Supervisors ok multimillion-dollar loan to cover hospital shortfall

RIVERSIDE, Calif. - The Riverside County Regional Medical Center will receive a $40 million cash infusion to cover its bills in the current fiscal year, thanks to action today by the Board of Supervisors, but the hospital's troubles are not behind it.

``This is $40 million to keep it alive,'' said Supervisor Kevin Jeffries prior to joining his colleagues in a unanimous vote for the allocation. ``We don't have a choice.''

According to the county Executive Office, the medical center will have to slash services and implement measures to make it run more efficiently, or its financial woes will only worsen in the next fiscal year.

The board voted 5-0 to provide a loan -- using funds left over to pay workers' compensation insurance claims -- to the Moreno Valley facility to temporarily rectify its structural budget deficit.

The red ink could swell to $52 million in the 2014-15 fiscal year without remedial action, the Executive Office said.

``This is at the forefront of my attention,'' said county CEO Jay Orr. ``We understand the (hospital's) business model needs to change, and we are moving forward with that.''

The loan must be repaid, with interest, by June 30, 2014. If it isn't, the county will have to absorb the loss in its general fund, according to county officials.

The hospital has been plagued with a deepening shortfall over the last couple of years as the county engaged in a deficit reduction strategy that required all agencies to focus on cost-cutting. RCRMC serves a large number of indigent patients, and ``receivables,'' or ongoing payments for services, have been slow to arrive, if at all, according to medical center Director Doug Bagley.

Bagley has also attributed losses to low Medi-Cal reimbursements from the state, rising costs in other programs and county agencies effectively being subsidized by the hospital, which provides health care services to the Departments of Mental Health and Detention Health.

The county has hired a consultant to scrutinize operations and propose strategies for how the hospital can run more efficiently.

More than 90 percent of the medical center's budget originates from federal and state sources. Supervisor Jeff Stone today wondered how well the facility would be able to compete for business after full implementation of the Patient Protection & Affordable Care Act -- better known as Obamacare -- next year, when previously uninsured individuals will have access to medical care virtually anywhere.

``This situation could cause some significant financial misery for the county if we are not careful,'' Stone said. ``My prediction is things are going to get worse before they get better. This could be a major liability to the county if we don't approach it right.''

Stone questioned whether the hospital should not be partially privatized -- or sold outright.

According to Orr, the consultant will review all options and report back to the board in the next 60 days.

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