Hospital has own version of health care reform

January 16, 2012 — Half a dozen years after posting a $20 million loss in a single fiscal year, Natividad Medical Center in Salinas is looking to the future with big plans, and 2012 is expected to be an important year in deciding the fate of its aspirations.

On the heels of a record $32.3 million profit last fiscal year, the county-owned hospital has visions of a local partnership with Salinas Valley Memorial Healthcare System, which is seeking potential affiliations as it struggles financially. To make its pitch, Natividad has suspended its bid to form an independent public authority.

The endeavor comes as the hospital embarks on a multi-million-dollar series of upgrades and helps initiate a pilot program for low-income residents designed as a precursor to national health care reform.

Natividad CEO Harry Weis said 2012 will be a "very busy year," with the goal of creating "our own version of health care reform in Monterey County" through the hoped-for partnership and the pilot program.

Weis said the county Board of Supervisors first proposed the idea of a partnership with Salinas Valley Memorial last fall, sending a letter expressing interest as the public-district hospital system’s board considered hiring a consultant to lead the affiliation process. More recently, county officials have been making their case to their district counterparts.

Weis said the board’s vision, shared by many others, is the formation of a unified, comprehensive health care system that offers area residents access to seamless primary, secondary and specialized care.

"I think there was a realization by the Board of Supervisors that there was an opportunity to put together something special for the people of Monterey County," he said. "The potential is quite clear to many. It’s a once-in-a-lifetime opportunity."

Supervisor Jane Parker, who showed up with a handful of county officials to a Salinas Valley Memorial stakeholder meeting about affiliation Thursday, said the prospect of maintaining local governance and control is a key consideration driving the proposal. Parker said bringing in an outside health care organization might not offer the same benefit.

"I know there’s a feeling among some at the county and Salinas Valley Memorial that having a local solution is desirable," she said. "The board felt there was an opportunity to reach out to Salinas Valley Memorial right now that wouldn’t come back again. I think there’s a strong argument for a local solution."

Jim Gattis, Salinas Valley Memorial board president, said the local partnership would be considered along with other potential affiliation partners, noting that is what consultant Cain Brothers is charged with accomplishing.

Gattis said very different rules govern public district hospitals like Salinas Valley Memorial and county-owned safety net hospitals like Natividad, and the task will be to see if the two can merge, then assess the potential benefits.

"There’s certainly a lot of political interest in making (a local partnership) happen," he said. "I think the Board of Supervisors would like to get out of the health care business. Very few counties run their own hospitals any more. They’re very interested in seeing something happen, and we’ll see if it’ll work."

Expansion

Natividad officials had argued that the hospital’s finances — and its ability to invest in long-delayed upgrades to help it adapt to the demands of health care reform — would be enhanced if it separated from the county’s oversight.

That, they said, would be the only way the hospital could afford its planned 10-year, $132 million expansion and overhaul.

Under the public authority plan, state legislation was supposed to be written and introduced by this month and take effect along with a county ordinance by July 31.

Weis said the process would start over if a partnership with Salinas Valley Memorial doesn’t work out.

He said a partnership with Salinas Valley Memorial would likely result in formation of a public authority as the "legal chassis" on which to build the new system.

Such a partnership could render at least some of Natividad’s planned capital investment unnecessary, Weis said, because of the facilities and space the public district system offers.

Natividad plans to kick off its three-phase facilities master plan this year with $17.5 million worth of projects, including $2.1 million to expand the outpatient clinic, $6.5 million to expand the Natividad Professional Center, and upgrades to diagnostic imaging, seismic safety and medical-surgical units.

The master plan’s first phase would cost an estimated $64 million and include an expansion and renovation of the emergency department. The other phases will follow as money becomes available.

Pilot program

Also this year, Weis said, the hospital hopes to implement the pilot low-income health program by March 1 in partnership with the county health and social and employment services departments.

Weis said the program, dubbed Via Care, is fashioned after the federal Medicaid system and aimed at the area’s poorest residents as a lead-in to implementation of health care reform in 2014.

The goal is to improve coordination of care through a more integrated delivery system and expand health care coverage and access to care through a "medical home" for area residents.

The program, expected to cost $14 million and be reimbursed by the federal government at 50 cents for each dollar spent, will provide coverage to as many as 1,500 uninsured or underinsured residents with incomes under the federal poverty level. The program targets people between 19 and 64 without children.

Patients will be divided into three groups: those eligible for the Via Care program, those who are not quite eligible but can’t afford to pay for coverage, and the "residual uninsured," including undocumented immigrants excluded from the provisions of health care reform.

Via Care will expand services, such as mental health benefits and case management, that are part of an existing program being phased out under health care reform.

The county will continue to operate that program, which is for uninsured adults with incomes up to 250 percent of the federal poverty level who can’t afford to pay medical bills, until it is phased out.

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