As we enter the New Year, many in the health care industry feel as if we are sprinting across ever-shifting sands. Planning for the future is particularly challenging in lieu of changes from the Affordable Care Act. Some of the anticipated changes will be positive and some will negatively affect hospital economics across the country. It will be more important than ever for Torrance Memorial to partner with the community in ways that allow for the provision of high quality medical care and valuable community services.
Pulse sat down with Craig Leach, President/CEO of the newly named
Torrance Memorial Health System, to give you answers about how the hospital is navigating the changes in health care reform—while continuing to provide excellent services to our South Bay community.
Q: Torrance Memorial has grown dramatically over the years and seems to be a major employer in the community. Is that true?
A: Yes, Torrance Memorial is one of the largest employers in the South Bay, employing almost 4,000 people. Torrance Memorial has a major economic impact on the South Bay economy, as not only a large employer, but also a provider of free or assisted health care programs.
Q: As Torrance Memorial has grown you must have been thinking ahead about health care reform and its impact on the medical center and the community.
A: We have been planning and continue to plan for its impact on both the hospital and our community. One of our concerns is the long-term negative economic impact on hospitals and physicians. Torrance Memorial currently derives a mere 2% profit margin from taking care of patients—clearly a slim margin.
Q: That is a slim profit margin. How, then, has Torrance been able to afford the construction of the new patient care tower? (Torrance is currently building a seven-story, state-of-the-art patient care tower named the Lundquist Tower.)
A: As we envisioned the construction of our new patient tower, we knew that the Affordable Care Act (also called ‘Obamacare’ by many) would likely have a negative economic affect on the hospital. We did our homework and planned accordingly. We saved money over many years to help pay for the tower, and we also borrowed $200 million that will be paid off during the next 30 years. Because of the scope of the project, we deemed it imperative to approach the community and ask them to help us with financial support for the tower. We had originally budgeted $75 million in gifts from the community to help us pay for it. We were surprised by the outpouring of support. We are now approaching $140 million in donations. It is an amazing statement on the part of this community that they trust this hospital and believe in the importance of this new community asset. We feel very fortunate to have the support from the community that we do.
Q: Returning to the topic of health care reform and the Affordable Care Act, what has been the impact on Torrance Memorial?
A: To date, the impact on the hospital has been a reduction in payments both from Medicare and private insurance. This is one reason our margins are so small. We do, however, hope that more individuals and small employers in the community will find new options for affordable health insurance as offered under the recently formed
Covered California Health Insurance Exchange. We don’t know the numbers yet of how many have signed up in our area as it’s still very early since its implementation.
Q: Can community residents who buy insurance through Covered California use Torrance Memorial?
A: We have worked hard to open access to Torrance Memorial for the Covered California health insurance plans. To date, we have contracted with the Blue Cross EPO, Blue Shield PPO, and the HealthNet PPO and HMO plans. But, just like all insurance plans, the provider panels change and are sometimes complex. We’ll try to keep the community current of our offerings on our web site at
torrancememorial.org/CoveredCA, or by calling 310-517-4711; alternatively, consumers can call the health plan directly.
Q: Torrance Memorial is so active in the community. Can you tell us about the ways in which the medical center assists the community?
A: One of the mandates of being a non-profit hospital is to annually report how we impact the community in a positive way. In 2012, the most recent year we have compiled this report, we provided about $60 million in services and subsidies to the people of the South Bay. We subsidized government programs (Medicare and Medi-Cal), by approximately $47 million. In addition, we provided almost $8 million in free care to patients who either couldn’t afford to pay or who didn’t have health insurance. We also provide a host of community service programs from health education classes; support at local health fairs; free van transportation, and other programs. (See side bar for a list of community services and programs Torrance Memorial provides.) The value of those services to the community is between $4 million and $5 million annually.
Q: I had no idea the hospital provided so many community programs! Do you think the community is generally aware and able to benefit from them?
A: The purpose of articles such as this Q&A is to continue to inform the South Bay community of all that is available to them. The medical center offers so many programs that provide a wide array of benefit for just about everyone—from children to the elderly. The more people are aware, the more we impact the community. That’s our goal.
Q: When you think back over the past year and all the community organizations that Torrance Memorial partners with, is there one in particular that brings you joy and satisfaction?
A: Well, as you can see from our list of community programs, it’s hard to single out just one. But I will say that our partnership with Harbor Interfaith Services is really special. Harbor Interfaith is a non-profit organization serving the Harbor Area and South Bay communities of Los Angeles, including San Pedro, Harbor City, Harbor Gateway, Lomita, Torrance, Wilmington and Long Beach.
In 2013, Harbor Interfaith assisted almost 22,000 homeless and working poor people—the majority of whom were families. As I understand it, this represents a nearly 70 percent increase in service demand and provision since the inception of our partnership. In our more than five years of partnership, Torrance Memorial has worked to channel resources to respond to the growing needs of Harbor Interfaith. Support and activities have included: financial assistance for dental care, the food pantry, health education, and child care programs.
Q: Lastly, with all the economic uncertainty facing hospitals, will Torrance Memorial continue to offer so much support in the form of free programs and services to the community?
A: It is our goal for Torrance Memorial to continue to grow and provide value to the people of the South Bay. I am proud of our organization and how hard everyone works to serve both the patients when they are at their most vulnerable, and other people in the community who need our help. We will continue to be a community partner in as many ways as we can, and we are fortunate to receive the emotional and economic support from our community like we do.