The fiscal bleeding at Kern Medical Center could force the county to cut its general operating budget by 5 to 11 percent -- worse than earlier projected -- and put jobs on the line, the Kern County Board of Supervisors heard Monday.
Hospital Chief Financial Officer Sandra Martin told supervisors the public hospital could lose another $18 million in the next six months. That would bring the total losses at KMC this fiscal year, estimated in September to be about $19 million, to about $37 million.
In light of the losses, and a host of other fiscal challenges facing the county, departments will be asked Tuesday to build budgets for the coming fiscal year that are at least 5 percent smaller than this year's.
Department leaders will also have to draft a 6 percent "step-down" plan -- a list of additional reductions that could take the total cut to each department to as much as 11 percent.
The county can't handle that kind of blow without layoffs, Kern County Administrative Officer John Nilon said.
And even a 5 percent cut, Assistant Kern County Administrative Officer Nancy Lawson said, could force some departments to let workers go.
Martin said the $18 million loss was the worst-case scenario. "We are being very, very conservative," she said.
Supervisor Mike Maggard said he appreciated her not sugar-coating the situation.
"There are real people and real jobs that could be cut," Maggard said.
Lawson said the $18 million loss Martin talked about Monday was a one-time hole that could be plugged with reserve funds or any end-of-year budget surpluses that may develop. But her office was aware of the trend and has already assumed the monthly losses at KMC will continue.
That is why departments will be asked to develop a budget plan that could cut so deeply into day-to-day county operations.
"We need KMC to really hone down and mitigate their $18 million issue," Lawson said.
Supervisors took the news with grim acceptance but applauded the work of Martin and new KMC Chief Executive Officer Russell Judd.
"It's a mess," said Supervisor Mick Gleason. "We got the right people. It's just going to take time."
The hospital's losses, Judd said, stem from declining patient volumes, broken billing and information technology systems and an inability to staff the hospital for the level of work coming in the door.
He outlined critical first steps the hospital is taking to fix the problem:
* Cleaning up coding, billing and revenue collection processes -- the system by which KMC is reimbursed for medical services. Supervisors have directed Judd to hire a company to oversee that process.
* Building strong partnerships with doctors and health plans to get more paying customers through the doors.
For years KMC has seen its number of patients treated drop and its patient mix saturated with people who can't pay for care.
"We don't want people to get sick," Judd said. "But when they need health care, we need to make sure they are choosing KMC."
KMC plans to hire a consultant to negotiate new contracts with health care managers to bring more patients in.
* Better controlling staffing levels.
Judd said the hospital is beginning to develop a plan to help its supervisors determine the exact number of employees needed to handle the amount of work there is to do. The adjustments must be made daily to avoid either over- or under-staffing.
A call for serious cutbacks at Tuesday's supervisors meeting would mark a turnaround from last year when departments, for the first time in years, were able to build at least status quo budgets because county finances were improving.
KMC's problems aren't the only cause, though. According to a County Administrative Office memo to the supervisors, other challenges include:
* Health care costs increasing, by about $6 million.
* Sales tax revenue dropping to normal levels after being inflated by construction of roads and wind energy projects.
* The need, in two years, to fund an additional $18.3 million in Sheriff's Office staffing costs tied to the opening of a new wing at Lerdo Jail.
* Finding money for future freeway projects.
On a positive note, residential and commercial property tax funds are expected to climb a bit and pension costs are down a little, about $1.2 million. But the news is not nearly good enough to soften the blows county finances are taking.
So the county plans to cut $15.8 million from department budgets and tap some of the $88 million it has in reserves to make it through the financial year that starts July 1.
Departments are scrambling to keep their operations intact in the face of the crisis.
Kern County Fire Chief Brian Marshall hopes he can keep nine rural fire stations staffed with three firefighters each as a $4.5 million grant expires, the county docks his budget and nature conspires to deliver the threat of a dry, dangerous fire season.
"I think we'll be OK this year. We may be able to defer the big ticket items -- fire stations and fire apparatus," he said.
The staffing at rural stations is critical, Marshall said, to serving the outlying areas of the county.
Without the three-person staffing at each rural station, firefighters can't enter a burning structure -- there must be at least two firefighters inside the building and one outside to make an interior attack on a fire.
"The goal is to keep those fire stations fully staffed at all times," he said.
Marshall said he has tried to create a reserve fund inside his own budget to handle volatility.
"We positioned ourselves a little bit better. We've been setting some money aside for a rainy day fund," he said. "My goal as the fire chief is to take a little bit of the peaks and valleys out of the budget."
Of course this year the reserve evaporated when departments were asked to make up losses at Kern Medical Center.
And Marshall is trying to get some of his seasonal fire crews up and running early this year because the drought has dried out a lot of vegetation.
"We have the potential for a catastrophic fire year," Marshall said.
When supervisors approved this year's budget last summer, they proudly added an extra day of service at each of the county's more than 20 libraries.
They had to squeeze and scrimp to do it, but they got it done.
When the Library Department was asked to cut costs, after bad news began pouring out of Kern Medical Center, Library Director Sherry Gomez was able to keep the doors open that extra day.
Now she will need to defend the time again.