North Coast hospitals face rocky transition

When the hospital groups agreed to those cuts, they were told that roughly 97 to 98 percent of uninsured Americans would be getting coverage, said Jan Emerson-Shea, vice president of external affairs at the California Hospital Association.

"When the final law was passed, that was reduced to 92 to 93 percent," she said. With all the problems Obamacare is going through, it's unclear how many people will be covered and, more importantly, how soon they will be covered, she said.

Harlan, for example, said he expects the swelling ranks of insured patients to bring in additional money, potentially $600,000 a year. But it's unclear when that change will happen, and exactly to what extent the revenue will offset what is being lost in Medicare reimbursements.

Of the $155 billion in Medicare reductions over 10 years, $17 billion will be cut from hospitals in California, Emerson-Shea said. On top of that, she said, there have been additional cuts made to Medicare because of the recent debt-ceiling negotiations and sequestration, bring the statewide figure up to $22 million.

Union officials, however, say the hospital industry is using Obamacare as a scapegoat for their efforts to maximize net revenues.

John Borsos, secretary treasurer for the National Union of Healthcare Workers, said health care providers like Kaiser and Sutter are making significant revenues, in some cases reporting record highs.

"The single biggest cost that a health care organization has is labor. The more they can reduce labor costs, the more money they make," Borsos said.

Todd Salnas, president of St. Joseph Health in Sonoma County, said local St. Joseph operations are expecting a reduction in government payments of $76 million over five years.

"We're seeing reductions in revenue and reimbursement from outside payers — which are primarily driven by Affordable Care Act changes," Salnas said.

"St. Joseph Health supports access to care being provided to the current uninsured populations, but it's important to understand that there's a price that we all pay to allow that to happen," he said.

Back in July, when St. Joseph announced it would lay off 37 employees at Memorial and Petaluma Valley, the hospital said the cuts would result in an annual savings of $3 million. Two of the employees were given jobs elsewhere in the health care system.

Salnas said there were no immediate plans for further reductions.

"At the present time, we're not planning for any widespread reductions as we continue to transform our medical models," he said. "We'll likely experience changes in roles and responsibilities as we evolve. But we do not have any plans in additional broad reductions in workforce."

Kaiser Permanente last saw layoffs in Sonoma County in 2009, when 50 people were let go as part of a 2 percent statewide staff reduction. The reductions were driven by recession-era job losses that left many without health insurance.

In the first half of that year, Kaiser lost 36,000 subscribers across the state, and the year before it lost 30,000. At the time, Kaiser had 172,000 patients in Sonoma County.

Kaiser Permanente — with its unique, integrated mix of health plans, hospital and medical facilities and physicians — said it has aggressively sought advances in clinical quality, prevention and safety that keep people healthier.

"As a result of this transformation of care, we are seeing shorter and less-frequent hospital stays, and fewer patients in our hospitals," said Judy Coffey, senior vice president/area manager of Kaiser Permanente Marin-Sonoma.

Coffey said Kaiser also is trying alternative health care delivery settings, including services based at home, over the phone and even online. The changes are part of the national trend "in which hospital admissions and length of stay have declined and are continuing to go down," Coffey said.

"We are addressing these changes in many ways, including greater flexibility in managing schedules and staffing, so members get the care where and when they prefer," she said. "Position eliminations would be used only as a last resort."

Like Kaiser, Sutter and St. Joseph also cut their local staffs during the recession, eliminating 130 and 180 jobs respectively in 2008 and 2009.

Sutter Medical Center, which is scheduled to open its new hospital in north Santa Rosa in late 2014, does not anticipate having to cut its current workforce of 800 to 850 employees, said Mike Purvis, chief administrative officer.

"Our staffing at the new hospital will be very similar to what we have now," he said.

In keeping with the shift toward more outpatient care, Sutter's new hospital features a centrally located outpatient unit.

"For us, it's a matter of being attentive, staying as efficient as we can possibly stay," Purvis said.

Another area of concern for smaller hospitals is the loss of inpatient revenue from residents who live in their area but have doctors at physician groups affiliated with Kaiser or Sutter.

In some cases, a Kaiser patient can be treated at Palm Drive or Healdsburg emergency rooms, but if an inpatient admission is required, Kaiser must approve it.

Schmid, Healdsburg District Hospital's CEO, said it's hard to compete with larger hospitals that have the ability to affiliate with large physician groups that can funnel more patients into the hospital. She blasted a state law that prohibits hospitals from hiring their own doctors, requiring them to contract with physician groups. Critics believe direct hiring of doctors could increase patient volumes at smaller hospitals.

Harlan, Palm Drive Hospital's CEO, said one measure the hospital is taking to increase revenue is getting some hospital employees to switch their health coverage from Kaiser to Western Health Advantage. Currently, half of hospital employees are covered by Kaiser. The move would allow the hospital's own employees to use Palm Drive services.

Harlan said he also expects to boost revenues by increasing certain procedures, such as MRIs, wound care, 3-D mammography and new spine procedures. He also expects Obamacare to increase annual revenues by $600,000 once currently uninsured patients get health coverage. But he said there's a lot of uncertainty about the degree to which that is going to happen.

"The uncertainty is what's causing people to blame the Affordable Care Act," Harlan said. "There are Medicare cuts, and that's not good if the revenue from newly insured patients never becomes a reality."

(News Researcher Janet Balicki contributed to this story. You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com.)