Santa Cruz County health agency proposes ending in-house X-ray and most phlebotomy services to close budget gap

Santa Cruz — County Health Services Agency (HSA) officials presented a proposal June 10 to reorganize clinic laboratory and radiology services, saying rising operating costs are outpacing revenue and that outsourcing some services is needed to keep core primary and behavioral health clinics open.

HSA Interim Director Jen Herrera told the Board of Supervisors the county’s federally qualified health centers (FQHCs) serve more than 13,000 patients and delivered about 100,000 appointments last year, but revenues — largely paid through a bundled FQHC prospective payment (PPS) rate — have not kept pace with salary and supply cost increases. "Our expenses for healthcare services are outpacing our revenues," Herrera said. "This proposal is one of multiple tactics to increase our efficiency and our sustainability." (Jen Herrera, interim director, Health Services Agency; first referenced 4982.25s)

Why officials proposed changes

HSA said changes would preserve the agency’s core mission — comprehensive, affordable primary and integrated behavioral health care — by reducing overhead tied to maintaining in-house radiology equipment and expanded phlebotomy staff. The agency proposed keeping CLIA‑waived point‑of‑care testing and maintaining agreements with commercial laboratories and imaging providers for more complex testing and X‑rays, while reducing on‑site specimen‑collection staff so outside labs bill directly for…