Indigents Added Up to Red Ink at UCI Hospital, Report Says

A report on UCI Medical Center and two other UC teaching hospitals concurs with an independent consultant’s conclusion that the hospitals’ financial problems are primarily a result of their disproportionately large numbers of indigent patients.

The University of California staff report, to be presented to regents today at their meeting in San Francisco, is in response to an independent analysis last year of the hospitals operated by the university branches in Irvine, San Diego and Davis. The independent analysis was mandated by the Legislature in 1985 when it granted $26 million to the three financially ailing institutions, and the Legislature later asked the UC staff to respond to the consultant’s recommendations.

The independent review, conducted by Arthur Young and Arthur D. Little Inc., found that most of the debts came from treating Medi-Cal and other indigent patients, not from financial mismanagement, just as UC officials had claimed. All three institutions are former county hospitals with reputations for treating the poor; the more prestigious hospitals operated by UCLA and UC San Francisco are more financially solvent.

The three hospitals should maintain their efforts to attract more patients with private insurance--policies that fully reimburses the medical centers--but the institutions are expected to need continued subsidies from the state, the independent report concluded.

The report was mildly critical of the UC regents’ hospital governance committee, saying its responsibilities should be centralized and streamlined. The UC report defended the current setup, which provides monthly and annual reports on each of the five UC teaching hospitals to the regents, who also oversee policy issues.

Leon Schwartz, director of UCI Medical Center, said the hospital in Orange has adopted many of the minor recommendations in the independent report, such as those regarding billing and fees. But the major benefit of the report, he said, was “having someone come in from the outside” and affirm the university’s claim that its hospitals’ financial problems were caused by their high numbers of indigent patients.

Schwartz said Wednesday that UCI Medical Center is continuing its financial turnaround. The hospital finished the 1984-85 fiscal year nearly $10 million in debt, but last year finished $770,000 in the black.