Way to Go?

The University of Southern California has announced an expansion of its medical teaching facilities that would profoundly affect health care throughout Los Angeles County. It is not yet clear whether the possible advantages of the plan outweigh the potential disadvantages for health care in this region.

At the base of the plan is the determination of the university leadership to provide higher compensation for members of its medical school faculty by assuring them better access to private patients. Until now, USC’s medical school faculty, unlike that of virtually every other medical school in the nation, has been without its own hospital for private referrals. This enhancement of the professors’ income is essential to maintaining a high-quality faculty and a quality education program, the university argues.

Trustees of the university have agreed to turn over the project to a for-profit health-care corporation, National Medical Enterprises, that will construct the $100-million center--including a 275-bed hospital, a 75-room hotel, an ambulatory-care center, outpatient psychiatric facilities and up to 50 offices for faculty members to use in their private consulting work. Under the terms of the agreement, the medical school will have complete control over the medical operation, even though the corporation will own and manage the facilities, with 5 of the 11 seats on the board of directors reserved for the university, including 3 faculty members.

Evidently it is a highly attractive proposition for the university, assured of virtually everything that the faculty wants without any outlay of funds.

Questions nevertheless remain in terms of the broad public interest, for there are questions that go beyond the compensation for the faculty--however important that may be.

This would be the first time that a for-profit company had been contracted to build, own and manage a teaching hospital, although similar plans are being discussed in Chicago. Existing teaching hospitals in Louisville and Omaha were purchased and are now operated by for-profit companies, a third is now being purchased in Wichita, and the sale or lease of a fourth in Washington, D.C., will soon go to bid. At least two others are managed by for-profit companies. But in Phoenix and Boston such sales have been reversed amid controversy.

The controversy over the quality and efficiency of for-profit and nonprofit hospitals may be academic. Much of the recent growth of for-profit hospitals has been fueled by the reduction of public funds available for health-service expansion and the reluctance of communities to launch major fund drives. For-profit companies now own and manage hospitals with about 15% of acute-care beds in the nation.

There is also controversy over the effect of the proposed plan on the 1,200-bed Los Angeles County-USC Medical Center, now the core of training for USC medical students and the primary source of health care of the poor. University officials are confident that construction of a new facility nearby would enhance that care because doctors would spend less time commuting to the affiliated hospitals where they now see patients on referral and augment their base teaching salaries. And the officials argue that training would be enhanced as students increase their opportunity to see more affluent patients, who likely will constitute most of their future practices, in addition to the patients at the County Medical Center. But if that is the case it raises serious questions for the special teaching and research programs that have been established at the affiliated hospitals, including the extensive clinic and research program at the Orthopaedic Hospital and the fertility, infertility and neurological research programs at the Hospital of the Good Samaritan.

Officials of some of these affiliated hospitals do not yet know enough about the plan to be able to judge its effect. That in itself is a matter of concern, for it indicates how little community consultation there has been in working out the plan. Good Samaritan looked favorably, for example, on a program for major expansion of the consulting work by the university faculty, but this was never developed as an alternative to building a new hospital because of university insistence on total control of the medical staff. That insistence on total control contrasts with many mixed working situations at teaching hospitals in other cities.

There is only one official obstacle to the program, and that is in obtaining a certificate of need from the Office of Statewide Health Planning and Development. The proposal seems to satisfy the criteria regarding economic viability and financial feasibility, given the medical corporation’s commitment. But it may be challenged in terms of the criteria of demonstrated need, the possibility of less costly alternatives and community support.

Los Angeles County has a large surplus of hospital beds that will be 9,411 in excess of need by 1990, according to the state. Major hospitals such as Good Samaritan are operating at less than 60% occupancy. White Memorial, within walking distance of the USC campus but with a teaching affiliation with the more distant Loma Linda University Medical School, is at 50% occupancy. USC officials believe that their project will not affect more than 2% of the admissions of other hospitals, but at least one of the currently affiliated hospitals receives 5% of its patients through USC research and teaching programs.

USC and corporation officials insist that there is “no choice.” There is no other source of money to pay for a new medical center. That may very well be. But before they proceed further they owe to the community, and to the other providers of health care, a clearer picture of what this will mean to total health service in the region--including care of the indigent and poor, care within existing nonprofit hospitals with excellent records of efficient and effective management and high-quality health care, and the cost of care. Empty beds increase the cost for everyone.

Only when more details are known will the community be able to determine if this is the best way to assure higher compensation to the USC medical school faculty while assuring the quality of health care for all in the region.