Will Reed's Exit Tempt County to Slide Back?

With Sally Reed leaving as Los Angeles County chief administrative officer, the supervisors and bureaucracy will be tempted to return to their lackadaisical ways.

Reed, a straight-talking, conservative bottom-liner, was hired as the county's top fiscal officer 2 1/2 years ago. She quickly learned that the county was spinning toward bankruptcy.

Her prescriptions were extreme, including closing County-USC Medical Center. The hospital is aging, but it provides the sole care facility for thousands of L.A.'s poor, as well as a badly needed emergency ward and a teaching hospital for USC.

That was too extreme for a more liberal county and Board of Supervisors.

Reed didn't understand the county and its politics. L.A. County, Democratic in registration, is middle-of-the road in its political orientation. The county has demonstrated no taste for throwing thousands of its residents onto the streets without medical care.

But it was her analysis, rather than her solutions, that made Reed so valuable. She used honest numbers, forcing the county bureaucracy and supervisors to abandon their former state of denial.

Early this month, however, Reed got so sick of the struggle that she resigned her $180,133 county job and took a $72,743 pay cut to become director of the state Department of Motor Vehicles.


It may be difficult for the supervisors to return to the past.

Reed' legacy of straight bookkeeping may be hard to obliterate. And fiscal and policy conditions have changed, especially in the health care field.

Even though the supervisors turned down Reed's drastic hospital closing proposals, change was on the way.

Throughout the country, the new economics of medicine, powered by cost-conscious health maintenance organizations, dictated shorter hospital stays and a greater reliance on out-patient care and preventive medicine. Los Angeles' public health system, based on the big, old hospitals, had become a dinosaur.

Unwilling to accept Reed's harsh solution, the supervisors turned to an outsider for help. He was Burt Margolin, a Los Angeles lawyer who had become an expert in the murky field of health care while serving in the state Assembly.

Margolin is what Reed is not--a smart political operator. He looked outside the ledgers for a cure to the county's funding shortage. He found it in Washington.

There, President Clinton was open to suggestions that would help him win support in California, crucial to his reelection hopes. And the Clinton administration, having lost its battle for health care reform, was looking for creative ways to provide medical care.

Margolin proposed that the county run an experiment in reducing health costs, eliminating a third of its hospital beds over five years, privatizing two smaller hospitals and increasing out-patient health care by 50%. The Clinton administration agreed, and provided $364 million, enough to bail out the county, at least temporarily.


Margolin told me that the new county administrative officer will be crucial in making the experiment work.

"The CAO is the most powerful official in the bureaucracy," he said. It is critical, he said, that the CAO vigorously support the reforms.

But strong elements in the county health bureaucracy have resisted change, even though an energetic new director, Mark Finucane, has been placed in charge. As F. Richard Brown, director of UCLA's Center for Health Policy Research, told Times reporters this month, "the main obstacle is the county's lack of experience in running a system focused on primary care and prevention, rather than emergency rooms and hospitals."

And, the supervisors could lose their taste for reform, despite their votes for the new program. Downsizing means possible work force reductions, inspiring the opposition of influential employee unions.

Sally Reed's successor will have to resist these forces and be the tough fiscal overseer, forcing the bureaucracy and the supervisors to stay on the money-saving health reform path.

Otherwise, L.A. County will backslide and once again be faced with the bankruptcy Reed helped avert.

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