Madera Community Hospital could ‘face challenges’ if Congress OKs Medicaid cuts, CEO says

Madera Community Hospital’s chief administrator says cuts to Medicaid could harm the facility’s ability to fund certain treatments.

Cuts to that federal health insurance program, which provides more than 60% of Medi-Cal’s budget, are likely if Congress approves a current blueprint for cutting $2 trillion in spending that the GOP-led House approved last week.

“It is something that we are watching and advocating against,” said Madera hospital CEO Steve Stark, who is working to reopen the facility after it closed more than two years ago.

His worry stems from the budget blueprint’s call for the House Committee on Energy and Commerce to find ways, “within its jurisdiction,” to slash $880 billion over the next 10 years. Medicaid is within that committee’s jurisdiction.

Lawmakers have not yet revealed exactly how they plan to make those cuts. But budget experts have warned that it’s impossible to reach the $880 billion goal outlined in the budget blueprint without slashing into Medicaid. If that happens, the San Joaquin Valley could be hit especially hard because 2.2 million people across the eight-county area rely on Medicaid funding for their healthcare.

In Madera County, where residents have gone without an adult emergency room since Madera hospital closed in January 2023, more than 83,000 people rely on Medicaid funding through Medi-Cal.

Depending on how the cuts under consideration play out, Stark and other healthcare providers said that access to medical treatment could be reduced for the Valley residents with the highest need. That could also impact the finances for healthcare facilities, including Madera hospital.

“If our main payer source is getting cut, or even not keeping up with the expense, we’ll face challenges,” Stark said.

Cuts to Medicaid ‘mean three things’

Kristof Stremikis, director of market analysis and insight for the California Health Care Foundation, said reducing federal spending on Medicaid can mean only three things: Fewer benefits will be covered, fewer people will be covered and providers that serve Medi-Cal enrollees will receive lower payments.

“It’s that simple,” he said. “With less money, which is what this is at the end of the day, you’re going to start to see pretty dramatic changes within the program.”

Medi-Cal accounts for a total of more than $150 billion in annual spending on healthcare for Californians. More than $100 billion of that total comes from Medicaid, making it a “crucial source of economic activity and revenue in the state,” Stremikis said.

Reduced federal funding for Medi-Cal would undermine the financial stability of hospitals, clinics, nursing homes and physician practices in the Valley, he said.

“These cuts that are being considered are highly consequential for most folks there now,” Stremikis said.

Challenges for Madera Community Hospital

The hospital’s past leadership attributed its bankruptcy and closure, in-part, to low reimbursement rates from Medi-Cal. Stark said Medi-Cal will also cover the healthcare for more than 50% of the facility’s future patients.

“If our pre-closure (reimbursement) rates were low and they cut those even deeper, it would compound the financial challenges to overcome because the cost to do business continues to go up,” he said.

Overcoming those challenge could require a reduction in the hospital’s service offerings that are subsidized but run at a financial loss.

“We’ll have to look at some of those loss leaders and decide, ‘Are those things we can continue?’” Stark said.

Clinics concerned across the Valley

Worries are also high at clinic systems that serve patients from Bakersfield to Madera regardless of their insurance status or ability to pay.

“With a substantial portion of our funding coming from Medi-Cal reimbursements, cuts could lead to budget constraints that may force us to scale back services or reduce our workforce, including doctors and nurses,” physician and Clinica Sierra Vista CEO Olga Meave said in an email to The Bee.

She also noted a possible reduction in access to preventive care and management for chronic illnesses. As a result, patients’ illnesses could worsen and land them in emergency treatment, she said.

Camarena Health CEO Paulo Soares and United Health Centers CEO Justin Preas voiced similar concerns.

“Oftentimes, we need to send them (patients) out to specialists for specialty care — they may need to go somewhere else for some type of procedure or surgery,” Soares said. “When they’re uninsured, that really just becomes kind of an untenable situation for them. ... A lot of patients will just wind up in the emergency room.”

Preas said the Valley’s emergency room resources are already stretched thin.

“They (hospitals) rely on primary care for us to keep people out of the emergency room,” he said. “So, this is devastating to people that have chronic conditions, and really is just a blow to everyone in the state.”

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