California hospitals seek a broad bailout, but they don’t all need it

by Samantha Young and angela hart KFF Health News

SACRAMENTO — One of the country’s richest hospitals, which caters to Hollywood elites, accepted nearly $28 million last year from an unusual source: a charity that siphons money from other California hospitals, many of which serve the state’s poorest residents.

Cedars-Sinai Health System in Los Angeles secured the grant under California’s recession-era financing scheme that allows wealthy hospitals to take valuable health care tax money from poorer ones. Hospitals across the state agreed in 2009 to the arrangement in order to tap billions more per year in taxpayer dollars to support the state’s Medicaid program, called Medi-Cal.

Now, some of those hospitals serving a greater share of Medi-Cal patients are in dire financial need and face cutbacks and potential closures. But instead of asking for help for only those at greatest risk, California’s powerful hospital industry is putting the squeeze on

Gov. Gavin Newsom and fellow Democratic lawmakers for an unprecedented bailout. And they are doing it even as the state faces a nearly $32 billion budget deficit.

Hospitals argue that to avert a crisis, they need an emergency infusion of $1.5 billion. They also want a steady annual stream of new health care tax money despite already having their own dedicated tax intended to support struggling facilities that serve a large percentage of the state’s low-income people, such as Madera Community Hospital in the Central Valley, which closed earlier this year.

Ads by the California Hospital Association paint a scary picture: “1 in 5 Hospitals are at risk of closure.” Yet another warns, “Health care that millions rely on is at risk.”

Those claims are being repeated by state lawmakers as they debate financial rescue for hospitals.

But a KFF Health News analysis of state data revealed that despite increased labor costs and inflation, many California hospitals have been profitable in recent years. The industry earned roughly $131 billion last year in patient revenue, a key indicator of profitability — $7.3 billion more than the previous year. After factoring in rising costs, the industry still turned a profit of about $207 million last year. State figures show the industry reaped $9.2 billion in patient revenue in 2021, partly a reflection of big swings in the stock market.

Leading health care finance experts and former state officials are urging Newsom and lawmakers to resist the industry’s fear tactics, saying that, even though hospitals are still reeling from the covid-19 pandemic, many have plush financial reserves.

“They are big fans of these giant bailouts, where the relatively rich hospitals benefit as well as the ones who really need it,” said Glenn Melnick, a health economist at the University of Southern California. “A big chunk of the hospitals, even if they’re losing money, don’t need taxpayer money to help them through this crisis.”

Melnick and others who have analyzed the financial state of California hospitals say a sliver of California’s 368 general hospitals u PAGE 4 first appointed by Governor Gavin Newsom as attorney general in March 2021, before being elected to a full term last November 2022. He was sworn in and delivered his inaugural address in Sacramento last January 6.

During the discussions with AAPI reporters, the state’s chief legal counsel said that amidst the alarming and continuing rising level of anti-Asian hate crimes over the past years, his office is very keen on implementing some definitive short-term and longterm programs to address these concerns.

He said short-term solutions may involve an immediate and effective way to resolve a hate crime as it happens.

“We need accountability for hate crimes when they occur and in my view charging hate crimes as hate crimes when elements are there and making sure that there’s an appropriate and proportionate accountability for those who commit hate crimes,” Bonta said.

According to Bonta, providing relatively prompt help to assist hate crime victims could also be a part of a short-term scheme.

“We provide victims with the services that they need to heal in the way that they need for them to heal, could be trauma form of care, it could be culturally competent care, could be inlanguage care like programs and services that allow and assist and expedite the healing of victims,” he said.

For long-term solutions, he said there is a need to implement a strategic plan of action involving education, cross-cultural awareness, and ethnic studies.

The government official also admitted that pushing for solid steps in tackling hate crimes is tedious as it entails a more complex approach in terms of implementation and execution of legislative measures and law enforcement.

“We need to have a lot of guidance on this with local enforcement on how to identify, investigate and how to build a hate crime case when the evidence is there,” he said.

He likewise underscored the need for the active participation of all concerned individuals to have an effective reporting system for these hate crimes.

“We also need a reporting system that people consistently and in a high percentage participate in so we could understand the problem, its nature, the hotspots, who’s been targeted, why, and we can get to, address the root process,” he said.

One main dilemma of coming up with an effective reporting system, he noted, is the victims’ inability to come out in the open.

“Not everyone reports. Some folks do not report to law enforcement because they do not trust the law enforcement. Some people don’t report because they could be retaliated against, for example, an undocumented individual victim of a hate crime may not want to report to law enforcement because they might be worried about any potential adverse immigration consequences and so the people will report when they think something might be done and they won’t be retaliated against,” he said.

Bonta called on community leaders and groups and social services agencies to assist his office in addressing these concerns.

“We need to create those systems but I think that largely lies with community groups who are trusted, who’ve earned the trust, who have deep roots and deep histories with communities like to Stop AAPI Hate, a lot of folks call them because of their reputation and they have good data that helps us understand the problem better,” he said.

Stop AAPI Hate, a coalition of community organizations that started in May 2020, tracks and responds to incidents of hate, violence, harassment and discrimination against the AAPI community.

Over the last two years, antiAAPI hate crimes went up 107% followed by an additional 177% increase the year before. The next updated data on hate crimes will be released in coming months, Bonta said.

With this unprecedented rise of hate crimes, Bonta also spearheaded the creation of a Racial Justice Bureau a few weeks after assuming office in 2021.

“We want to take a very strong PAGE 4