For more than a year, Alameda County Medical Center-a network of public hospitals and clinics serving mostly low-income residents in Northern California-has been desperately downsizing to keep itself afloat. The system has already closed two of its five clinics and cut 176 positions at its three hospitals. And now it's taking an even more drastic step.
This week, Alameda County residents will be asked to vote on Measure A, a ballot initiative that calls for a half-cent increase in the sales tax to prop up the county's cash-strapped public healthcare system. If approved by a two-thirds majority, the tax increase would generate about $90 million annually for 15 years, of which 75% would go to the Oakland-based medical center, which includes 269-bed Highland Hospital, 193-bed Fairmont Hospital and 80-bed John George Psychiatric Pavilion. The remaining 25% would be divided among the county's other healthcare facilities that serve the indigent.
"We've run out of options," said Jim Mittelberger, president of the medical staff at Alameda County Medical Center. "We've been trying all sorts of management changes, restructuring and cuts, and the county, which is facing a huge deficit, has no money to provide. The only solution to keep us viable is to seek the community's support."
Alameda is the third California county in two years to turn to the ballot box in a last-ditch effort to keep its healthcare system afloat. So far, only one public hospital outside the Golden State-Maricopa Integrated Health System in Phoenix-has tried a similar move in recent years; in November 2003, Maricopa County residents approved a new property tax that will raise up to $40 million per year to renovate the 482-bed hospital and keep its beleaguered burn and trauma facilities open.
But with public hospitals nationwide caught in a crunch between rising costs, a growing number of uninsured patients and dwindling state and federal reimbursements, ballot initiatives could become an increasingly important option elsewhere, said Christine Capito Burch, executive director of the National Association of Public Hospitals and Health Systems.
"The margins of our members are extraordinarily low, so of course they are under increased pressure to find new or expanded revenue sources," Burch said, adding that hospitals' efforts will vary by state.
California may be leading the trend because it poses particular challenges for its public hospitals, said Rachael Kagan, spokeswoman for the California Association of Public Hospitals. Not only does the state have the lowest Medicaid reimbursement rates in the nation, it also faces cutthroat hospital competition and strong penetration by managed-care plans, which tend to steer members to private hospitals, she says. In addition, the state has been especially hard hit by cuts to the federal disproportionate-share hospital program, which subsidizes hospitals treating an inordinate share of the poor. In 2003, California hospitals lost 20%, or $184 million, of this money.
For Alameda County Medical Center, these factors have contributed to a cumulative loss of $109 million over the past four years, according to the county auditor-controller. The system is expected to lose another $71.6 million in the current fiscal year, ending June 30. It spent $30 million, or 7.1% of its revenue, on uncompensated patient care in fiscal 2003.
The medical center is hoping taxpayers will agree to pitch in to rescue the county's foundering healthcare system, much like they did in Los Angeles in 2002. That November, a resounding 73.2% of voters endorsed a property tax increase to raise $168 million annually for Los Angeles County's emergency rooms and trauma centers, sparing 333-bed Harbor-UCLA Medical Center and 226-bed Olive View-UCLA Medical Center from potential closure.
Residents of the city of Alameda approved a similar ballot measure in April 2002, which spared then-private Alameda Hospital from certain closure by creating an annual parcel tax and converting the 135-bed hospital into a district facility.
Measure A is backed by the regional medical association, local unions and the Alameda County Taxpayers Association. It faces no organized opposition, though Service Employees International Union Local 250, which represents 800 healthcare workers at the medical center, isn't supporting the initiative because of concerns about fiscal mismanagement by the county board of supervisors.
Still, the initiative must overcome some harsh electoral realities. Raising taxes is never an easy sell, and Measure A would make Alameda County's sales tax the highest in the state, at 8.75%. "People are at their wits' end with all these new taxes," Mittelberger said, adding that the March 2 ballot will contain five separate fund-generating initiatives, including a state bond measure and a parcel tax for education. "Getting a two-thirds majority (vote) is going to be a huge hurdle."
Indeed, a similar measure in Monterey County fell just short of passage in December 2003, with 62% of the vote. The proposed half-cent sales tax boost would have raised $25 million per year to support the 163-bed Natividad Medical Center in Salinas. The county-run hospital and its new chief executive officer, Lionel Chadwick, are exploring several options-not excluding sale to a private company and even another ballot measure-to prevent a projected $8.8 million loss next year.
Since last June, Alameda County Medical Center has worked to stem its losses by closing two outpatient clinics, slashing specialty services, routing eligible patients into public insurance programs, charging copayments to those with some means to pay and postponing the opening of a newly built, $110 million critical-care center at Highland Hospital from January until later this year. Medical center officials had also considered shuttering the three other clinics as well as Highland Hospital's trauma center but shelved the idea amid strong opposition.
Last month, the medical center's board of trustees hired turnaround consultant Cambio Health Solutions to assess the system's problems, make changes and train a new team of managers. The medical center has had an interim CEO since September 2003, when the board fired Kenneth Cohen, its eighth CEO in 10 years.