Southland Hospitals Seriously Ill : Medicine: Industrywide reorganization may prepare it for coming reforms, but change raises fears about quality.

Southern California’s hospitals these days are like an emergency-room patient who is seriously ill and struggling to survive.

The hospital industry nationwide is grappling with sweeping changes in the health care marketplace, a glut of hospital beds, growing competition and Medicare reimbursement cuts. But the problems are worse in Southern California, where penny-pinching managed-care programs are more popular, and a 3-year-old recession has swelled the ranks of the medically uninsured.

Alarmed by an unexpected drop in the number of patients--a factor that helped push 60% of the region’s private hospitals into the red last year--hospitals are laying off thousands of workers, eliminating programs and services and reassessing the way they provide medical care. Seeking strength in numbers, some hospitals are swallowing their pride to team up with former rivals; others are going out of business.

Even as the region’s hospitals try to stop the financial hemorrhaging, their methods are raising concerns about the quality of patient care as fewer nurses, orderlies and other support staff are pressed to perform more duties.

A report released last week by the Hospital Council of Southern California details the pain of the region’s facilities.

Nearly 52% of all hospital beds in Los Angeles, Orange, Riverside, San Bernardino, Ventura and Santa Barbara counties were empty on an average day in 1992, according to the council’s report.

The industry shake-up comes even before the Clinton Administration unveils its health reform proposals, which could add to the financial pressures facing hospitals. Experts say that while most of the hospital cutbacks are due to current turmoil in the market, hospitals are also preparing for the changes to come.

Thomas Priselac, executive vice president and chief operating officer at Cedars-Sinai Medical Center, says the uncertainty of health reform may be causing physicians and patients to alter their behavior.

“Health care reform is so broadly covered in the media and the issue of health care costs has been so much in . . . people’s minds, that it has to affect consumer and physician thinking,” he says. “People are thinking twice about whether they need to see the doctor, and physicians, in general, are adapting their practice style.”

Even the prestigious are not immune from the upheaval.

Cedars-Sinai--the largest private hospital on the West Coast--recently laid off about 85 of its 6,000 employees and froze the salaries of top management and staff physicians as part of a cost-cutting plan prompted by an unexpectedly sharp drop in its patient census.

UCLA Medical Center, where the patient count is also in decline, slashed nearly $50 million from its $358-million budget last year and has trimmed its 3,700-person work force by 500 positions during the past two years.

The recession is one of the biggest problems for hospitals in Southern California, where the jobless rate exceeds 10% in many places. One-third of adults in Los Angeles County lack health insurance--a higher proportion than any other major U.S. metropolitan area.

“I suspect that people who are self-insured have had to drop their insurance and are suffering at home,” says Steve Willis, a spokesman for Huntington Memorial Hospital in Pasadena.

The recession has shaken Long Beach Memorial Hospital, whose community has been hard hit by defense layoffs and cutbacks at McDonnell Douglas’ commercial aircraft plant.

The Long Beach hospital has slashed 944 jobs--a 20% cut in employment--since January, 1992. It has also frozen new hiring, reduced its licensed beds by 175, to 816, and eliminated mental health, chemical dependency and preventive health programs.

“We’ve shed ourselves of some of the luxuries that we used to be able to provide people,” said Ron Yukelson, hospital spokesman.

Other changes in the health-care market are also rattling Southern California hospitals, especially the big crackdown on costs by employers and insurers.

California employers have moved aggressively to shift their workers into so-called “managed care” programs, such as health-maintenance organizations, or other groups that hold down costs by requiring pre-admission approval for hospital stays. (Nearly one-third of Californians belong to an HMO.) Companies are also negotiating with doctors, hospitals and drug providers to get the lowest prices.

The growth in managed-care programs in California has brought a dramatic drop in how much time patients are spending in hospitals. At Cedars-Sinai, for example, admissions this year are down 5%, but the number of days patients who remain hospitalized has dropped 12-15%, Priselac says.

Another reason for the drop in patient days is the increasing use of outpatient surgery. Advances in technology, such as laparoscopic surgery, have made it possible for surgeons to remove gall bladders, ovaries and appendixes at free-standing clinics without the patient spending a minute in the hospital.

As layoffs and cost-cutting spread in the hospital industry, some contend that the quality of patient care is slipping.

Ronald D. Spoltore, director of health care for consultant Kenneth Leventhal & Co. in Los Angeles, says many hospital cost-reduction programs are “completely reactive and, in the short term, there is a possible impact on quality--whether it’s quality of care or guest relations or just the perception of the patient.”

Cathie Direen of the California Nurses Assn., a labor union, says that many hospitals have been slashing their nursing staffs while at the same time requiring nurses to handle more patients. Some routine nursing duties have been turned over to lesser-trained staff, she says.

As a result, she says, nurses often are stretched so thin that they have little time to spend with patients. “A patient may be in the hospital for a day or more before a nurse can meet with them. You can’t meet with the family member who is trying to find out what’s going on, or the patient rings the buzzer because they’re in need and the nurse can’t get back in there,” Direen explains.

Even the Journal of the American Medical Assn. reported earlier this month on a study by researchers at Harvard Medical School and Harvard School of Public Health that concluded that financially strapped hospitals may be a higher risk of providing substandard patient care. The researchers, who analyzed hospital records of medical injuries and substandard patient care at 51 acute-care hospitals in New York state, found that patients admitted to hospitals under financial stress “were at greater risk of negligent injury.”

But hospital executives vigorously defend their institutions, saying quality of care has not suffered.

“Every hospital is very concerned about quality,” says Dr. Raymond Shultz, director of the UCLA Medical Center. “In some cases, we think we have been able to improve our quality,” even while sharply reducing expenses.

Experts say it will take a flurry of hospital closures, mergers and business alliances to sort out the current industry mess.

Hospitals already are striking deals with one another, as well as with physicians groups, to improve their financial outlooks and gain clout with insurers. One example was Huntington Memorial’s decision late last year to join forces with Methodist Hospital of Southern California, a competitor in nearby Arcadia.

Combining the two hospitals gives the 606-bed Huntington and 200-bed Methodist more negotiating power with HMOs and saves money on medical supplies, says Huntington spokesman Willis.

Spoltore, the Kenneth Leventhal consultant, estimates that Southern California hospitals will shed up to 15% of their current beds as the industry consolidates. Some hospitals will convert beds from traditional acute-care use to other uses, such as serving patients who need long-term care.

Glenn Melnick, a consultant at the Santa Monica think-tank RAND, says the turmoil in the hospital industry may have a positive result. Hospitals here will be much better prepared than most to face health-care reform.

“California is so far ahead of anywhere else in managed care that all the players in this system will already have adjusted to a competitive environment,” says Melnick, who is also an associate professor at the UCLA School of Public Health.

But he also sees a potential for danger as the industry consolidates.

“My biggest concern is that the mergers will increase so much that we’ll lose the competitiveness of the system,” he says. “The big hospitals will merge with one another in order to limit the ability of insurers to negotiate with them in price.”