Prognosis Is Poor for Survival of Debt-Ridden Hospital : Inner-City Physicians & Surgeons Suffers From the Treating of Too Many Non-Paying Patients

The 24-year-old mother knows her young daughter has been feverish and complaining about her ear hurting. But two part-time secretarial jobs bring the struggling mother little income and no medical insurance. She decides not to take the girl to a doctor. She hopes the ailment will get better by itself.

But it doesn’t. At 2 a.m., the girl wakes up, screaming with pain from an ear infection and mother and daughter head for the nearest hospital emergency room.

Variations on such scenes, played thousands of times every year, are the human side of a bottom-line problem in San Diego County: People get sick. They seek treatment the only way they can. And no one pays the bills.

Nowhere has this health-care problem hit home so dramatically as in Southeast, served by San Diego Physicians & Surgeons Hospital which is limping toward a sale or closing forced by the many non-paying patients.

Financial pressures on hospitals are so widespread, if not always as urgent as at Physicians & Surgeons, that some people are beginning to wonder if San Diego County should once again operate a hospital.

The Physicians & Surgeons situation “raises the really underlying question of whether we should go back to having county hospitals,” said Stephen J. Williams, director of the Health Policy Center at Scripps Clinic and San Diego State University. “With all their problems, they certainly provided the service.”

A county hospital would represent a much-needed “safety net” for people who over 10 years have seen their access to health care repeatedly cut back, said Kim Warma, director of the Regional Perinatal System, which monitors prenatal care given poor women in San Diego and Imperial counties.

“I recognize the county’s money problems, but there needs to be someplace we can send poor and indigent patients, and I don’t think that that translates into second-class care,” Warma said.

However, in a report issued last week, Dr. J. William Cox, county health director, ruled out buying Physicians & Surgeons and turning it into the public hospital, something the county hasn’t had since 1968. Even at a bargain-basement price, the county just doesn’t have enough money to properly run a hospital for the poor, the report said.

Hospital administrators say that means government has decided that it is better to subsidize public health care with private hospitals’ dollars than to pay the whole tab with public money.

Although Cox acknowledges that that is how the system now works, he said his objections to a county hospital are both practical and philosophical.

“The generally accepted thesis is that it is best to find a way to mainstream eligible persons into the private sector,” Cox said. “Hospital construction is extremely expensive, hospital operations are expensive, and, without a source of some revenue to offset the cost of operations, you’d find county hospitals in even a worse plight than private-sector hospitals.”

Indeed, Los Angeles County’s public hospitals have been beset in recent months by a series of budget problems caused by uninsured or under-compensated patients.

Even San Francisco General Hospital, a city-county hospital considered one of the best-financed in the state, in the last few years has had to put off capital expenditures because of worsening budget constraints, said Phillip Sowa, executive director.

Also, San Diego County is too big to have just one county hospital, Cox said. “When you have one centrally located hospital with a 4,300-square-mile county, you really don’t facilitate emergency care. You put up all manner of transportation barriers to those in the remote areas.”

Michael Stringer, director of UCSD Medical Center in Hillcrest, recalls when it was converted from a county hospital to a UCSD teaching hospital in the late 1960s.

Underwritten by the heady days of massive federal spending for then-President Lyndon Johnson’s Great Society social programs, California had committed itself to “mainstreaming” welfare recipients and the working poor into the private health-care system.

“The county hospital census had really bottomed out, because those eligible for Medicare and Medi-Cal were seeking care at other providers,” Stringer said. “UCSD had just started its first medical school class and needed a clinical facility for graduate medical education--and it was clear that there was a possibility for a serendipitous relationship between the university and the county.

“Now, 20-plus years have gone by and questions are being raised about whether there should be a county hospital in San Diego. It is sort of ironic,” Stringer added.

But, two decades ago, as the need for a county hospital waned, UCSD and other private health-care providers could take on publicly funded patients without hurting their revenue base. Federal-state welfare programs were more generous, and the hospitals and doctors were reimbursed virtually fully.

Cost-containment and tax-limitation measures of the ‘70s and ‘80s changed all that, though. The system metamorphosed from one that promoted access to health care to one that limited it.

Shrinking Percentage

Medicare, for instance, paid hospitals based not on how much care was provided, but on how much care should be given on average to a patient with a specific condition. Likewise, indigent health care was reimbursed at a steadily shrinking percentage of full cost.

Then, in 1983, California backed away from universal health-care coverage for the working poor, who are known as MIAs, for “medically indigent adults.” After cutting allocations 30%, the state dumped the program on the counties to administer, and has cut its budget regularly since then.

Today, San Diego County serves 40% more MIAs with 19% less money than it had in 1983, said Paul B. Simms, deputy director for physical health services in San Diego.

So commenced the handwriting on the wall for institutions like Physicians & Surgeons--hospitals serving impoverished communities whose health-care costs would not be fully covered by government, if they were covered at all.

Figures gathered by Simms showed that 58% of the patients in the first half of 1986 at Physicians & Surgeons were uninsured or covered by government programs that didn’t compensate the hospital fully for their care. Losses at the 78-bed hospital have been estimated at $1 million to $2 million a year over the last four years.

Faced with those problems, the hospital’s operator, National Medical Enterprises, has begun maneuvering to be able to sell the hospital and to remove a city requirement that it remain an acute-care hospital. County supervisors are scheduled to consider Tuesday the effects of a closure.

But even a healthy institution such as Scripps Memorial Hospitals spends about $12 million a year on care for completely uninsured patients, said Michael D. Bardin, director of communications. Another 15% are Medi-Cal patients whose state reimbursement is held to about 60% of the bill’s face value, he said.

Furthermore, at a time when private health insurers are successfully twisting arms to get discounted hospital rates, hospitals have less leeway to subsidize poor patients with revenues from paying ones.

Thus, private hospitals could expect to benefit from establishment of a county hospital again.

“Had California’s county facilities all closed in 1985-86, approximately 61% of private hospitals’ net income would have been eroded simply by the increased burden shifted from the public sector for Medi-Cal and bad debt losses alone,” said Carol B. Emmott, executive director of the California Assn. of Public Hospitals, in a paper she delivered to a health-care group in April.

There are 30 county hospitals in 23 California counties, situated primarily in the state’s most urban areas, Emmott said. Only the urban counties of Sacramento, Orange and San Diego--all of whom turned their county hospitals over to University of California medical schools--don’t run county hospitals for the poor, she said.

But the existing county hospitals have their own set of money problems, caused by the same pressures a hospital such as Physicians & Surgeons faces: a geographically concentrated population of the poor, who are being inadequately served by government medical programs.

State-mandated care to uninsured people at public hospitals in California costs them $208 million a year, and Medi-Cal under-reimbursement costs them another $191 million, Emmott’s group calculated.

Such pressures invariably mean corners must be cut on care, she said, pointing to LA county’s recent funding troubles with a trauma care system and emergency room care as examples.

“What is visible from the outside is public facilities closing frequently to ambulance traffic due to unavailability of intensive care beds,” Emmott said. “What is not seen are the patients who die or whose conditions worsen in medical/surgical beds when they clearly require . . . intensive care units.”

Cox said such fiscal and medical nightmares are another reason he opposes establishing a county hospital in San Diego.

“Health care is best when dealt with by contracting or providing for procurement in the private sector,” Cox said. “If Medi-Cal and Medicare . . . would provide for paying reasonable costs for services rendered, the system would work.”

However, that is unlikely in the near future. Faced with a $2-billion deficit, Gov. George Deukmejian is proposing a $6.75-billion budget in 1988-89 for health services for the poor, a slight increase. In that total, funding for Medi-Cal patients is up 10%, thanks mostly to federal contributions to the program.

But funding for the working poor would rise only 1.4%, a figure that may trigger policies to jettison more of them into the ranks of the uninsured--the population that shows up in emergency rooms for routine care they can’t get any other way.

Difficult Choices

Sounding a controversial theme, Cox said such a fiscal atmosphere requires that society make some difficult choices about health care.

For instance, should the state be paying for heart transplants for just a few people when thousands of pregnant women statewide are going without any prenatal care?

Such proposals for consciously rationing health care are controversial, yet critics of the current system point out that de facto rationing already occurs because of the shrinking health-care budgets.

“You can array a whole host of high-tech medicine and surgery, and those that are in the responsible positions have got to decide whether you’re going to use public funds for the few in those expensive technologies,” Cox said. “These are extremely tough questions, but the fact remains that there are insufficient funds to do everything that we can do and everything that we would like to do.”