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Hospitals have been losing millions a year, may face closure

LOS ANGELES (AP) -- Many Los Angeles hospitals have been losing millions of dollars a year and face financial meltdown because of inadequate reimbursement, rising labor costs and the influx of uninsured patients.

Almost half the area's hospitals operated at a loss in 1998, and nearly as many reported operating losses in 1999, according to a report by the Daily News of Los Angeles, which analyzed the most recent state data.

"We are at the brink of a meltdown," said Jan Emerson, vice president of the California Healthcare Association. "I think that we as a society are really going to have to decide who pays for this. We can't keep operating in the red."

While some say their financial outlook has since improved within the last two of years, many fear that if things don't change soon many hospitals will start closing.

"If something doesn't happen in the next year and a half to two years (you're) going to see tremendous numbers of hospitals, physician groups, nursing homes just go out of businesses," said Tom Wallace, president and chief executive at Granada Hills Community Hospital, who said his facility has posted deficits of $5 million in both 1998 and 1999. "I don't think we can survive much longer."

A recently released report from the state Attorney General's Office said financial problems were the main factor contributing to the closure of 23 hospitals statewide from 1995 to 2000.

Hospital officials site several reasons for the current financial state. Low reimbursements rates from the government and the health care plans fall short of the money hospitals spend caring for patients. A nursing shortage that has left Los Angeles with 42 percent fewer nurses per 100,000 residents than the nationwide average has sent labor costs soaring. One-third of Los Angeles County residents under 65 are without insurance, often leaving hospitals with the tab for services.

To cope, hospitals have taken various cost-saving measures, including cutting staff, giving discounts to patients who pay in cash and aggressively seeking donations.

Meanwhile, as hospitals struggle to survive 40 percent of facilities statewide also face with mandated seismic repairs estimated to cost $24 billion. By next year, hospitals are required to submit plans showing how they will comply with the law that requires their buildings be able to withstand a major earthquake.

-- Swissrose (, May 20, 2001

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