Deficits Caused by Uninsured Cases Threaten Trauma Centers

Three years after three San Fernando Valley hospitals eagerly joined Los Angeles County’s new network of trauma centers, administrators say that a flood of uninsured trauma patients and a lack of beds at county hospitals--where such patients would normally be transferred--are creating large financial losses.

Because of those losses, two of the 21 participating hospitals, Hollywood Presbyterian Medical Center and Daniel Freeman Memorial Hospital, have dropped out of the network. Their departure is straining what had been recently hailed as an efficient system for providing speedy specialized care to victims of accidents or violence, administrators said.

Administrators at Holy Cross Hospital in Mission Hills said participation in the program is such a burden that the hospital may be forced to drop out if no new county or state funds are provided. Holy Cross entered the trauma network in spring 1984, along with Northridge Hospital Medical Center and St. Joseph Medical Center in Burbank.

Appeal for Funding

At a hearing last week before the Los Angeles County Board of Supervisors, called to examine what is widely acknowledged to be a crisis in the trauma-care system, Stuart Katz, vice president of ancillary services at Holy Cross, was among several hospital administrators who appealed for more funding for the system.

“We have had long, serious discussions about whether we can afford to maintain the trauma program,” Katz said in an interview. Hospital officials recently decided to keep the trauma center going at least through the beginning of the fiscal year starting in June, he said.

“If things don’t get any worse, we will probably continue through June, 1988,” Katz said. “Beyond that, I haven’t got the foggiest idea.”

About 100 hospitals in the county have emergency rooms, but only 15--now that Daniel Freeman and Hollywood Presbyterian have pulled out--are designated as trauma centers by the county Department of Health Services.

Trauma centers each serve a different “catchment area” to ensure that a seriously injured person anywhere in the area can get treatment within 20 minutes.

Treatment Within Minutes

At the trauma centers, specially trained surgeons and other personnel are available around the clock to treat grievously injured patients within a minute or two of their arrival at the emergency room.

Northridge Hospital took in 491 trauma patients last year, Holy Cross treated 525 and St. Joseph had 586 cases. According to administrators, Northridge’s trauma center lost $630,000 last year, Holy Cross $850,000 and St. Joseph more than $1 million.

The financial woes of the private hospitals in the network have resulted from the high percentage of trauma patients who have no medical insurance, Katz and other officials said.

That lack of insurance--or medical indigence, as hospitals call it--partially stems from the fact that a large number of trauma patients are victims of violence, or what is known in emergency rooms as the “Saturday night knife-and-gun club,” Katz said. Such victims are most often from poor communities, he said.

A trauma case usually begins with a radio call from paramedics, said Sherry Kleven, trauma coordinator at Northridge. The trauma team is alerted that a patient is being brought in. The team works to stop bleeding, raise blood pressure, restore breathing and bring other vital systems under control.

After the patient’s medical condition is stabilized, the hospital determines the patient’s financial condition.

Normally, if a patient has no insurance, he or she can be transferred to a county hospital, where the cost of care is absorbed by the public-health system. But cutbacks in the number of beds at county hospitals have frequently forced private hospitals to keep such patients and absorb the cost of their care.

“You have patients ready for transfer who are clearly the responsibility of the county at that point, and we sit here and collect nothing--absolutely nothing,” said Daniel Adams, administrator of Northridge Hospital. “Today we probably have three or four indigent patients waiting for transfer but the county has no room,” Adams said.

Last year, he said, more than a third of the trauma patients treated at Northridge were not insured.

When asked if the hospital is considering pulling out of the system, Adams said: “The county really needs to maintain a trauma system, but I don’t know what our threshold for pain is.”

Originally Seen as Lucrative

The attitude of hospitals toward trauma care has undergone a dramatic reversal in just a few years. When the trauma network was being created from 1982 to 1984, the three Valley hospitals competed heatedly for entry into the network. It was believed that trauma care could be lucrative because patients such as victims of car accidents or shootings often require many specialized services.

There was also a perception in the health-care industry that trauma centers would be a valuable marketing tool, increasing public confidence in a particular hospital, several administrators said. “If you’re recognized as a trauma center, there is great community appeal,” said James Sauer, administrator of St. Joseph Medical Center.

Half of Cases Uninsured

In retrospect, Katz said, “we were looking at the system through rose-colored glasses.” Not long after the trauma system started, Katz had estimated that the hospital would be reimbursed in 90% of all trauma cases. It has turned out that almost half of the trauma patients treated at Holy Cross are uninsured, he said.

As a result, the hospital is collecting payment on only about 55% of the charges it bills for trauma services, he said. Holy Cross’ trauma center thus loses 20 cents for every dollar charged, he said.

In his testimony before county supervisors, Katz recalled a particular case at Holy Cross that illustrates the hospitals’ predicament: On Oct. 12, 1984, Katz said, a young man riding his motorcycle along Van Nuys Boulevard on his way to work turned left in front of an oncoming car.

The resulting accident shattered two vertebrae in his neck. He was treated at the Holy Cross trauma center. His life was saved, but he was comatose and diagnosed as unlikely to recover. He was also found to be uninsured, Katz said.

Unsuccessful Transfer Attempts

For months the hospital tried without success to have the man transferred to a county nursing home or hospital. Finally, 626 days after he was admitted, the man died. Medi-Cal paid for about $200,000 of the man’s $1-million bill, leaving Holy Cross with a loss of $800,000.

In caring for uninsured patients, a private hospital not only absorbs unreimbursed charges as it seeks to have the patient transferred, it also loses a bed that would otherwise be available to insured patients, Katz said. Although Holy Cross’ intensive-care beds are filled with “county-responsible” patients, with little prospect of payment for their care, “we are also losing some of our paying patients,” Katz said.

There have been times when a backlog of stabilized trauma patients waiting for transfer to county facilities has filled the last of the hospital’s intensive-care beds, Katz said. In such a situation, staff physicians, for example, may be asked to postpone admission of patients waiting for elective surgery, Katz said.

Emergency Cases Redirected

Even emergency cases, such as a patient suffering a heart attack, may have to go elsewhere in this situation, he said. A staff physician may send the patient to a smaller hospital that can stabilize his heart but cannot provide follow-up services such as cardiac imaging systems that can detect specific problems within the heart, he said. The patient might then have to be transferred a second time.

In addition to losses from charges that were not reimbursed and occupied beds, trauma centers have created other unanticipated expenses, said Sauer of St. Joseph Medical Center.

For instance, he said, “After only a year, physicians in our program insisted that we provide malpractice insurance. That’s $160,000 right there.” The doctors had their own insurance, he said, but they did not want their private insurance rates to be raised by the high-risk cases that they treat when working for the trauma center.

Effect on Physicians

The drain caused by uninsured patients also affects the physicians who work on trauma cases, Sauer said. A surgeon, for example, who is called to treat a patient who has no insurance risks not getting paid. “When maybe 40% of what you bill is collectable, that’s not a very good ratio for people in private practice,” Sauer said.

According to Katz and other administrators, the financial difficulties of the hospitals in the trauma network have been compounded by a recent cut in the state’s Medi-Cal reimbursement rates and a decision last year by the Board of Supervisors to cut $4.5 million from a $5-million program that repays private hospitals for expenses incurred in giving emergency care to indigent patients.

At St. Joseph Medical Center, the program was never expected to make money, said Sauer. “We went in with the idea that we were not going to collect as we collect for all cases,” Sauer said. But no one anticipated that the trauma program would be such a money loser, he said.

The portion of trauma-care costs that are not reimbursed is about 15% higher than the hospital predicted, producing the annual loss of more than $1 million. Despite the deficit, Sauer said, it is unlikely that St. Joseph will pull out of the trauma network.

“We have an obligation to continue to serve the community as long as we can,” Sauer said. “I think there would be a systemwide shutdown before we would have to get out of the trauma program.”