State-imposed Furloughs Cause Regulatory Backlogs that are Hurting Hospitals

Cheryl Clark, for HealthLeaders Media , August 10, 2009

The purpose of government-imposed furloughs is to save taxpayers money. But in California, dozens of agencies funded exclusively by licensing fees–not state taxes–are being furloughed too, prompting many practitioner groups and hospitals to cry foul.

Why should the state use a hospital's or a physician's licensing fee to help other state programs, they ask. And what will happen to the money those agencies are saving in avoided salaries?

The answer is as yet unclear. Though the money remains as income on those agencies' books, California Gov. Arnold Schwarzenegger may, at least in theory, "borrow" those funds to pay other state debts, leaving many organizations whose members pay those fees not too happy. Who knows when, or if, the state will ever pay it back, they wonder.

By state decree, agencies that license and discipline health practitioners have been forced to take two days a month without pay since February and in July, the furlough mandated three days off, or about 15% of a worker's hours. The result has been an increasing backlog of investigation work, much of it related to disciplinary actions, but also related to initial licensing and hospital seismic retrofit review and construction permits for dozens if not hundreds of healthcare buildings.

Furloughs at California's fee-funded agencies are holding up numerous hospital construction projects, required to meet state-required seismic upgrades and that's costing those hospitals a lot of money. Workers sit idle waiting for reviews and construction permits, while construction costs go up.

"It is obvious we can no longer do business as usual," wrote Paul Coleman, acting deputy director of the Office of Statewide Health Planning Development in a memo last month. "The loss of staff hours resulting from the furloughs is equivalent to losing 34 of the 226 positions in the division."

The agency also has postponed release of key quality, utilization, seismic compliance, and finance data for hundreds of health facilities throughout California. Several programs have also been put off indefinitely.

The Medical Board of California, just one of some three dozen licensing agencies, is losing 5,100 hours of work per month, equivalent to 28 or 29 positions monthly, says spokeswoman Candis Cohen. That also has delayed many aspects of the agency's watchdog functions.

One might think the California Medical Association, which represents many for the 125,000 physicians licensed by the medical board, wouldn't have a public view. But they're not happy about it either.

Spokesman Andrew LaMar says the CMA has not yet issued an official position on the furloughs, but is "very concerned about the Medical Board's growing backlog of work and the impact that is having on patients and doctors.

"We have a shortage of physicians in California, and the Medical Board has been unable to process more than 600 medical license applications in a timely manner. The backlog of applications has increased 50% since the governor ordered furloughs, and that's bad for all Californians," LaMar says.

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