Medical center told to organize debts
By Guy Ashley, CONTRA COSTA TIMES
Posted on Wed, Aug. 04, 2004

OAKLAND -Auditors for the fiscally challenged Alameda County Medical Center have demanded the health care network present a schedule for repaying its massive debts to the county.

If that repayment doesn't happen, they said, the county may be forced to write off those debts and adjust other programs' budgets accordingly.

The news was revealed Tuesday by the county's auditor-controller at a rare joint meeting of the county Board of Supervisors and trustees of the medical center.

Patrick O'Connell told the joint meeting that outside auditors have demanded the county issue a "going-concern letter" addressing its financial relationship with the medical center and the estimated $191 million in loans the county has shelled out to prop up the financially flagging network of public hospitals and health clinics.

O'Connell told six trustees in attendance that the demand is driven by an acknowledgment that "without the loans (from the county) you are not a financially viable organization."

"In addition, now that the debt has grown so large, the auditors not only want a letter but they want a repayment schedule as well," O'Connell said.

As part of that schedule, county supervisors said they were prepared to impose a shrinking "cap" on the debt so that the medical center sticks to its repayment plan, or risk a shutoff of loans deemed essential to make payroll and fund operations.

"We're capping these debts and we're not going to make any payments above that cap," said County Supervisor Nate Miley. "That's not even up for discussion or negotiation."

County officials say the debt has ballooned in large part due to a financing scheme the county and the medical center adopted when the public health care network split off from the county in 1998.

The county routinely fronts the medical center millions of dollars to fund payroll and other obligations, relying on delayed payback made necessary by the lag time all health care providers see between billing and receiving payment for services. The approach has left the county squeezed for funds over the past three years, as the county's up-front outlay has invariably exceeded medical center deposits by more than a little.

Repayment has been widely criticized by labor groups who feel the county is piling on the bad news, as the medical center makes painful budget adjustments. An annual budget passed last week calls for the elimination of about 200 jobs.

Those job losses were the subject of a protest Tuesday led by labor unions who say the job cuts will cripple health care services for the poor and uninsured. Bradley Cleveland, a spokesman for the medical center's largest workers union, said these cuts come while management practices such as poor oversight of billing remain unaddressed.

O'Connell said outside auditors have demanded a plan to end the financial hemorrhaging. Failure to do so will force the county to write off the debts and absorb the losses in its own budget.