Calif. budget freeze endangers small providers

California's budget impasse is having a devastating impact on providers waiting for payments. Despite being guaranteed they'll be paid when the budget problem resolves itself, the banks are telling providers such guarantees aren't sufficient. That's why elder care providers like Janet Rios are being forced to take $100,000+ loans at high-risk rates just to stay afloat.

At risk for financial disaster are smaller providers like nursing homes and medical clinics, small contractors which, unlike large institutions, don't have big reserves to cover their operating capital needs.  With the state budget vacuum having extended a long 50 days, some contractors are losing ground rapidly. Some are running their business on credit cards, like Maureen DeLeon, who operates homes for developmentally disabled children and adults. She's waiting on $50,000 from the state.

All told, these providers may make it through California's budget standoff, but it seems likely many will bear financial scars from the experience for some time to come. And some may not make it at all.

To learn more about the credit crunch:
- read this Los Angeles Times article

Related Articles:
State budget freeze squeeze California providers. Report
Mass. halts mental health admissions due to state budget cuts. Report
Spitzer battles N.Y.'s healthcare industry over budget cuts. Report
Florida facing deeper budget cuts. Report

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.