This week, Bay Area media have been covering the financial crisis at Doctor’s Medical Center, a public hospital operated by the West Contra County Healthcare District. As I discussed in a recent California Policy Center study, many California health care districts have financial issues, but the problems at WCCHD are especially acute. The district filed for bankruptcy in 2006 and appears to be on the brink of doing so again. There have been two ongoing themes in the Doctor’s Medical Center drama: the facility consistently loses money and local political leaders are always searching for some way to keep the doors open. Often missing from the coverage is a debate over whether keeping Doctor’s Medical Center open is a cost effective way of providing hospital care to area residents. A review of public data raises some questions about whether the facility succeeds in this mission.
In 2013, WCCHD paid 45 of its employees total wages in excess of $150,000 each. Most of these highly compensated employees were registered nurses. In fact, two nurses received more than $250,000 including overtime but excluding the value of benefits. This compares to an average salary of $112,140 for Bay Area RNs. A complete list of WCCHD salaries is available on the State Controller’s Public Pay web site. Transparent California also provides the salary data together with employee names.
Since personnel costs accounted for 64% of operating expenses in 2013, high compensation at Doctor’s Medical Center is a major barrier to reaching a budgetary balance. The facility is also handicapped by its relatively small size, which reduces its ability to spread fixed costs across a large number of patients. Contrary to statements from district officials, patient mix is not the primary cause of its financial woes. In 2011, the hospital sustained a substantial loss, even though 46% of patients had private insurance (this proportion fell to 36% in 2013).
With respect to quality, Medicare’s Hospital Compare web site provides some useful insights. According to patient surveys, only 52% of Doctor’s Medical Center patients would definitely recommend the hospital. This compares unfavorably to a statewide average of 71%. Among nearby facilities, 64% of patients would definitely recommend Contra Costa Regional Medical Center in Martinez, 66% would definitely recommend Kaiser in Oakland and 67% would definitely recommend Alta-Bates in Berkeley. The Medicare comparison tool also reports that Doctor’s has an unplanned hospital readmission rate that exceeds national averages, but does not provide an exact level.
Since its last bankruptcy filing in 2006, WCCHD has sought (and in many cases received) extraordinary assistance from the state, the county, the cities of Richmond and San Pablo, and district residents. While no political leader wants to see a community health facility close on his or her watch, at some point, it becomes time to bow to fiscal realities. That time appears to be now.