Millions of cancelled healthcare appointments and lengthy waits for care abound in UK, New Zealand, and in the US
Strikes continue on multiple continents as thousands of healthcare workers walk off the job. Doctors, medical laboratory scientists, nurses, phlebotomists and others around the world have taken to the picket lines complaining about low wages, inadequate staffing, and dangerous working conditions.
In England, junior doctors (the general equivalent of medical interns in the US) continue their uphill battle to have their complaints heard by the UK government. As a result, at hospitals and clinics throughout the United Kingdom, more than one million appointments have been cancelled due to strikes, according to the BBC.
“The true scale of the disruption is likely to be higher—many hospitals reduce bookings on strike days to minimize last-minute cancellations,” the BBC reported. “A total of one million hospital appointments have had to be rescheduled along with more than 60,000 community and mental health appointments since December [2022], when industrial action started in the National Health Service (NHS).”
According to The Standard, “Consultants in England are to be re-balloted over the prospect of further strike action as doctors and the government remain in talks with a view to end the dispute. The British Medical Association (BMA) said that specialist, associate specialist, and specialty (SAS) doctors will also be balloted over potential strike action.”
“We must be prepared to take the next step and ballot for industrial action if we absolutely have to—and we will do this … if upcoming negotiations fail to achieve anything for our profession,” Ujjwala Anand Mohite, DRCPath, FEBPath (above), a histopathologist at the NHS, Dudley Group of Hospitals, and the first female Chair of the SAS committee UK, told The Guardian.
New Zealand Doctors, Clinical Laboratory Workers Strike
In September, the first-ever nationwide senior doctor strike occurred in New Zealand and was then followed by another strike of about 5,000 doctors and 100 dentists from New Zealand’s public hospitals, the World Socialist Web Site reported.
Similar to the UK, the strikes reflect mounting frustration over pay not keeping up with inflation and “decades of deteriorating conditions in the public health system,” the WSWS noted.
This follows months of strikes by the island nation’s medical laboratory workers, which are ongoing.
“Our pay scales, if you compare them internationally, are not competitive. About half of our specialists come from abroad, so it’s quite important for the country’s health system to be able to attract and keep people,” Andy Davies, a lung specialist who joined the picket outside 484-bed Wellington Hospital, told the WSWS.
“We’re not asking for the world, we’re asking for an inflationary pay rise, and we haven’t had an inflationary pay rise year-on-year, and it’s beginning to show,” he added.
“What type of health system do they want?” he continued. “Do we want one that treats all people and manages what they need, or do we want a hacked down system that does less?”
The conflicts over pay and working conditions have caused many healthcare workers in New Zealand to leave the field entirely. This has led to severe shortages of qualified workers.
“Patient waiting times—for cancer, hip replacements, cardiac problems, and many other conditions—have exploded due to understaffed and overwhelmed hospitals,” the WSWS reported.
US Healthcare Workers also Striking
The US has its share of striking healthcare workers as well. Healthcare Dive tracked 23 ongoing or anticipated strikes throughout the nation’s healthcare industry since January 1, 2023. In 2022, there were 15 strikes of healthcare workers at the nation’s hospitals and health systems.
These walkouts include doctors, nurses, pharmacy workers, imaging specialists, and thousands of frontline healthcare workers striking over dangerously low staffing levels, unsafe working conditions, and low pay.
In October, 75,000 nurses, support staff, and medical technicians from Kaiser Permanente participated in a 72-hour strike comprised of hundreds of hospitals and clinics throughout California, Washington state, Oregon, Virginia, and the District of Columbia, Reuters reported.
The three-day strike, “Marked the largest work stoppage to date in the healthcare sector,” Reuters noted. Doctors, managers, and contingency workers were employed to keep hospitals and emergency departments functioning.
“The dispute is focused on workers’ demands for better pay and measures to ease chronic staff shortages and high turnover that union officials say has undermined patient care at Kaiser,” Reuters stated.
Staffing shortages following the COVID-19 pandemic are partly to blame for current struggles, but contract staffing to fill critical positions has exacerbated the problem.
“Kaiser’s outsourcing of healthcare duties to third-party vendors and subcontractors has also emerged as a major sticking point in talks that have dragged on for six months. … The clash has put Kaiser Permanente at the forefront of growing labor unrest in the healthcare industry—and across the US economy—driven by the erosion of workers’ earning power from inflation and pandemic-related disruptions in the workforce,” Reuters noted.
Across the globe, many healthcare workers—including clinical laboratory scientists in countries like New Zealand—are feeling burnt out from working in understaffed departments for inadequate pay. Hopefully, in response to these strikes, governments and healthcare leaders can come to resolutions that bring critical medical specialists back to work.
Federal class action lawsuit looms as genetics company searches for what went wrong; a reminder to clinical laboratories of the importance of protecting patient information
Several years ago, security experts warned that biotechnology and genomics company 23andMe, along with other similar genetics companies, would be attacked by hackers. Now those predictions appear to have come true, and it should be a cautionary tale for clinical laboratories. In an October 6 blog post, the genetic testing company confirmed that private information from thousands of its customers was exposed and may be being sold on the dark web.
According to Wired, “At least a million data points from 23andMe accounts appear to have been exposed on BreachForums.” BreachForums is an online forum where users can discuss internet hacking, cyberattacks, and database leaks, among other topics.
“Hackers posted an initial data sample on the platform BreachForums earlier this week, claiming that it contained one million data points exclusively about Ashkenazi Jews,” Wired reported, adding that “hundreds of thousands of users of Chinese descent” also appear to be impacted.
The leaked information included full names, dates of birth, sex, locations, photos, and both genetic and ancestry results, Bleeping Computer reported.
For its part, 23andMe acknowledges the data theft but claims “it does not see evidence that its systems have been breached,” according to Wired.
Anne Wojcicki (above) is the co-founder and CEO of genetics company 23andMe, which on October 24 told its customers in an email, “There was unauthorized access to one or more 23andMe accounts that were connected to you through DNA Relatives. As a result, the DNA Relatives profile information you provided in this feature was exposed to the threat actor.” Clinical laboratories must work to ensure their patient data is fully secured from similar cyber theft. (Photo copyright: TechCrunch.)
23andMe Claims Data Leak Not a Security Incident
The data leaked has been confirmed by 23andMe to be legitimate. “Threat actors used exposed credentials from other breaches [of other company’s security] to access 23andMe accounts and steal the sensitive data. Certain 23andMe customer profile information was compiled through access to individual 23andMe.com accounts,” a 23andMe spokesperson told Bleeping Computer.
However, according to the company, the leak does not appear to be a data security incident within the 23andMe systems. “The preliminary results of this investigation suggest that the login credentials used in these access attempts may have been gathered by a threat actor from data leaked during incidents involving other online platforms where users have recycled login credentials,” the spokesperson added.
What the genetics company has determined is that compromised accounts were from users choosing the DNA Relative feature on their website as a means to find and connect to individuals related to them. Additionally, “the number of accounts sold by the cybercriminal does not reflect the number of 23andMe accounts breached using exposed credentials,” Bleeping Computer noted.
Price of Private Information
Following the 23andMe data leak, the private genetic information was quickly available online … for a price.
“On October 4, the threat actor offered to sell data profiles in bulk for $1-$10 per 23andMe account, depending on how many were purchased,” Bleeping Computer reported.
Stolen medical records are becoming hotter than credit card information, the experts say. “Stolen records sell for as much as $1,000 each,” according to credit rating agency Experian, Bleeping Computer noted.
In its 2018 Global Security Report, “cybersecurity firm Trustwave pegged the black-market value of medical records at $250 each. Credit card numbers, on the other hand, sell for around $5 each on the dark web … while Social Security numbers can be purchased for as little as $1 each,” Fierce Healthcare reported.
Clinical laboratory managers and pathologists should take note of the value that the dark web places on the medical records of a patient, compared to the credit card numbers of the same individual. From this perspective, hacking a medical laboratory to steal patient health data can be much more lucrative than hacking the credit card data from a retailer.
“Victims of the breach are now at increased risk of fraud and identity theft, and have suffered damages in the form of invasion of privacy, lost time and out-of-pocket expenses incurred responding to the breach, diminished value of their personal information, and lost benefit of the bargain with 23andMe,” according to court documents.
“The lawsuit brings claims of negligence, breach of implied contract, invasion of privacy/intrusion upon seclusion, unjust enrichment, and declaratory judgment,” Bloomberg Law noted. Additionally, the claim states that 23andMe “failed to provide prompt and adequate notice of the incident.”
Plaintiffs are “seeking actual damages, compensatory damages, statutory damages, punitive damages, lifetime credit-monitoring services, restitution, disgorgement, injunctive relief, attorneys’ fees and costs, and pre-and post-judgment interest,” Bloomberg Law reported.
Preventing Future Data Leaks
Years of experts warning genetics companies like 23andMe that they need more strict data security have proven to be true. “This incident really highlights the risks associated with DNA databases,” Brett Callow, a threat analyst at data security firm Emsisoft, told Wired. “The fact that accounts had reportedly opted into the ‘DNA Relatives’ feature is particularly concerning as it could potentially result in extremely sensitive information becoming public.”
“Callow notes that the situation raises broader questions about keeping sensitive genetic information safe and the risks of making it available in services that are designed like social networks to facilitate sharing. With such platforms come all of the data privacy and security issues that have plagued traditional social networks, including issues related to data centralization and scraping,” Wired noted.
Clinical laboratory databases are full of protected health information (PHI). Wise lab managers will work to ensure that their medical lab’s patient data is secure from today’s cyberthreats.
Plans by several national retail pharmacy chains to expand primary care services and even some clinical laboratory test offerings may be delayed because of financial woes
Times are tough for the nation’s retail pharmacy chains. Rite Aid Corporation, headquartered in Philadelphia, closed 25 stores this year and has now filed for bankruptcy. In a press release, the retail pharmacy company announced it has “initiated a voluntary-court supervised process under Chapter 11 of the US Bankruptcy Code,” and that it plans to “significantly reduce the company’s debt” and “resolve litigation claims in an equitable manner.”
Rite Aid may eventually close 400 to 500 of its 2,100 stores, Forbes reported.
Meanwhile, other retail pharmacy chains are struggling as well. CVS Health, headquartered in Woonsocket, Rhode Island, and Walgreens Boots Alliance of Deerfield, Illinois, are each closing hundreds of stores, according to the Daily Mail.
They are each experiencing problems with labor costs, theft, being disintermediated for prescriptions by pharmacy benefit managers (PBMs), and probably building too many stores in most markets.
This is a significant development, in the sense that Walgreens, CVS, and Walmart are each working to open and operate primary care clinics in their stores. This is a way to offset the loss of filling prescriptions, which has migrated to PBMs. Primary care clinics are important to the revenue of local clinical laboratories, but retail pharmacy chains do not yet operate enough primary care clinics in their retail pharmacies to be a major influence on the lab testing marketplace.
“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy,” said Jeffrey Stein (above), Rite Aid’s CEO/Chief Restructuring Officer, in a press release. Clinical laboratory leaders may want to closely monitor the activities of the retail pharmacies in their areas. (Photo copyright: Rite Aid.)
Multiple Pharmacy Companies at Financial Risk
Rite Aid Corporation (NYSE: RAD) confirmed it continues to operate its retail and online platforms and has received from lenders $3.45 billion in financing to support the company through the bankruptcy process.
However, according to the Associated Press (AP), Rite Aid has experienced “annual losses for several years” and “faces financial risk from lawsuits over opioid prescriptions,” adding that the company reported total debts of $8.6 billion.
Additionally, the US Department of Justice (DOJ) filed a complaint “alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances,” explained a DOJ press release.
Rite Aid is not the only retail pharmacy brand dealing with unwelcome developments. Fortune reported last year that Walgreens and CVS paid a combined $10 billion to 12 states for “involvement in the opioid epidemic.”
Walgreens intends to close 150 US and 300 United Kingdom locations, its former Chief Financial Officer James Kehoe shared in a third quarter 2023 earnings call transcribed by Motley Fool.
And in a news release, CVS announced plans to close 900 stores between 2022 and 2024.
Pharmacy Companies’ Investment in Primary Care
Though they are experiencing difficulties on the retail side, Walgreens and CVS have significantly invested in primary care.
In that same ebrief, we reported on CVS’ acquisition of Oak Street Health, a Chicago-based primary care company, for $10.6 billion. CVS plans to have more than 300 healthcare centers by 2026.
“We looked at our business, and we said, ‘We’re seeing an aging population.’ We know people don’t have access to primary care. We know that value-based care is where it’s going. We know that there’s been a renaissance in home (care). So that’s kind of how we approached our acquisitions,” Karen Lynch, CVS Chief Executive Officer told Fortune.
Other Challenges to Retail Pharmacies
It could be that these major pharmacy chains are hoping entry into primary care will offset the loss of sales from prescriptions that have migrated to PBM organizations.
In addition to reimbursement challenges, retail pharmacies are reportedly experiencing:
High labor costs,
Competition from online, bricks-and-mortar, and grocery businesses, and
Effects from the work-at-home trend, among other struggles.
“I think there’s a number of challenges which are coming to a head. One, you have ongoing reimbursement pressure. The reimbursement level for drugs continues to decrease, so profit margin on the core part of the business is under pressure,” Rodey Wing, a partner in the health and retail practices of global strategy and management consulting firm Kearney, told Drug Store News.
Additionally, the pharmacy’s drug sales need to be high enough to retain pharmacists, who are difficult to recruit in a post-pandemic market, Drug Store News explained.
And in the retail space where products are displayed, some pharmacies struggle to compete with Amazon on convenience and with “dollar” stores on price. And with more people working from home, retail pharmacies are seeing less foot traffic, Drug Store News noted.
Retail pharmacy companies also have competition from pharmacies conveniently situated in grocery and big-box stores, Forbes reported. These include:
Walmart, for its part, reduced operating hours of pharmacies at more than 4,500 sites, Daily Mail reported.
Thus, medical laboratory leaders would be wise to keep an eye on market changes in their local retail pharmacies. Some locations are equipped with clinical laboratory services and a closure could give local labs an opportunity to reach out to patients and physicians who need access to a new testing provider.
The newly approved legislation will “eliminate regulations preventing patients from learning about diagnostic testing and services provided by local clinical laboratories,” according to a press release issued by the Pennsylvania Senate Republicans.
Republican state Senator Rosemary Brown was the bill’s primary sponsor. She was joined as co-sponsors by a bipartisan group of colleagues.
“The regulations prevent patients from learning about clinical laboratories and the services they provide,” Brown said in the press release. “Patients deserve to know about their options when they are selecting a clinical laboratory to perform these important tests and procedures.”
The press release noted that Pennsylvania is the only state that prohibits clinical laboratories from advertising to residents.
“It’s time for Pennsylvania to catch up with the rest of the nation and enable patients to have access to this information,” said co-sponsor of the bill Republican Senator Tracy Pennycuick (above) in a press release. “Our bill would enable advertising while maintaining the important consumer protection provisions that ensure tests and procedures can only be performed based on a doctor’s order.” Once enacted into law, clinical laboratories in Pennsylvania will be able to advertise their services just like labs in other US states. (Photo copyright: Montgomery County Republican Committee.)
Details of Senate Bill 712
The bill applies to clinical laboratory tests ordered by licensed healthcare practitioners and performed by the medical laboratories themselves. Labs are prohibited from making claims “about the reliability and validity of the testing that is inconsistent with the testing proficiency standards” in federal law, the bill states, and labs must disclose that the test “may or may not be covered by health insurance.”
Brown, Pennycuick, and co-sponsor Republican Senator Lynda Schlegel Culver, discussed the need for the new legislation in a March 2023 memo, observing that 70% of healthcare decisions are influenced by clinical laboratory tests.
“As our state and the nation’s healthcare system continues to grow and evolve, consumers are demanding greater transparency and to be more engaged in how healthcare is delivered to them,” they wrote, adding that the state’s current restrictions are “outdated.”
“We believe permitting outreach to Pennsylvania consumers with accurate, scientifically based diagnostic information can be a source of personalized, highly relevant insight to help foster better, more informed dialogue with licensed healthcare providers, which enables Pennsylvania consumers to take action to improve their health,” they wrote.
“Patients should have access to information about the services and procedures available at their local clinical laboratories,” said Senator Culver in the press release. “I want to make sure patients can make informed decisions about where and how to obtain these important health services. Our bill would remove the gag order on this specific set of healthcare services.”
Similar legislation, HB1558, sponsored by Republican Representative Paul Schemel, is currently pending in Pennsylvania’s House of Representatives.
Larger Push for Healthcare Consumerism
Dark Daily and our sister publication The Dark Report have reported extensively about the rise of consumerism in healthcare—including factors such as price transparency—as it applies to medical laboratories.
And in “Millennials Set to Reorder Healthcare and Lab Testing,” The Dark Report advised clinical laboratories on the need to reconfigure key aspects of their services to accommodate the rising numbers of Millennials in the workforce. For example, these consumers are accustomed to using mobile devices to interact with retailers and want the same convenience when obtaining healthcare services from doctors and labs.
Global management consulting firm McKinsey and Company addressed many of these issues in report titled, “Driving Growth through Consumer Centricity in Healthcare.” The authors suggested that healthcare providers need to “redefine the consumer experience” by emulating “consumer-focused companies in other sectors” with “personalized offerings and services, value-based pricing, and an elevated experience—all from distinctive, high-quality brands.”
The report also noted that providers still have a lot of work to do. “Many consumers believe that the health system does not support their care needs, and they perceive that the quality of their healthcare is negatively affected by their personal attributes, including income, insurance coverage, weight, and age, among other factors,” the authors wrote.
Huron, a healthcare consulting company, identified five current trends in healthcare consumerism based on a survey of US consumers, Healthcare Dive reported. They are:
Greater digital functionality, including telehealth, wearable devices to report health data, and mobile apps for scheduling, communication, and payment.
Affordability, shorter wait times, and online ratings as factors driving consumers to choose providers.
Accurate diagnoses and effective treatment plans as drivers of consumer satisfaction.
Increasing demand for technology-enabled conveniences such as virtual care.
More price transparency in response to concerns about affordability.
Pennsylvania’s decision to join the rest of the nation and allow clinical laboratories to advertise their services may be evidence that the growing number of consumers who want direct access to medical care and the ability to choose their provider—be it hospital, physician, or clinical laboratory—are encouraging the pathology and medical laboratory professions to lobby their state lawmakers to make it easier to advertise their services to the public.
Clinical laboratory leaders may be aware that many hospitals still do not have capabilities to make a timely diagnosis of sepsis
Despite the fact that “one in three people who dies in a hospital had sepsis during that hospitalization,” recent data from the Centers for Disease Control and Prevention (CDC) show that many hospitals in the US lack the resources to identify sepsis and begin treatment as soon as possible, CNN reported.
According to the CDC, 1.7 million Americans develop sepsis annually. And of that group, at least 350,000 adults die in hospitals or hospice care centers. Clinical laboratories tasked with performing the plethora of tests needed to diagnose sepsis will agree that it is one of the gravest healthcare dangers patients face.
To address this potentially deadly threat, the CDC developed the “Hospital Sepsis Program Core Elements: 2023” to support the implementation of sepsis protocols at all hospitals, to optimize any existing sepsis programs, and to organize staff and identify resources to lower sepsis rates and raise survivability.
“Modeled after CDC’s Core Elements of Antibiotic Stewardship, which has proven to be an impactful resource to protect patients from the harms caused by unnecessary antibiotic use and to combat antimicrobial resistance, the Sepsis Core Elements were created with the expectation that all hospitals, regardless of size and location, would benefit from this resource,” a CDC press release noted.
“CDC’s Hospital Sepsis Program Core Elements are a guide for structuring sepsis programs that put your healthcare providers in the best position to rapidly identify and provide effective care for all types of patients with sepsis,” said Raymund Dantes, MD (above), Medical Advisor, National Healthcare Safety Network, CDC, and Associate Professor, Emory University School of Medicine, in a CDC press release. Hospital medical laboratories will play a key role in the success of the CDC’s sepsis program. (Photo copyright: Emory School of Medicine.)
Seven Elements to Improve Sepsis Diagnosis
Sepsis can occur when chemicals released into the bloodstream to fight off an infection produce massive inflammation throughout the body. This potentially fatal reaction can cause a deluge of changes within the body that damage multiple organs, leading them to fail.
The CDC designed its hospital sepsis program to improve and monitor the management and outcomes of patients with sepsis. The core elements of the program include seven main points:
Hospital Leadership Commitment: Management must dedicate the necessary staff, financial, and information technology resources.
Accountability: Appoint a team responsible for program goals and outcomes.
Multi-professional Expertise: Make sure key personnel throughout the healthcare system are engaged in the program.
Action: Implement structures and processes to improve the identification of the illness and patient outcomes.
Tracking: Develop initiatives to measure sepsis epidemiology, management, overall outcomes, and progress towards established goals.
Reporting: Provide information on sepsis management and outcomes to relevant partners.
Education: Provide healthcare professionals, patients, and family/caregivers with information on sepsis.
“Sepsis is taking too many lives. One in three people who dies in a hospital has sepsis during that hospitalization. Rapid diagnosis and immediate appropriate treatment, including antibiotics, are essential to saving lives, yet the challenges of awareness about and recognition of sepsis are enormous,” said CDC Director Mandy Cohen, MD, in the CDC press release. “That’s why CDC is calling on all US hospitals to have a sepsis program and raise the bar on sepsis care by incorporating these seven core elements.”
Early Diagnosis Presents Challenges
Sepsis care is complex. The condition requires urgent medical intervention to prevent organ damage and death. But the symptoms, which include fever or low temperature, shivering, confusion, breathing difficulties, extreme body pain or discomfort, high heart rate, weak pulse or low blood pressure, and low urine output, can be general and indicative of other illnesses.
The diagnosis of sepsis usually requires the collection of a blood culture specimen that is then incubated until there is enough bacterial growth to identify the specific strains of bacteria in a particular patient. This process can take several days, which can delay the administering of the most effective treatment for the condition. Treatment usually includes antibiotics and intravenous fluids.
A recent CDC survey of 5,221 US hospitals showed that in 2022, only 73% of hospitals reported having a sepsis program, ranging from 53% among hospitals with less than 25 beds to 95% among hospitals with over 500 beds.
That survey, released in the CDC’s August Morbidity and Mortality Weekly Report (MMWR), also discovered that only 55% of all hospitals had personnel with dedicated time to manage and conduct necessary daily activities for a sepsis program.
Raymund Dantes, MD, Medical Advisor, National Healthcare Safety Network, CDC, and Associate Professor, Emory University School of Medicine, told CNN that as many as 1,400 hospitals have no sepsis program in place at all. Therefore, he added, the CDC’s Hospital Sepsis Program Core Elements documents also include a “getting started guide” to help those hospitals create the needed committees.
“For those hospitals that already have sepsis programs underway and have available resources, we have a lot more details and best practices that we’ve collected from hospitals about how to better improve your sepsis programs,” he said. “The seven elements complement clinical guidelines by describing the leadership, expertise, tracking, education, and other elements that can be implemented in a wide variety of hospitals to improve the quality of sepsis care.”
Hospital Laboratories Play a Key Role in Reducing Sepsis
According to the CDC, anyone can get an infection and almost any infection can lead to sepsis. However, some populations are more vulnerable to sepsis than others. They include:
Older persons
Pregnant or recently pregnant women
Neonates
Hospitalized Patients
Patients in Intensive Care Units
People with weakened immune systems
People with chronic medical conditions
According to the World Health Organization (WHO), there were 48.9 million sepsis cases and 11 million sepsis-related deaths worldwide in 2017. This number accounted for almost 20% of all global deaths. Almost half of all the global sepsis cases occurred in children, resulting in 2.9 million deaths in children under the age of five.
“Sepsis is complex, often difficult to identify, and takes a tremendous societal toll in the United States,” said Steven Simpson, MD, Professor of Medicine at the University of Kansas and Chair, Board of Directors, Sepsis Alliance, a non-profit organization dedicated to raising awareness and reducing suffering from sepsis, in a press release. “To tackle the number one killer in American hospitals, we need a comprehensive National Action Plan to find cures, get them in the hands of professionals, and educate the public and professionals alike.”
Hospital medical laboratories can help reduce sepsis by finding ways to support their physicians’ diagnoses of this infection that has taken so many lives.
State’s new program helps ensure local communities have access to a community hospital and its physicians and clinical laboratories
Like phoenixes rising from ashes, a number of bankrupt and shuttered California hospitals have new life due in part to a state-run program offering the healthcare providers interest-free loans. The medical staff in these hospitals—including the clinical laboratories—will be happy to learn that their local communities refused to let their preferred healthcare providers shut down and disappear.
“The program, established through Assembly Bill 112, offers interest-free, working capital loans to nonprofit and publicly operated financially-distressed hospitals, including facilities that belong to integrated healthcare systems with less than three separately licensed hospital facilities,” according to the news release.
This clearly demonstrates that even as both physicians and patient are increasingly comfortable with telehealth consultations—and having their healthcare conditions managed in ambulatory settings—the concept of the community hospital as an essential medical resource continues to motivate local governments and citizens to invest money in money-losing hospitals.
“Today we have provided much needed assistance to community hospitals across the state that desperately need financial help to provide the care their communities need,” said HCAI Director Elizabeth Landsberg (above). “I’m grateful to the legislature for spearheading this effort to help make sure these vital healthcare institutions are fiscally stable so they can continue to provide quality, affordable healthcare for all Californians.” Thanks to these loans, clinical laboratories in these hospitals will continue to perform critical testing for their communities. (Photo copyright: Gilbert Perez/HCAI.)
Providers Get Support with Conditions
Among the 17 healthcare providers receiving loans is Madera Community Hospital, a 106-bed hospital that served a rural area in California’s Central Valley. Madera, which closed in December and filed for Chapter 11 bankruptcy earlier this year, is one of 17 “troubled hospitals” in California getting a “lifeline,” KFF Health News reported.
Madera will receive a $2 million bridge loan earmarked toward operational costs. It is also eligible for a $50 million loan once Adventist Health, Madera’s intended new administrator, offers up a “comprehensive hospital turnaround plan,” HCAI noted.
“California hospitals face many financial challenges, and for independent rural hospitals, these challenges can sometimes be almost insurmountable,” said Kerry Heinrich, JD, President and CEO of Adventist Health, in a blog post leading up to the state’s announcement of loan awards. “If Madera succeeds in getting the financial resources it needs, Adventist Health will provide Madera Community Hospital with the expertise of a large healthcare system, helping to secure a sustainable future for healthcare in Madera County.”
It’s interesting to note that potential “operators” are watching to see if the hospital or State of California can arrange tens of millions of dollars in loans or other financing before they agree to come in and manage the hospital.
The Distressed Hospital Loan Program aims to provide “loans (repayable over six years) to not-for-profit hospitals and public hospitals, as defined, in significant financial distress or to governmental entities representing a closed hospital to prevent the closure or facilitate the reopening of a closed hospital,” according to California Assembly Bill 112.
“The hospitals approved for this program have shown a detailed plan for financial recovery, and these funds will help them keep the doors open so they can keep serving their communities,” Fiona Ma, CPA, California State Treasurer, told Cal Matters.
Also receiving financial support is Beverly Hospital, a 202-bed Montebello, California, provider set to be purchased by Adventist Health White Memorial of Los Angeles, Cal Matters reported.
Beverly Hospital received a $5 million bridge loan to use toward operation costs while it is “purchased out of bankruptcy,” HCAI said in the news release.
Another hospital getting a “lifeline” is Hazel Hawkins Memorial in Hollister, California. The 25-bed level IV trauma center will receive a $10 million loan.
Other Ailing Hospitals Getting Interest-free Loans
According to HCAI, the other 14 hospitals receiving loans include:
What Led California’s Hospitals to Financial Hardship?
According to Cal Matters, hospitals in California are “distressed” due to rising labor costs and inadequate reimbursement from Medicare, Medi-Cal, and commercial insurance.
One in five California hospitals is at risk of closure due to “an unsustainable combination of negative margins, decreasing cash positions, and increasing debt.”
Hospital expenses in 2022 were $23.4 billion over pre-pandemic levels, outpacing revenue increases.
Operating income in 2022 was $8.5 billion less than in 2019.
Will Consumer Demand Affect California’s Success?
California’s commitment to its financially struggling hospitals comes amid national trends suggesting physicians and patients—especially younger healthcare consumers—are becoming increasingly comfortable with remote healthcare monitoring and receiving primary care in non-traditional environments, such as retail pharmacies and clinics.
Will younger Californian’s demand for low-cost, convenient healthcare render the state’s attempt to rehabilitee its failing hospitals moot? Time will tell. The ongoing financial woes of California hospitals will be watched by hospital-based clinical lab managers and pathologists in other states. That’s because California has a reputation for being first in the nation in attempts to address problems or regulate activity.
Regardless, it’s clear that—at this moment—the state is willing to invest in hospitals with a history of deteriorating financial performance as a way of ensuring access to healthcare for all of its citizens.
