The Very High Price of a Healthy L.A. County : How to cut costs but still keep County-USC open

Should Los Angeles County act as a broker of health care services rather than a provider? Should it contract out some of these services but maintain critical trauma and burn units? And if it did so, would the change substantially ease its fiscal crisis?

These are among the formidable questions confronting the new Health Crisis Task Force. The County Board of Supervisors created the panel to find alternatives to closing the County-USC Medical Center and making other horrific cuts in medical services. A huge demand for health care for the working poor and indigent, coming at the same time that Sacramento has been cutting funding, has plunged the budget into the red. More than half of the county’s projected deficit of $1.2 billion is due to a shortfall in health services--$655 million.

In addition to closing the medical center, Sally Reed, the county’s chief administrative officer, proposes eliminating four comprehensive health centers and 25 neighborhood centers. Only two comprehensive centers and 14 community clinics would remain open. Reed hopes that private hospitals will fill the need.

HORSE-AND-BUGGY: There is no doubt that the county now has an expensive, antiquated system that relies on hospitals providing in-patient care. In contrast, private insurers and health maintenance organizations have shifted to less costly outpatient systems. Can county hospital services be decentralized and made more cost-effective if some care is shifted to clinics or contracted out? Might mobile clinics provide cheaper basic care in this sprawling county?

For the last year, county health administrators and a coalition of 13 Downtown-area private hospitals have been informally discussing a public-private partnership. In Los Angeles County there are six county hospitals and 79 private hospitals. Most of the private hospitals have emergency rooms, and on any given day more than half of all private hospital rooms are vacant. But capacity is one thing and economics is another. Private hospitals are willing to consider a contractual agreement but they insist on reasonable compensation. Last year, private hospitals in all of California lost $2.7 billion in indigent charity care, provided almost entirely through emergency rooms and trauma centers.

So the tougher question is: Who pays? The current payment system for medical services for the poor is a patchwork quilt. Both the federal and state governments help pay for Medi-Cal. California also provides some funds for the care of medically indigent adults between the ages of 18 and 65, who aren’t covered by Medi-Cal. (About 40% of the county’s total patient load is indigent.) These outside funds have diminished since the 1980s. The federal government has withheld funds too. Washington and Sacramento both must be prepared to keep helping even if the county slashes services.

AN EARLIER SUCCESS: The task force needs to explore whether timely payments to private hospitals for certain medical services can be worked out. Such an arrangement worked when the county contracted with hospitals for the delivery of babies in the 1980s after County-USC was swamped by the demand for obstetrical services.

But private hospitals, because of limited capacity and prohibitive cost, may not be a viable alternative to emergency rooms and burn units. County-USC Medical Center alone handles 650 emergency visits a day; the county probably still would have to provide such a service, as do most other counties.

The task force faces the challenge of performing surgery on county health services while trying to keep basic care intact. Of course major cuts in other spending are inescapable if the county is to avoid bankruptcy. We all will have to face this reality if the fiscal crisis is to be managed without triggering a total shutdown of County-USC Medical Center.