California budget impasse hurts health clinics

Without a state budget, health care providers must dig into their own pockets

By KEN CARLSON
kcarlson@modbee.com

last updated: July 25, 2008 12:18:29 PM

The state hasn't passed a 2008-09 budget, so community health clinics and other providers that serve the poor are relying on reserves and loans to keep their doors open.

On Thursday, the state ran out of money for Medi-Cal payments to clinics, hospitals, medical equipment suppliers, adult day health care centers and others.

Even if a budget is passed, most of those health care providers are faced with payments deferred until September. The state is required to pay physicians, nurse practitioners and pharmacists.

Health advocates say clinics in disadvantaged areas such as the San Joaquin Valley might have to reduce hours, turn patients away or even close clinics.

"We need a budget now," said Dr. Thom Mahoney, director of clinical affairs for the California Primary Care Association, which represents 600 safety-net clinics in the state. "Unfortunately, in some areas, including the Central Valley, there is a real possibility of clinics closing down."

Mahoney spoke at a news conference Thursday at the Tenaya Drive clinic in Modesto operated by Golden Valley Health Centers, which has no plans to reduce hours or close clinics. Golden Valley has primary care clinics in Stanislaus and Merced counties serving about 75,000 patients, including members of low-income families, farmworkers and homeless people.

About 60 percent of its budget comes from Medi-Cal and state grant programs.

Executive Director Michael Sullivan said the health system has reserves to last two months, then it would be unable to pay its 450 employees. But other clinics in the valley are not on such solid footing, he said.

Golden Valley is talking with its lender about a $4 million extension on its line of credit, he said.

The state created an emergency fund to pay Medi-Cal providers when the state budget isn't passed by the July 1 start of the fiscal year. This year the $2 billion fund lasted less than four weeks.

Health providers that serve the state's 6.6 million Medi-Cal recipients also took a hit when the Legislature and Gov. Schwarzenegger agreed to a 10 percent across-the-board cut in Medi-Cal reimbursements, effective in July.

State leaders, in an effort to erase a $15.2 billion deficit, have considered changes that would make fewer people eligible for Medi-Cal, the state health program for the poor, and reduce funding for dental care, vision services and services for children with genetic diseases.

Dr. Silvia Diego, medical director for Golden Valley clinics in the county, said Medi-Cal patients already are feeling the pinch. Diabetic patients at risk of losing their sight are unable to get appointments with optometrists because vision benefits are on the chopping block.

Golden Valley has plans for converting a warehouse at the Tenaya clinic for dental care, but it sits empty because of uncertainty about state dental benefits.

Raising taxes the only way?

Every day, the Golden Valley clinics see new patients as private physicians leave the Medi-Cal program, Diego said.

Health care advocates have argued that raising taxes is the only way to prevent drastic cuts to health services.

"Let's face it, there are people in the state of California who can afford to support more revenue through taxes, and we think you have to put that on the table," Sullivan said. "If you don't do that, you are going to put this $15 billion deficit on the backs of California's poor."

The state Department of Health Care Services has promised to pay the clinics after the budget is passed. As the providers submit claims, the agency will issue IOUs that can be used to obtain loans from banks.

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