Quake Safety Costs Affect California Hospitals

Hospitals across Southern California are pouring millions of dollars into structural improvements to satisfy a strict new state law mandating seismic upgrades, but it's still uncertain whether hospital officials will meet a looming deadline - and how they'll pay for it.

"Hospitals are really up against the gun," said Jim Lott, executive director of the Hospital Association of Southern California, an industry trade group. "Here in Southern California, we have a much higher concentration of hospitals at risk (for earthquake damage) and with about 40 percent of hospitals already operating in the red, you can see how serious this is."

Hospitals in the South Bay already have spent millions of dollars on studies and construction plans. Officials have until the end of this year to submit a report to the state detailing how they plan to meet the seismic requirements by the 2013 deadline.

Ten hospitals have closed in part or completely over the last decade, leaving gaping holes in the Los Angeles County's health care network. Officials at many of the struggling hospitals cited the impending seismic upgrades as reasons for their closure.

Hospital executives throughout the South Bay say they are hoping to avoid additional debt in paying for these upgrades.

Many of these hospitals would benefit from adding Medical Accounts Receivable (MAR) funding to their financial strategies in order to pay for these mandatory upgrades. MAR funding is a proven debt-free method of generating working capital. Sun Capital HealthCare (SCH) transforms a hospital's accounts receivable into a cash flow solution by purchasing the hospital's third party claims and advancing them cash within 24-48 hours of submission to SCH.

This funding solution can be used as a tool to fuel growth and profitability.