County Panel Nears Deadline to Find Health Care Solution : Budget: Task force must find ways to plug $745-million hole. It is sorting through a raft of ideas from private hospitals, unions and medical schools.

The hospital lobbyist sat down at the witness table, smiled at the task force members and began his remarks with a touch of gallows humor.

“No matter what kind of decision you come up with,” he told the five members of the Los Angeles County Health Crisis Task Force, “it’s going to be a decision that nobody can live with.”

Appointed by the Board of Supervisors last month, the task force has been assigned a Herculean--if not Kafkaesque--chore: find ways to plug a $745-million hole in the budget of the county’s massive, fiendishly complicated health care system.

Without cutting it to shreds.

Oh, and do it in a month.

“It is an intimidating and awesome responsibility,” conceded Burt Margolin, the task force’s chairman.

But it is a job that Margolin--a former state legislator who once chaired the Assembly Health Committee--and other task force members have tackled with vigor since their June 21 appointments.

They have held about a dozen public hearings, gulping Diet Cokes and sandwiches at their desks as they listen to cost-cutting suggestions from a parade of private hospital executives, union leaders, medical school provosts and county bureaucrats.

Before and after the hearings, they work the phones, pleading with members of Congress, picking the brains of management consultants, trying to pry loose more federal and state money for Los Angeles County.

“I’m so sleep-deprived I could collapse right here,” said a weary Margolin last week, after jetting to Washington to personally buttonhole federal officials.

Task force members hope to come up with ways to avoid what all parties agree would be a monumental disaster for the county health system: elimination of its crown jewel, County-USC Medical Center. County Chief Administrative Officer Sally Reed reluctantly urged supervisors last month to shutter the venerable hospital complex, saying the county doesn’t have the money to keep it open.

“I’m obsessed with changing the premise,” said Margolin. “I want to change the numbers. I want to find good ways of pushing the [$745 million budget shortfall] down to a more reasonable number.”

To that end, Margolin and his colleagues are hurriedly sorting through a raft of ideas that only a few years ago would have been considered radical or politically unworkable, such as farming out county hospital patients to private hospitals.

In testimony last week, representatives of 15 nonprofit private hospitals said they could treat county Medi-Cal patients far more cheaply than county hospitals do, while allowing the county to keep a good chunk of state and federal reimbursement payments.

The hospitals said they can handle up to one-third of the county’s Medi-Cal load. But county officials said the plan may not work because the federal government may not be willing to pay the county if private hospitals are providing the care.

Another recommendation involved downsizing County-USC by shedding its outpatient departments.

Dr. Joseph Van Der Meulen, USC’s vice president for health affairs, proposed that the big medical center transfer outpatient functions to community health clinics while maintaining a core of inpatient departments.

Van Der Meulen said he had not had time to calculate any cost savings from such a plan. He said it would likely reduce county revenues in the short run because fewer patients in hospital beds means lower state and federal reimbursements.

But in the long run, he said, the plan would help to preserve the hospital to take care of those with burns, AIDS, gunshot wounds, tuberculosis and other acute problems.

Margolin agreed that the county must find long-term ways to cut costs. But, he said, solving the immediate crisis boils down to getting more federal and state cash.

In a barrage of phone calls to Sacramento and Washington, Margolin--a low-key but crafty deal-maker with wide contacts among government and private health experts--has concentrated on squeezing more dollars from an obscure government program called Medi-Cal Administrative Claiming, or MAC. Under it, the federal government pays counties for services rendered to Medi-Cal patients that are not strictly medical, such as advising them on how to obtain child care.

Seeking reimbursement for three years of MAC costs, Los Angeles County submitted claims totaling $800 million. When federal officials later paid out $56 million, county supervisors confidently built $600 million of expected future reimbursements into this year’s budget, said Jerry Roos, a senior assistant to Reed.

But the federal government later denied the county’s claims, saying it was impossible to tell how much time county health workers had devoted to MAC-covered activities, Roos said. Federal officials, he said, are likely to approve only $80 million more in claims.

In addition to pushing for more MAC money, Margolin is lobbying for more cash under the federal “disproportionate share” program, which provides extra money to hospitals that care for large numbers of the poor.

Two years ago, the amount of disproportionate share money hospitals could claim was capped after federal officials charged that some hospitals used it for unauthorized purposes. Margolin wants the cap lifted.

But his task force is working under a nearly impossible deadline: its report--upon which the supervisors are expected to rely heavily--is due Friday.

That, in turn, has prompted Margolin, 44, to prod nearly everyone he speaks with to work faster, refine their ideas and come up with hard figures about the potential savings to the county.

“You have to get this proposal advanced one or more generations than it is now by next week,” he told some private hospital executives this week.

Margolin and his colleagues represent a small health care brain trust. As chairman of the Assembly Health Committee, Margolin was a key force in the creation of the Health Insurance Plan of California, which provides health insurance to small businesses that would otherwise not be able to pay commercial rates.

The other task force members are: Dr. Thomas J. Collins, chief executive officer of Long Beach Memorial Medical Center; Jane G. Pisano, vice president of external relations at USC; Dr. Raymond G. Schultze, retiring director of UCLA Medical Center, and J. Duffy Watson, chief executive officer of Henry Mayo Newhall Hospital in Santa Clarita.

But the group’s triple-time pace is raising eyebrows among some health activists, who argue that too little thought is being given to proposals that could profoundly change the nation’s second-largest public health network. The system serves hundreds of thousands of poor people and trauma victims.

“County-USC has been around for what, 100 years? To give it three weeks of thought is just not enough,” said Geraldine Dallek of the Center for Health Care Rights, an advocacy group for medical consumers.

Others worry that task force members are being used by the supervisors. By producing a report that is likely to say major cuts are inevitable, these critics say, the task force will take political pressure off the supervisors to hold the system together.

“I just hope you don’t get used to certify the legitimacy of something that is not legitimate,” Dr. Reed Tuckson, president of Charles R. Drew University of Medicine & Science, recently told task force members. “The bottom line is that there are no savings that don’t have a price attached in terms of sacrificing human lives.”

Margolin agreed that deep cuts in the system, which he said is badly underfunded, would be “immoral and obscene and will kill people.” But, he said, the harsh reality is that painful downsizing probably must be done.

And given that reality, it is better for public health experts to help decide what to cut, in hopes of preserving the system as much as possible. Otherwise, he said, the cuts will be made by county “numbers crunchers” with less sensitivity to how the system is affected.

Margolin said one major problem the task force faces is convincing key state and federal officials of the scope and urgency of the budget problem.

“Some people at the federal level still think this is one more round of the same problem, and somehow it’ll get fixed by the county,” he said. “That’s not the case.”

Margolin also expressed disappointment in some county health officials and medical school executives who manage county hospitals. Like poker players waiting to be called before showing their cards, he said, such officials are holding back until the last minute before offering some of their programs for possible cuts.

Some public health officials, he said, “historically have been very careful and cautious negotiators, who don’t want to be the first to leap off the bridge and make a sacrifice before they have to.”

The task force’s job, he added, is to “relieve them of some of that caution.”