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Fatal System Error

Private nonprofit hospitals, which benefit from huge tax breaks, fail to care for the East Bay's poorest residents — and now one public hospital is on the verge of collapse.



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The incident sheds light on the potentially grave consequences of private nonprofit hospitals' inadequate care of low-income patients. And the current health crisis in West County, with DMC closed off to ambulances, offers a preview of the disaster that would occur if the region were to fully lose this safety-net public hospital.

In addition to Booker Williams II and the recent Kaiser San Francisco case, Weiland told me of two other instances in which emergency patients died after ambulances couldn't take them to DMC. In one fatal case, an ambulance ended up taking a West County heart attack patient to Kaiser Vallejo in Solano County — about thirty minutes north of San Pablo.

In another incident relayed by Weiland, a West County woman with congestive heart failure decided to have a friend drive her to DMC after paramedics told her that the hospital was closed to ambulances, but open to walk-ins. She went into cardiac arrest in the car.

While it's impossible to know the role that the ambulance diversion played in these fatal cases, it's clear that the reduction in services in the area can only hurt a patient's chance of survival. For many more families in Richmond, San Pablo, and the surrounding municipalities, the impact of the downsizing has been less extreme, but still very problematic.

"It's ludicrous. We've got a hospital that's open, but not accepting emergency vehicles," said Matt Taylor, a 44-year-old Hercules resident who suffered a heart attack in November and ended up at Kaiser Vallejo, instead of DMC where Weiland, the cardiologist who had treated him in the past, was working. The ambulance took side streets once in Solano County, because Interstate 80 was jammed with traffic, he said. "If it were to happen again, I might roll the dice and have my wife drive me [to DMC]."

Chronically ill patients — whose regular doctors, and medical records, are located at DMC — are ending up at unfamiliar hospitals throughout the region, getting care from physicians who know nothing about them. "Patients used to coming here for everything call the ambulance and no one knows where they're going to go," said Drager, the DMC surgeon.

Some people who are sick enough to call 911 wind up having to make the stressful choice between a long journey to an unknown hospital or driving themselves to DMC. Every day, about 20 to 25 ambulances are diverted away from DMC to other emergency departments, though the ED still sees roughly eighty patients a day.

Chaos aside, the state of the public hospitals' finances also shed light on the detrimental impacts of a system that depends so heavily on a few hospitals to take the toughest cases.

Given that DMC sees so few commercially insured patients, its net revenue per patient — meaning the average payment the hospital ultimately receives from the patient or insurer (like Medi-Cal) — is lower than all other hospitals, according to an analysis of OSHPD data that Gideon provided. The hospital receives an average of $2,682 for every day that a single patient spends at the facility, while John Muir's Walnut Creek and Concord hospitals on average receive 215 percent and 184 percent times as much, respectively. Alta Bates Medical Center Summit on average receives 148 percent as much as DMC.

And because DMC's patient population is largely impoverished and the payments the hospital receives are thus very low, its patient care expenses are far greater than the associated revenue. In 2013, the hospital lost an average of $893 per patient per day at the hospital, according to state data. As a result, the hospital on the whole lost more than $19 million in 2013. Meanwhile, John Muir's three hospitals combined earned $344 per patient per day, because of their profits from privately insured patients. The total profit of those three hospitals combined in 2013 was $68 million.

Like DMC, Sutter's East Bay hospitals lost more money than they earned on patient care — $440 per patient per day, about half the rate of DMC's loss rate. While those hospitals reported a combined net loss, the Sutter Health network of 24 hospitals had a total income of $300 million at the end of 2013.

Further, while John Muir and Sutter's hospitals spent an average of 3.3 percent of their operating expenses on charity care, the three public hospitals I reviewed spent an average of 16 percent of expenses on charity care (with the county hospitals spending significantly higher rates than DMC).

Because of its unique model, Kaiser is exempt from disclosing the annual hospital-specific fiscal data that all other nonprofits provide to the state.

When public hospitals carry such heavy financial burdens, more taxpayer dollars must go to hospitals and away from other critical services in the public health sector and beyond. In other words, when private nonprofits fail to do their job, the public is hit twice — both in lost taxes from the nonprofits and in lost revenue from county budgets or parcel taxes that get sucked into financially desperate hospitals.

In interviews, Sutter Health and John Muir representatives defended their charity care and community benefit programs, arguing that their hospitals are accessible to all and invest significantly in public health efforts that serve the poor. In 2013, Sutter Health's East Bay hospitals reported a total of $252 million in community benefits (covering investments such as AIDS and HIV services, programs for asthma patients, and community clinic partnerships) while John Muir claimed a total of $105 million (which included funding for mobile health clinics, cancer screening, and school nurses).

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