For healthcare providers and programs, the Orange County, Calif., bankruptcy has meant funding shortfalls. But the event has also inspired one HMO to an act of generosity blended with self-interest.
The Dec. 6, 1994, bankruptcy declaration threatens some $3.7 million due hospitals for medical services to the indigent.
But in a funding role reversal, Kaiser Permanente of Southern California has offered a $3 million loan to a new county healthcare authority formed to administer a new managed-care system covering 300,000 beneficiaries of Medi-Cal, the state's Medicaid program. Without Kaiser's loan, the Optima program, which is set to begin this summer, would be delayed.
The 14-month-old program, part of a statewide initiative to expand enrollment of Medi-Cal recipients in managed-care plans, was dependent for startup revenues on some $2.4 million in funds on deposit in the Orange County Investment Pool.
Terms of Kaiser's loan allow Optima to make a monthly withdrawal through August, when the agency will be funded by the state.
The catch? Kaiser is one of the provider organizations intending to bid for contracts to care for Medi-Cal recipients under the Optima program. It is in Kaiser's interest to get that program off the ground.
The big loser in the indigent-services funding shortfall is the University of California-Irvine Medical Center, which provides up to 40% of services to the county's poor. The rest of the shortfall will be borne by the 10 to 12 hospitals that provide indigent services in the county, said Edward J. Foley, regional vice president at the Healthcare Association of Southern California.
The hospitals are continuing to receive another $1.8 million in interim payments for the 1994-95 indigent-care contract, though the payments are being reduced by about $63,000 a month because of bankruptcy-related cuts.
The county Health Care Agency's 1995-96 budget will be cut a total of $13 million from the 1994-95 budget, but details on the effect of this reduction on indigent care and other programs are not yet known.