Major Cuts Still Ahead for County : Health care: Officials say 1,600 workers, up to $78 million in outpatient services are at risk despite U.S. bailout. They urge keeping health centers, some clinics.

Despite a federal bailout, more than 1,600 Los Angeles County health workers still could lose their jobs and hospital-based outpatient clinics that provide care ranging from the routine to the lifesaving remain in jeopardy of dramatic cuts, county officials said Monday.

Health officials met behind closed doors with county supervisors and their staffs in a daylong series of meetings--the third straight day in which marathon talks were held to determine how the county can save parts of its health system while dismantling others. The federal government is insisting that the county profoundly restructure its $2.1-billion public health system in exchange for the funding infusion.

Although the bailout will help the nation’s second-largest health care system avert a “meltdown” caused by an unprecedented deficit, many of the 5,200 workers targeted for layoff or demotion may nonetheless soon be out of work.

“It appears it may be a 40% reduction; that is, about 40% [of the 4,166 given layoff notices] will still have to go out the door,” said a top county official familiar with the discussions. “There certainly will not be a return to business as usual. There will be a large number of layoffs.”

Last month, county supervisors approved a spending plan that would have required closing all six of the county’s comprehensive health centers, 28 of 39 smaller neighborhood clinics and 75% of its hospital-based outpatient clinics.

But after a $364-million rescue package announced by President Clinton last Friday, top county officials are recommending that funds be restored for much of the county’s far-flung network of comprehensive health centers and smaller clinics, while they press ahead with deep cuts in outpatient care at the county’s six hospitals.

“We have developed a plan which we believe is consistent with the board’s instructions not to return to ‘business as usual’ and to begin measures to ensure that we do not face a similar financial situation next year,” according to a draft memo submitted to the supervisors by Chief Administrative Officer Sally Reed, county health czar Burt Margolin and Robert C. Gates, director of the Department of Health Services.

The supervisors approved $98 million in reductions in outpatient hospital care last month, effectively slashing those services by 75%. Margolin and other county officials now recommend restoring just $20 million of that money, according to the draft memo, which is to be considered by the Board of Supervisors today.

The county operates 690 clinics at its hospitals that provide walk-in care for those with heart problems, cancer, high blood pressure, ear, nose and throat conditions and other ailments.

The proposed closure of most outpatient clinics triggered a federal lawsuit by legal advocates for the poor and disabled that charged that low-income patients would be deprived of vital medical care. On Monday, the legal coalition withdrew its suit a month after filing it, saying it wants to see how many services the county supervisors will restore with the federal money.

The supervisors, eager to restore some of those services and jobs, may act today at their meeting to accept some or all of the recommendations as they race to beat the Oct. 1 deadline for closing clinics and laying off or transferring employees. The memo also recommends postponing all layoffs for at least a month.

Margolin, Reed and Gates also urged that hospital inpatient operations be reduced by 10% in the coming year. They said seven neighborhood clinics should be quickly turned over to private operators and another 22 should be privatized by June.

In an indication of possible obstacles ahead, however, Board of Supervisors Chairwoman Gloria Molina said the recommendations do not go far enough because they leave a $192-million deficit for next fiscal year.

“I’d like to save every single clinic and I’d like to save every single job, but we’ve got a bigger responsibility than that,” Molina said. “We’ve got to save the system overall, not just for next year but for the long haul. I don’t think it’s sufficient to say that we can move forward without really wrestling with that deficit.”

Mary Jung, chief deputy director of the Department of Health Services, and other top health officials did not return calls seeking comment on the proposals.

Reed confirmed that, based on what the county expects to receive from the federal government, the 40% layoff figure is “an accurate approximation. It fits in with the amount of money we hope to have.”

County personnel chief Michael Henry said, “while the current proposed funding level will mitigate the projected layoffs and demotions and keep hospitals open, there will still be a large number of layoffs required to stay within the funding level provided.”

Citing frayed nerves, county officials said they want to rapidly notify some employees that their hopes of a reprieve from layoffs will not come true, while telling other employees that their jobs are safe--especially highly trained personnel such as trauma nurses who are being snapped up by private hospitals.

“Are the harder decisions ahead? Absolutely,” said Reed. “It is clear there is not enough in this package to eliminate the layoffs.”

“I’m trying to have people not think everything is OK,” Reed said. “The problem isn’t gone. There are still some significant reductions here, and some significant problems we are going to face, both this year and in future years.”

Dan Savage, spokesman for Local 660 of the Service Employees International Union, which represents about half of the county’s 85,000 workers, said union officials were disappointed that layoffs are still necessary despite the federal bailout.

“With the federal money they got, they should be able to rescind all of the layoffs,” he said.

According to the memo, the health services department also would set up a $40-million reserve fund to help reduce the projected $192-million deficit for the next fiscal year, which begins July 1.

Health services officials also will continue to seek funding from the recently created $3.2-billion Blue Cross charitable foundations. But one supervisor’s aide called that plan “pie in the sky.”

As county officials scrambled to address the issue of whom to lay off and whom to retain, they said Monday that other problems have cropped up as well.

The county’s vaunted juvenile probation camps are more in danger of closing now than ever, Reed said, despite vigorous efforts to keep them open all summer while a lobbying drive was under way in Washington and Sacramento.

And court officials have demanded another $41 million in county funding this year, citing state laws that they contend guarantee a basic level of services. Reed has urged supervisors to reject that demand.

Although legal-aid attorneys agreed Monday to drop their lawsuit against the county in U.S. District Court, they said they will monitor the situation to make sure the cuts do not significantly reduce the level of care.

U.S. District Judge John G. Davies hailed the action as a “very, very wise choice,” since the proposed cuts have not yet been imposed, and thus none of the plaintiffs in the suit had suffered actual harm.

Beth Osthimer, a senior attorney for San Fernando Valley Neighborhood Legal Services, said she might refile the suit, depending on what cuts are eventually made by the supervisors.

“We need to know what the board is going to do tomorrow and assess the effects on our clients,” she said. “I don’t know what adjustments they are going to make.”

Osthimer said she was especially concerned about the proposed cuts in outpatient clinics at hospitals.

“We just want to make sure outpatient services include these critically needed services,” Osthimer said. “You need access to this expertise and equipment” that only hospitals can provide.