County Votes to Put Doctors on USC Payroll

In a move decried by union leaders as illegal and wasteful, the Los Angeles County Board of Supervisors on Tuesday approved a plan to eventually place all new physicians assigned to the county’s largest hospital on the USC School of Medicine’s payroll.

Following the 3-1 vote to begin the new pay procedure June 1, leaders of the 1,400-member Joint Council of Interns and Residents vowed to challenge the action in court, possibly as early as today. Union leaders charged that the action threatened to silence an effective voice for indigent patient care.

Echoing the union complaints, Supervisor Ed Edelman, the board’s lone opponent of the employee shift, said, “We’re turning over the very heart and soul (of the county’s health-care system) to USC.”

About 853 interns and residents staff the County-USC Medical Center, where they are county employees under the direction of USC School of Medicine faculty. Unless halted by the courts, about 217 replacement residents and interns will become USC employees June 1, said Dennis Kazarian, the union’s executive director.

Kazarian said that over the next three years, the union will be in danger of losing most of its membership because the joint council fears it may not be successful if it attempts to organize the young doctors at USC.

Edelman also said the new arrangement, packaged as a pilot project of up to four years, will add to county costs during a time when as much as $55 million in health cuts are threatened due to a limited state budget. He said such a “cost-ineffective” move will also violate a 1978 voter-approved Charter amendment allowing contracting out of government work only if it does not result in added costs.

Schabarum Expects Savings

Though there is no certain saving for the county by transferring doctor pay to USC, Supervisor Pete Schabarum--the strongest backer of the action--predicted that the plan will ultimately result in a cost-saving and greater accountability for health services rendered.

Over the years the Joint Council of Interns and Residents has been one of the most vocal advocates of indigent patient care in the county. In recent years, union members have been particularly critical of what they have viewed as attempts by the board’s conservative majority to trim county health services in favor of law enforcement and fire protection.

The transfer of the medical center’s new interns and residents from the county payroll to USC’s will not affect those union members at the two other large county teaching hospitals, Martin Luther King Jr./Drew Medical Center and Harbor-UCLA Medical Center. But Kazarian said the supervisors could use this pilot program to eventually turn all county-funded physician care over to private providers.

USC reluctantly agreed to accept the transfer of the interns and residents as part of a three-party agreement reached last November for the construction of a specialty care hospital near the County/USC Medical Center. Under that agreement, National Medical Enterprises will build and manage the new 283-bed facility on county-owned land that was sold to USC. USC’s physician faculty, meanwhile, has agreed to continue staffing and teaching at the medical center once the $100-million hospital is built.

Proof of Savings Demanded

Edelman, invoking the 1978 Charter amendment, has insisted that any transfer of the interns and residents be backed up by proof that such a move will not add to county costs. In opposing Tuesday’s move, he said county projections already show that the employee shift will result in a cost of nearly $450,000 a year because the county has agreed to pick up the Social Security benefits for the new USC interns and residents.

But county Health Director Robert Gates told the board that ultimately the employee shift will save county taxpayers money. He explained that under current conditions, his department has been unable to adequately account for all the services rendered by the county hospital physician staff. His lack of accurate bookkeeping has resulted in the loss of $8 million to $10 million a year in federal or state reimbursements, he said.

Under the shift, Gates said, the county will pay USC only for services performed by the interns and residents so there will be incentive for USC to maintain accurate billing.

The agreement approved Tuesday permits the return of the interns and residents to the county payroll if it is determined that the payroll shift has not been cost-effective.