Sisto: The Queen and
the Health-Care Crisis

Few people foresaw California's energy woes, but there's already abundant evidence we may soon face equally grave problems with health care, according to QVH President and CEO Dennis Sisto.

"I want to give you early warning that we are facing a crisis," Dennis told dozens of Foundation trustees and other QVH supporters on March 22 at a special education session on the state of managed health care. "And it's going to impact Napa County and Queen of the Valley."

Dennis explained that hospitals and physicians have seen their reimbursement drastically reduced by federal cuts under the Balanced Budget Act. Those cuts will cost the Queen $23 million in revenue between 1998 and 2002.

Meanwhile, California's Seismic Safety Act requires all hospitals built before 1973 - most of the state's hospitals - to be retrofitted or rebuilt by 2008. The cost to QVH to move essential services out of non-conforming buildings and into seismically approved construction will be about $25 million.

Not surprisingly, hospitals are having a rough time. In California, 54 percent of hospitals had negative operating margins in 1999-2000. "Fortunately, the Queen has a very strong margin compared to many hospitals in our area," Dennis said, with some operating at close to zero or below. "But even our margin has precipitously declined."

Hospitals also face a severe shortage of nurses. Enrollment in nursing schools is down and California has fewer employed RNs per capita than any other state. "Here at the Queen, 63 percent of our nurses are over 40 years old," Dennis said. "You look at these numbers and wonder: Are we going to be able to replace this generation of the nursing workforce when it retires?"

Hospitals aren't the only ones hurting. Eighty-three HMOs, almost 12 percent, ceased operations in 1999, and 29 failed outright. Of California's 300 large medical groups and independent practice associations, 115 have gone bankrupt or closed in the last three years. Dennis reported that an estimated 90 percent of California medical groups are on the brink of bankruptcy.

The state's seismic rebuilding requirement may put many hospitals in similar straits. "I'm afraid that the number of hospitals will be reduced and the lack of nurses will shut down units," Dennis warned. "Then we'll have ambulances driving around, trying to find a hospital with an open slot. Nobody wants that scenario."

Locally, Dennis would like more focus on the unreimbursed costs of providing medical, emergency, and ancillary services and hospitalization - costs currently borne by our community physicians and QVH. "With the health-care environment in crisis, possibly the Napa County Board of Supervisors will partner with us to find a solution before the infrastructure of our health-care system deteriorates any further," he said. "Definitely more money is necessary to continue to provide the level of services and quality of care people expect from the Queen."

He also hopes California politicians will take steps to help vulnerable hospitals undertake seismic retrofitting, and that Washington will continue to improve Medicare reimbursement rates. "These issues are not a real priority in Washington," he admitted. "We just have to keep letting people know what's happening and hoping they'll take action before it's too late."