Last week's bankruptcy filing by Orange County, Calif., could interrupt payments to some private hospitals.
Although the county operates no hospitals of its own, payments to some 27 private hospitals for the care of indigent adults may be affected. Edward Foley, the Hospital Council of Southern California's regional vice president for Orange County, said hospitals receive monthly payments from the county totaling $25 million a year.
The county's bankruptcy filing stems from losses on a highly leveraged investment portfolio.
Meanwhile, questions have arisen over the county's ability to fund a new Medi-caid managed-care program called Orange Prevention and Treatment Integration of Medical Assistance. The county's woes won't be an issue because services will be funded through state and federal money, said Mary Dewane, OPTIMA's chief executive officer.
But Mr. Foley said hospitals have set aside $3 million to get the program started, some $1.5 million of which remains in the county's coffers.
Moody's Investors Service said none of the hospitals it rates have invested in the troubled county fund. However, New York-based Moody's began a national telephone survey of hospitals' investment policies.