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Published on 10/02/1995 All articles from this issue

El Camino Hospital faces $2.5 million loss this year

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Clyde Noel / Town Crier Staff Writer

Camino Healthcare's 1995-96 fiscal year budget requires a $22 million reduction in operating expenses and a $2.5 million loss from a $187 million revenue base. Reductions will be in administrative and non-clinical areas.

"We have embarked on a three-year plan to re-engineer clinical care and remain a quality, viable organization," said Dr. Gerry Sarnat, Camino Healthcare chief medical officer and beginning Oct. 1, acting president and chief executive officer. "The board of directors is making a concerted effort to bring expenses in line with income, because they want to avoid a Good Samaritan (a hospital in San Jose) scenario."

According to staff members at El Camino Hospital, Good Samaritan Hospital was on the brink of bankruptcy until the hospital merged with a large Health Maintenance Organization (HMO) last week.

Sarnat said unaudited financials indicated Camino Healthcare experienced an $8.2 million loss last year because of marketplace conditions, but this year the losses will be reduced to $2.5 million.

"The cost of providing care to a patient often exceeds what the insurance company will pay for the patient's care," Camino Healthcare Board Chairman Doug Usher said. "We know we have to bring our expenses in line because we are being reimbursed $10 million less than last year."

Reductions will be in the following areas:

• 12 positions have been eliminated from the organization's current payroll of approximately 2,800 employees.

• Camino Healthcare reduced overhead costs through consolidation .

• Patient-care services are undergoing changes by reducing overtime pay and

nursing registry (part time) use.

In addition to reduced reimbursement from HMO's, Camino Healthcare is experiencing declining inpatient days and shorter lengths of stay for acute care. At the same time, demand for outpatient care services is growing and Camino Healthcare's new budget calls for investing in outpatient care and investing more money in Los Altos, Sunnyvale, Cupertino and other South Bay city clinics.

Officials have indicated they are considering the possible sale of the dialysis unit which provides services to about 400 patients annually.

"Even if Camino Healthcare does divest the assets of the dialysis unit, the goal would be to ensure the same level of quality services we currently provide in this area," Usher said.

In the middle of all the budget reductions, Camino Healthcare received the maximum, three-year accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), a national organization dedicated to improving the quality of the nation's health care.

"The Joint Commission congratulated Camino Healthcare physicians and staff on restructuring efforts and the ability to provide quality health care to the community," Sarnat said. "The three-day survey was conducted in June 1995 and Camino Healthcare scored 92 out of a possible 100."

Camino Healthcare is a nonprofit corporation governed by six volunteer community members and three physicians who practice in the community. Camino Healthcare was formed in September 1994 by joining the El Camino Hospital with Camino Medical Group. The physician group was made up of doctors and staff from the Sunnyvale Medical Clinic and Shoreline Medical Group. A majority of the community physicians on the El Camino Hospital Medical Staff contract with Camino Healthcare and the contracting physicians are known as "Camino Healthcare Physicians."