Imperial County’s largest hospital is running out of cash
Imperial County’s largest hospital is in turmoil.
Prompted by what officials called “financial challenges,” the El Centro Regional Medical Center has seen most of its governing board and CEO ousted. Its obstetrics and pediatrics department has since shut down. And healthcare consultants who were hired to run the hospital following the shakeup have already resigned less than three months after signing a contract.
The hospital said finances have somewhat improved in recent weeks, mostly due to a more than $5 million loan from the state. But the money will soon run out.
“Our current projections are that the hospital will hit bottom, in terms of cash, sometime the end of March or early April,” outgoing interim CEO Scott Phillips told county supervisors last month. “We’re in the process of implementing steps to cure that.”
Hospital officials have attributed the poor finances to a continued trend of county residents going elsewhere, primarily San Diego, for health services, and large spending on travel nurses. Over the past six months, the hospital saw a $19 million, or 22%, operating loss.
The El Centro City Council now comprises most of the hospital board after taking emergency action in November to assume governance duties. It hired Tennessee-based Healthcare Management Partners, of which Phillips is a managing director, to run the hospital.
But that arrangement was short-lived: Phillips and Derek Pierce, another managing director at the consulting firm who handled CFO duties, officially stepped down Jan. 29 — but not before collecting a six-figure payment.
Records that inewsource obtained show the hospital paid more than $600,000 over a two-month period for their services, about 40% of which was a retainer fee. The two employees were eligible to be paid as much as $180,000 a month under the contract.
City Councilmember Tomás Oliva, who serves as the hospital’s board president, did not respond to multiple requests for an interview.
Serving a mostly rural region of nearly 180,000 residents, Imperial County already suffers from poor health factors.
More than 25% of women who give birth in the county have inadequate prenatal care compared to 10% statewide, according to a 2019 report. The rate of children hospitalized for asthma is twice the statewide rate.
There is one primary-care physician for every 5,000 residents in the county, one of the highest ratios statewide. Some 80% of services are covered by public health insurance such as Medi-Cal and Medicare, both programs that reimburse hospitals less than the actual cost of providing care.
Phillips said “well over half” of all hospital services for county residents also are consumed elsewhere — meaning the region is losing as much as $350 million a year in services that could be provided locally.
Jan Emerson-Shea, vice president at the California Hospital Association, said more than half of the hospitals in the state face “severe financial strain” as they grapple with inflation and COVID-19’s continued impact.
Earlier this year, the Madera Community Hospital in the San Joaquin Valley shut its doors after years of financial struggles. It was the only general hospital in the rural county.
“No one wants a hospital to close — especially in communities that already have few and insufficient health care resources,” Emerson-Shea said. “If a hospital closes, where do people go when they have a medical emergency? How far do people have to travel for cardiac or cancer care or to have a baby?”
Community members have criticized Gov. Gavin Newsom’s lack of response to Imperial County in a recent open letter, saying the region “continues to be overlooked and disregarded despite the many boxes it checks on the Governor’s social-justice buzzword jargon.”
“Getting the short end of the stick and seeing the widening gap between the haves and have-nots is something that we have unfortunately become accustomed to in the Imperial Valley,” the letter said.
Newsom’s office declined to respond to an inewsource request for comment, instead referring the inquiry to the state’s Health and Human Services Agency.
Imperial County quickly became one of the nation’s hardest-hit regions during COVID-19. With fewer than 300 beds, the El Centro hospital was forced early on to divert patients elsewhere and hire travel nurses to meet demand. Last year, it spent $18 million on traveling nurses.
“Had that same service been provided by nurses living in our community,” he said, “we would have spent less than 5 (million) on the same staffing.”
Dimitrios Alexiou, head of the Hospital Association of San Diego and Imperial Counties, called on the state to help.
“The only solution for El Centro Regional Medical Center and the many other California hospitals on the financial brink is for the state to immediately deliver $1.5 billion of emergency relief funding this year,” he said, “and to work on a longer-term strategy to systematically increase Medi-Cal payments so they more closely cover the actual cost of caring for patients.”
Officials have proposed a possible merger with the county’s other hospital, Pioneers Memorial in Brawley, a move they say would strengthen both facilities’ chances of staying open and improve quality of care. They’ve pointed to Pioneers taking on El Centro’s now-shuttered obstetrics and pediatrics services, which they say could expand the program and attract additional revenue.
“The single greatest indicator in hospital success is membership in a multi-hospital system,” Phillips said. “There are very few hospitals left in America that are not part of large, multi-hospital systems, and most are government owned.”
Still, prior merger talks have failed. And now, Pioneers has its own leadership turnover and financial struggles. Its interim CEO previously indicated that officials aren’t interested in taking on El Centro’s financial problems.
“There’s no sane entity that’s going to merge with El Centro hospital with the level of debt it has,” Pioneers interim CEO Damon Sorensen told the county board. “That debt is a huge albatross and issue in this equation.”
Though he has left the position, a spokesperson said former El Centro hospital CEO Adolphe Edward remains an employee of the UC San Diego Health system. UCSD has a services agreement with the hospital, and is now providing leadership services at no additional cost following the consultants’ departure.