Hospital of Last Resort in S.D. Is Fighting to Save Its Own Life

The man from Room 616 is in the corridor showing off his legs. Lifting his hospital pajamas, he reveals ankles the color of beets. He laughs. Those gams, stained and swollen by a life of drink, today will carry him back out onto the streets.

The character in Room 607 had been mixing heroin and cocaine. A five-bag-a-day man, he was shooting it into his left calf. He turned up in the emergency room shivering and sweating and unable to walk, his lymph system sick with infection.

In 509, the steel bed rail has been wrapped against the patient’s seizures. In 618, a woman bloated with cirrhosis of the liver shifts painfully under the sheets. From 603 comes the voice of an 86-year-old man telling in Spanish what it is to be lonely and leukemic.

But the man of the hour lies folded under a bedspread the color of lemons. His hair is long, his eyes glitter, he breathes through a hole in his neck. At 42, he has neither voice nor teeth. His speech is a smiling, gurgling, flapping of gums.

Back From the Dead

He is back from the dead, the way hospital workers tell it--found by paramedics in February in an alcohol-induced coma. Encrusted in feces, he was brought to San Diego Physicians & Surgeons Hospital. There he lay in intensive care, for months.

His life is something of a mystery even now. Social workers who contacted his neighbors say the neighbors know nothing about the man. His hospital computer printout tersely declares under the heading Nearest Relative: “Patient says is none.”

“It’s a miracle that this guy’s alive,” says the hospital social worker.

San Diego Physicians & Surgeons Hospital is, for many, a place of last resort--a place you go, or end up, when life has gotten out of hand. It has become a hospital for the homeless, the undocumented, the transient, the broken, and the poor.

Crouched on a hillside in Logan Heights, where Southeast San Diego meets Barrio Logan and the two shoulder up to downtown, the 156-bed facility presides over a ramshackle neighborhood of sometimes-rundown bungalows cut off from the rest of the city by freeways.

Its bailiwick extends to the welfare hotels of downtown, the homeless shelters, the detoxification programs and some of the city’s drug rehabilitation houses. Down the hill stands the city’s most infamous welfare office, a former Safeway market at 25th and Imperial.

Few Are Insured

A mere 6% of the hospital’s patients have private health insurance; 87% belong to federal, state and county programs for the elderly, poor and indigent. Seven percent have no funding at all, many of them Mexicans who have entered the country illegally.

Yet 70% of the acute patients come in the most expensive way--through the emergency room, in a state of advanced disease or decay. For reasons of economics, education and distribution of doctors, many seek medical care, or are forced into it, long after it’s too late.

As a result, the hospital wrestles with chronic debt. For five years, annual losses have hovered around $1 million. To generate revenue, there are new programs for the elderly, the impotent, the incarcerated, but none has brought the hospital into the black.

So on Tuesday, hospital officials intend to make a pilgrimage to Sacramento for what they say is a last-ditch plea for more money under the Medi-Cal program. Without a large increase, officials say, they must seriously consider closing San Diego’s only ghetto hospital.

“The fact that we’ve hung on with losses well in excess of $1 million a year indicates we’re looking at this from more than a financial perspective,” said Thomas Mackey of National Medical Enterprises, the nationwide health-care chain that has run Physicians & Surgeons since 1982.

“We do have a desire to serve the community,” said Mackey, who is vice president of operations for the company’s western division. “But you cannot do it forever. That’s the reality. We’ve got to correct this situation over the next year if we’re going to continue.”

At the crux of the problem is the hospital’s Medi-Cal contract, under which the state pays the hospital a negotiated daily rate to care for Medi-Cal patients. Under state regulations, that rate is confidential. But hospital officials say unanimously it falls terribly short.

Last year alone, the hospital lost $840,000 on Medi-Cal inpatients and $225,000 on Medi-Cal outpatients. Officials say the rate works out to 28% less than the hospital’s costs for taking care of the average Medi-Cal patient.

The reasons behind the discrepancy are less clear-cut.

Some hospital staffers trace it back to initial Medi-Cal contract negotiations in the early 1980s, when San Diego was one of the first areas to enter talks. With few guidelines, and eager for a contract, some assert, the hospital settled for a rate that proved impossibly low.

Others say the Medi-Cal program was never intended to cover full costs: It pays the “marginal costs” of the small fraction of Medi-Cal patients in the average hospital. Wealthier patients carry the bulk of hospital costs through private insurance.

Few Insured Patients

But that equation falls apart in a hospital like Physicians & Surgeons--a small hospital with a tiny fraction of privately insured patients. Neither Medicare nor the private insurers produce a surplus sufficient to cover what the hospital loses on Medi-Cal.

“It’s like a grocery store putting coffee on sale for 50 cents less,” said Bob Duzan, the hospital’s chief financial officer. “It’s a loss leader. But how long is that store going to be able to exist if 50% or 70% of their items are loss leaders?”

So hospital officials intend to ask the state Medical Assistance Commission for some consideration of their “disproportionate share” of poor and indigent patients. Without more favorable contract terms, they say, the hospital is unlikely ever to break even.

After all, says Dr. Richard Halbert, the hospital’s chief of staff-elect: “We take care of a patient population that nobody wants to take care of.”

Chris von der Ahe sits in a glass-enclosed office near the emergency room, sorting through the chaos of patients’ lives. Her job is to find out if they are eligible for state and county funding: She is the official spelunker in the gloomy caves of the bureaucracy.

“You get an undocumented alien who’s in a coma,” she explains to a visitor, laying out her case study like a puzzle to be solved. “You’ve got a major medical problem, and you’ve got a major funding problem.

“County Medical Services won’t touch him because you have to be a resident. For Medi-Cal, he isn’t eligible because he’s single and between 21 and 64. Now, if he dies, there’s funding. Because he’s considered disabled and you sneak all the paper work through.”

Disabled? Von der Ahe is asked.

“That’s right, that’s the disability: He’s dead.”

But in one of the many paradoxes of the hospital, he’s even more trouble if he is saved.

“If he gets better, then he has to obligate himself for the bill,” she said. “Which is a joke, because he could have been here 100 days . . . and he may leave a $10,000 bill behind. He’s never going to pay that bill. So the hospital eats that bill.”

Last year, Physicians & Surgeons lost nearly $1.5 million. This year, the chief financial officer is shooting for $1 million. Next year, through a host of new programs aimed at generating revenue, he’s hoping to hold the loss to $400,000.

Doctors and administrators insist that the financial problems have not “jeopardized quality of care,” as they put it in health-care lingo. They say that there are no frills and no fat and that they work close to the bone but their patients receive adequate care.

But in quiet ways, the financial pinch exacts a toll.

Doctors say it is increasingly difficult to convince the company to buy new equipment. For example, the CT scanner is outdated and inadequate for examining certain parts of the body. The hospital has not replaced it (but it plans soon to have access to a mobile scanner).

As a result, doctors say they have had to transfer patients to other hospitals for some scans, running a risk that their condition will worsen during transport. Dr. Rodney Hood, an internist on the hospital’s staff and governing board, said he has simply put patients permanently in other hospitals if they needed a high-resolution scan.

“Lots of times, there’s equipment that is available to us at a cheaper price but it isn’t the right equipment for our laboratory,” said Halbert, who runs the lab. “We sort of get funneled toward that. One of my major triumphs, though, was I was able to get a chemistry analyzer that’s more expensive. We’ve needed it for a year. It’s drained us. I mean, we’ve worked out the figures 50 times in 50 meetings.”

“You know, the victory’s rather hollow for us,” Halbert added. “Because we had to work so hard for it, it burned us out.”

Hood worries about the long-term effects:

“In the long run, that’s going to alienate the physician to the point where they’re going to say, ‘Hey, I don’t even want to be bothered. I won’t ask you for a new CT scanner. I won’t even ask you for this. I’ll just put my patients elsewhere.’ ”

‘Crisis Management’

There is an impression among many staff members that the hospital is understaffed, especially in light of the intensity of the work. Many staff members also believe salaries are low--a charge that the administration acknowledges may be true in certain areas.

“As I said, we feel that the quality of care has been maintained,” Halbert said. “But we feel the price has been high in terms of burnout. I see us walking this line: Periodically, different departments will have crises. It turns into sort of crisis management.”

Dr. David Slack, an anesthesiologist and the hospital’s chief of staff, said, “It’s a very wearing kind of environment. You know, medicine itself is difficult enough . . . without the fight, the constant fight, to just try to get enough things to provide safe medicine.

“That’s been our struggle in the face of all these monetary restrictions. To maintain a level of care, and a level that is morally all right.”

In the past year, turnover has been high. Among those who left were heads of nursing and the emergency room and an operating room supervisor. Many factors seem to have played a role, not the least of which were stress, frustration and job insecurity.

“There’s kind of like a cloud over this facility,” Hood said. “It’s like everybody knows it’s losing money; everybody knows that (the corporate owner) is saying we may pull out, everybody knows the state is not giving the hospital any more money. So people say, ‘Well, I like working here, it’s nice, but maybe I should start looking for work elsewhere.’ ”

“It’s just very difficult to staff (the emergency room) with the type of physician that you need to have there,” said Dr. Richard Stennes, a past president of the American College of Emergency Physicians who ran the emergency room until leaving in January. “You’ve got to be able to do just about anything, and perhaps do it alone until you can get help. And that may be sometimes difficult to come by.”

During Stennes’ tenure, the hospital became unable to recruit the full range of specialists required by law to be on emergency-room call. At other hospitals, specialists accept being on call in order to garner new patients, but Physicians & Surgeons’ patients have less allure.

To solve the problem, the hospital now must pay specialists to be on emergency-room call. Neither administrator Scott Rhine nor chief financial officer Duzan could recall ever hearing of a hospital that had to take such a step.

Physicians & Surgeons has taken other extraordinary measures, most of them aimed over the past five years at attracting more paying patients to make up for the deficit created by Medi-Cal and county-funded patients.

First, National Medical Enterprises--believing that, with investment, the hospital might eventually turn a profit--worked hard to upgrade the facility, equipment and staff to try to erase the poor image created under the hospital’s previous owner. The hospital, formerly Community Hospital, had closed in 1981 amid scandal and widespread criticism.

NME embarked on an aggressive community relations program, geared to attracting patients and erasing suspicions that the hospital would close again. There were luncheons, seminars, workshops and advertising that hospital officials believe were effective.

Then, the staff set up programs for target groups, such as one program aimed at attracting the elderly with free services and discounts. There is now a program for male impotency and a referral service intended to attract people with military insurance.

A 14-bed chemical dependency unit was set up. Now, 31 beds are being added to the skilled nursing facility attached to the hospital. Those beds are expected to boost revenues because, administrators say, Medi-Cal pays a more favorable rate for such nursing home care.

Other revenue generators that have been considered include a possible neuropsychiatric facility. Finally, the hospital recently applied for and received a contract to care for the county’s adult custodial patients, such as inmates from the County Jail.

Troublesome Drawbacks

But several of those efforts--in particular, the last--are perceived by some as having troublesome drawbacks. Some fear that the hospital may inadvertently be moving further away from serving the Southeast San Diego community it was built to serve.

“They’re going to go away when they find out they’re getting all the junkies and ex-cons,” Dell Epps, a member of the hospital’s governing board, said of the county “custodial care” contract.

“That’s something I have had mixed feelings about,” said Micki Stockalper, the hospital’s spokeswoman. “I understand the necessity for those kinds of things. But after all, my job is public relations person, and it’s one more thing that I don’t need to have.”

Paradoxically, even the attempts to raise the number of patients proved somewhat self-defeating: More Medi-Cal cases multiplied the loss per patient. As Stockalper says, the hospital may be one of very few in which “It’s not necessarily a good thing to have volume.”

As for the chemical dependency unit, it cannot accept some of the hospital’s patients needing its services most because Medi-Cal does not pay for drug and alcohol treatment. So Medi-Cal patients with drug problems use the hall phones to line up programs that will accept them.

Meanwhile, the hospital has no obstetrics service (a service many hospitals now shun because of high expenses and liability). Some say that fact is understandable from the standpoint of economics but illogical in the context of community need.

“Southeast has an infant mortality rate of 19%,” said Dr. Richard Butcher, who is on the hospital staff and is president-elect of the San Diego County Medical Society. “It would behoove any facility in this community to have an obstetrics service.”

Whether Physicians & Surgeons still “serves the community” is a matter of some debate.

A study several years ago indicated that many people living in the area surrounding the hospital have private health insurance. But doctors and administrators say most of them appear to leave the community when it comes to finding medical care.

Part of that is because many belong to health-maintenance organizations and other plans that restrict them to certain facilities. But others appear to shun the hospital, as well as other local services, once they have the means to choose.

“I really don’t know how much we serve the community,” said Halbert, the pathologist. “Basically, we end up taking care of a lot of street people. That’s sort of serving the community, in a way. But not really.”

Yet that is no argument against the hospital’s survival, many contend. Administrator Rhine argues that the fact that some people in the community may be upwardly mobile is no reason to neglect those who are not.

“It’s sometimes harder for (the upwardly mobile) to go back, say, to driving a Volkswagen,” Rhine said. “And yet they went through a period of time where they felt like they were glad they had a Volkswagen. So should we cut out all Volkswagens now?”

What would be lost if San Diego Physicians & Surgeons were to close?

Mercy Hospital and UC San Diego Medical Center would receive an even greater share of the downtown homeless than they already receive. Caring for them there would be more expensive than at Physicians & Surgeons, Rhine said, and that expense would be felt by the county and state.

As for the patients, many would have to travel farther for medical care--and for many, transportation is already a problem. Doctors predict that would create yet another deterrent to timely medical help, exacerbating illness and raising costs.

“I think it would be a slap in the face to the community,” Hood said. “Would these people survive? Yeah, they survived without it before it was here. OK, so I can’t say these people aren’t going to survive.

“But I think it would add another hardship to the community. You’re making access to medical care even harder. I think it would add another burden to the folks in this area, on top of all the other burdens that they have.”

Adds Von der Ahe, from her emergency room post:

“You know, there but for the grace of God go I. It’s a thin line that separates us. You could break a leg, lose your job, run out of unemployment, and if you didn’t have a damn family that gave two hoots in hell about you, you’d be in the same place they are, knocking on the door saying, ‘Somebody, please help me.’ ”