OLIVE VIEW : Now Comes the Hard Part: Paying the Bills

Olive View is back.

Fifteen years after the Sylmar earthquake destroyed the county hospital in the northeastern San Fernando Valley, a new Olive View Medical Center has risen on the same site. It is the last major institution to recover from the earthquake of 1971.

The new hospital, dedicated Saturday, is expected to open in late April. When fully operational, it will return a full-fledged county hospital to the Valley.

In a three-day series that begins today, The Times examines Olive View’s re-emergence from the rubble of the quake. The series also assesses what the opening of the huge concrete and steel structure will mean to Valley residents.

Olive View Medical Center, rebuilt at last after it was destroyed in the Feb. 9, 1971, earthquake, was welcomed back to Sylmar Saturday amid uncertainty over its future funding.

But that didn’t dampen Saturday’s festivities, as nearly 1,200 people gathered on the same grounds as the former hospital to celebrate the long-awaited completion of the $120-million, six-story glass and steel building set against the San Gabriel Mountains.

A beaming Los Angeles County Supervisor Mike Antonovich, who for the last six years has steered the project through stormy political waters, told a group of well-wishers: “It’s taken a lot of hard work, a lot of time. But the baby has been delivered.”

Antonovich was among a dozen local politicians who praised the efforts that resulted in the rebuilding of the San Fernando Valley’s first full-fledged county hospital. The new 350-bed hospital will replace Mid-Valley Hospital in Van Nuys, an aging 123-bed facility bought by the county for temporary use after the 1971 earthquake.

Forced at the last minute into the hospital’s huge warehouse because of blustery weather, the crowd included hospital employees, local residents and equestrians who rode their horses to the event. During a 90-minute ceremony, they were read a letter from President Reagan, who said the dedication was an “especially moving occasion for me” because his mother, Nelle Wilson Reagan, worked as a volunteer in the early days of Olive View when it was a tuberculosis hospital.

Funding Problem

With the celebration now behind them, supervisors will have to decide how they are going to fund Olive View’s costly operations in light of a projected $250-million deficit in the county’s budget for the next two years.

There is enough money to open the medical center late next month and offer the same level of services currently provided at Mid-Valley Hospital.

But Olive View Administrator Douglas Bagley said the budget shortfall threatens to leave the new 506,690-square-foot facility only about half-used.

“What you might see is that growth would be delayed,” Bagley said. “The question is: ‘Will it be slowed to none at all the first year?’ ”

Besides taking over Mid-Valley patients, Olive View will serve patients who have been forced to travel to County-USC Medical Center in East Los Angeles because of overcrowding and the unavailability of services at Mid-Valley.

Eventually, Olive View is to handle 300,000 patient visits a year--about 2 1/2 times the number at Mid-Valley, which will close as a hospital once Olive View opens. This will cost the county about $118 million a year, nearly double what it now costs to run Mid-Valley.

When Olive View opens in late April, it will, however, operate at only a slightly higher level than Mid-Valley because of a plan to phase-in the new services over two years. An exact date has not been set for the opening because of uncertainty about when government officials will complete inspections.

Unless additional money is found, supervisors will have to cut existing county programs to come up with the additional money needed to fund Olive View, delay plans to add services at the new hospital or do both, county budget officials said.

Politically, it means that supervisors who supported Olive View’s construction may feel differently about funding the hospital’s operations, knowing the decision could take away money for services in their districts.

“Some of my good colleagues who supported the reconstruction should now expect to have declining resources spread even thinner to operate this facility,” said Supervisor Pete Schabarum, who opposed rebuilding Olive View because of the cost.

Awaiting Recommendations

Schabarum and Antonovich’s other three colleagues on the board said they are waiting for county Administrative Officer James C. Hankla’s budget recommendations later this month before committing themselves to a specific level of funding for the new hospital.

The budget for 1986-87 will be adopted this summer.

“There is no point in building it if you’re not going to operate it,” said Supervisor Deane Dana, a conservative who also is looking for money to run a new health center in his own district in Long Beach.

Antonovich predicted money would be found not only to start up Olive View but to quickly expand services there. He said some of the money could come from better collection policies for patients treated at public hospitals or from revisions in federal immigration laws. Many of the patients who use county hospitals are illegal aliens.

Three years ago, county Chief Administrative Officer Harry L. Hufford warned supervisors they would face a problem of funding the operations of the hospital if they built it.

But the board decided it could help pay for Olive View’s operations by reducing services at County-USC Medical Center, which would no longer be called upon to serve large numbers of Valley patients. The board also planned to lease or sell Mid-Valley and unused portions of the 535-acre Olive View site for private development.

Supervisors have since retreated from some of these ideas.

They are now considering converting Mid-Valley to other county uses, such as housing for abused and neglected children. The board, at Antonovich’s urging, has delayed selling surplus Olive View land because of community opposition to various plans for its use. The plans have included a giant water slide.

Bagley said supervisors also may retreat from the idea of cutting back service at County-USC. Despite the loss of a large number of Valley patients to Olive View, County-USC has continued to receive an increasing number of patients from other areas, he said.

The impending battle for funds to operate the hospital is typical of the problems faced by county officials in their efforts to rebuild Olive View.

For 15 years, the reconstruction has been hampered by a bitter dispute between the county and federal government over how much each should pay for it, by the passage of Proposition 13, and by a last-minute lobbying effort by private hospitals to kill the project.

In the year following the quake, there was never any question about rebuilding Olive View.

Supervisors were unanimous in their decision to have a new public hospital, opting for the original location because of the cost of acquiring another one. Studies showed the Sylmar site was safe, providing the new hospital would be built to the higher quake safety standards adopted after 1971.

The decision was made easier by the assumption that the federal government would pay the full cost of replacing the facility, as it was required to do under the law.

But when the county began drawing up plans for the new hospital in 1974, the federal Disaster Assistance Administration balked at paying the full cost.

The government concluded that even though the new hospital would have only 600 beds, contrasted with the previous hospital’s 888 beds, the new facility would serve more patients (mostly outpatients), so would actually be larger than the destroyed one.

Under federal law, the disaster administration was required to pay the full cost of rebuilding earthquake-damaged facilities, but only if comparable in size. Thus, the federal agency offered to fund only $35 million of the estimated $49 million for construction.

(The county decided to build a 600-bed facility because of a general trend away from hospitalizing patients and an increase in outpatients. It later scaled back the number to 350 because of financial constraints.)

“We were stunned,” Bagley said. “Up to that point, the county was expecting the federal government to pay the full cost of rebuilding Olive View.”

In 1977, despite the dispute, supervisors decided to proceed with the hospital’s construction.

Two-Phase Plan

The county planned to build the hospital, by then estimated to cost $75 million, in two phases. The reinforced concrete foundation and steel frame would be built first with $9 million in federal funds. The far more expensive completion work would be financed by a bond.

Construction began in August, 1977, with the county preparing to sell bonds in late 1978 or early 1979.

Then came Proposition 13.

After California voters overwhelmingly approved the tax-cutting initiative in June, 1978, panicky financial institutions stripped the county of its bond rating. Supervisors ordered a halt to further work on Olive View.

The following spring, the county’s credit rating was restored after the Legislature approved a Proposition 13 bail-out.

In the meantime, the steel frame for the hospital rusted, and the grounds became overgrown with weeds.

The barren site proved a tempting political issue. Antonovich, for example, as challenger to then-Supervisor Baxter Ward, blamed the incumbent for failing to get his fellow board members to get the project moving.

Unlikely Role for Conservative

Politically conservative, Antonovich was an unlikely Olive View supporter, since he is opposed to most social programs for the poor and favors contracting out government services to private enterprise.

Olive View’s critics, including Antonovich’s conservative colleague Schabarum, questioned whether the county should be committing itself to new and expensive health projects while cutting existing health programs. In fact, Antonovich, while advocating the rebuilding of Olive View in his district, joined the board’s conservative majority in cutting health programs that serve the inner city and its many poor residents.

Antonovich, however, contended that Olive View’s rebuilding was an issue of equity.

Once Antonovich took his place on the board, he faced political pressures from a consortium of private Valley hospitals. Citing a surplus of hospital beds in the Valley, the hospitals wanted the county to contract with them to treat the poor, rather than complete Olive View.

Although Antonovich favored private contracting in nearly all other areas of county government, he was not prepared to give up on Olive View. He appointed a citizens’ committee to study the matter. Not surprisingly, the committee recommended that the county go ahead.

Federal Ultimatum

The recommendation was partly based on an ultimatum from the federal government. It told the county to return the $16.1 million in disaster aid already spent on the project if it did not finish Olive View.

The committee rejected contracting to private hospitals, challenging claims that those institutions could offer cost-savings. Concern also was expressed that indigent patients would receive second-class care from private hospitals, recalled Dr. Stanley Korenman, associate dean of the UCLA School of Medicine, who served on the committee.

With the committee’s endorsement, Antonovich needed to get the votes of liberal supervisors Ed Edelman and Kenneth Hahn to move ahead with the project.

It took a strange political deal--unrelated to the merits of rebuilding Olive View--to do that.

Edelman and Hahn were seeking board support for a resolution asking the state Legislature to give counties the power to raise “sin taxes” on alcohol and tobacco to soften the blow of budget cuts to health programs in their districts.

Antonovich had always opposed further tax increases. But he agreed to support the measure. In return, Edelman and Hahn, who, in all other recent votes had opposed Olive View’s rebuilding, supported the project.

Olive View was back on the road to completion.

CHRONOLOGY

Oct. 27, 1920--Olive View Sanatorium opens as a tuberculosis treatment hospital with about 150 cottages spread over 589 acres in the San Gabriel foothills. Housing 1,500 patients, it is the largest TB center west of the Mississippi River at a time when TB cures consist mostly of liberal doses of fresh country air.

Nov. 12, 1963--County supervisors vote to build an 888-bed Olive View Medical Center on the site of the sanitarium, which has gradually evolved into a general hospital following advances in drug therapy to treat TB.

Jan. 4, 1971--Dedication ceremonies are held for the new $23-million Olive View Medical Center.

Feb. 9, 1971--Olive View Medical Center is irreparably damaged in an earthquake measuring 6.6 on the Richter scale. Three patients and a hospital worker die after the main part of the six-story building shifts on its foundation more than two feet. The first floor of a separate two-story mental health center collapses, dropping the second floor to ground level.

July 14, 1972--Supervisors vote to replace the 888-bed Olive View with a $39.5-million, 600-bed hospital, but funds are delayed in a dispute over who should pay for it.

June 14, 1977--Despite a continuing dispute with the federal government over money, supervisors award the $9.2-million construction contract for the scaled-down 350-bed hospital’s foundation and shell. Construction begins two months later.

June 6, 1978--Voters approve the tax-cutting Proposition 13. In a panic, financial institutions strip the county of its bond ratings, preventing the county from selling bonds to finance the hospital’s completion.

March 15, 1983--The county’s bond rating restored, the Board of Supervisors votes to resume construction of the hospital, now expected to cost $120 million.

March 15, 1986--The new Olive View Medical Center is dedicated.