Back in 2004, California鈥檚 children鈥檚 hospitals asked voters to approve a $750 million bond measure to help fund construction and new medical equipment. In 2008, they asked for $980 million more. Now they鈥檙e hoping voters will agree on Nov. 6 to cough up an additional $1.5 billion.
The state鈥檚 13 children鈥檚 hospitals treat California鈥檚 sickest kids 鈥� including those with leukemia, sickle cell disease, rare cancers and cystic fibrosis 鈥� so approving their fund-raising requests is an easy 鈥測es鈥� for many voters.
Despite the feel-good nature of the requests, some health care experts and election analysts question the hospitals鈥� multiple appeals for taxpayer money 鈥� and are warning voters to review this year鈥檚 proposal with a critical eye.
鈥淚 think it鈥檚 a misuse of the initiative process for private groups to sponsor ballot measures that are intended to benefit them exclusively,鈥� said Elizabeth Ralston, a former president of the League of Women Voters of Los Angeles who analyzes state finance measures for the group. The league a 鈥渘o鈥� vote on the measure.
Repeatedly asking taxpayers to pay for the construction of state-of-the-art facilities is not standard practice, according to critics who believe it raises questions about financial accountability 鈥� and whether the hospitals truly need some of the projects on their wish lists.
This pattern 鈥渃ould leave children鈥檚 hospitals with little incentive to control their costs,鈥� said Ge Bai, a professor at the Johns Hopkins University Carey Business School, who added that each hospital should take care of itself.
The initiative, Proposition 4, needs a majority vote to pass. The 2004 and 2008 children鈥檚 hospital bond measures 58.3 percent and 55.3 percent of the vote, respectively.
The California Children鈥檚 Hospital Association said its members can鈥檛 afford to pay for their building and technology needs without help from the state鈥檚 taxpayers, who would be on the hook to pay off $1.5 billion plus interest. The estimates that would come to $2.9 billion 鈥� or about $80 million a year over the next 35 years.
Private donations often aren鈥檛 the answer because donors frequently specify how their money should be used, said Ann-Louise Kuhns, the association鈥檚 CEO. The posh playrooms and gardens at some of these hospitals, for example, are completely funded by private donations, she said.
鈥淲e do fund-raise, we ask donors to make contributions and we issue our own debt,鈥� Kuhns said. 鈥淏ut it鈥檚 hard to completely close that gap for what鈥檚 needed聽鈥� without a little bit of assistance.鈥�
The association, which sponsored the initiative, said the bond measure would help pay for construction, remodeling, equipment and seismic retrofitting at the state鈥檚 eight private, nonprofit children鈥檚 hospitals and the five that are part of the University of California medical system.
The California Health Facilities Financing Authority would have to approve the hospitals鈥� use of the bond money. The agency weighs whether projects would expand access and improve patient care but does not determine whether a project is necessary or prudent.
That鈥檚 up to the hospitals.
The campaign in support of the bond measure 鈥� funded by the nonprofit hospitals themselves 鈥� has raised nearly $11 million this year, according to the California .
In their last financial reports audited by the state, six of the eight private, nonprofit hospitals reported annual profits ranging from to nearly聽. The bond issuance would provide each with $135 million, regardless of its profits or losses.
Almost three-quarters of the bond proceeds would go to the nonprofits because they have the most beds, but nonprofit hospitals already receive certain perks, Bai explained. For instance, they鈥檙e exempt from paying property taxes, as well as state and federal income taxes.
Eighteen percent would be allotted to the UC system hospitals. And the proposal would offer 10 percent in competitive grants for approximately 150 hospitals that aren鈥檛 classified as pediatric hospitals, but treat children nonetheless.
The hospitals argue they need to expand because they are facing greater demand for services, as general and community hospitals increasingly transfer their patients to them for specialized pediatric care.
Children鈥檚 hospitals also rely heavily on Medi-Cal, the state鈥檚 insurance program for low-income people, Kuhns said. Medi-Cal pays hospitals less than private insurance.
Nancy Kane, a professor in the department of health policy and management at the Harvard T.H. Chan School of Public Health, pointed out that nationwide 鈥渕any children鈥檚 hospitals have the same payer mix, but manage to do this anyway without the government paying for their capital.鈥�
Kuhns said that California hospitals also face deadlines to meet seismic safety mandates. By 2020, they must be ready to withstand a major earthquake, and by 2030, they must be deemed safe enough to continue operating after a quake.
About 28 percent of the beds in the eight nonprofit children鈥檚 hospitals do not meet the 2030 seismic standards, so significant investments must be made, she said.
Tim Curley of Valley Children鈥檚 Healthcare in Madera said the helped pay for a 60,000-square-foot expansion of operating rooms. If this year鈥檚 bond measure is approved, the hospital would consider renovating its laboratories and pharmacy, he said.
At the end of last year, it had just under $28 million in funds remaining from the 2008 bond, a report by the financing authority said.
Loma Linda University Children鈥檚 Hospital is still using its share of the 2008 bond to help with the construction of a nine-story tower that will house most departments and labs.
The new tower, expected to be completed by 2021, will help the children鈥檚 hospital operate independently of the rest of the medical center 鈥� which serves adults 鈥� 聽and meet the growing demand for space, said Scott Perryman, a senior administrator.
But Ralston, with the League of Women Voters, said Californians should consider whether the money could be better used elsewhere.
鈥淵ou鈥檙e committing state money,鈥� she said, 鈥渁nd that means that鈥檚 money not spent on something else鈥� like affordable housing or aging roads.
Should voters nonetheless approve this third bond measure, Bai wonders if and when the requests for taxpayer money will stop. 鈥淭here are always new things to buy,鈥� she said.
This story was produced by聽, which publishes聽, an editorially independent service of the聽.