Cedars-Sinai dumping hundreds of low income patients

The California Nurses Association has sharply criticized state officials for establishing a dangerous precedent in approving tax-supported revenue bonds for the state's largest private hospital, Cedars-Sinai Medical Center of Los Angeles, which is dumping hundreds of its Medi-Cal patients, denying them access to available and much needed medical care.

CNA also charged that Gov. Arnold Schwarzenegger is effectively sanctioning medical redlining by proposing to shift the state's poorest patients into managed care plans while his administration supports the use of tax supported bonds to hospitals that terminate medical services for those patients.

The California Health Facilities Financing Authority in Sacramento Wednesday approved a request by Cedars-Sinai for renewal of $556 million in revenue bonds that are backed by taxpayers, ignoring California law that as a condition for issuance of revenue bonds, hospitals must assure that its services "will be available to all persons in the area served by the facility."

CNA challenged the bond approval, presenting evidence to the bond authority of a sharp drop in the number of Medi-Cal patients served by Cedars- Sinai after it terminated its Medi-Cal managed care patients, and how the hospital had also apparently violated the law relating to tax-supported bonds by failing to pass along savings to consumers.

"This decision sends an ominous signal at a time when Gov. Schwarzenegger and Cedars-Sinai are working in tandem to cut medical services to many of the state's poorest patients," said CNA President Deborah Burger, RN.

Cedars-Sinai readily conceded to the board that it no longer cares for Medi-Cal managed care patients, saying the hospital receives lower payments from HMO plans for poor patients than it does for regular Medi-Cal patients.

As a result, according to CNA research based on publicly available state data, the number of all Medi-Cal patients discharged by Cedars-Sinai fell by 21% from the second half of 2002 through the end of 2004. The number of Medi- Cal managed care patients, mostly low income women and children, with a disproportionate number of them Hispanic, plummeted in that period from 931 to just 10.

Cedars-Sinai's actions come at a time when Gov. Schwarzenegger has proposed a massive shift in the state's Medi-Cal program to push many more low income patients into Medi-Cal managed care plans.

"With influential hospitals like Cedars-Sinai showing its disdain for these patients and denying them care, the effect of the governor's plan could be devastating, greatly exacerbating the state's overall healthcare crisis," said Burger. "And now we have the specter of the governor pushing indigent patients into managed care health plans while state officials are rewarding hospitals that refuse to treat them."

Medi-Cal managed care patients are typically among the most low income residents of the state. Cedars-Sinai specifically targeted its obstetrics and pediatrics departments, assuring that those cut off from service would be primarily low income women and children.

CNA first approached the bond authority after reviewing internal Cedars- Sinai documents that described the hospital's decision in the fall of 2003 to dump its Medi-Cal managed care patients. In minutes of the hospital's Medical Executive Committee dated September 8, 2003, hospital Chief Executive Officer Thomas Priselac, cited "high volume concerns," an indication, said Burger, "that Cedars-Sinai is more concerned with its reimbursements than whether its poorest patients receive needed medical care."

Minutes of the hospital's Medical Executive Committee meeting on March 14, 2004 quote Priselac affirming that for obstetrics and pediatric patients, "it is no longer necessary for CSMC to maintain a Medi-Cal managed care contract. Written notification to discontinue that contract has been submitted to Medi- Cal."

Subsequent CNA research of data the hospitals themselves provide to the Office of Statewide Health Planning and Development (OSHPD) documented the huge drop in both the number of Medi-Cal managed care patients and the overall number of Medi-Cal patients who received care from Cedars-Sinai.

The OSHPD data shows that the percentage of Medi-Cal patients seen at Cedars-Sinai has been steadily dropping since 2002. Overall Cedars-Sinai accounted for less than 2% of all Medi-Cal discharges for Los Angeles County in 2003.

CNA also told the Authority Board that Cedars-Sinai had violated another provision of the law that requires that "all or part of any savings experienced by a participating health institution, as a result of tax-exempt bond funding, be passed on to the consuming public through lower charges or containment of the rate of increase in hospital rates."

Instead, Cedars-Sinai has steadily jacked up its charges over its costs. As of tax year 2004, Cedars-Sinai charged $371.41 for every $100 in costs, according to the Institute of Health and Socio-Economic Policy, CNA's research arm. From 1997 to 2004, Cedars-Sinai's average charge per discharge increased 154%, while its average cost per discharge increased only 89%.