Hospitals throughout Southern California are not growing fast enough to meet the needs of the region’s growing population, said the Hospital Association of Southern California in response to the results of a study it commissioned. “We’re certainly seeing capacity remain stagnant, or at least the increase in capacity is not keeping up with the increasing (population),” said Jim Lott, executive vice president of HASC. “If you ask what keeps me awake at night, that’s it.” The health care economic impact study, completed by the Los Angeles County Economic Development Corp., showed that in 2004, 107 out of 212 hospitals surveyed spent more money on patient care than they received in reimbursement. “The federal government, under the Medicare program, pays hospitals less than 95 percent of their costs. The state, which pays hospitals for welfare beneficiaries on Medi-Cal pays less than 85 percent of their costs,” said Lott. “One can hope that when policy makers see what is happening to the health care infrastructure and their constituents’ needs, they will find a way to help.” Arnold Schaffer, COO of Providence Health System’s Southern California Region, said that he’s constantly worried about hospitals closing, especially after watching Northridge Hospital Sherman Way campus and Granada Hills Hospital close in recent years. “There have also been, if you look at the sales transactions, a number of those hospitals sold last year. Everyone is sort of waiting in the wings to see how many of those hospitals make it,” said Schaffer. If the survival of some Los Angeles-area hospitals is in doubt, future population growth certainly is not. The population is growing and growing quickly, the region is adding roughly 300,000 people per year. Much of that growth is coming from people who are already here having children,” said Greg Freeman, vice president of public policy consulting for the LAEDC and one of the authors of the study. “At the same time, we’ve got an aging population , the proportion of residents over 65 is increasing, people who are getting older are living longer. The demand for health care services is greatest at the start and at the end of life.” Hospital projects Hospitals in the region are reinvesting, both in physical expansion projects and in technological advancements. Both of Providence’s Valley hospitals have lean operating margins of about one percent, which would be dismal in another business but is a noteworthy success in the world of hospital management. The hospitals are each in the middle of large expansion projects, but those are only made possible with the help of successful hospital foundations. Hospitals run by for-profit corporations cannot launch large-scale community fundraising efforts and rely on parent corporations to fund expansion projects. Even Providence has had to cut some programs in order to keep from losing money. “We closed programs that were failing if others in the community were doing them,” said Schaffer. “If we were the only one left doing them then obviously we would be very hesitant to close anything.” With or without an increase in the number of hospitals in the region, health care as an overall part of the economy will continue to be a huge player. “We see in an overall outlook for the industry that it will get larger and add additional jobs in order to meet these demands,” said Freeman. “Having said that, what the growth looks like and where it will happen in the industry is subject to doubt and turmoil given hospital closings.” He said that since more procedures are being handled by specialty surgery centers or require less time in a hospital, it’s hard to predict the what health care in the future will look like, other than that it will be expensive. “What you’re seeing here is the encapsulation of a trend that’s taking place in the U.S. health care system. While patients are struggling to be able to pay for health, hospitals are on the other side of the equation, both are trying to present affordable health care options.
