Supervisors OK Limited Health Services Cuts

A much-awaited plan by the Los Angeles County health department to address a looming funding shortfall identified a few possible cuts Tuesday but left the agency’s most difficult questions for a new director, who takes over next week.

The plan, approved by the Board of Supervisors, calls for administrative consolidations and some internal restructuring that shave a mere $8.5 million from the department’s $2.5-billion bud- get--a continuation of the agency’s 10-year trend of nipping and tucking.

Also among the recommendations accepted by the board are the closures of five “underutilized” county health clinics: Northeast, Compton, Sepulveda, Paramount and Burbank--one in each of the supervisors’ districts. Department officials acknowledge that this will save at most an additional $5 million.

The Department of Health Services faces a $688-million funding shortfall in three years, when the federal government’s bailout of the agency runs out.

“These clinical consolidations will not result in significant changes, but will set the tone,” said Fred Leaf, interim health director.

County supervisors approved the plan and credited the department for heading in the right direction, but criticized it as not going deep enough, quick enough.

“This is nothing,” Supervisor Zev Yaroslavsky said. “The big bucks are not in health clinics or in public health, they’re in the hospitals.... The tough decisions are the ones you’re postponing,” he told Leaf.

A new director, Dr. Thomas L. Garthwaite, former undersecretary of health for the Department of Veterans Affairs, will take over next week.

“When I look at these numbers,” agreed Supervisor Yvonne Brathwaite Burke, “I’m not convinced we can cut” enough to make up for the deficit when the federal bailout begun in 1995 begins to phase out next year.

The department has enough cash in reserves to cover next year’s losses, but estimates it will rack up a $364-million deficit the following year.

“At that time, the health department goes bankrupt,” Supervisor Gloria Molina said. “People are under the impression that we can solve this, but it’s not true. In ‘03-’04, we go off the cliff--in a big way.”

The bailout took the form of a waiver of Medicaid rules, thus allowing the county to charge a higher rate for outpatient visits. In exchange, the county agreed to move the system away from expensive hospital treatment to less-expensive outpatient care.

Tuesday’s report shows that increased primary care was not cutting costs as hoped.

Burke suggested that those statistics may help the county’s case in appealing to the federal government for further help.

That is the only way the county can provide health care for its 2.5 million residents with no health insurance, 90% of whom are employed, said one health advocate.

“You can’t cut your way out of a $600-million deficit,” said Beth Osthimer of San Fernando Valley Neighborhood Legal Services. “It’s a closure of the system.”

But Molina cautioned that the Bush administration is unlikely to offer any more help and called for more concrete plans to meet the looming funding shortfall.

And that shortfall may be even bleaker than yet known because it does not account for reduced federal funding for Medi-Cal, increased state fees and a state proposal to limit the number of patients assigned to nurses at hospitals.

The plan revealed Tuesday seeks to improve management of the department and its hospitals and to take a hard look at which services are necessary at every facility and which can be consolidated into just a few.

Leaf said such measures ultimately could save the department $100 million a year or more without cutting into funding streams. But that is only a fraction of what’s needed.

“There’s no way to solve the problem through cost reductions and reforms,” Leaf said.

But he added that demonstrating to the federal government that the county is “moving into the 21st century” in an effort to solicit additional help is the only way to stave off severe service cuts.