SJ Health Centers posts $2.2 million net income for two months; board presses for plan if QIP funding shifts

Roshna Sharma, controller for SJ Health Centers, told the San Joaquin County Healthcare Services Review Project Committee on Oct. 15 that the clinics reported $1.1 million net income for August and $2.2 million net income year to date, compared with a budgeted loss of $119,000 year to date.

Sharma said the favorable results were driven primarily by two factors: lower payroll expense because many budgeted positions remain vacant, and a larger-than-expected accrual of supplemental QIP (quality incentive program) revenue. “The total operating revenue as of August…42% of the overall operating revenue. So that is really playing a big role in the survival of the organization apart from bringing in the net patient service revenues,” she said.

The committee heard that billable visits for the 12 months ending August 2025 were 11,442 for August and 22,500 for the two months ending August (versus budgeted 11,062 and 22,648, respectively). Sharma noted year‑to‑date billable visits are slightly unfavorable by 148 visits. She also said cash on hand stood at about 246 days, and that average daily cash‑basis expenses are about $125,000–$128,000.

Sharma described the QIP increase as the most consequential driver of the improved bottom line. She said the hospital changed how pool money was allocated — shifting some global payment program (GPP) funds into the QIP — producing a roughly 75% increase in the QIP pool and a current accrual of about $2.2 million per month. “They took that money, and they moved it over to the QIP,” a committee member said during discussion; Sharma and others said the county will need a plan if that funding changes.

Committee members pressed staff on the sustainability and risk of relying on the QIP accrual. County staff said the county administrator’s office, healthcare services and the hospital will meet in early November to discuss a memorandum of understanding (MOU) and allocation splits and will return with preliminary recommendations by next quarter. Sharma added that the $2.2 million included an embedded reserve of roughly $1 million in the budget — about $83,000 per month — to cushion a potential shortfall.

The presentation also covered revenue mix and operational details. Sharma said 77.82% of billable visits are for Medi‑Cal managed care patients, 12.02% Medicare, 6.05% Medi‑Cal (traditional), 3.17% commercial and 0.94% self‑pay. She reported higher-than-budgeted 340B pharmacy revenues stemming from expanded manufacturer authorizations and noted related third‑party administrator (TPA) fees and higher pharmacy supplies as offsetting costs.

Staff described workforce and cost drivers: the clinics had budgeted roughly 239 FTEs and showed 184 county FTEs as of August, plus about 70 locum/contract clinicians. That mix has produced favorable salary variances to budget but higher professional fees, travel and malpractice costs tied to locums. The committee asked about “right‑sizing” and staff said they are reviewing classifications and staffing ratios, aiming to convert or reclassify roles where appropriate at midyear.

Sharma and other presenters said intermittent clinic billing changes implemented in September 2024 — consolidating certain child clinics under parent clinic rates — have increased collections and will require a longer period of data to fully measure. Staff also said excess QIP cash is intended to support the county’s Be Well campus capital projects, including urgent care construction and expanded medication‑assisted treatment services, and that some clinic cash will move to the Be Well capital fund for construction.

Committee members repeatedly cautioned that the county should not rely on QIP or hospital allocations as a permanent substitute for operational revenue and asked staff to return with clear recommendations and contingency plans.

Sharma closed by reiterating that the favorable year‑to‑date results are mainly due to QIP accruals and payroll variance from vacancies and that managers are actively recruiting to reduce vacancy‑driven variances over time.