Health Dept. Faces Tough Challenges

When Dr. Thomas Garthwaite took over the massive Los Angeles healthcare system nearly four years ago, he immediately faced deep-rooted financial problems that eventually forced him to recommend cutting medical services, reducing inpatient beds and closing hospitals.

When the replacement is chosen for Garthwaite, who announced his resignation Tuesday, the challenge will be much the same: keeping the nation’s second-largest public health system, which treats 715,000 patients annually, from going under.

After back-to-back federal bailouts in the last decade, the health system once more is facing the prospect of mounting deficits, beginning with the next county budget. The cumulative deficit is projected to total $866 million by 2009.

This is a perennial problem: sustaining a public health system in Los Angeles County, where about 2.2 million people are uninsured.

There is “a constant financial cloud that hangs over the department,” said Robert C. Gates, who served as health director from 1984 to 1995, when the department nearly dragged the entire county into bankruptcy.

To some health experts, the solution seems obvious -- though frustratingly elusive. “There has to be additional sources of funding,” said Dr. Robert Tranquada, retired dean of the Keck School of Medicine of USC.

But getting new state or federal funding is not going to be easy, especially under Republican administrations in Sacramento and Washington facing their own budgetary squeezes.

At the same time, the county doesn’t have the luxury of cutting back any more -- not without striking the system’s sinews and bones, said Jim Lott, executive vice president of the Hospital Assn. of Southern California.

“We cannot simply afford to have the types of cuts Dr. Garthwaite proposed three years ago,” Lott said. “We cannot take major county hospitals offline. That just simply will not work. That will crush the entire emergency medical service system that serves everybody.”

Indeed, some of the deepest cuts Garthwaite proposed in 2003 -- closing Rancho Los Amigos National Rehabilitation Center in Downey and eliminating 100 beds from the flagship County-USC Medical Center -- were blocked by a federal judge, who ruled that the county would be hurting the region’s most vulnerable patients.

For Garthwaite’s successor, financial savvy, experience in Los Angeles County and political connections with state and federal politicians and policymakers are a must, Lott said.

The county has turned off some state and federal lawmakers in the past by assuming that the magnitude of its system and its needs obligated the lawmakers to generously respond, Lott said. He added that leaders need to make the case that financing Los Angeles County’s healthcare system is in the state’s and nation’s best interests -- for example, that the county’s hospitals and clinics need to be capable of responding to terrorism.

Others suggested that the county rethink the very structure of its healthcare system, a sprawling organization that includes four general hospitals, an ambulatory care center and a rehabilitation facility.

“We’ve got a hospital in every supervisorial district, a political formula,” said Lark Galloway-Gilliam, executive director of the nonprofit healthcare advocacy group Community Health Councils. “It has got to follow the needs of the patients. We will have to lose something.”

Galloway-Gilliam and Lott also suggested trying more creative approaches to financing, infusing money, for instance, by requiring county employees to use the health system as their HMO.

Supervisor Zev Yaroslavsky downplayed the dire financial projections for the Department of Health Services, saying they depict a worst-case scenario.

He pointed out that the county has more options today than in the past because voters agreed in 2002 to impose a property tax to keep trauma centers open and maintain emergency services. And the county receives the benefit of a legal settlement with tobacco companies.

But Yaroslavsky said, “We can’t substitute local tax revenues for federal and state health funds.... It’s impossible.”

Supervisor Yvonne Brathwaite Burke agreed that the county can’t stand on its own. “The reality is, unless something changes dramatically, we are not going to have a lot of paying clients,” she said.