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Options Are Few in Health Dilemma

Times Staff Writer

With $16.5 billion to spend on Los Angeles County’s vast government, it might seem easy enough to find $75 million to save a few crucial health services.

In fact, however, supervisors and others say it is more difficult than it appears. Policy decisions over the years have committed some of the county budget to programs that are not easy to adjust quickly, and mandates have tied officials’ hands in other areas.

Today, local officials control only a small fraction of the county’s overall revenue, with more than 90% earmarked for specific state and federal programs. So when a judge recently halted county plans to save $75 million by closing one hospital and trimming beds at another, officials were left with few immediate options. The budget hole must be filled quickly to rebalance the books for the coming year.

The choices, none pleasant, include chopping other badly needed health services such as medical clinics or emergency rooms.

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Or yanking millions of dollars out of law enforcement, libraries, parks or other programs that also have taken a big financial hit this year.

Or begging for mercy from state and federal governments saddled with their own financial problems.

“I don’t know what we can do,” said Yvonne Brathwaite Burke, chairwoman of the county Board of Supervisors. “Frankly, I wish I could say, ‘My solution is to do this, this and this,’ but it wouldn’t provide the amount of money we need to maintain the existing health system.”

In the longer term, the supervisors could explore a range of money-saving reforms, such as narrowing limits on which hospital patients to accept and what medical services to offer. They could negotiate new contracts with public employee unions, or hire some private companies to do part of the work.

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But such fundamental policy shifts would take months or years to implement -- and probably would unleash a storm of political opposition.

For now, county leaders must look to readily available pots of cash. There aren’t many big enough to do the trick.

Even if the supervisors chose a drastic remedy -- say, eliminating the Department of Parks and Recreation -- that would save only $60 million. Closing all 84 county libraries wouldn’t suffice either; that would conserve just $21 million.

Cutting the whole Board of Supervisors and its 300-person administrative staff, which runs the county’s executive office as well as board-appointed commissions and task forces, would save $41 million.

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So far, no one is suggesting such measures. The county has instead tried to plug the growing deficit in its Department of Health Services by jettisoning health programs and shifting money around within the $3.1-billion department.

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It’s Not Working

But it’s not working. Blocked at least temporarily by the court, the county must preserve what it had planned to cut: Rancho Los Amigos National Rehabilitation Center in Downey and 100 beds at County-USC Medical Center in Los Angeles.

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Health officials could try to pare costs somewhere else in the system, but attorneys defending poor patients have threatened to sue the county again if it tries to slash patient services.

So what else is left? Where might the nation’s largest county, serving a population greater than that of 42 states, turn to find more money?

Skeptics -- and there are plenty -- say Los Angeles County retains a fat and sluggish bureaucracy rife with inefficiencies and larded with generous benefits for its 91,000 employees.

“Los Angeles County is still viewed as the land of milk and honey as far as public employees go,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn. “They may have to take some pay decreases. That’s what’s happening in the private sector.”

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Any pay cuts would have to be renegotiated with the unions.

County officials often insist that their hands are tied because so many of the services they provide, from welfare to foster care, are mandated by the state or federal governments.

Indeed, the largest chunk of the 2003-04 budget -- $12.8 billion -- is set aside to pay for such mandates, as well as debt service and other fixed costs. Most of the health department’s budget comes from federal and state sources.

An additional $2.4 billion covers services that the county must maintain to qualify for matching dollars from Sacramento or Washington. For example, Los Angeles County must kick in $15.9 million toward AIDS programs in the coming year to receive about $42 million in federal AIDS funding under the Ryan White CARE Act. Scrap the $15.9 million, and the matching money goes down the drain.

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The same holds true for the $1.2 million the county contributes toward alcohol and drug prevention, a required match that leverages about $9 million in state substance-abuse funds.

Counties throughout the state are in the same bind. According to a 1999 report by the Public Policy Institute of California, counties have been transforming from independent local governments into agents of the state and federal governments ever since the Great Depression.

“Counties have become dependent on state and federal budgets and have lost control of their own destiny,” Los Angeles County’s top administrator, David Janssen, told the board in a recent report.

But critics say the county could be delivering its mandated services in a much cheaper way. They point to places such as San Diego County, where instead of running public hospitals, county leaders have contracted with a university hospital to care for the uninsured.

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Los Angeles County supervisors also have chosen to offer a relatively generous menu of services. For instance, the county provides emergency care for illegal immigrants at an estimated cost of $340 million a year; San Diego County refuses to pay for such treatment.

Others say the county could be tapping more revenue. Tom Scully, the federal official in charge of Medicare and Medicaid, has urged the county to court elderly patients more aggressively to capture more Medicare dollars. Most public hospitals receive between 12% and 15% of their funding from that government insurance program, but only 4% of Los Angeles County’s health revenue comes from Medicare.

“They just, as a tradition, don’t think of marketing to seniors,” Scully said. “They think of themselves as the low-income, indigent-care hospitals. Well, there are plenty of seniors in those neighborhoods who would use those hospitals.”

Reforming the county’s health-care business will take time -- and the county is hardly known for moving quickly. It’s already been eight years since the Clinton administration gave Los Angeles a $1-billion bailout for its faltering health system; efforts to streamline services and trim costs have yet to yield a stable solution.

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More immediately, the county could pull money out of its so-called discretionary programs. It has about $1.3 billion, just 8% of its overall budget, to be spent as the supervisors see fit.

Many of the things residents expect from local government -- staples such as public libraries and parks, beach lifeguards, animal control services and the coroner’s office -- come from that discretionary pot of money.

Could some of the cash be diverted to the health department, whose heavy load of uninsured patients will drag it into a $1.1-billion budget hole within five years?

In a seventh-floor office at the county Hall of Administration, health budget manager Sheila Shima pores over a stack of color-coded charts looking for stray dollars. Each discretionary program, from anti-gang youth groups and probation camps to county golf courses and the performing arts center, seems important. Legally, the Board of Supervisors could pry money away from such things to prop up its wilting health department.

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But politically?

“Each of these line items has a constituency. If we ever tried to touch this money,” she said, pointing to a line referring to an AIDS program, “we’d have all the AIDS activists out.”

Or the children’s activists, or the advocates for the homeless, or the labor unions, or the homeowner groups, or just about anyone else with a stake in any of hundreds of county programs.

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Public Safety?

If the county were to shift a sizable portion of its discretionary cash toward health services, it probably would come at the expense of public safety. About 38% of the $1.3 billion goes to the sheriff’s, probation, district attorney and other public safety departments, while 10% goes to the health department.

Chief Paul Tanaka, who oversees the sheriff’s budget, said that, by summer of next year, his department will have absorbed at least $177 million in cuts over two years.

But even Tanaka, a fierce defender of law enforcement, is reluctant to say that his programs are more critical than those that help sick or wounded people.

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“If you get injured, you’d sure want hospital services,” he said. “But if you get carjacked on the street, you’d sure want us.”

Tanaka said crime is already rising in unincorporated areas patrolled by the Sheriff’s Department, which slashed community policing teams there to save money. When the department is pinched for cash, it’s often the unincorporated areas that suffer most because the sheriff cannot cut services to the 41 cities he is bound by contracts to serve.

In the first four months of this year, the homicide rate in unincorporated areas near Temple City shot up 400% over the same period last year, Tanaka said. It soared 200% in the unincorporated regions near Lancaster and Pico Rivera. Miguel Santana, a longtime aide to Supervisor Gloria Molina, was pessimistic about the public’s likely reaction to gutting other programs to save health services.

The supervisors “could say, ‘We’re going to shut down every library, every park, every senior center.’ But then you need to ask: Is county government only a health-care agency?” Santana said.

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“Most people have never been to a public hospital,” he added. “They’d say, ‘We need our library. Go ahead and shut down that hospital we’ll never go into.’ ”

To avoid deeper cuts, the supervisors have been furiously lobbying Sacramento and Washington in an effort to scare up more money. But the federal government’s patience is clearly running out; since 1995, it has given Los Angeles more than $2 billion in three bailouts of its tattered health system.

Things aren’t much more promising at the state level, where lawmakers are wrestling with their own budget shortfall, estimated at $38.2 billion. In fact, the state budget proposed this month by Gov. Gray Davis could cost Los Angeles County more than $100 million in lost revenue.


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