El Camino Hospital is losing much more money from low Medicare reimbursements than similar hospitals in the Central Valley and Southern California, a study shows.
According to a recent report released by the California Hospital Association, El Camino isn't alone. Many hospitals in the Bay Area are losing more money on Medicare patients than comparable hospitals elsewhere in the state.
There are likely a number of reasons for this. However, the primary cause can be traced to the Bay Area's high cost of living, according to Ned Borgstrom, the hospital's chief financial officer.
In fiscal year 2013, the hospital reportedly lost $61.7 million on inpatient Medicare expenses and $32.3 million on outpatient Medicare expenses. Borgstrom said the hospital loses about $90 million on Medicare patients annually -- "not particularly bad compared to other Bay Area hospitals."
And while not good for the hospital's bottom line, the Medicare losses aren't going to put the hospital in dire straits.
"The hospital makes a healthy operating margin, despite its Medicare losses," Borgstrom told the Voicevia email.
The news shouldn't discourage Medicare patients from seeking care at El Camino, Borgstrom said -- even though there is anecdotal evidence that it is harder for consumers with Medicare coverage to find physicians willing to accept Medicare's low payments. That would never happen at El Camino, he said.
"The hospital is not more reluctant to treat Medicare patients," he said. "It treats all patients the same, regardless of pay or payment rate."
Asked whether he believes there might be a direct link between the higher losses on Medicare in the Bay Area and the tech sector -- which has come under increasing criticism for playing a role in driving up all costs in the region -- Borgstrom said he couldn't be sure.
"Bay Area hospitals have higher labor costs than elsewhere in California," he wrote. "It is not just a function of Silicon Valley ... so we can't trace a line directly to the high-tech sector."