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Saturday, Sep 14 2013 09:00 PM

County begins eyeing cuts to cover KMC shortfalls

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    By Henry A. Barrios / The Californian

    Paul Hensler was fired from his position as Kern Medical Center CEO Monday evening. This photo was taken earlier in the day at the meeting of the Kern County Board of Supervisors.

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BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Kern Medical Center's financial trauma has blown a hole in Kern County's 2013-2014 budget.

The work of plugging that hole is already under way, with some departments being asked to cut spending by 2 percent.

And on Sept. 24, the Kern County Board of Supervisors is expected to rework its annual spending plan. It'll cut where it can to make up for the cash the hospital will never bring in and compensate for bills the county never knew the hospital would need to pay.

But the county may be able to weather the storm with only moderate cuts, said Assistant County Administrative Officer Nancy Lawson.

She's hearing that county departments may be able to "hunker down," reduce spending and make it through.

BIG NUMBERS

The county believes there is $36 million worth of funds it is owed that will never be paid, one of several pieces of bad news delivered at a Board of Supervisors meeting Monday that ended with the hospital CEO, Paul Hensler, being fired.

Lawson said it isn't certain that the county general fund will have to backfill all of that $36 million. The county has already written off $9 million in KMC debt this year, another $12 million has already been cut out of the budget and ruled "unspendable" and a special reserve fund of $10 million could be used to further cushion the blow.

And the rest of the loss would be written off in future years.

There is also the $28 million that the county believes the state of California has overpaid KMC for past service.

Lawson said the $28 million is not "a hard number" and won't need to be paid back immediately.

On Tuesday, according to county reports, the board will vote to send the state $4 million that KMC officials have determined is immediately owed.

The county will pay the rest by flowing $12.1 million from the general fund to the hospital, increasing the debt KMC owes the fund to $113.7 million.

The $12.1 million will go to the state, which will then send back around $8.1 million of it -- the correct payment the state should have made to KMC initially -- to the county.

Lawson said the remaining debt to the state won't come due for years while the state slowly audits its health care spending.

That gives the county time to build up a reserve and pay those bills when they come due, she said.

The biggest immediate problem is KMC's monthly deficit, Lawson said.

The hospital will lose, county staff estimate, about $1.6 million a month through December.

Accounting for all of the impacts on the budget from KMC, Lawson said, "We know there is going to be, perhaps, up to a $20 million issue."

There is no way to avoid that impact.

Lawson, on Friday, asked departments funded by general fund revenue to bring back plans to cut 2 percent from the amount of money they get from the county's main operating fund.

"The first place we have to concentrate on is the operation of the hospital. We've got to right that ship. I don't want to let the pressure up one ounce on the hospital operation," said Supervisor Mike Maggard.

Dr. Navin Amin, chair of Family Medicine at KMC, said hospital staff are deeply concerned about what the immediate future will hold for them.

"Everybody is worried," he said. "We are working on bare bones."

If cuts happen, he said, it could "deeply affect" patient care.

The hospital has a lot to offer the community, he said. There have been challenges to the hospital's financial future for years.

"This is the worst I have seen it in my 33 years. I can tell you that," Amin said.

Lawson said it isn't likely that cuts to KMC's budget will be able to make up for all of that $20 million budget shortfall the hospital is expected to have this fiscal year.

"We are looking at making a recommendation to the board about realistic reductions" at KMC, she said.

But other county departments will feel some pain.

Sheriff Donny Youngblood said he's expecting to take a $1.5 million hit to his budget -- one of the largest in the county.

Youngblood said he is planning to cut back on some vehicle leases scheduled for this year, running his existing vehicles a little longer and looking for other places he can save.

"We will find the $1.5 million. It doesn't matter whose fault this is. We've got to fix it," he said.

Library Director Sherry Gomez said she hasn't been directed to terminate her plans to open county libraries another day each week.

She thinks she will be able to absorb the cuts she's been asked to make and still add those days.

"We're mindful of the emergency that has taken place with KMC. We're team players, we'll do our part," Gomez said. "I think the library will be able to open another day a week. Another day the story might be different, but today I'm looking pretty positive."

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