Los Angeles County has launched the first of its public-private partnerships in response to a budget crisis that last fall threatened closure of public hospitals and clinics.
So far, private operators have taken over six public clinics that would otherwise have been closed, and the county has sent out requests for proposals to privatize another 20.
The county is also moving ahead with a plan to privatize its 722-bed rehabilitation facility, LAC-Rancho Los Amigos Medical Center in Downey.
The partnerships and other efficiencies are needed to close an anticipated healthcare budget shortfall of up to $200 million for the fiscal year beginning next July. But most importantly, to receive the $364 million Medicaid waiver promised by President Clinton in September, the county must demonstrate to the federal government that Los Angeles is restructuring its delivery system to emphasize outpatient care.
Obstacles. Apart from expected cutbacks in federal funding, several obstacles have cropped up in the way of that goal. For one thing, the waiver proposal sent to Los Angeles by HCFA contains no "tangible, immediate restructuring components," said James Lott, senior vice president-public policy and advocacy at the Healthcare Association of Southern California.
Because the government's proposal contains few specifics, county, state and federal representatives are now working out the details for the long-term restructuring, Lott said.
Without those specifics, the county may find itself in another budget crunch next July, he said. The county has to return the waiver proposal to HCFA by Jan. 22 for its final approval.
For the county to focus its services in outpatient care, it must downsize or close public hospitals. It is unlikely that the four county supervisors with public hospitals in their districts will act quickly to order downsizing and closures. There are five supervisors.
That is one reason county health chief Burt Margolin and other public and private officials have urged the formation of a semi-autonomous healthcare authority, which would make the difficult downsizing decisions while protecting the supervisors from political fallout.
But all the supervisors except Zev Yaroslavsky, whose west Los Angeles district does not include a public hospital, have been resistant to the idea of a healthcare authority.
Lost money. Another unexpected obstacle to the partnerships popped up when the merger of WellPoint Health Networks and Health Systems International fell through in mid-December (Dec. 18/25, 1995, p. 6). That combination would have created two public charities worth $3 billion, in connection with Blue Cross of California's converting to for-profit status. Blue Cross is WellPoint's parent.
WellPoint still will likely donate billions to a public foundation, but the funds will be held up pending state scrutiny of a public benefit plan revised in the wake of the failed HSI deal.
The success of the effort by private operators to run public clinics "is highly dependent upon receipt of philanthropic dollars. Unfortunately, the source was the new Blue Cross-WellPoint fund, which may be held up for two years or longer," said Lott.
"Everyone was hopeful that the money would have been available to facilitate those partnerships."
Consortium project. One of the first private concerns to be chosen to run two county clinics is the Westside Health Crisis Coalition, a consortium of private hospitals and clinics led by the not-for-profit Venice Family (Calif.) Clinic, or VFC. The coalition has taken over two county clinics-Venice Health Center and Yvonne Burke Health Center in Santa Monica.
In taking over the two county clinics, the coalition says it will provide $1.5 million a year in primary-care services, representing donations of human and medical resources and 26,000 patient visits a year.
VFC has been seeing 10,000 indigent people-mostly the working poor-on Los Angeles' west side. Those patients account for 50,000 visits a year. Eighty-five percent of those patients have no health insurance, 37% are children and 20% are homeless, said Elizabeth Forer, VFC executive director.
Half the VFC patient visits are provided by eight staff physicians. The rest are provided free by 500 volunteer physicians and residents from University of California Los Angeles Medical Center and UCLA School of Medicine, Saint John's Hospital and Health Center in Santa Monica, Santa Monica-UCLA Medical Center and Daniel Freeman Memorial Hospital in Inglewood.
In taking over the two county clinics, the coalition expanded to include Brotman Medical Center in Culver City and several private community clinics.
Most physician visits are provided by UCLA, and the other hospitals provide laboratory services.
Revenues. Those contributions constitute the most expensive parts of the healthcare program. In addition, the coalition is counting on several sources, including Medi-Cal-Medicaid in California-to pay for support staff and other expenses.
VFC itself has a $4.8 million annual budget, about 60% of which is captured through charitable fund raising.
The rest comes from federal, state, city and county money. "One of the questions we have is will we be able to increase our fund raising to keep those partnerships afloat" while waiting for public money to kick in, Forer said. Indigent patients are seen regardless of their ability to pay a $5 donation each visit.
"If the county is getting out of the healthcare business, they still need to pay for indigent care. They cannot assume they can walk away. The word is `partnership' and essentially in the beginning of this partnership, the Venice Family Clinic and its partners are all shouldering a heavy and unusual burden. We can shoulder this for a short period of time. We cannot shoulder it indefinitely," Forer said.
Some of the $364 million promised the county "has to flow back" to the partnerships, she said.
"We did this on the assumption that at some point they will be able to pitch in. Right now they are giving us their facilities rent-free and all the equipment," but that is not enough, she said.
Forer said the coalition operates the two county clinics at less cost because UCLA is providing six or seven doctors for free, saving them more than $700,000 a year.
Forer has arranged to place experienced VFC staff at the county facilities and has hired some laid-off county workers. Although she did not have specific numbers, Forer said that with more space, services could be reconfigured and staffing efficiencies could be made.
And UCLA has donated gynecological visits to the coalition that the VFC and county clinics did not have access to before. The indigent now have access to primary care on the city's west side.
Previously, if no private provider could be located to perform those services for free, VFC and the county clinics had to refer gynecological patients to a county hospital, which meant a long trip, frequently on public transportation.
The private-public partnership has meant that the public clinic is actually "hooked into the private physicians in the community," Forer said.
She cautioned that although primary care is now available to the indigent on the west side, the county is still the provider of acute and specialty care to the indigent.
VFC offers a broad range of specialty clinics through volunteer physicians who see patients in their offices or at VFC, but it is "a drop in the bucket," considering the county's 2.6 million uninsured, Forer said.
"Essentially, if you are medically indigent and you are really sick, there is a point where the county is your provider. They are the safety net and there isn't another option," Forer said.
That was brought home during a "dreadful" period this fall when specialty clinics at county hospitals were closed or curtailed, which meant there was no place for VFC physicians to refer patients, she said. "We won't know until mid-January" which county specialty services are restored, she said.
Organized labor will still play a part in the partnerships. Through an organizing campaign, the Service Employees International Union signed up a majority of the workers at the six privatized clinics, union officials said. That means the union will bargain with the private operators.