U.S. Loosens Rule on Quake Funds in Hospital Rebuilding

In a breakthrough that could accelerate Los Angeles County’s drive to downsize its fiscally troubled public health system, federal officials said Thursday the county can use disaster relief funds to rebuild earthquake-damaged hospitals and clinics as it sees fit, rather than return them to their configuration before last year’s Northridge earthquake.

James Lee Witt, head of the Federal Emergency Management Agency, said Washington also will make tens of millions of additional dollars available to repair county medical facilities.

Witt said he will allow the county to use federal earthquake repair money to build a smaller version of the giant County-USC Medical Center, rather than simply rebuild it as it was before being badly damaged in the earthquake.

“We’ll be able to provide dollars for that building or any alternative building that they might propose,” Witt said. “Then they would have a choice.”

County officials hailed FEMA’s policy switch, saying it will help the financially strapped county’s drive to downsize and overhaul its $2.1-billion network of charity hospitals and clinics. The county wants to save money by hospitalizing fewer people and treating them in less expensive outpatient clinics.

“It’s a major breakthrough,” said Supervisor Zev Yaroslavsky, who met privately with Witt on Thursday.

“We don’t know the dollar figure yet . . . or what this means to us totally financially,” he said. But, he added, “it certainly is going to be a dramatic increase over where we were. There are a lot of details that need to be worked out.”

Other county officials were more cautious in assessing Witt’s announcement. Chief Administrative Officer Sally Reed said federal officials had previously indicated that the county could choose how to apply earthquake relief funds to its reconstruction projects.

The county had been locked in a dispute with FEMA over the extent of damage to County-USC and other health facilities. Federal officials have questioned whether some of the damage the county wanted fixed was caused by the Northridge quake--as the county insisted--or by prior earthquakes or general wear and tear.

The county said the hospital alone suffered $1.3 billion in earthquake damage. After the temblor, its pediatrics pavilion and psychiatric hospital were closed and remain red-tagged.

The county has planned for several years to rebuild County-USC, which also suffers from numerous code violations, and federal relief funds could be applied to that project. On Wednesday, a San Francisco-based consultant urged county supervisors to build a scaled-down version of the hospital with 788 beds. The facility now uses about 1,000 beds, although it is licensed for 2,045 beds.