County, U.S. at Odds Over Long-Term Overhaul of Health System

Los Angeles County officials confirmed Tuesday they are at odds with the federal government over long-term restructuring of the troubled health system, and said they are worried about how to proceed without knowing the amount of money that will come from Washington.

At the weekly Board of Supervisors meeting, health officials said a proposed $364-million bailout of the health system pledged by President Clinton last September is all but assured for this fiscal year, which ends June 30.

But, they acknowledged, another significant problem has cropped up, as reported in The Times on Saturday: The federal government does not want to negotiate how much money the county will receive in the remaining years of a five-year health restructuring effort until the $364-million bailout is completed.

It is that insistence by federal officials on separating the short- and long-term financial issues that could pose serious problems, Health Services Director Mark Finucane and former county health czar Burt Margolin told the supervisors. They said the county will need more federal money to make the transition from their outmoded health system based on costly in-patient hospital services to less expensive, preventive outpatient care.

County officials say they are already facing a health deficit of more than $150 million in the next fiscal year.

“You can’t build new outpatient clinics if you are trying to fill a hole” created by the deficit, Finucane said.

The extraordinarily complicated negotiations focus on a proposed waiver of Medicaid regulations that the county is seeking so it can use federal money now earmarked for hospital care for outpatient services.

Supervisor Zev Yaroslavsky sought to counter criticism that the county does not have a restructuring plan by noting that the county has laid off 2,600 health workers, privatized six clinics and reduced the number of hospital beds.

While county officials sought Tuesday to downplay federal officials’ concerns, they said they fear the county must resolve some long-term issues in the next few months when they begin their annual budget deliberations.

Both Finucane and Margolin--now a county legislative strategist--said that in almost daily discussions with federal officials, they have strenuously objected to separating the short- and long-term issues because they want to ensure that their long-term concerns are addressed.

So far, however, federal officials are insisting on separating the two issues. “We’re not going to mix the two,” one senior White House official said last Friday.

Supervisor Deane Dana and Chief Administrative Officer Sally Reed said they were concerned because the county needs at least some estimate of federal funding levels while formulating its budget. Supervisor Gloria Molina added: “We’ve got to get going.”

Margolin said negotiators are ready to head to Washington on a moment’s notice. Finucane also said he has told federal officials: “We’ve got to get off the dime here. . . . I need some help about how we are going to move to this outpatient world and if it is not going to be forthcoming, let’s just get that settled.”

Times staff writer Jeffrey L. Rabin contributed to this story.