County Avoids Health-Care Debacle -- For Now

Although a wave of hospital and clinic closures, a voter-approved property tax and an infusion of federal dollars have spared the county’s health system from an immediate meltdown, multimillion-dollar deficits could return within four years without significant changes to the system, according to an update provided Tuesday to the Los Angeles County Board of Supervisors.

The county’s Department of Health Services, which in June predicted a deficit of $709 million within three years, should instead have a year-end surplus of $34.4 million in 2005-06, according to the report by Thomas Garthwaite, the department’s director.

“In a nutshell, we’re better off than we used to be,” Garthwaite said.

The county was able to resuscitate the health system through a combination of service cuts and revenue increases, closing 15 health clinics and moving to shut down two hospitals. In November, voters approved Measure B, a property tax to raise money for trauma hospitals, and the county received $150 million in federal money in February.

But those measures will keep the system solvent only through 2005-06. Although the property tax is permanent, providing $140 million annually, the county’s federal aid package is guaranteed only through 2004-05 and must then be renegotiated.

Projections in Garthwaite’s latest report show that the department’s year-end fund balance will nosedive again in 2005-06, reaching a deficit of at least $265 million by the end of the next fiscal year.

Without changes that county officials say are necessary to offset an ongoing structural deficit of about $200 million annually, Supervisor Yvonne Brathwaite Burke said, the department will find itself back on the brink.

“We’ll have to face this issue again,” Burke said, “We either find additional revenue or face additional reductions.”

The county’s quest for long-term stability includes seeking a change in state law that would allow the county to garner more federal funds for outpatient coverage. Another proposal would amend the state’s Medi-Cal plan to provide matching federal funds for some of the money raised by Measure B.

The board also received an update Tuesday on the status of negotiations to convert Rancho Los Amigos National Rehabilitation Center, one of the hospitals scheduled for closure, into a private nonprofit hospital.

A report by a consultant studying the plan said that converting Rancho into a new nonprofit is not feasible, and that having an existing nonprofit hospital or hospital system take it over would be speedier and would cost less.

If a nonprofit took over Rancho, the county would need to come up with about $18 million for a transition that would last up to a year, according to the report.