Good Medicine, Fewer Hospital Beds

David Cundiff is an internist at County-USC

The Board of Supervisors’ vote to spend up to $900 million for a replacement Los Angeles County-USC Medical Center with 600 beds was a tremendous disappointment to me as an attending physician there. My experience affirms the findings of federal, state and county health care analysts that the hospital’s resources go disproportionately to emergency and acute inpatient specialty services, leaving inadequate primary care and other out-of-hospital services for the county’s 3 million medically indigent and MediCal patients.

Of the 56,000 people admitted to the hospital in a typical year, 500 to 600 come to my internal medicine inpatient service. I also supervise USC medical students, interns and residents in providing more than 4,000 primary care outpatient clinic visits per year for medically indigent people. Recently, I reviewed the records of 52 consecutive patients sent to my inpatient service this year and found that 15 did not need the number of days hospitalization they had or did not need hospitalization at all. But County-USC Medical Center gets more than $1,500 per acute-care hospital day, as compared with less than $20 that MediCal pays for a primary care outpatient visit. So you can see how the current imbalance has evolved.

The following examples will illustrate why the current financial reimbursement structure favors hospitalization and impedes good care while increasing costs:


* A popular and successful pain and palliative care service for terminally ill cancer and AIDS patients virtually closed two years ago in a downsizing move. The service had saved MediCal (and cost County-USC) $20 million over nine years because of reduced inpatient and emergency services for patients who preferred hospice or home care to hospitalization.

* More than 40* of the admissions to County-USC are related to alcohol or drug abuse. There is no department specializing in rehabilitating drug and alcohol addicts. They often find it difficult to access private services such as methadone maintenance or inpatient detoxification and rehabilitation programs. The hospital profits significantly when addicts have repeated admissions for complications of their substance abuse; the hospital loses potential funding when addicts stay sober.

* County-USC Medical Center has two state-of-the-art cardiac catheterization labs but no cardiac rehabilitation program to focus on diet, exercise and stress management. Inpatient diagnostic and therapeutic procedures like cardiac catheterization, coronary angioplasty and coronary artery bypass grafting are well reimbursed by MediCal insurance, but resources going to diet and lifestyle changes that reduce the risk of atherosclerosis lose money for the hospital.

A new 600-bed hospital will perpetuate the financial incentive to keep patients in the hospital and to overuse expensive medical technology. Better care options include leasing acute-care beds from other nonprofit hospitals or buying a 300- to 400-bed hospital and leasing private hospital beds when more capacity is needed. We should use the money saved from not rebuilding County-USC to employ more health care workers to provide out-of-hospital services and to improve the deplorable conditions for doctors and other health care providers in training.

Correcting the reimbursement imbalance also requires that MediCal change from a fee-for-service program to a per-patient reimbursement program. The money saved could increase outpatient clinic visits from the current level of 3 million a year to at least 10 million per year.

Once County-USC’s funding is determined by the number of uninsured and MediCal people served rather than the intensity of services provided them, it will have the financial incentive to appropriately restructure. The hospital will be rewarded for excellent pain and symptom management of terminally ill patients in their homes or in inpatient hospices. It will be financially rewarded when addicts achieve sobriety rather than when they are rehospitalized for repeated complications of substance abuse. Doctors will have incentives to help patients reduce cardiac risk factors and therefore decrease the need for expensive diagnostic and treatment for coronary disease. This will allow us to provide much more care by more efficiently using taxpayers’ dollars.