Los Angeles County is facing a $1.2 billion budget deficit, of which $655 million is projected to come from health services, largely to the poor and uninsured. Sweating blood trying to keep county hospitals open, the county supervisors adopted a healthcare-crisis task force's desperate recommendation to close all but 10 of 45 outpatient clinics in the county. Experts are predicting that epidemics and other disasters will result.
Meanwhile, the people of California have been told they have a fortune coming soon. It's a byproduct of Blue Cross of California's conversion to for-profit status and the proposed merger of its for-profit managed-care subsidiary, WellPoint Health Networks, and Health Systems International. Blue Cross, with some prodding from the state, said it would set up two charitable foundations with $3 billion in assets gained from years of operation as a not-for-profit public-benefit company. The plan has yet to be approved by Gary Mendoza, the commissioner of the state Department of Corporations.
Blue Cross envisions the foundations as sources of funds to improve the healthcare of Californians, said Larry Bryant, director of corporate communications. "It would definitely be appropriate for the foundations to look at" handing out some funds to L.A. County as well as to other budget-wracked California counties, he said.
Mendoza recently requested more information on the plan from Blue Cross. With $3 billion at stake, the foundations must be carefully structured to protect the interests of Californians, he said. Blue Cross told Mendoza it has answered enough questions and has demanded a decision by Aug. 22.
I dare you.Amid the many events to mark the 30th anniversary of Medicare was one you may have missed.
The conservative Association of American Physicians and Surgeons-the same group that pursued a lawsuit against the Clinton administration over the White House Health Care Task Force-on July 31 charged patients $1 per visit and didn't bill Medicare as required under law.
Current Medicare law prohibits physicians from contracting directly with beneficiaries, a measure the AAPS strongly disagrees with.
According to AAPS spokeswoman Kathryn Serkes, at least 500 physicians participated and one neurosurgeon even performed surgery for the $1 fee. No physicians were arrested and HCFA did not mete out any fines.
Running on empty.Should 85 of Florida's 229 hospitals close?
John Nuveen & Co., Chicago, contends in a report that Florida is an overbedded market and that more than a third of its hospitals should close.
"It's tough to disagree that we have a lot of excess capacity," said Patrick Haines, the Florida Hospital Association's executive vice president. "(But for the report's author) to say 37% of hospitals should be closed raises a question of who should make that decison, the author?"
So Outliers asked that question of Nessy Shems, the John Nuveen municipal bond analyst who wrote the eight-page report, Florida Hospitals: Running on Empty.
Shems said it isn't up to him to decide which hospitals should close and which ones should stay open.
Based on utilization data and managed-care trends, some 20,400 beds are unnecessary in Florida, Shems said. With the average Florida hospital at 240 beds, 85 hospitals should close, he said. But only eight hospitals have closed in Florida the past five years, he said.
Another telling statistic: Florida averages 4.0 beds per thousand population compared with 3.6 beds per thousand nationally, Shems said. A 1993 study published in the New England Journal of Medicine found that integrated systems require only 2.0 beds per thousand population.
Bucolic endeavors.Two former Healthtrust executives are getting into the rural hospital business. Dana McLendon and Robert Martin have formed New American Healthcare Corp., a Nashville, Tenn.-based firm specializing in acquisition, ownership and management of rural hospitals of between 100 and 200 beds. "We'd like to get 20 hospitals in the next five years," said McLendon, New American's senior vice president of finance and Healthtrust's former vice president of system integration.
The pair expects to attract $75 million in venture capital and another $187 million through commercial banks. They said they're not ready to disclose which venture-capital firm they're working with because they don't want to discourage any potential partners.
"That $260 or so million would cover acquisitions of those first 20 hospitals," said Martin, New American's chief executive officer and a former regional vice president of Healthtrust's eastern region, which included 17 hospitals in six states.
Initial targets are public hospitals located in population centers of between 15,000 and 30,000 people. The hospitals acquired also would have to be 45 minutes to an hour away from the nearest tertiary provider.
"We will be acquiring and doing long-term leases, which would basically be the same thing," McLendon said. "We'd want the public ones and the not-for-profits that may be in the hands of religious orders or denominations."
They also expect the investor-owned company to make an initial public stock offering in the next five years.
Quotables."I got the message of the 1994 election. I'm not going to let the government mess with your Medicare."-Bill Clinton, in a takeoff on the oft-repeated story of the healthcare reform debate, when lawmakers would be stopped by senior citizens demanding that "whatever you do, don't let the government take over my Medicare."
"It's been likened to changing the propellers on an airplane while it's flying. Try to stay off the airplane. And if you have to be on the airplane, for God's sake, don't look out the window."-G. Gordon Bonnyman Jr. of the Legal Aid Society of Middle Tennessee, describing the rocky and ad hoc way in which TennCare, the state's Medicaid managed-care program, has been implemented.
"My cholesterol is lower than (President) Clinton's and my weight is lower than Clinton's and so is my blood pressure. I'm not going to make health an issue in 1996, no."-Sen. Bob Dole (R-Kan.), 72, borrowing a tactic used by former President Ronald Reagan, who turned the age issue around on his youthful opponents.