Hospital Industry Changes To Take Hold Across Calif., Expert Says

The hospital industry in the San Francisco Bay Area is undergoing a “shakeup” as small and independent facilities undergo sales, potential closures and other changes — a trend that experts say could spread throughout the state as the federal government works to reduce health care costs, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 3/13).


Last week, Prime Healthcare withdrew its offer in the contentious sale of six California safety-net hospitals run by Daughters of Charity Health System — including facilities in Daly City, Gilroy, Moss Beach and San Jose. Some stakeholders have said that the hospitals likely will close if a sale does not go through (Gorn, “Capitol Desk,” California Healthline, 3/11).

Doctors Medical Center in San Pablo also faces closure if a sustainable source of revenue cannot be found soon (California Healthline, 2/20).

Meanwhile, other hospitals in the area are being “scooped up” by larger health systems, according to the Chronicle. For instance, Children’s Hospital Oakland became affiliated with UC-San Francisco’s academic medical center and Alameda Health System brought individual hospitals in Alameda and San Leandro into the county’s safety-net health care system.

Reasons for Changes

California Hospital Association spokesperson Jan Emerson-Shea said, “The financial environment for hospitals is getting ever more difficult.”

For instance, the Affordable Care Act puts pressure on hospitals to reduce patient admissions and improve care quality, but such changes can be difficult for smaller hospitals in disadvantaged communities.

Maribeth Shannon, a program director at the California HealthCare Foundation, said, “Hospitals like Daughters of Charity and Doctors [Medical Center] tend to have higher readmissions because people are often discharged and don’t have good support.” While the ACA’s changes are “a good idea,” Shannon said they can create “additional pressures on these hospitals serving difficult populations.” CHCF publishes California Healthline.

In addition, Shannon said smaller hospitals face more challenges than their larger counterparts because they lack resources to:

-Negotiate better insurance contracts;
-Recruit staff; and
-Upgrade facilities to meet state standards for earthquake preparedness.

She said, “The future is really bleak for some hospitals that don’t have the resources to build and expand and become more competitive.”
Trend Expected To Continue

Walter Kopp, a hospital and medical group consultant in San Anselmo, said changes to the hospital industry in the Bay Area are “just the beginning of what will be a lot less hospitalizations and fewer hospitals,” adding, “The weaker ones are happening now and, as time goes on, we’ll be seeing more falling.”

Kopp said that while the changes may be difficult on some communities, “that’s just something we have to go through” because the “current model is just unsustainable” (San Francisco Chronicle, 3/13).

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