Hospital executive Jerry Gillman can only shake his head.
When he became chief executive of Burbank’s Thompson Memorial Medical Center two weeks ago, he knew he’d face a savagely competitive health care market and uncertainty in federal programs like Medicare.
Now he also must plan for the fallout of Los Angeles County’s proposed budget cuts that could eliminate county health clinics without compensating private hospitals for taking on indigent patients.
“I don’t think it’s appropriate for the county to wash its hands of this,” Gillman said. “Public health is something that impacts everyone.”
Valley-area hospitals are among the first businesses likely to see a quick impact resulting from the repercussions of efforts to close Los Angeles County’s $1.2-billion budget shortfall.
With plans under way to shut down 28 of the county’s 39 clinics and all six of its comprehensive health centers, hospital executives are anxiously assessing how to balance their medical obligations to treat the sick and injured with their need to remain financially solvent.
What aggravates the problem here is that other market forces are already pushing hospitals to cut back, merge or simply shut down.
Of the 39 hospitals now operating in the San Fernando, Santa Clarita and Antelope valleys and Ventura County, as many as six may close in the next five years, the Healthcare Assn. of Southern California estimated before the current crisis began.
That number will now grow, predicts David Langness, the association’s vice president.
In addition, some hospitals may opt to close their emergency rooms rather than treat the influx of indigent patients expected as a result of county budget cuts.
“If you start developing huge losses all of a sudden from treating uninsured patients, you can close your emergency room or you can wait a few months and close your whole hospital,” Langness said. “If you are a nonprofit operating close to the margin . . . these patients can push you over the edge.”
Hospitals in the Valley were in trouble even before the current crisis because they were built when thriving aerospace and defense industries provided vast numbers of insured patients to fill beds.
Those industries faded and cut into the ranks of the insured. At the same time, health maintenance organizations insisted on lower costs and shorter hospital stays. Advances in medicine contributed to the trend by shortening hospital stays.
Less than half of the beds of Los Angeles County hospitals were filled during the first three quarters of 1994. More than half the hospitals in the county are operating at a loss, some analysts contend.
An estimated 1.4 million people will be left without health care by the county’s actions, the Healthcare Assn. said. In the Valley area, even conservative estimates by the association indicate that 300,000 patient visits will have to be absorbed by the private sector in the first year alone.
County officials have said they have few alternatives given the budget crunch, which includes a $655-million shortfall in the Health Services Department.
The county-funded clinics provide same-day services such as prenatal care, treatment of tuberculosis and sexually transmitted diseases and other types of preventive medicine.
But a health care task force recommended shutting down most of the clinics, which are the smaller health centers located in neighborhoods around Los Angeles County. Instead, the county plans to keep bigger medical facilities like County-USC Medical Center open. The plan’s intent was to keep emergency facilities operating while closing preventive care centers until money can be found to reopen them.
The county’s supervisors have said they would postpone dramatic cuts until Oct. 1, to give health officials time to search for a bailout from state and federal governments. But one health department memo instructs clinics to stop accepting new patients as of today.
“What we’re starting to witness here is the breakdown of L.A. County’s safety net,” Langness said. “We are linked together by our health care needs. The system can’t serve anyone when it’s over burdened. We’re looking at a breakdown not just for the poor and uninsured. We’re looking at a breakdown for everyone.”
What hospital officials don’t know is how quickly they could feel the pinch and how evenly the pain will be spread.
“This has never happened on this scale before,” said Dennis Coleman, chief executive officer of Granada Hills Community Hospital.
Take Gillman’s hospital as an example. The financial threat of the county’s decision weighs heavily on hospitals the size of Thompson Memorial Medical Center, with just over 100 beds. Gillman said larger hospitals “at least have more dollars to work with.”
“If we are inundated with a bunch of no-pays,” Gillman said, “it could be devastating.”
Larger hospitals don’t think they are that much better off. A few miles away from Thompson, at mammoth St. Joseph Medical Center, chief financial officer Mitchell Thomas is worried about staffing levels in the emergency room, which already handles 3,000 patient visits per month.
At Valley Presbyterian Hospital in Van Nuys, Chief Executive Officer Robert Bills said doctors and administrators are bracing for an influx of patients. The hospital is located near a comprehensive health center targeted for closure.
Trauma centers, like Holy Cross Medical Center in Mission Hills, seem especially vulnerable because of the high cost of treating victims of auto accidents, shootings and other life-threatening emergencies.
“The consequences are catastrophic,” said Carl Fitch, chief executive officer and president of Holy Cross. “Our expenses will go up dramatically. We won’t be able to serve the community at all. The failure of the county system could ultimately be the failure of the private system if we don’t figure out a way to pay.”
Hospital executives and county health officials are working feverishly on alternatives, such as forming public-private partnerships to run clinics slated for closure. Part of the reason to do that would be to limit a hospital’s exposure to vast numbers of uninsured patients.
Gillman of Thompson Memorial even sees opportunity, because he believes the private sector could run much of the county’s operation more efficiently.
And with so many hospitals facing financial ruin because their facilities are underutilized, Gillman argues it could be beneficial to both the public and the private sector to devise some sort of reimbursement mechanism.
“There’s room for improvement,” he said.