Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Louise F. Rogers, Chief, San Mateo County Health
Chester J. Kunnappilly, MD, Chief Executive Officer, San Mateo Medical Center
Subject: Operating Line of Credit for San Mateo Medical Center
RECOMMENDATION:
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Adopt a resolution to authorize:
A) Establishing a maximum limit for cash advances from the County General Fund to San Mateo Medical Center (SMMC) of $80,000,000 to support SMMC operations; and
B) Maintaining current cash advance limit of $45,000,000 interest free; and
C) Provide that SMMC pay interest at the County established pool rate on additional funds needed above $45,000,000, up to the established maximum of $80,000,000.
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BACKGROUND:
General Fund cash advances to San Mateo Medical Center (SMMC) are authorized by Board resolutions. These advances represent an operating line of credit, which is used by SMMC during the fiscal year to pay for expenses while awaiting reimbursement from the state and federal government. On October 17, 2006, this Board approved a resolution 068335, to reduce SMMC’s line of credit from $60 million to $30 million as of July 1, 2006, because cash advances of more than $30 million had not been necessary. On October 8, 2019, your Board approved resolution 076970, to increase SMMC’s line of credit from $30 million to $45 million as of October 8, 2019.
DISCUSSION:
SMMC is an Enterprise Fund of the County. Seventy-nine percent of SMMC’s operations are funded through federal and state government’s payments for patient services. While government fee for service and supplemental funding opportunities to public hospitals have grown over the years, allowing SMMC to maintain an overall strong fiscal position, these sources do not pay SMMC on a timely basis.
To bridge daily cash flow needs, SMMC relies on cash advances from the County General Fund (General Fund). The California Association of Public Hospitals and Health Systems is currently engaging with the state on behalf of public hospitals to shorten the reimbursement window.
As SMMC’s budget has grown over the years, so has the need for greater cash advances from the General Fund to cover the delays in reimbursement. In 2019, the County cash advance limit was $45 million, which was 11% of SMMC’s FY 2019-20 Adopted Budget of $427 million. Since 2019, SMMC’s adopted budget has grown to $497 million for FY 2024-25, but the cash advance limit has remained the same. While SMMC’s monthly cash advance has averaged $45 million for the year, there was a payment delay in the third quarter of FY 2023-24, when SMMC’s short-term cash advance need exceeded $75 million.
Considering these growing needs, we are requesting that this Board establish a maximum limit for cash advances from the General Fund of $80 million to support SMMC operations; maintain the current cash advance limit of $45 million interest free; and provide that SMMC pay interest at the County established pool rate on additional funds needed above $45 million, up to the established maximum of $80 million.
The resolution has been reviewed and approved by County Attorney as to form.
EQUITY IMPACT:
SMMC is committed to advancing health equity for its diverse, low-income patient population. It is the policy of SMMC to provide medical services to all individuals, regardless of their ability to pay, and to provide financial assistance to eligible patients who are uninsured, underinsured, ineligible for third-party assistance or have low incomes. Of the 76,069 patients served by SMMC, approximately 70,100 receive services through health coverage programs with low-income enrollment criteria, including Medi-Cal, ACE, or Charity Care. This agreement will impact equity by providing access to health care services for SMMC patients. SMMC’s patients span a wide spectrum of races, ethnicities, gender, and gender-identities. Within the past 18 months, the largest cohorts of specialty care patients at SMMC were female (53%), Hispanic, Latin, or Spanish Origin (57%), and primarily Spanish speaking (54%).
FISCAL IMPACT:
Each General Fund cash advance shall be repaid by SMMC upon receipt of sufficient cash to generate a positive cash balance.