A medical drama in Monterey County may spill over into the courtroom.

Pam Marino here, reflecting on the medical drama that has been unfolding right in our backyard.

Granted, there are no dramatic TV moments of bringing a patient back to life in the emergency room, a risky surgery or doctors solving a medical mystery. This medical drama involves spreadsheets, policy wonks, lobbyists and Sacramento decision makers—and it could change the face of health care in Monterey County.

The Office of Health Care Affordability Board voted 5-0 on Tuesday, April 22 to put a spending growth cap on seven California hospitals determined to be high cost, including Community Hospital of the Monterey Peninsula and Salinas Valley Health. 

Starting next year, CHOMP and SVH will be required to cap spending growth at 1.8 percent. The cap will decrease to 1.7 percent in 2027 and 2028 and 1.6 percent in 2029. All hospitals in California are already under orders to cap spending growth to 3.5 percent this year. By 2029 the cap will be 3 percent.

Union leaders and others who have been lobbying the OHCA Board for two years hailed the decision as a victory for working people. They’ve been pleading with the board to take any action that can lower costs at local hospitals.

But was this the right action? 

Hospital officials decried the decision—new Montage Health CEO Dr. Mike McDermott warned board members the results would be “catastrophic,” negatively impacting patient care.

As Weekly Editor Sara Rubin pointed out in her latest Spin column, the hospitals face numerous challenges, including the prospect of $880 billion in Medicaid cuts by the federal government in a system that already underpays providers, making them reliant on recouping costs from commercial payers. 

In addition, insurance companies are missing from the equation. If hospitals do manage to cut costs, the insurers are under no obligation to pass the savings onto patients, she argued.

Rubin concluded the spending caps won’t achieve the desired effect of cutting costs—“and they might backfire.”

The California hospital industry appears primed to fight the decision. Ahead of last week’s meeting the California Hospital Association submitted a detailed 13-page letter from Ben Johnson, vice president of financial policy, that reads like the precursor to a lawsuit.

Johnson called the OHCA proposal “deeply flawed” and said the end result will be “nearly $5 billion diverted from patient care by 2029, more than 10,000 lost jobs, and 83 percent of California’s hospitals operating in the red.”

Could the medical drama become a crossover episode in a courtroom drama? We’ll all have to stay tuned to find out.