http://biz.yahoo.com/bw/010515/0963.html

Tuesday May 15, 9:07 pm Eastern Time

Press Release

California Hospitals Warn of Impact on Patient Care Due to Energy Rate Hikes

Two-Thirds of Hospitals Losing Money, Rate Hikes Will Push More Closer to Financial Edge

SACRAMENTO, Calif.--(BW HealthWire)--May 15, 2001--The following is a statement by C. Duane Dauner, President, California Healthcare Association:

California's hospitals are deeply troubled by the increase in electricity rates that the California Public Utilities Commission (CPUC) has approved today. The CPUC's decision to increase the rates that hospitals pay for electricity comes at a time when two-thirds of the hospitals in California are already operating in the red.

California's health care system is nearing a financial meltdown. The cost of uncompensated care rose to $2.89 billion in California last year, a staggering 61.1 percent increase from just two years ago. The most severe nursing shortage in the nation has put California on the brink of a public health crisis -- with RN vacancy rates in hospitals averaging 20 percent statewide.

California's Medi-Cal program ranks 48th out of 50 in terms of the state's reimbursement to hospitals for patient care provided to low-income people. And, California's hospitals are facing a $24 billion unfunded state mandate to meet new seismic standards.

Now, under the CPUC decision, some hospitals will face a doubling of electricity costs. California's hospitals acknowledge that all ratepayers -- including hospitals -- are going to have to pay more for electricity in order to resolve our current energy crisis. And, we appreciate the CPUC's recent decisions that exempt hospitals from any future black-outs, and eliminate proposed tiered rates and on-peak rate structures for commercial users. Our concern remains the degree to which hospitals will be hit with higher electricity costs.

A newly released study by the state Attorney General's Office on hospital closures in California unequivocally states that of the 23 hospitals that closed between 1995-2000, financial hardship was evident in all cases.

The report states ``...nearly all of the state's general acute care hospitals showed signs of financial distress, but those that closed were performing worse even than the average.'' With the precarious financial condition that California's hospitals already find themselves in, a potential two-fold increase in the amount they spend on electricity will push more hospitals closer to the financial edge.

Contact:

California Healthcare Association, Jan Emerson, 916/552-7516

-- Swissrose (cellier3@mindspring.com), May 16, 2001