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Monday, Mar 10 2014 05:32 PM

County expands contract with KMC management company

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    By Casey Christie / The Californian

    The main entrance to Kern Medical Center (KMC) on Mt. Vernon Avenue and Flower Street in east Bakersfield.

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BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Kern Medical Center's new management company is assuming more control over the county owned hospital -- and being paid more to do it.

Kern County supervisors on Monday moved three top KMC jobs into hospital CEO Russell Judd's privately owned KMC Management Inc.

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Supervisors also heard a report on KMC's financial performance in January, and it had good news about the hospital's payor mix.

The percentage of medically indigent adults -- people who couldn't pay their bills -- dropped from 20.2 percent to 1.1 percent as the Affordable Care Act kicked in and hospital employees aggressively signed up patients on Medi-Cal managed care plans.

But, Chief Financial Officer Sandra Martin warned, the trend might not continue.

If patients take their shiny new insurance coverage to other hospitals, KMC will lose that business, Martin said.

The hospital lost about $2.7 million in January, Martin reported.

They also gave Judd's business a 59 percent pay boost, increasing total compensation from $7 million under a five-year agreement approved in December to $11.2 million.

But County Administrative Officer John Nilon said the county will offset the new cost by eliminating existing positions at Kern Medical Center.

The difference in cost should be "a wash," he said.

Supervisor Mike Maggard said he is increasingly optimistic about what Judd will be able to accomplish as he watches him analyze staffing trends, work on the revenue cycle and build his team.

That doesn't change the fact, Maggard said, that the next 18 months will be costly as the changes come online and KMC struggles to become profitable.

Supervisor Mick Gleason said he still wants to make sure that it is the Board of Supervisors -- not Judd's company -- that is setting the ultimate strategy for KMC.

Kern Medical Center has been losing about $3 million a month, has lingering financial obligations to the state and owes a debt to county government that should be around $113 million at the end of June.

Judd has promised to systematically identify the billing, cost, structural and technological problems at the hospital and fix them.

It's a task many leaders have tried -- and failed -- to accomplish.

But this time the effort is critical because the county's finances are in a precarious position with pension costs, upcoming freeway construction bills and a massive jail expansion project poised to choke its budget power.

Judd said moving the positions into his payroll will allow him to be more flexible and respond more quickly to new needs at the hospital.

The money will be used to add a chief operating officer at a base salary of $200,000 a year plus a vice president of ambulatory services and a vice president of administrative services -- both of whom will make $150,000 a year in base salary.

The positions that will become vice president slots are currently filled and Judd will decide whether to hire those people. The chief operating officer job has been vacant for about eight months.

The vice presidents will handle KMC's clinic operations and build relationships with care providers and health insurance plans in the community, Judd said.

Also Monday, supervisors voted to approve a deal with Clinica Sierra Vista that will transfer control of the controversial family practice residency program from KMC to the large healthcare nonprofit.

"I think they do a better job of running primary care clinics than we do," Judd said.

Student doctors would be hired by Clinica Sierra Vista and learn at Clinica but be able to do rotations at Kern Medical Center to complete their training.

Judd said the federal funding Clinica is using to power the program will last for about 1 1/2 years.

But the budget President Barack Obama submitted to Congress recently contained funding to keep the program going, so there is hope it can be funded through the full five-year contract with Clinica.

With that funding, the cost to the county could be negligible. Without it, the county could be required to spend $4 million to fund the program.

But even if the full cost has to be paid, Judd said, the program would be cheaper than the KMC-based program the county has now.

Clinica CEO Steve Schilling said that his nonprofit is doing everything it can to find more financial support for the program as well.

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