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HOME > ABOUT > PRESS > UNHEALTHY IMPACTS OF NO STATE BUDGET CONTINUES
Article published - Sept 3, 2008
Credit: SONOMA WEST TIMES
Unhealthy Impacts of No State Budget Continue:
Local Health Clinics Operating on IOU's
By David Abbott
Despite the Governor’s pledge to forego the Republican National Convention until the 2008-09 budget is signed, California continues to operate on fiscal fumes, and the impasse is beginning to have an effect on community health.
“We’re getting IOU checks from the state,” said Louis Ponick, the chief operating officer of Pediatric Dental Initiative of the North Coast in Windsor. “It’s very difficult to operate with zero cash flow.”
On July 24, State officials announced that Medi-Cal would freeze payments to clinics until the budget is passed.
More than 90 percent of PDI’s patients are Medi-Cal patients, and the freeze means that the fledgling office — which opened on Jan. 22 of this year — will experience a “significant” delay in its ability to hire more staff, increase services, and potentially affects its ability to remain open.
The dental clinic provides services for low-income patients in Sonoma, Lake, Mendocino, Marin, and Napa Counties, and has a wait list of about 450, which keeps growing every day, according to Ponick.
Community health clinics have become an increasingly important part of health care due to the growing number of uninsured residents in Sonoma County, according to Pedro Toledo, Director of Community and Governments Relations for the Redwood Community Health Coalition (RCHC).
“It’s a big issue,” he said. “Almost $2 million a month will be impacted.”
The total budget for the RCHC Sonoma County clinics is approximately $60 million per year, with each clinic managing its own budget. Seventy percent of that funding comes from Medi-Cal.
Toledo said that the proposed state budget is a bigger problem than the impasse, because it reduces the amount budgeted for Medi-Cal.
According to the State’s Legislative Analysis Office (LAO), Medi-Cal will be reduced a total of 3.4 percent in the proposals current configuration, dropping from an estimated $14 billion in 2007-08 to $13.5 billion in 2008-09.
But administrators of the clinics have enough to worry about simply getting through the current crisis.
“The smaller health centers with fewer resources will have difficulties,” Toledo said. “Some may have to reduce services or layoff employees.”
Jack Neureuter, chief executive officer for Alliance Medical Center of Healdsburg is trying not to go that route.
Alliance serves 12,000 patients and has a budget of about $8 million per year. Neureuter doesn’t want to lay off his employees even temporarily because, “they wouldn’t trust an employer that would do that.”
Forty-five percent of Alliance’s patients get health care through Medi-Cal, and Neureuter sees the potential for an economic health care disaster if those patients are cut off and have to seek care in hospital emergency rooms.
In order to bridge the gap, many medical facilities are seeking loans from the the state or from private banks.
According to Toledo, entities such as Catholic Health Care West, and Sutter contribute sizable sums — $15 million and $10 million respectively — to a “Community Clinic Fund,” that offers low-interest loans that can be repaid once the Medi-Cal checks start to come in again.
The interest on those loans, as well as loans from the California Health Facilities Financing Authority (CHFFA), is about 3 percent, but even when the state begins its reimbursements again, there isn’t a guarantee that there will be sufficient funds to cover the cost of the loans.
“There’s always a question of whether Medi-Cal will pay in full or not,” said Ponick, who is also trying to get by without resorting to layoffs or service cuts.
According to other news reports, Schwarzenegger’s office met with two former state finance directors and former Senate Republican Leader Jim Brulte last week “to discuss strategies for continuing state operations until November or later without a budget in place.”
According to some meeting participants, the group discussed options for the state to secure cash when its reserves run out, and whether the governor is authorized to release emergency funds to health clinics and other initiatives.
“That’s really scary,” Toledo said.
Director of the Sonoma County Department of Health Services Rita Scardaci said that the county won’t feel the effects of the impasse until after the beginning of the year because the county has already developed budgets for the 2008-09 fiscal year, and is already planning for 2010.
She added that the county has sufficient reserves, and makes its plans expecting a budget impasse every year.
“There’s potential for overall erosion of funds,” she said of the proposed budget. “The state hasn’t set rates for Drug Medi-Cal, which will be problematic for non-profits.”
The county will bill the state 90 days after the end of the fiscal year — at the end of this month — but she hopes the deadlock will be over by then.
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