or maybe next month generally. Why is that ? Yeah.

S5: So this is a city owned hospital that's been struggling for several years , and it finds itself facing some of the same issues that other community hospitals are facing. Essentially , they're providing care at a loss. They're getting reimbursed for less than what it costs to provide that care. But officials also pointed to this continuing years long trend they're seeing in Imperial Valley in which patients are going elsewhere for services , primarily to San Diego. And when they do that , they're taking the money with them. So like other hospitals as well. With that , it's also been hit particularly hard by the pandemic and by personnel costs. You know , so they've seen some help. You know , the state has provided a $5 Million bridge loan. They've been able to collect on some of these outstanding invoices that have helped in the most recent numbers. They do show some improvement in cash flow. But I will say the reason behind that is particularly troubling because the hospital is actually withholding payments to vendors where they can. So it is certainly a serious financial situation that is almost a day by day situation.

S1: Most of us might not think about it this way , but hospitals are businesses and talking with health leaders , they'll say that there has to be a balance of private and public insurance to sort of make it all work. Here's El Centro's chief medical officer , Dr. Christian Tomaszewski.

S6: This is one of the poorest counties in the nation. And reimbursement , I mean , it's mostly Medi-Cal and Medicare , Many , many. So essentially , the hospital , every time we admit a patient , we're actually losing money at El Centro Regional Medical Center.

S1: What he means there is that Medi-Cal and Medicare reimburse hospitals less than the actual cost of care. So , Julio , with UCSD stepping in here , that issue certainly isn't going away.

S2:

S1: So it sounds like that this partnership with UCSD is going to allow them to borrow more money or sort of take on some more debt. Ana , in your reporting on the Madera Community Hospital , that's up in the Central Valley and it recently closed its doors , that shows that what's happening over in El Centro is not unique. I'm curious where the financial problems similar they're.

S3: They do sound very similar. And we know that in Madera , even prior to the pandemic , that hospital was not doing great. It was mostly staying afloat. And so the hospital had been in negotiations with the buyer , Trinity Health , which is a Catholic health care system that owns a neighboring hospital in Fresno County. But that deal fell through in December. And without another buyer lined up , it had to close its doors. You know , I would add that some hospital leaders have also pointed the finger at low reimbursement rates in Madera Community Hospital. About 60% of the hospital's visits were paid for by Medi-Cal. There was actually a great story just yesterday by Fresno Land , a local news outlet in Fresno , that also found that in the case of Madera , they weren't just getting low Medi-Cal rates , but they also had negotiated low rates with their private insurance. And that's an issue because typically the idea is that private insurance pays a little better. So , you know , hospital and insurance companies negotiate payments in private. So I think this also prompts the question of , you know , what role Medi-Cal payments play. But is there more to than just the Medi-Cal rate ? Hmm.

S1: And sort of a question for Anna or Jennifer. So our rural hospitals saying like if reimbursement rates for Medi-Cal and Medicare actually increase , that this whole issue might be going away.

S3: I think they're saying it would make things easier. I don't know if it would solve all their issues. You also need good management. But if you are disproportionately serving patients on public insurance and that payment isn't adequate , then you can see how that really creates an imbalance.

S1:

S5: You know , in Imperial County , it's about 80% of their services are covered by Medi-Cal , Medicare. So it's certainly , you know , the majority of of their patients who have public health insurance. But , you know. Yeah. Would that necessarily solve the entire problem in the Imperial Valley ? I'm not so sure. What we have heard during this crisis for the El Centro Regional Medical Center is is hospital official saying that the chances of a single hospital like El Centro Regional , their chances of surviving is slim. That really what hospitals you're seeing survive these days are they're part of multi hospital systems , perhaps national systems. And these officials say that they just have a better chance of kind of withstanding the cost of providing care. And so what you see in Imperial County is two hospitals kind of standing on their own. And I think that presents some challenges right off the bat.

S1: And El Centro officials also say that the COVID 19 pandemic made the financial situation a lot worse. Imperial County was hit hard by COVID , and they had to quickly scale up hospital capacity. Here's their chief medical officer again.

S6: That just put a big strain on it. Yes , we saved a lot of lives , but there were a lot of costs involved with tents , extra staff , traveling nurses that came in. So that really put an extra strain on the system.

S1:

S5: You know , you saw patients being diverted away early on because of of the capacity issues. There was a tent that needed to be set up. So , yeah , an extreme when it came to cost , there certainly was an extreme jump in that. It's probably worth noting that , yes , the hospital received federal relief funding. It did have some help from the state to set up that tent , get some of those resources to meet demand. But personnel costs have really hit the hospital , particularly when it comes to traveling nurses like you just heard last year , the hospital spent $18 million on traveling nurses. And if you were to compare that to if they were to fill those positions with local nurses instead , it would have cost less than $5 million. So , you know , it's they had these problems as a rural hospital that existed , but they continue to grow and just exacerbated during the during the pandemic.

S1: You're listening to KPBS roundtable. Our guests this week are Julio Morales from the Calexico Chronicle , Jennifer Bowman from a news source , and Ana Ibarra from Cal Matters. Julio , you know , in January , El Centro Regional Medical Center , they closed its labor and delivery department and they moved those services to the region's only other hospital. And that's pioneers.

S7:

S2: About any other potential closures that's been on a lot of people's minds , both physicians and community members especially. So there hasn't been anything out there to suggest that something is pending. But when it did happen and they moved those services over to Pioneer's Memorial , it did cause quite a bit of an uproar. People complaining or concerned about having to travel farther to get those services. That was probably the major complaint and just how that could jeopardize lives , too.

S1: El Centro regional medical officials say that the UC San Diego takeover could last up to 18 months and that's why they try to become financially stable. They're stressing that this step is only temporary.

S2: And so I guess it's safe to assume that during that time where you UCSD Health is kind of managing things , that they're going to keep pursuing that option. And it appears that they are to some extent. You know , it does appear , you know , they do have what's called the local agency formation commission doing a study to determine the feasibility of that district and what kind of tax might have come with it.

S1: Creating a countywide health care district that would require voter approval. El Centro officials say money could be raised to support it through things like property taxes or even sales taxes. Jennifer , this is not a new concept for hospitals , these special districts.

S5: But , you know , there is a placeholder bill , some state legislation right now that would create that single health care district and it would potentially consolidate El Centro Regional with with Pioneers Memorial Hospital. But yeah , you're talking about kind of the will of the voters. One thing that's also been mentioned in these talks about consolidating is that this has been discussed before , that , you know , in years past El Centro regional and pioneers have talked about how to work together , how to consolidate. And leaders have admitted that egos have come into play there. So I think there's there's still a lot that needs to be answered. But it does seem like that is the kind of primary solution that we're hearing from hospital leaders right now and how to move forward.

S1:

S2: I will say that when it comes to bond measures out here to , you know , fund school infrastructure and things like that , they do seem to pass fairly regularly. So it might be the case that this one is well be accepted by the general public.

S1: And Jennifer , this idea of consolidating health services , it sounds good in theory , but but do we know if imperial's other hospital pioneers , if they're on board with this ? You mentioned that there's some other efforts in the past that just didn't happen.

S5: Yeah , I guess we'd have to see how , you know , historical experience has played into that. But there is one thing that we have heard from pioneers where they have pointed to the massive amount of debt that El Centro Regional has. And pioneers , we should note , has also struggled financially. It also was hit hard by the pandemic. They also had to spend a lot of money on traveling nurses. They're struggling with some of the same issues , but they talk about this consolidation or taking on El Centro Regional's debt , and that is a very big obstacle that an entity would really have to get behind. So there's there's things that need to be answered. But it seems , you know , what we hear from from the leaders right now is kind of a team effort that they're kind of working together , seem to kind of be on the same page , at least from what I could tell so far.

S1: Jennifer El Centro , Regional's former CEO , said that many residents in the valley , they actually seek health care outside of the county and. That's a missed revenue opportunity.

S5: So the former CEO told county officials that patients are going elsewhere. Right. That the services they're seeking are actually indeed provided locally. But for whatever reason , they're going outside of the county to get those services. And as a result , they're finding that as much as $350 million is being spent outside the county. So that's a significant amount of money , especially for a region where both of its hospitals are struggling financially. It could be a game changer. It also depends , I guess , on on quality of care. I know that the closing of the labor and delivery department was a very controversial move. What hospital officials said and their justification of closing is that it actually improved quality of care and might entice folks with those similar moves to to stay in the region for their services.

S1: Officials in Imperial County , they've been calling on the state to do more here. The leader of the local hospital association says that the only solution for El Centro regional and other struggling hospitals is for the state to distribute some $1.5 billion to them and also increase Medi-Cal payments.

S5: But , you know , I think there's there's things at play , right ? The state is facing a budget deficit right now. That's the dynamic that exists. What I do know is that Imperial County has time and time again called on the state and the state's leaders to help them. They've pointed to the long standing problems they've had in their region , including these health factors. And most recently , there were community members who wrote an open letter to Governor Gavin Newsom asking , Where is our leader as our hospital is facing closure. What I found interesting is that when we reached out to the governor's office for comment , we got nothing. So , you know , there are there are residents who are asking for help and are hoping that that the state will step up and help them. This is an incredibly important asset to the region. There's , of course , many folks. Right. Who are leaving and going to San Diego and elsewhere for services.

S1: And Jennifer also mentioned lawmakers there.

S3: They're taking a little bit of a different approach here , and they're going after the attorney general's role in all of this. So for some background , when the Madera community hospital deal fell through , some of the hospital board leaders pointed to the attorney general's conditions. So the attorney general by law has to review and approve any mergers or acquisitions that involve a nonprofit health care organization. And so the attorney general pretty much said , I can approve this purchase. Trinity Health buying Madera community if Trinity commits to meet a certain set of conditions. And so the idea is that you want to ensure patient protections. So there's conditions regarding access to care , affordability , quality. And one of the conditions that stuck out , according to some of the hospital leaders I spoke to , was some price caps. And so the price caps are and , you know , if you talk to consumer advocates , price caps are important because if a new system is going to take over a hospital , you still want that care to be affordable to community members. At the same time , you know , they the hospital leaders said that sort of made a Trinity Health kind of pull away from this deal. So it's an interesting take. I don't know how much that would help immediately. But , you know , if the idea is that this would make any further or any future purchase easier , you know , that is , I guess , one way to to look at it.

S1:

S3: You know , there is another hospital out in San Benito County and in the city of Hollister , and they've said they're they're expecting to run out of cash in mid-April. And they are looking. King for buyers and partnerships. So if someone steps up , that could be another example. When we see another merger or another purchase of a small hospital. So I think it's it's , you know , still something that some of these struggling hospitals are seeking.

S1: And as we wrap up here , we want to hear from all of you. You know , where do you see this going and what are you going to be looking for in the coming months ? And Jennifer , we can start with you.

S5: Yeah , I mean , I think there's this is a really important story. I think , you know , aside from looking at how finances improve or don't with the hospital and the chances of consolidating and seeing if the single health care district will indeed come to fruition , on top of mind for me is to see how health care for for the residents of Imperial County is affected and you know , who's impacted and how.

S1:

S2: You know , it seems like that this potential single health care district , a lot of people are hoping that that's the solution. Not sure what might happen if that falls through. But I think for the moment , you know , all eyes are kind of following that progress.

S1: And Honore , you have the final word here.

S3: Yeah , I think , you know , I'll be looking to see what sort of creativity comes in , all of these potential solutions. And perhaps what works for one hospital could work for another. It will be interesting to see what else comes from the legislature as we start to hear from more and more hospitals , you know , say they're in trouble. So , yeah , I think I'll be looking for what type of proposals come out of all of this.

S1: And we're going to have to end it there for this week's edition of KPBS Roundtable. And I want to thank our guests so much , The Calexico Chronicle's Julia morales. I knew sources Jennifer Bowman and Ana Ibarra from Cal Matters. Be sure to stream our show anytime as a podcast roundtable is produced by Andrew Bracken , and Rebecca Chacon is our technical director. I'm your host , Matt Hoffman. And a quick note for our listeners. Starting next week , the roundtable will be taking a short break. We're stepping away from the mic to work on ways to tell stories that reflect and serve all of our communities. And you can be a part of our evolution. If you want to join our listener focus group , you can send an email to midday at pbs.org. We'd love to hear from you. In the meantime , the folks over at the BBC NewsHour , they're going to be holding our spot for a few weeks , so don't go anywhere. We're excited to bring you some fresh new content. Be back with you soon.