By Charles M. Kelly
On June 3, Tim Kielpinsky, chief strategy officer at Catalina Island Health, gave the council an update on current hospital operations. He followed that with an update on the new hospital.
Kielpinsky said CIH was on the calendar to give a quarterly report to the council in September.
The following are highlights from his presentation rather than a transcript of the entire meeting.
Kielpinsky said there were 37 critical access hospitals in California. “Half of those are public hospitals or tax district hospitals and qualify for a lot of supplements to make up for being under reimbursed for some of the health healthcare they provide,” he said.
The other half of the 37 are part of bigger systems, he said.
According to Kielpinsky, bigger costs of hospital’s costs (he used the figure of $15 million) are reimbursed.
Kielpinsky said of the 37 critical access hospitals in California, two are private—Catalina Island Health and Rivercrest.
According to Kielpinsky, 59% of rural hospitals in California are at risk for closure. “The primary reason for that is they are not getting equitable reimbursement from the big insurance companies,” he said.
“For example, we are struggling with Torrance over HIPPA. We are only getting 7 cents on the dollar,” he said.
“We’ve re-negotiated. We’re getting 20 cents on the dollar, which is about what we get from Medicaid,” he said.
“But we just don’t have the bargaining power with insurers like that,” he said.
He also mentioned under0reimbursement for Medicaid.
Referring to the 2002 LA County property Measure B funding, he said that generates about $350 million for Los Angeles County and that is dispersed to the hospitals.
“As you know uh a month or six weeks ago uh we were awarded $3 million surplus uh from uh the Measure B funds that that were collected last year,” he said.
“Now that $3 million really only gets us for about a year,” Kielpinsky said.
According to Kielpinsky, Catalina Island Health will be out of money again in June or July of 2026.
Kielpinsky said officials the LA County Department of Health Services visited the Island a couple of weeks ago and stayed for six hours. According to Kielpinsky, they are now putting a report together about the hospitals financial situation. According to Kielpinsky, the Department of Health Supervisors officials hope to get that report to the Board of Supervisors by the end of this month.
“Even though it’s a struggle and we’re thin staffed, 5,000 people come through the clinic for their primary care their primary care. Twenty-four hundred people come through the emergency room pretty much annually,” Kielpinsky said.
“That’s pretty consistent year after year,” he said.
He said Catalina Island Health was getting about 80 cents on the dollar from Blue Shield but Blue shield has made a verbal offer to reimburse CIH 95 cents on the dollar.
Kielpinski said CIH has an appointment with Kaiser. He anticipated that the hospital would be able to add Kaiser to the list of the insurance that CIH offers.
He said in April a “hospitalist” started working at the hospital. He is a board certified trauma surgeon and he is on call to take care of patients. (“Practitioners of hospital medicine include physicians (‘hospitalists’) and non-physician clinicians who engage in clinical care, teaching, research, and or leadership in the field of general hospital medicine,” according to the Society of Hospital Medicine.)
Kielpinsky turned to some of CIH’s cost-cutting measures. He said they rebid employee insurance, and property insurance. “We canceled a lot of contracts. We tried to really thin down the number of contracts we did,” he said.
Kielpinsky said there has been a hospital wide pay freeze for three years. He said the administration took a 20% pay cut two years ago.
According to Kielpinsky, they are still hopeful to partner with UC Irvine. “If we partner with UCI, all of a sudden we fall into the same thing as the tax district hospitals and we would qualify for all the supplements,” he said.
As for the Avalon hospital, he said Catalina would be going from 12 beds to 14. (Later he said that the current hospital has double-occupancy rooms. The new hospital will be a private room.) Catalina Island Health currently has one isolation room. The new hospital would have two. He said the new hospital would have specialty examination rooms. He said the new building would have a couple of operating rooms for general outpatient surgery.
“The other thing that’ll be in the new hospital is infusion therapy,” he said. Chemotherapy could be done on the Island.
Kielpinsky said the new hospital would have a helipad.
He said that would expedite getting people off the Island.
Catalina Island Health is planning to build 12 one-bedroom housing units for hospital staff.
He said the new building is going to be 70,000 square feet.
As for the status of the new hospital, he said Catalina Island Health was coordinating with the California Coastal Commission. Kielpinsky said the project is not part of Avalon’s Local Coastal Program. (An LCP is a Coastal Commission approved program that allows the transfer of some of the Coastal Commission’s permitting authority to a local agency.)
He said they have had two meetings with the Coastal Commission. According to Kielpinsky, the hospital will have to change the location of the housing to protect the coastal sage. However, the commission will allow the disturbance of the native plants for the new hospital building.
“We found a new location. They’re OK with it,” he said.
He said the hospital has spent $2.3 millions of Measure H dollars. He said that money has gone to the program manager, two archeologists, civil engineers and geotech. They have hired a heliport consultant and a retired Coastal Commissioner as a consultant.
“We have a land use attorney that is also helping us navigate entitlements,” he said.
They have hired a fire prevention consultant. They also have an environmental team.
Kielpinsky said the way Measure H works, an independent contractor evaluates CIH’s invoices against the budget.
He said Avalon Finance Director Matt Baker makes sure there funds and gives his OK to authorize a check.
Kielpinsky said the new figure for the hospital is $224 million.
According to Kielpinsky, CIH will be able to afford the building once it is complete. He said they would put depreciation of $6 million down on the building and Medicare would pay $3 million of that depreciation in cash to the hospital.
He said Catalina Island Health would become more financially stable because of that building.
He said CIH would finance it with a $99 million USDA 30-year loan.
He said there was another $76 million USDA loan. He said CIH was going to do a bond of $25 million. “Then we’ll have $24 million of philanthropy that’ll add up to $224 million dollars,” he said.
“We hope to break ground in quarter one or two of 2027,” he said.
Kielpinsky said the Department of Defense had approved CIH’s request for the military to help with construction. Two Marine Corps units were interested in doing some of the flatwork on the project. He said that would save money.
