Semi-Privatized Clinics Cut Costs, Improve Care for Poor

As Southern California officials wrestle with health care funding reductions, they might be wise to look to the north, where an unusual partnership between Ventura County and private doctors has resulted in a dramatic turnaround for medical clinics.

Three years ago, Ventura County’s supervisors nearly closed the county’s four family care clinics, where the poor can receive basic medical services at minimal or no cost. Although they served nearly 20,000 patients annually, the clinics ran close to $1 million in the red each year.

But an enterprising group of doctors stepped in with an idea for privatizing the clinics, and today the system is self-sufficient and serving more patients than ever, officials said.

Three clinics have become semiprivate corporations, distinct from the government that spawned them but still charged with providing care to anyone who walks through the door. Plans are in the works to convert the fourth, in Simi Valley, sometime next year.

In each clinic where the county has relinquished control, care has been improved, the clinics have grown, patient-doctor relationships have been strengthened, and the county has saved hundreds of thousands of dollars, county health officials and patients said.

Officials say there are two key reasons for the success of the new system: It provides a profit incentive for doctors and frees them of unnecessary bureaucratic controls.

“Everybody’s a winner,” said Phillipp Wessels, director of the Ventura County Health Care Agency and one of the principal designers of the public-private partnerships. “The patients are getting better care, taxpayers are no longer paying a subsidy and the physicians are pleased with their practices.”

Wessels said he is not aware of other counties in California that have privatized clinics, although some have called him about the idea.

Although the public-private partnership works well in Ventura County, it may be more difficult to establish in urban areas, said Larry Roberts, deputy director of the Los Angeles County Department of Health Services.

“It depends on the situation,” Roberts said. Ventura County differs from Los Angeles County in that it has less demand for health services and a Board of Supervisors more willing to take chances, he said.

Los Angeles County has used private contractors for health services with mixed results, Roberts said. But he added that Ventura County’s successes bear watching, even as Los Angeles County considers shutting down 16 health centers because of a lack of funding.

“We will be monitoring it,” he said. “Given the shortfall in the state budget, we may have to look at the way we do business as well.”

In the newly privatized clinics, the county holds the lease, guarantees the doctor’s first-year salary and provides hospital services through the Ventura County Medical Center.

But as with private clinics, the doctors follow their patients through a hospital stay. They are responsible for hiring staff, balancing budgets and tending to bottom lines.

Since the switch, the clinics have seen profit margins grow. In 1991, an Oxnard clinic cost the county $300,000. This year, it has tripled its patients to 130 a day and will boast an estimated profit of $168,000, Wessels said.

Last year, the county’s Santa Paula neighborhood clinic operated at a $46,185 loss and saw 5,293 patients. This year, it is projected to earn a $69,000 profit while serving 11,800 patients, Wessels said.

The clinic in Ventura posts similar results. It lost nearly $125,000 two years ago, but is earning a $58,000 profit this year. Patient load has almost doubled.

The changes have been dramatic for many patients who, because they are on government programs such as MediCal, were accustomed to long delays and spotty care.

Cradling her newborn in a waiting room at the Oxnard clinic, Lupe Ponce, 24, said “the doctors were nicer” and more attentive. “They tell you about possible problems before they happen.”

Because the semiprivate clinics retain their status as public health care providers, they are paid a premium by the state for each MediCal patient they see. MediCal accounts for at least 80% of their patient load.

Although they also see private patients, they do so on a pay-as-you-go basis. If a patient only has $20 for a $40 fee, they may accept the $20, knowing that the administrative costs of constant billing could cost more than the outstanding balance. That helps make the clinics financially viable.

“We still need the county label for funding,” said Dr. Joan Baumer, who runs two of the clinics along with her husband, Dr. Nat Baumer. “If you are a private practice you don’t get paid as much by MediCal.” Profits are plowed back into providing more services, she added.

In addition, the doctors have the advantage of buying malpractice insurance through the county for lower costs than they would have paid for policies purchased on their own.

“The way we used to do business needed to be repaired,” said Pierre Durand, administrator of the Ventura County Medical Center. The new clinic system was a risk, he said. “This was something that was not consistent with how government usually runs.”

Since the new system was put in place, clinics have added more doctors and extended operating hours into the evenings and through lunch. As with private clinics, strong doctor-patient relationships are stressed. When patients feel sick, they call their personal doctor first.

“We keep them out of the emergency room and in better health,” said Dr. Brian Prestwich. “In the long run that saves the county huge amounts of money.”