2 Hospitals 1st in L.A. to End Medi-Cal Contracts

Two hospitals in northern Los Angeles County have dropped their contracts to treat Medi-Cal patients because state reimbursements are so low that they can no longer afford to provide the treatment, the hospitals said Tuesday.

Northridge Hospital Medical Center and Henry Mayo Newhall Memorial Hospital in Valencia are the first in the county to join a growing number statewide that have terminated Medi-Cal contracts.

Administrators at Northridge and Henry Mayo Newhall said they dropped the contracts last week because state reimbursements have remained the same while their cost of providing treatment continues to rise. Both hospitals had tried without success to renegotiate their Medi-Cal contracts to receive greater reimbursement.

“We were placed in a position of not being able to cover direct costs of providing in-patient services,” said Jeff Flocken, administrator for Northridge Hospital, which signed its first Medi-Cal contract in 1983. “That places us in a very precarious position financially if you carry that on for a very long time.”

‘An Inconvenience’

Medi-Cal patients who had used Northridge or Henry Mayo Newhall will now have to go elsewhere for most treatment. Twelve hospitals in the San Fernando and Simi valleys still admit Medi-Cal patients, as do two in Antelope Valley.

“It’s definitely an inconvenience,” said Dave Langness of the Hospital Council of Southern California. “The providers who do accept Medi-Cal care are becoming fewer and further between.”

In the past year, Langness said, hospitals in Northern California and in Riverside and San Bernardino counties have dropped their Medi-Cal contracts in an effort to offset escalating medical costs.

“It’s a trend,” Langness said. “And it’s going to begin happening more and more in Los Angeles County because Medi-Cal contracts are not paying hospitals for the costs they incur in treating the poor patient.”

Costs Exceed Reimbursement

According to figures compiled by the Hospital Council, a nonprofit association of industry representatives, the state reimburses 30% to 40% of hospital charges for Medi-Cal patients, Langness said.

In 1987, the costs of treating Medi-Cal patients at Northridge exceeded the amount of state reimbursement by $2.8 million, Flocken said.

Although Medi-Cal patients will not receive in-patient services at Northridge, they may still receive out-patient care and be treated for emergencies at the 345-bed facility, Flocken said.

But patients cannot stay overnight in the hospital unless it is an emergency, he said. After they are well enough, they will be transferred to a hospital that admits Medi-Cal patients.

Trauma Center

At Henry Mayo Newhall, a 133-bed hospital that has served Medi-Cal patients since 1982, Medi-Cal patients who require emergency help will be treated until their condition improves, and they can be transferred, spokeswoman Anita Weld said. “We are a trauma center so we do tend to have life-threatening emergencies,” Weld said. “They may remain until they’ve been stabilized. We feel really good about that.”

The number of Medi-Cal patients is relatively low at both facilities contrasted with a county-owned hospital such as Olive View Medical Center in Sylmar, which may receive some of the Medi-Cal patients from the two hospitals. Northridge’s Medi-Cal patients constitute 9% of the total patients, whereas Henry Mayo Newhall’s Medi-Cal patients number about 3% of the total. At Olive View, Medi-Cal patients are about 55% of the total.

The state’s medical budget was cut by $240 million this year, Langness said, ranking California 46th among the 50 states for the amount allocated to state-subsidized medical care, he said.

“The squeeze is on for health care for the poor,” he said. “If the squeeze continues, it’s going to get very serious. County hospitals are already very crowded, and they will be more and more stressed.”