County Health System in Peril, Panel Says : Finances: Supervisors warned of urgency. Huge worker protest held.

As thousands of sign-carrying county employees, blowing whistles and chanting slogans, protested sweeping budget cuts on the streets of Downtown, the Board of Supervisors heard a stark warning Tuesday that they must move quickly to save the county’s health care system from collapse.

Members of the county’s Health Crisis Task Force warned in blunt terms that closing hospitals and shutting health clinics will destroy the safety net that protects the needy and uninsured and the fragile network of trauma centers that protects everyone. The task force has recommended that hospitals be spared and most of the clinics be closed, at least temporarily.

It was a day filled with drama--but no action--over closing an unprecedented $1.2-billion budget deficit that threatens to drive the county to the brink of insolvency:

* The Rev. Jesse Jackson, joined by union leaders, called for a moratorium on budget cuts and layoffs of county workers until all potential sources of funding from the state and federal governments have been exhausted.

* Despite efforts by some Los Angeles-area lawmakers, there was no sign of hard dollars from Sacramento to assist the county.

* The word from Washington was more encouraging, with federal health officials expressing interest in a experimental program to shift the county’s health care system toward outpatient care at clinics instead of far more expensive treatment in hospitals. But the county received no firm commitment in its effort to obtain up to $300 million in federal funding.

While the largest demonstration to date took place outside the Hall of Administration, the supervisors heard task force chairman Burt Margolin warn that failure to provide medical care to those who have nowhere else to go could lead to social unrest. And he warned that closure of County-USC Medical Center would put the county’s health care system in “a death spiral with no opportunity for survival.”

Margolin, expressing the sentiment of the five-member panel formed to find alternatives to closing the nation’s largest public hospital, said the “mission of the county is the protector of public health. . . . It is literally at stake in the decisions you will make this week.”

The task force offered the supervisors a plan that would scale back operations at county hospitals but keep them all open, while closing most of the county’s community health clinics unless additional financial resources can be found within 90 days. At that point, Margolin said, the county will have no choice but to close hospitals.

After leading the march of county of workers, Jackson made an impassioned plea to the supervisors seeking a delay in sweeping cuts to county services.

With union leaders at his side, Jackson called for a moratorium on proposed spending cuts that threaten to eliminate one out of every five county jobs.

Jackson told the supervisors that a high-level meeting of federal, state and county leaders is essential to solve the county’s fiscal crisis.

The supervisors expressed their gratitude to the task force members, who examined the county’s labyrinthine health care system over the past month, searching for ways to restructure and save it in the face of growing demands and shrinking resources.

“There is no doubt we need to reconstruct this system,” board Chairwoman Gloria Molina said.

“We all realize the downsizing of the health system is going to take place,” said Supervisor Mike Antonovich. “We don’t have the ability to be the health maintenance organization for the world.”

While expressing interest in the task force’s recommendations, the board took the suggestion under consideration without making any decisions Tuesday. They canceled today’s budget session and will resume deliberation Thursday on bridging the deficit. In the interim, they will continue to lobby Washington and Sacramento for firm commitments of dollars to help solve the fiscal crisis.

Earlier, Jackson called on Gov. Pete Wilson and state lawmakers to break the stranglehold that powerful liquor, wine, beer and tobacco industries have in Sacramento and give the county the ability to impose its own so-called “sin taxes” that could raise hundreds of millions of dollars in new revenue.

“They are a factor in the health care crisis,” Jackson told the crowd of 3,000 mostly unionized county employees that marched outside the Hall of Administration. “They are corrupting the Legislature. They are helping make people sick.”

As sheriff’s deputies stood by, Jackson later received a prolonged standing ovation from hundreds of county employees gathered in the Board of Supervisors chambers.

While Jackson appealed for Sacramento to come to the aid of the state’s most populous county, there was no sign that state lawmakers are willing to give the supervisors the authority to impose a 10% tax on alcoholic beverages sold in bars and restaurants.

An alternate proposal to give the supervisors the ability to raise the county’s sales tax by 0.5% was given a slightly better chance. But nowhere in sight was the kind of complete package that could avert deep reductions in county services.

“There is no assurance from Sacramento about anything,” a disappointed Supervisor Zev Yaroslavsky said. “On the contrary we have to have our head examined if we count on anything significant at this point from Sacramento. Things have not gone well for us.”

The signs were more hopeful from Washington after Yaroslavsky’s and Molina’s lobbying trip last week. A high-level delegation of federal health officials met privately with each supervisor on Monday to express interest in assisting the county in developing a new health care system that primarily relies on outpatient care instead of far more expensive treatment in hospital emergency rooms.

While encouraging, the federal officials have not made any specific promises on how much money the county can count on in the near future to help close a budget deficit of at least $655 million in health services.

Several supervisors announced Tuesday that the federal government will come through with as much as $300 million for the experimental program. Molina publicly thanked President Clinton and Shalala for responding so quickly to the county’s pleas for help.

But federal officials said it is premature to be making such an announcement. “It is not a done deal,” said Shalala’s top spokesman, Victor Zonana. “We have not reached an agreement. It is too premature.”

Shalala did speak with Molina and Jackson in a morning conference call, and indicated a willingness to seek help on the health package.

But any federal help would require approval by the state Legislature and Gov. Pete Wilson, and possibly state funds that the federal government would match.

Chief Administrative Officer Sally Reed told the supervisors Tuesday that even if the federal bailout plan needs no state funding, “Our experience in the past on these . . . is very bad” because the state has balked at following policy changes dictated by Washington.

Outside, protesters jammed the sidewalks in front of the county supervisors’ meeting auditorium, chanting, blowing whistles and carrying signs. There were new signs in the crowd, many of them attacking Wilson. “Wilson to LA: Drop Dead,” said one.

“Where’s the money, Pete?” said another.