County Feels Symptoms of Health Crisis Relapse

For the last 15 years, the crisis has been called a meltdown and a snowball, a doomsday scenario and a healthcare Chernobyl. It has been blamed on old people and more people; nursing shortages and earthquake retrofits; the uninsured, the indigents and the illegal immigrants.

Attempted solutions have included centralization and decentralization, “sin taxes,” property taxes and federal bailouts. And somehow, the Los Angeles County health system has managed to survive.

But now public and private healthcare administrators are sounding the alarm yet again, warning that the system is on the brink of collapse, with growing deficits threatening to shut down hospitals.

Six emergency rooms have closed in the last 14 months. Hospital and healthcare officials predict a further 10% to 15% reduction in the county’s emergency room capacity, with three large ERs at private hospitals thought to be at risk of closure.

All of this is taking place as the number of Californians without health insurance continues to surge. Census figures released last week showed that the number increased by 200,000 from 2000 to 2003 and stands at 6.5 million, or 18.4%. The percentage is even greater in Los Angeles County, where more than one in four residents are now uninsured.

Since 1988, the number of emergency rooms in the county has dwindled from 97 to 79. Trauma centers have fallen from 16 to 13. Though some remaining hospitals have expanded their services to make up for those closures, the Los Angeles County population has grown by more than 1 million and the portion of uninsured residents has climbed from 20% to 27% during that period.

“Just because the sky didn’t fall doesn’t mean it wasn’t dire,” said E. Richard Brown, director of the UCLA Center for Health Policy Research, referring to the county’s past healthcare crises. “The Chicken Little routine is helpful getting the bailout. The risk is we may do it too many times and people will stop believing us.”

That day could come in November, when two ballot initiatives will present voters with tough choices between emergency services and taxes.

Hospital administrators and county officials are urging voters to defeat Proposition 72, which would repeal a senate bill passed last year that requires employers of 50 or more people to pay for 80% of workers’ health insurance by 2007.

They say the bill could reduce the number of uninsured by 800,000. Those backing Proposition 72, including the California Chamber of Commerce, say the law is a $5.7-billion tax on employers and a $1.5-billion tax on workers that slows job growth.

The other initiative, Proposition 67, which is supported by hospitals and healthcare advocates in Los Angeles County, would add a 3% surcharge to phone bills in order to generate $150 million to pay for emergency room care, paramedic training and care, and community clinics.

Opponents of that measure, which include major telephone companies, say the tax is not justified because it would benefit large healthcare corporations without guaranteeing better service.

County health officials and many healthcare experts say defeat of Proposition 72 and approval of Proposition 67 would help stabilize the county healthcare system in the short term. But, they add, favorable action by voters would not address the issues underlying the county’s healthcare crisis.

That, most experts agree, will only come with a national solution to the problem of the uninsured.

“It’s going to take a consensus in America that healthcare is a right, not a privilege,” said County Supervisor Zev Yaroslavsky, who has helped engineer bailouts over the last decade. “Until it gets personalized by someone everybody knows, it remains an intellectual exercise. If Elvis were alive today and didn’t make it because he couldn’t find a trauma center, then everyone would care.”

In the meantime, what county health services director Dr. Thomas Garthwaite calls a “chronically semi-starved healthcare system” is likely to continue lurching from crisis to crisis, much as it has over the last decade and a half.

A Times headline in May 1988 could have just as well appeared last week: “Hospital Shuts Its Emergency Room: ‘Ripple Effect’ Feared.”

In 1986, the federal government had required all hospitals that participate in Medicare to treat patients with emergencies regardless of their ability to pay. One in five people in the Los Angeles area were uninsured at the time, and hospitals said they could not afford to treat them.

Citing annual losses of $2 million, California Medical Center had announced plans to close its ER doors to ambulances. Neighboring downtown hospitals warned the move would send a wave of uninsured patients to their emergency rooms, causing them too to shut down.

“There are situations where people cry wolf,” said then-state Health Services Director Dr. Kenneth Kizer at the time. “In this case, in Los Angeles, the wolf is at the door.”

Looking back, Carol Meyer, director of the Los Angeles County Emergency Medical Services Agency, said last week that the current situation “is almost like deja vu with a greater population and [fewer] resources.”

The 1988 crisis was averted when county supervisors provided millions in bailout funds to the hospitals, and Proposition 99, a state tobacco tax, provided hundreds of millions in compensation to reimburse hospitals for medical care to indigents.

By 1990, legislators were promising to find a solution before the year was out. Gov. George Deukmejian’s administration backed a bill written by then-Assembly Speaker Willie Brown that would have required California businesses to pay for 75% of health insurance for their employees and half the costs for their families. Another proposal called for creation of a universal healthcare system supported by tax revenues. Both failed, and within a year, Los Angeles County-USC Medical Center was threatening to close its ER.

The number of uninsured in Los Angeles County rose to 27% in 1992, higher than any major metropolis in the country. Ninety percent of the uninsured held jobs that offered no health insurance.

Growing numbers of uninsured residents, coupled with inefficiencies in the county health system, brought the county health department to the verge of another collapse by 1995. Projections showed a $1.2-billion budget shortfall that could have pulled the entire county into bankruptcy.

The Health Crisis Task Force delivered a proposal to save the county-run hospitals by closing 30 walk-in health centers and clinics, a move that private hospitals said would overwhelm them. “That is going to cause an overload and a meltdown like no one has ever anticipated in this community,” Jim Lott, executive vice president for the Hospital Assn. of Southern California, said at the time.

It took a visit from President Clinton to save the county health system. A $1-billion federal bailout package kept the promised “meltdown” from happening, but required a series of changes that would make the system more efficient by shifting patients from hospitals to clinics.

The crisis “is a national issue. It’s not a Los Angeles County issue,” Clinton said in September 1995 on the tarmac at Santa Monica Airport. “If it can be solved here with the restructuring, a lot of people all over America will be learning a lot from what you are doing.”

But some health officials were less optimistic, warning that even with the massive bailout, the crisis was not going away.

“It’s not a bailout,” said David Langness, then a spokesman for the Healthcare Assn. of Southern California and now with Tenet Healthcare Corp. “It’s just a finger in the dike.”

Two years later, the county was grappling with a $125-million budget shortfall, and public health officials said the uninsured were overwhelming the county’s trauma centers.

Despite the economic boom of the late 1990s, researchers were surprised to find that Los Angeles County’s ranks of uninsured continued to grow, reaching 2.4 million in 1999. As the federal bailout money dried up, emergency rooms were hardest hit, with 64 of the county’s 78 ERs in the red, loosing a total of $95 million in 1998-99, a report found.

New warnings of a pending “Chernobyl of healthcare” drew another federal bailout, this one worth $1.2 billion. Federal health officials warned that the five-year package would be the last.

Even with the second bailout, by 2002 the county was projecting a $688-million budget shortfall within three years, and county officials were proposing three scenarios to close the gap. The most drastic threatened to cut the number of public hospital beds in half, convert three of the six county hospitals into clinics and cut more than 8,000 jobs.

Spurred to action once again, county supervisors put a bold tax hike on the ballot that year, Measure B. It meant increasing property taxes by an average of $42 per parcel to raise money needed to save the county trauma system. Critics called it a Band-Aid to cure a serious cancer. But advertisements for the measure, paid for by the unions that faced the steepest job cuts, struck a chord, showing feverish paramedics driving around the city looking for a hospital with open beds.

Measure B was approved by 73% of the voters, and contributes $150 million a year to county and private trauma and emergency centers.

Also in 2002, county officials requested a third federal bailout of $1.4 billion, but officials in the Bush administration were unimpressed by the county’s restructuring efforts. In 2003 they offered only $150 million over two years. Nevertheless, coupled with the closure of 16 community health clinics, county officials declared optimistically the money was “effectively ending the health department’s immediate funding crisis.”

But later in the year, the county was forced to restrict the number of uninsured transfers they could accept from private hospitals. Though that has allowed health services to balance the budget, and even run a small surplus, officials say it won’t last long.

“The health department is going to face another deficit when the federal money runs out in 2008,” Meyer said.

Meanwhile, the private hospitals, suddenly unable to transfer large numbers of uninsured patients to the county system, are feeling the pinch, facing growing losses in their emergency rooms. The ripple effect triggered by the uninsured is back, only now it is threatening private hospitals in the county system.

Robert Fuller, executive vice president of Downey Regional Medical Center, one of the private hospitals considering downgrading its emergency room, said another bailout would probably be necessary.

Otherwise, he said, “this is going to be bigger than the electricity crisis.”