Once-Powerful Force Expires : Health Planning Unit to Go Out of Business

The Orange County Health Planning Council, once a powerful force in determining which hospitals could expand and which could purchase expensive new equipment, will close its doors after 15 years Tuesday.

The council, which saw its power and responsibilities fizzle in recent years as government deregulated health care, runs out of federal and state funds on Sept. 30, said Terri L. Jacobi, interim executive director.

Federal legislation authorizing health planning councils expired four years ago and has been kept alive since by annual resolutions in Congress, but this year all efforts to renew the legislation failed, Jacobi said.

The Orange County council dates back to April 1, 1971. It was set up under state and federal law and was composed of representatives of the public, physicians’ groups, hospitals, government, insurance companies and other businesses. It was charged with assessing the county’s health-care needs and planning for the future to control burgeoning costs.

In the early 1970s there was a surge in the construction of hospitals, which at the time did not fall under the authority of the council.

Beginning in 1976, the council wielded power by issuing--or denying--”certificates of need,” documents required to build or expand a hospital or to add expensive, patient-luring equipment. Certificates of need were required by state law and were designed to hold down health-care costs by preventing communities from building more expensive facilities than needed.

In its heyday, the council was a highly controversial panel headed by an even more controversial director, Stanley Matek, who was critical of the health-care industry for “overbedding” the county with excessive hospital facilities.

One of the panel’s last major decisions was in 1983 to approve a community group’s plan to construct a hospital in Irvine, instead of endorsing UC Irvine’s plan to construct one on campus. Since then, UCI has reached an affiliation agreement with American Medical International, which will break ground next month on the $80-million, 177-bed Irvine Medical Center in the City of Irvine.

Two years ago, as government regulation of the health-care industry was geared down, the certificate of need was dropped except for major projects, such as new hospital construction, Jacobi said. The argument was, Jacobi said, that competition in the medical marketplace, coupled with cost controls by insurance companies and federal and state medical programs, would keep consumers’ costs down.

Data on Beds

Jacobi said Orange County is still considered to have far more hospital beds than it needs. According to the council’s data, there are 5,267 medical-surgical beds in hospitals here, when the county currently needs 3,816.

In recent years, the council has been a resource for demographic and economic data on health care.

Under its current $430,000 contract with the federal government, the council has assisted senior citizens with Medicare difficulties, established a task force on chemical abuse and produced a booklet on childhood immunizations and a handbook listing the various services and capabilities of the county’s hospitals.

The council also had a $55,000 state contract, which expired June 30 but was extended for three months. Among the projects financed by the state was an analysis of the county’s future health care needs, Jacobi said.

In addition, the council has co-sponsored with St. Joseph Health System a project called California Health Decisions, which brings the public and medical and business communities together to discuss ethical issues in health care.

Without the council, the county no longer will have “a bipartisan agency putting together data and showing it in a bipartisan way,” Jacobi said. “We don’t refer people to one hospital over another. We give them the tools to evaluate for themselves the health care services in the county. So what we’ve tried to do is educate the consumers so they can be more informed, so that their decisions are based on facts.”

Adversaries of Council

Dr. Michael T. Kennedy, president of the Orange County Medical Assn., acknowledged that physicians initially were adversaries of the council. Because of that early friction, “not too many doctors will be sorry to see them go,” he said.

He regrets there was not more cooperation between the medical community and the council in the beginning, he said. Doctors--not used to being regulated--got off to a bad start with the council, which reflected the leanings of Gov. Edmund G. Brown Jr. and had a “provider- (doctor and hospital) bashing attitude,” he said.

Kennedy said he could understand the motive in setting up the panels because “health care costs were going through the roof, and the public felt they had little control.”

Still, the actions of the council and of the state, in setting up the authorizing legislation, “made things worse, not better,” he said.

Because the state law required certificates of need for any new projects that began construction after 1976, “there were hospitals, when that law passed, that built (a total of) 500 beds to get in under the law,” Kennedy said. “If there had never been that act, many of those beds never would have been built.”

But, in fairness, he said, the doctors were partly responsible for the ill feelings. “Doctors were hostile to people telling them what to do. There was fire on both sides,” he said.

Today, with government and insurance companies pressuring doctors to restrict health care for economic reasons, “the public needs to have a group on its side not to control costs but to prevent under-utilization” of hospitals, Kennedy said. With the council gone, the public will have to find another group to be its watchdog, he said.