Clinton's Health Plan : Health Plan: A User's Guide : For Care Givers and Businesses. . . There Are Reasons to Hope and Fear : HOSPITAL ADMINISTRATOR : 'The system doesn't pay adequately'

Douglas Bagley is interim administrator of the giant, crisis-ridden Los Angeles County-USC Medical Center, one of the nation's busiest hospitals. No wonder he is worried.

While running a public medical facility that handles 80,000 admissions a year--almost all low-income people--Bagley faces inadequate and uncertain financial support, a deteriorating physical plant, fear of losing a highly trained staff and the ongoing need to provide expensive services such as trauma and burn centers.

And, under President Clinton's proposed health care reform plan, Bagley is afraid things could get even worse.

"That's possible," he said, "because there doesn't appear to be anything in the plan that suggests that reimbursement rates for this (poor) population will be increased, and there is some suggestion that the reimbursement rates for this population will be decreased."

Bagley's problems are not unique to Los Angeles. "I think our situation right here is quite typical of the large urban public hospitals," he said.

Like most other hospital administrators around the country, Bagley is upset that the Clinton plan foresees further cuts in funding for Medicare patients. Even now the government pays only 90% of the cost of Medicare patients. Yet at the same time, the Clinton plan promises hospitals full reimbursement for Medicaid patients, compared to the 80% that hospitals now typically receive.

Hospitals and doctors must either swallow the rest or compensate by charging more to their non-elderly, non-poor patients. Hospital administrators such as Bagley fear more such cost-shifting under the Clinton plan, even though the President has promised to make the practice obsolete.

County-USC is run by a staff of 8,000. Of its annual operating budget of $736 million, 53% comes from federal Medicaid dollars, 13% from state MediCal funds, 17% from funds allocated in the state budget process, 10% from county property taxes, 3% from federal Medicare money, 1% from private insurance, 1% from people who pay for their own care and 2% from miscellaneous sources.

Bagley said that the two biggest sources of revenue--the federal Medicaid program and the state--are both unreliable and inadequate.

The state funds, Bagley said, are subject to a yearly political tug-of-war in Sacramento over the budget. This, he said, leads to annual threats to cut services and to a "constant cycle of disruption."

More than that, he said, the federal funds for Medicaid patients (the program is called MediCal in California) are inadequate to cover the cost of the services for the poor.

"The reason we have such an outmoded facility," he said of the hospital, "is precisely because we have been providing services to the medically under-served population and we're not well-reimbursed compared to commercial insurance payments. So there's not enough money to maintain capital investments."

Many of the hospital's patients have special and expensive medical and social problems that the hospital staff attempts to cope with. Many have no medical coverage at all--not even MediCal--and are often homeless.

"So you can't just treat the illness in isolation," Bagley said. "There's no home in some cases in which to lay out a plan of home care" after hospitalization.

Under Clinton's plan, hospitals are promised extra subsidies if they serve a higher than normal percentage of poor, homeless and AIDS patients. But Bagley believes that under the Clinton plan, the extra federal money will go to outpatient clinics called "essential community providers." He is concerned that County-USC would not get the extra federal funds it is now receiving to provide care for the poor.

Bagley said that the County-USC staff has developed a high degree of expertise in serving patients with severe medical and social problems. But the chronic underfunding and the annual uncertainty of state funds makes it difficult for the staff to provide the level of services needed for things such as outpatient treatment and preventive care.

"We know how to do these things," Bagley said, "and we'd like to do them, but we can't because the current system doesn't pay adequately for them."

Even without national health care reform, Bagley lives in constant fear of severe cuts to a hospital staff that he refers to as a "valuable public asset."

"The big problem we face is the preservation of this valuable public asset because of the continuing (financial) threats," he said. "So what does the Clinton plan do to assure the preservation of this valuable public asset?"

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