Monterey Peninsula and Salinas Valley hospitals suffer from atrophied revenue.

Ghost Nurse: An orderly makes his rounds at the Community Hospital of the Monterey Peninsula. Aetna's demand for a higher discount adds salt to CHOMP's wounds as it cuts costs and lays off staff (left); while SVMH workers makes their case public on Oct. 21, arguing a smaller staff means patients will have to wait longer for care.

Lean economic times tend to hit the public where it hurts most, including health care facilities. Couple the recession with insurance companies squeezing their providers and employers looking to stabilize rocketing health care costs, and it looks like we may have an epidemic. Here we examine the symptoms at two of Monterey County’s major hospitals.

Aetna plans to drop CHOMP from its network in 2011.

Aetna health insurance members who use Community Hospital of the Monterey Peninsula could soon have to fork out more cash for health care, or find another hospital. CHOMP officials say Aetna has issued a termination letter that will remove the hospital from its network after Dec. 31.

This could strain existing doctor-patient relationships, since some physicians who practice exclusively at CHOMP, including radiologists and pathologists, could be deemed out-of-network come 2011, according to hospital spokeswoman Mary Barker.

“[Aetna members] are just going to have to pay more out-of-pocket or drive elsewhere to get their care,” she says.

Aetna spokeswoman Anjie Coplin says CHOMP wouldn’t agree to reduce its reimbursement rate, which Aetna claims is too high: “CHOMP has the highest average cost-per-day stay of any large-volume, Aetna-contracted hospital in Northern California.”

“Our job is to help control health care costs for our customers and members,” she writes in an e-mail. “When charges are exorbitant, we must take action to protect our customers and members from unnecessary costs.”

In response, Barker points to a report that puts CHOMP’s payments for private insurance patients in the middle compared to 11 community hospitals in the region.

Negotiations fell apart after Aetna requested a 34 percent discount for medical expenses to keep CHOMP in its network, Barker says. The hospital tried to pitch a long-term cost-reduction strategy that would have reduced hospital stays through disease prevention, she adds.

“We don’t discount to anyone at this point,” Barker says. “We felt like it was an irresponsible price cut that we would be giving them.”

Aetna has about 6,000 members in Monterey County, according to Barker. The health insurance company’s move could cost CHOMP more commercially insured patients at a time when the hospital is already laying off employees to trim expenses.

As part of a $21 million cost-cutting plan, CHOMP laid off 43 employees on Oct. 21 on top of 14 voluntary buyouts in September. Rate increases by two local school insurance groups aren’t helping CHOMP’s bottom line.

On July 1, the Monterey County Schools Insurance Group, which represents about 6,000 local school employees, started charging its members $1,000 in-patient and $500 out-patient co-pays to use CHOMP. The group found CHOMP’s and Salinas Valley Memorial Hospital’s health care billings to be above average and now charges its members more to use the facilities, says Sherrell Freeman, the group’s executive director.

Monterey Peninsula College recently implemented a similar tiered system for its medical benefits program, which covers 424 employees and retirees, not including dependents, according to college spokesman Rich Montori. MPC now pays 80 percent of members’ medical expenses at “tier-three” centers like CHOMP, compared to 100 percent at “tier one” facilities, Montori says.

CHOMP’s financial pains, in part, stem from the hospital serving more government-insured patients. About 68 percent of patients are on public medical plans, Barker says; average government reimbursements for programs such as Medicare and Medi-Cal amount to 50 cents on the dollar.

“If you don’t have enough commercial folks to pick up the difference, then you’ve got to cut costs,” she says. “We are not alone. Every hospital in this country is facing this kind of challenge.” [ZS]

Layoffs add heat to Salinas Valley Memorial Hospital elections.

Dozens of nurse’s aides and other Salinas Valley Memorial Hospital workers took to the street in front of the hospital with picket signs on a recent afternoon to warn the public of upcoming staff cuts.

“I like what I do,” says Maureen Canepa, an aide who’s worked at SVMH for six years. “But I can only do so much so fast. I feel like I’m rushing and I can’t give as good patient care.”

In anticipation of leaner times, a nurse’s aide now cares for 10 patients at a time instead of seven or eight, according to SVMH Vice President Bev Ranzenberger. Nurses will also take on bigger loads, although hospital officials emphasize they’ll comply with state-mandated nurse-to-patient ratios.

Hospital administrators say they’ve already shaved $22 million from SVMH’s $375 million budget with major cost-cutting in the past two years, including offering buyouts to managers and other non-union workers. Now they hope enough unionized nurses, aides and other workers will take severance packages in exchange for early retirement to cut another $3 million. If not, the hospital has warned, layoffs could be imminent.

Hospital CEO Sam Downing says big insurers like Blue Cross, with whom the hospital is currently negotiating a new contract, are demanding the belt-tightening. So are large employers.

“We want to meet them halfway to get costs out of the system,” he says.

If not, insurers like Blue Cross threaten to bypass SVMH and send their members to larger facilities that can perform procedures more cheaply, according to hospital board member Jim Gattis.

The squeeze comes as voters decide whether to return Gattis and two other incumbent trustees, Debby Nelson and Harry Wardwell, to the board, or replace one of them with challenger Ken Scherpinski, an International Brotherhood of Electrical Workers union official. The incumbents are running as a slate.

“Are they just making business decisions, or are they making people decisions?” Scherpinski asks.

The current board, which includes four business leaders and one retired teacher, seems to go along with hospital management without much public discussion, Scherpinski adds.

If that’s the case, shoots back board veteran Gattis, “It’s because they’re doing the tough choices to guarantee they’ll be successful in the future.”

Gattis argues that the board often wrestles with issues in greater depth in committee: “I don’t believe I’ve seen Mr. Scherpinski at those meetings.”

Nine of 10 U.S. hospitals are going through similar shifts as SVMH, Gattis says, in part because no one knows exactly what will happen under federal health reform, which will be fully implemented by 2014. For example, he says, insurers will be barred from denying coverage to people with costly pre-existing conditions.

But Assemblyman Bill Monning (D-Carmel), chair of the Assembly Health Committee, calls the insurers’ reasoning into question. “The whole philosophy is to create more competition to drive costs down for the consumer,” he says. “But you’re going to have more participation, and that’s going to create more revenue.” [RU]

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