UCLA Orders Cutback in Care for Medi-Cal Patients : Health: Debt, revenue decline cited for decision affecting poor. Load will be shifted to county facilities.


Strapped by debt from new construction and sharply declining revenues, the UCLA Medical Center plans to substantially reduce care for poor people insured through the government-funded Medi-Cal program.

UCLA officials disclosed that they expect to cut their Medi-Cal patient load by 17%, on top of the 4% they cut last year. The move will eliminate 7,000 days of hospitalization a year and involve hundreds of Medi-Cal patients. Most of the people who are affected will be transferred or referred to overcrowded Los Angeles County public hospitals and health centers.

UCLA Medical Director Ray Schultze said the medical center--for years a key source of high quality care on the Westside for growing numbers of Medi-Cal patients--can no longer afford to care for so many poor patients, whose bills, he said, are not adequately covered by the state’s Medi-Cal program.

Schultze said each department within the hospital will soon be given a Medi-Cal patient quota that doctors will be asked to enforce. He acknowledged the move is likely to generate turmoil and debate among physicians.


“Some will find it very objectionable,” he said.

“All of us are a little bit upset about this,” acknowledged Dr. Marshall Morgan, director of emergency services at UCLA. “Here it seems we have a bunch of old white men sitting in a room . . . conspiring how to deprive the poor of access to our institution and that doesn’t feel good. On the other hand, this institution won’t survive” unless some changes are made.

E. Richard Brown, a professor at the UCLA School of Public Health, asserted that the new restrictions “will only add to the burdens and suffering of the Medi-Cal population” which already faces “great difficulties in accessing care.”

David Langness, vice president of the Hospital Council of Southern California, said UCLA’s plans to refer or transfer its patients to the public hospitals will result in an untenable overload that will, in turn, “cause backups in the rest of the system.”


UCLA Medical Center fell several million dollars short of meeting its projected budget during the last fiscal year ending in June. Schultze said the shortfall represented a “significant drop . . . and that’s uncomfortable for us.”

The fiscal crunch has been aggravated by the hospital’s debt of more than $100 million on its new medical plaza and a drop in the hospital patient census--especially a steady decline in the number of privately insured patients who are the most profitable people for hospitals to treat.

Critics such as Brown say that by reducing its Medi-Cal load, UCLA is shirking its moral obligation to serve the poor and is setting a bad example for other private hospitals that are often reluctant to shoulder their share of the Medi-Cal load.

He suggested further that the poor may be indirectly paying the price for the university’s heavy investment in the new outpatient medical plaza which was designed in large part to attract privately insured patients and their doctors.


Indeed, the medical center’s agreement with the bondholders, who provided money to build the medical plaza, stipulates that the hospital must show a net gain of about $10.5 million at the end of each fiscal year.

But others found little fault with UCLA, suggesting that the medical center’s problems mirror those of university hospitals nationwide and exemplify a breakdown in an underfunded health care system, especially the state’s Medi-Cal program.

UCLA’s Dr. Martin Shapiro said the medical center’s dilemma shows, “Something is wrong with the Medi-Cal system which discourages doctors and hospitals from participating. The whole system is a farce and an outrage and cries out for reform.”

James Bentley, vice president for clinical services at the Assn. of American Medical Colleges, said declining profit margins at university hospitals across the country have forced many to limit their Medicaid loads and to look for new money-making opportunities.


The USC Medical School, for example, is trying to improve its financial underpinnings by teaming up in a joint venture with a large private corporation, National Medical Enterprises, to launch a new university hospital specifically designed to attract a profitable clientele of privately insured patients. The hospital has no plans to contract with the state to care for any Medi-Cal patients.

Schultze pointed out that UCLA Medical Center, which receives only 4% of its operating budget from the state, is primarily dependent upon patient revenues.

During 1990, the hospital admitted six times as many Medi-Cal patients as any other non-county hospital on the Westside, UCLA officials said. Since l983, Schultze pointed out, the medical center has subsidized the care of Medi-Cal patients with $200 million. “It has clearly met its moral obligation,” he said.

During the last fiscal year, which ended in June, officials at the medical center took action in response to what Schultze declared in February was the institution’s “very disappointing” financial performance. They accelerated staff reductions, implemented price increases earlier than planned, and instituted an aggressive marketing strategy to attract privately insured patients, whose numbers have been declining by 12% a year during the last two years, officials said.


In addition, the hospital reduced its Medi-Cal load by arranging to transfer certain Medi-Cal patients to the Queen of Angels/Hollywood Presbyterian Medical Center at a rate of about one every other day. UCLA also reduced the number of Medi-Cal patients it accepts from two other nearby hospitals--Brotman and Midway Medical Centers--from about 50 a month to five.

As a result, the total number of Medi-Cal patient days declined during the last fiscal year from 42,500 to 40,800, said Schultze. He is aiming to cut back to 34,000 this year. This figure, he said, is based on financial projections that would satisfy the bondholders who financed the new medical plaza buildings.

Schultze said UCLA’s plans to reduce the hospital’s Medi-Cal patient load was approved last month by state health officials at the California Medical Assistance Commission--an agency that negotiates individual contracts with more than 200 hospitals statewide to care for the state’s Medi-Cal population.

During the negotiations with the commission this summer, sources said UCLA threatened to terminate its contract to treat Medi-Cal patients unless reimbursement rates were substantially raised. Medi-Cal provides reimbursement for about 40% of the costs, according to Schultze. He estimated that UCLA had to subsidize the Medi-Cal hospitalization costs with about $40 million during the last fiscal year.


Mike Murray, commission executive director, declined to comment on the negotiations or their outcome, which he said are confidential. He said UCLA is free to try to control its volume of Medi-Cal patients within legal limits. For example, doctors must continue to treat and stabilize patients needing emergency care.

Murray said there are enough private and public hospitals in Los Angeles County to care for those Medi-Cal patients UCLA will no longer see.

But Langness countered that the commission “tries to make it sound like everything is peachy, when it’s not.”

He said other private hospitals may be reluctant to accept extra Medi-Cal patients because the reimbursement rates for their care are so low. As for the public hospitals, he said, “They are full now, and any attempt to have them take more patients will cause backups in the rest of the system.”


Carl Williams, director of hospitals at the county Department of Health Services, acknowledged the public hospitals are so full that patients needing to be transferred there are put on a waiting list. Priority is given to those coming from trauma centers such as UCLA and from a core of hospitals that shoulder a disproportionate share of indigent patients.

“To the extent that they (UCLA) will be transferring more patients to us,” Williams said, “other hospitals will be able to transfer in fewer patients.”

Medi-Cal Patients at Local Hospitals

Here is a look at the way patients insured by the state Medi-Cal program for the poor are distributed among hospitals in West Los Angeles . This shows the number of days of care each hospital devoted to Medi-Cal patients in 1989:


HOSPITAL MEDI-CAL PATIENT DAYS UCLA Medical Center 44,003 Daniel Freeman Memorial Hospital 6,891 Santa Monica Hospital Medical Center 6,532 Cedars-Sinai Medical Center 5,365 Century City Hospital 1,901 Centinela Hospital Medical Center 1,122 Washington Medical Center 1,004 Brotman Medical Center 984 Daniel Freeman Marina Hospital 285 St. John’s Hospital and Health Center 100

SOURCE: UCLA Medical Center