COLUMN ONE : Helping Hospitals to Stay Healthy : Urban institutions are challenging HMOs and county facilities. The strategy is bringing in much-needed revenue and better care to the poor.

At a small class for expectant mothers at the St. Francis Medical Clinic in Downey, Martha Lopez is warning three pregnant women about tales told by the viejitas, the little old ladies.

Referring to one of the enduring myths she is trying to dispel, she gives an impromptu quiz: “If a pregnant woman raises her arms above her head, do you believe it will cause the umbilical cord to wrap around her baby’s neck?”

The answer is no, of course, and Lopez shares a laugh with her students.

This is more than a routine prenatal class. It is a new way of delivering health services to impoverished communities in Los Angeles County’s urban core, one that is both changing the way the poor receive care and breathing new life into big-city hospitals that many have put on the endangered list.

The trend is bringing prenatal care and modern clinics--long commonplace in the suburbs--within reach of women such as Alma Rivera, 17, and Aleska Escobar, 19, two students in Lopez’s class.

Just a few months ago the women were lost in the public health system. Unable to afford mainstream care and uncertain about where to turn for it, they were bounced from county hospitals to private hospitals, and from clinic to clinic. They said they usually found long lines and impersonal care wherever they went.

In today’s unsteady economic climate, hospitals are aggressively seeking out such patients, whose care is covered by Medi-Cal, a state and federal health insurance program for the poor.

Now they are prized recruits in a highly-charged competition for patients among large urban core hospitals such as the St. Francis Medical Center in Lynwood, which built the Downey clinic, as well as commercial health maintenance organizations.

The St. Francis program, with four clinics open and five in development, is part of the massive shift of Medi-Cal patients into managed care programs that is being pushed by Gov. Pete Wilson. Joe Kelley, chief of managed care programs for the state Department of Health Services, said the movement of hospitals like St. Francis into managed care was “a positive development.”

Although prenatal programs in Medi-Cal have been around for years, the efforts of large urban hospitals to build outpatient clinics and integrated health networks is new and has put them on the cutting edge of the changing health care environment.

Los Angeles County, with 1.2 million people on Medi-Cal, is a key testing ground for the notion that patients previously treated by hospitals on an inpatient or emergency room basis can receive better care, less expensively, as outpatients.

“The trend of treating patients outside hospitals isn’t happening anywhere else in the nation to the degree that it is happening here,” said David Langness, a spokesman for the Healthcare Assn. of Southern California.

In the meantime, the massive revenues involved represent an important new stream of income for urban hospitals, one that could ensure their long-term survival.

St. Francis has signed up 7,800 members in its Health Choices program, a managed care plan in which the hospital is a partner with a large HMO, Universal Care, and a physician network of community doctors. Ultimately, hospital officials say their network could have 150,000 members.

St. Francis will not reveal its reimbursement rate, but Health Choices is receiving $100 a month from the state per patient, according to sources. This would mean its 7,800 members generate $9.3 million annually, which the hospital would split with physicians and the HMO acting as the plan administrator.

*

The system is still very much in flux, with nonprofit and for-profit providers exploring the new terrain, all the while trying to sign up as many members as they can. Rather than try to compete with urban core hospitals for patients, some for-profit HMOs are contracting with them as partners.

The prenatal care for patients like Escobar is financed by another state program. But her care is coming at a clinic set up for Health Choices members and expectations are that she will be signed up for that program after her baby arrives.

For Escobar, the change is like night and day. A college student expecting her first child, she went to four public and private health care providers--seeking help for pregnancy-related bleeding--before finding the clinic in Downey.

One of her stops was the emergency room at County-USC Medical Center near Downtown Los Angeles. “I spent the entire day there,” Escobar said. Once an examination determined that her condition was not life-threatening, she said, she was told to wait. “I kept waiting for them to call my name to see what was going on, but they never called me.”

These days Escobar and the others in her class rarely have to wait for appointments, which in the public health system can take weeks or months. Each lives about 10 minutes from the clinic.

*

For hospitals such as St. Francis, which is owned by the Daughters of Charity national hospital chain, the transformation from an inpatient hospital to a multifaceted health care provider is part of a game plan for survival.

Financially battered by white flight from the inner city, the tough new rules mandated by managed care and a glut of empty beds, hospitals see change as the only way they can survive the health care revolution. With each year bringing a new round of mergers, closings and downsizing, hospitals like St. Francis are borrowing strategies from for-profit facilities and HMOs, while hanging on to their traditional mission of serving the underserved.

Hospital administrators still talk about their mission to help the poor, but conversations are just as likely to be about outreach programs, marketing strategies and strategic positioning.

These days, St. Francis advertises on bus benches, distributes brochures at community events and staffs tables at fairs and swap meets to attract clients, just like for-profit hospitals.

“Care for the poor for me is not poor care,” said the hospital’s chief administrator, Sister Elizabeth Joseph Keaveney, whose religious order dates back to 1633. “We feel passionately about that.”

St. Francis and other hospitals in low-income communities are driven by predictions that not all of them will survive.

Estimates are that within five years, the number of hospital beds being used in the county will drop 15%. “We think most of the loss in beds will be the result of actual hospital closures,” said Jim Barber of the Healthcare Assn. of Southern California, which represents hospitals and other providers. “In inner-city areas, where people are underserved as it is, we think community hospitals are especially vulnerable.”

*

Threats to the viability of urban core hospitals are coming from several fronts. State, federal and county governments are slashing hundreds of millions of dollars from health programs for low-income patients. Hospitals like St. Francis, which receives about 90% of its operating funds from government sources, could be hurt the most. “They would be the first to feel it and be the least able to absorb it,” Barber said.

Finding themselves competing for Medi-Cal patients with the county and commercial HMOs, private nonprofit hospitals have formed an association, known by the acronym PEACH, to lobby their cause before state and federal health care financing agencies. Members must have been designated by the state as “disproportionate share hospitals”--a legal term that makes them eligible for additional funding. Just how a hospital qualifies is complex, but one of the rules is that at least 35% of its patients must be on Medi-Cal and the hospital must also provide certain levels of care to indigents.

The hospitals started as a group of 11, most from the central urban core of Los Angeles County. Now they number 20 and are growing, with expansion into the San Francisco Bay Area expected.

County officials say they are willing to work with the private hospitals, but tension underscores the relationship. Driving the county’s concerns are the fact that private disproportionate share hospitals are taking an increasingly larger piece of the Medi-Cal funding pie.

The county’s share has dropped from $387 million in 1991-92 to an estimated $244 million in 1994-95. At the same time, the share of that money going to private hospitals has been rising, from $101 million to $190 million.

“Just look at the trend line and you will see the problem,” said county Health Director Robert Gates. “But we are trying to find a win-win situation where we can work together. We are not trying to take revenue away from them, but we would rather they not take revenue away from us, either. I think we have a fair understanding.”

*

Among the larger local hospitals allied with St. Francis are White Memorial Medical Center in Boyle Heights, Childrens Hospital Los Angeles, the California Medical Center in Downtown Los Angeles and the Queen of Angels/Hollywood Presbyterian Medical Center in Hollywood.

Queen of Angels/Hollywood Presbyterian, near Vermont Avenue and Sunset Boulevard, was formed by the merger of financially struggling hospitals that each date to the 1920s and a much more glamorous Hollywood. Movie stars, particularly those prominent in the Catholic Church, once made Queen of Angels their hospital of choice. Now its old building sits vacant on a hilltop in Echo Park, up for sale and used as a movie set.

These days the hospital serves a truly diverse population, and it is not uncommon to hear people in the halls speaking Armenian, Korean, Russian, Spanish and other languages.

Dependent on patients with taxpayer-financed health insurance, hospital officials are familiar with the vagaries of trying to survive in the rapidly changing world.

Several years ago, when the county could not keep up with its obstetrical patient load, Queen of Angels/Hollywood Presbyterian was among the hospitals that stepped in to handle the overflow. Deliveries of babies jumped to 850 a month, and, with the spurt, the hospital built a new obstetrics wing.

Then, almost as suddenly, the county was able to handle more obstetrics cases, and the flow of referrals slowed. Deliveries dropped to 650 a month. With such sudden shifts, few hospital workers take the future for granted.

“We all have to be concerned,” said Mary Jane Cox, a registered nurse who heads the hospital’s perinatal program.

The hospital has forged a community network with 23 churches. Each month, workers from the hospital show up at each church for a day of free disease screenings, health promotion or tests. Similar programs are under way at California Medical Center and other hospitals.

Queen of Angels/Hollywood Presbyterian also is establishing its own HMO, which would compete for clients with commercial plans.

“Hospitals always operated as sort of little islands in our own communities,” said Robert E. Seward, a vice president of Queen of Angels/Hollywood Presbyterian. “But as the whole medical system revolves into managed care, it is no longer possible to just sit behind walls and wait for patients to come to you.”

At St. Francis, a hospital that was on the verge of closing in 1981, there is a sense of excitement about the future.

Before the turnaround, the hospital was caught in the same downward spiral that has led to nearly two dozen hospitals closing or merging in Los Angeles County since the mid-1980s. It was aging rapidly, struggling to serve impoverished patients and trying to find a way to survive under the new rules.

Now, the clinic where the prenatal classes are conducted is part of an interconnected system of managed care. St. Francis is not an HMO. But it serves as a subcontractor for traditional HMOs like Universal Care or Maxicare, which provide administrative help and experience dealing with large numbers of clients and split the state’s payment with the hospital.

The hospital also signed contracts with physicians in the communities it serves--Lynwood, South-Central Los Angeles, Downey, South Gate, Huntington Park--and created the St. Francis Care Medical Group. The physicians agreed to serve as primary care physicians, and use St. Francis Medical Center if the need arises. About 40% of the 7,800 Health Choices members use the clinics for their primary care, while 60% go directly to the offices of network physicians.

As dramatic as the changes are for the hospital, the impact may be greatest on its clients.

Vicky Perrigan, 28, one of the women in Lopez’s class, is expecting her first baby. Her husband has health insurance, a private policy he first received as a college student. But she has no insurance, and is limited by what she can afford. At one clinic a social agency referred her to, “there were about 40 women packed in there. We were treated like cattle,” she said. “Here, when I call, they don’t put me on hold. Every time I come I see the same person. It’s the same secretary, the same doctor, the same nurse every time.

“It doesn’t even compare.”