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By Sabrina Singhapattanapong
DAILY BRUIN REPORTER
[email protected]
The UCLA Medical Center will aggressively seek increases from
its payers ““ mainly health insurance companies ““ to
make more profits and combat rising costs, said Sergio Melgar, the
medical center’s chief financial officer.
With nurses’ salaries accounting for 35 percent of the
hospital’s salaries ““ their number one cost ““
paying off these expenses remains a challenge, Melgar said.
The medical center will also reduce unnecessary costs by closely
monitoring supplies, its second largest cost, contracting better
prices with suppliers, and finding medical ways of delivering
efficient, yet quality care, he said.
“We do have to do whatever we can to come up with
additional revenues to compensate additional costs,” Melgar
said.
Though department budgets are usually revised to account for
inflation, the increased nurses’ salaries will cause a higher
proportion of the inflation money allotted to each
departments’ budget, to pay for salaries, Melgar said.
“Managers will be challenged to make sure we provide all
of the services within the resources we have available,” he
said.
Last week’s contract settlement between the California
Nurses Association, is said to increase UCLA nurses’ wages by
a total of 23.4 percent over the next three years, according to UC
Office of the President.
The projected increase in nurses’ salaries may push their
current 35 percent proportion of total expenses to almost 40
percent in the coming years, he added.
But Melgar said he does not plan on resorting to labor cuts,
since the medical center treats the highest amount of trauma
patients in the area and needs to protect its labor force.
For the past two years, UCLA has neither made nor lost money,
partly due to the low reimbursement payments it received from
health insurance companies, Melgar said.
Even larger hospitals, like UCLA’s, were forced to accept
low reimbursement rates from health insurance companies as a result
of competitively low bids from other hospitals, he explained.
The trend caused smaller hospitals, like the Daniel Freeman
Hospital, to close down, and made generating any profit difficult
for UCLA, Melgar said.
But he said a different cycle in health care is now present. As
smaller hospitals close down, the pressure to contract lower
reimbursement rates with insurance companies dwindles, Melgar
said.
Consequently, UCLA’s medical center will be in a better
position to negotiate higher rates with insurance companies, he
said.
Reimbursement payments from health insurance companies make up
nearly 55 percent of the hospital’s income, while about 25
percent comes from Medicare and Medi-Cal, and the remainder from
private payers, Melgar said.
So far, the Medical Center has earned $7 million and is pushing
to earn $10 million in profits by the end of this month ““ the
end of its financial year ““ Melgar said.
He said the hospital hopes to increase its profits from $10
million to $15 million in the short term, and $25million to $30
million in the long term.