Health Care Out of Hope?

President Clinton flew to the rescue seven years ago, landing on the tarmac of Santa Monica Airport to announce a $1-billion bailout for the county’s teetering health-care system. It was a dramatic gesture, meant to spur great reforms and quell recurring fears of collapse.

Now, skidding toward a $500-million to $750-million health-care deficit, county supervisors are scheduled to consider Tuesday whether to end inpatient services at two of four full-service hospitals.

Even after the 1995 bailout and a $1.2-billion second helping in 2000, the Los Angeles County health system is sitting just about where it started: in deep financial trouble.

Unable to count on a third federal rescue, county supervisors are back to the cutting board. And they are asking voters to approve a $168-million parcel tax to sustain core medical services: the emergency room and the trauma network.

But as they plead for more money from Sacramento, Washington and their own constituents, the supervisors are running into some skepticism.

“The L.A. County hospital system was supposed to be reforming and becoming more efficient, and it basically hasn’t,” Tom Scully, the top Bush administration health official who runs the Centers for Medicare and Medicaid Services, said in an interview last month.

Said Jon Coupal of the Howard Jarvis Taxpayers Assn.: “It seems to us that the burden of proof should be on the county showing that they have met their efficiencies before they go out asking for more money.”

In exchange for the 1995 bailout, the county pledged to cut the size of its hospitals, increase the number of cheaper outpatient visits and streamline its health department. It fell short, to varying degrees, on all three promises.

But as the massive deficit looms closer, supervisors have begun to take the bad-tasting medicine they long avoided.

In June, for example, they voted to end inpatient service at High Desert Hospital. On Tuesday, they will discuss whether to close Rancho Los Amigos Medical Center, a rehabilitation hospital in Downey, or turn it into a self-supporting entity. They are moving to consolidate specialty care and to centralize their records to better track patients’ care.

All those reforms had been discussed -- and postponed -- in the past.

County supervisors argue that they have made real, if incomplete, progress. They cite expansion of outpatient care and note that they have kept their budget from climbing, even as medical costs soar, private hospitals close and the number of uninsured residents rises.

Other reforms, they say, are tougher to implement because of entrenched opposition from special interests.

“Every time you try to change anything, you’re an ogre,” Supervisor Yvonne Brathwaite Burke said. “All the unions say we can’t lose any workers. [Medical schools] tell us, ‘Well, you’re going to destroy the medical schools’ ” that count on county hospitals for physician training.

Some reforms the county did make are returning to haunt it. Consider the attempt to shift to outpatient services.

Normally, the federal government pays much more for treating Medicaid (Medi-Cal in California) patients in hospitals. As part of the bailout deals, county clinics could get extra money for outpatient care. But as the latest bailout begins to expire, the county will receive far less money for its now-expanded clinic system.

To some, that shows that the county’s problems are not all of its own making.

“It isn’t as if there haven’t been any mistakes and there hasn’t been some faulty management,” said Robert Tranquada, a former USC professor who helped create the Department of Health Services in the 1970s. “But the whole thing is set up so it can’t be solved.”

Some medical experts and county officials argue that even if the health system were run perfectly, it would face periodic crises because it has been chronically underfunded and the county has among the highest rates of uninsured people in the nation.

Whatever the true reasons for the county’s predicament, an enormous system serving 800,000 patients a year is at stake. Most of them are the uninsured working poor, but the county’s trauma system serves everyone, treating more than half the victims of car accidents and gunshot wounds in the region.

“It would be a huge disservice to the public” if more funds were not forthcoming, said Dr. Brian Johnston, an emergency room physician and former president of the county medical association. “We can deal with governance and efficiency later, but at the moment the system is starved for funds.”

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The 1995 bailout was touted as a national model for how to expand treatment of uninsured people while saving money.

“A lot of people all over America will be learning a lot from what you are doing,” Clinton said that day on the tarmac.

Instead, the county itself learned some hard lessons.

It was unable to cut its health budget significantly, even as it tried to scale back expensive hospital care and concentrated on outpatient services.

Some medical experts and supervisors say that, in retrospect, the bailout deal may not have been the best medicine for Los Angeles County.

“They never should have said they could fix it,” Tranquada said, “because until the system of funding these services is fixed, they can never fix [the county health department].”

Supervisors say their experiment shows that there is no way to care for the uninsured on the cheap.

“Turned out that the more people you saw in an outpatient setting, the more maladies you saw and diagnosed -- which required those people to go into a hospital,” Supervisor Zev Yaroslavsky said.

He argued, though, that the endeavor was worthwhile. “I think it’s been a significant, partial success,” he said.

Perhaps the boldest part of the county experiment involved signing contracts, beginning in 1996, with about 100 private clinics to treat the uninsured. In one move, the county tripled the number of sites where it could provide outpatient care.

But over time, the county failed to meet its targets for outpatient visits. The deal called for the county to have 3.9 million by 2000; it fell 900,000 short, angering federal officials.

In 2000, those officials expanded the bailout -- but with a catch. The money would begin to dwindle after two years, running out in 2005.

But the county would have to continue to see as many people on an outpatient basis each year as it had been.

So far it has done that, but supervisors say the strategy is unworkable over the long term.

The county has had even less success in directly cutting health-care costs.

It promised to find about $300 million in savings in the 1995 deal, but came up with only about $90 million.

It was only this year, with deficit projections deepening, that the county’s new health director, Dr. Thomas Garthwaite, proposed cuts that over time could save $300 million annually. The supervisors approved them in June.

Politics have complicated matters. Perhaps nowhere is that more evident than in efforts over the years to scale back hospitals, often the pride of a supervisor’s district.

The county has cut the number of hospital beds it operates by 30%, slightly less than the 33% reduction it promised in 1995.

A fight over rebuilding earthquake-damaged County-USC Medical Center on a smaller scale dragged on for three years.

In 1998, the board majority angered fellow Supervisor Gloria Molina, whose Eastside district includes the hospital, and Latino lawmakers in Sacramento with its decision to build a replacement with 600 beds rather than the planned 750.

“I have never seen such a vitriolic attitude within the state Legislature,” Burke said. “They almost wanted to recall us.”

The county ultimately compromised with Sacramento and Molina, and agreed to build an 80-bed satellite hospital in the San Gabriel Valley. Those plans are on hold because state funding that had been promised has not arrived, a county spokesman said.

Supervisors also have wavered on whether to close or sell off hospitals.

During the 1995 health crisis, they voted to privatize Rancho Los Amigos, a nationally recognized rehabilitative hospital. Two years later, after the bailout, they reversed themselves. Now they are considering a proposal to make the hospital self-supporting, saving about $35 million.

In the case of the 76-bed High Desert Hospital in Lancaster, county health officials for years conceded privately that it could serve more patients at lower cost as an outpatient facility.

The arguments were made in private for fear of angering Mike Antonovich, whose district includes the hospital. Last year, then-health Director Mark Finucane backtracked on a proposal to close the hospital after being scolded by Antonovich. Months later, Antonovich led a group of supervisors who forced Finucane from his job.

In December, even as board members spoke of the need to cut the health department, they directed its medical officials to study expanding High Desert Hospital by adding an emergency room.

This summer, Garthwaite proposed that the hospital instead be converted into an outpatient facility. Antonovich and the other supervisors now agreed.

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In November 2000, as the board put off one of a series of votes on proposed cuts in the health department, Supervisor Molina bemoaned the forces keeping the county from reforming health care.

“What we’re also saddled with is a Board of Supervisors who talk tough ... but cut our clinics, cut our hospitals; we go out screaming in the streets,” she said.

Now, most supervisors insist, they are genuinely ready to make the tough choices.

They surprised many observers by making a round of deep reductions in June without dissent.

This week, they are poised to consider more severe cuts, such as ending inpatient services at Harbor-UCLA Medical Center near Torrance and Olive View Medical Center in Sylmar.

“We have had five years to begin those cuts,” Antonovich said last week. “Every year we delay is going to [make it] worse.”

But even as the supervisors gird for cuts, they have shown a willingness to spend money. Earlier this month, they narrowly approved $18 million in raises to minimum-wage home- care workers.

Days later, one county health official privately marveled: “They did it again.”

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Times staff writer Charles Ornstein contributed to this report.