Federal officials last week assured Los Angeles County that they would soon make good on a promised $364 million bailout of the county's healthcare system. President Clinton pledged the funds last fall for the fiscal year ending June 30. The funds are the first part of a five-year rescue package, involving a Medicaid waiver, to shore up the bankrupt county system (Oct. 9, p. 4). County officials got the assurance after traveling to Washington last week in support of the county's formal waiver application, submitted earlier this month. The waiver would create a demonstration project envisioned as a model for the nation. The project would show "that a large, urban public health system can be converted from an emphasis on hospital services to a focus on primary care delivered in a community setting," wrote Burt Margolin, former county health chief, in a letter last week to county supervisors. In the waiver application, the county said it would reduce its 2,288 inpatient beds by one-third and provide a 50% increase in access to outpatient services in the next five years. The county already has begun to privatize its outpatient clinics. It also has laid off 2,525 people and eliminated 307 hospital beds.
Horizon/CMS Healthcare Corp. said it filed a lawsuit against Tenet Healthcare Corp., alleging Tenet owes the company $14.5 million related to the sale of Hillhaven Corp. to Vencor. Horizon said it entered into an agreement with Tenet in January 1995 while it was negotiating to buy Hillhaven. It contends the pact entitled Horizon to a portion of Tenet's windfall from selling its equity stake in Hillhaven. Hillhaven rejected Horizon's subsequent proposals to buy the Tacoma, Wash.-based nursing home chain and later merged with Louisville, Ky.-based Vencor. In the suit, filed in U.S. District Court in Las Vegas, Horizon said Tenet, based in Santa Monica, Calif., reaped a $171 million pre-tax gain as a result of Horizon's efforts. Horizon and Tenet have been negotiating the exact amount due Horizon, according to Diana Takvam, a Tenet spokeswoman. She said Tenet was disappointed by Horizon's action and will dispute the claims. According to Horizon, Tenet has contended that it owes Horizon only $5.1 million. Albuquerque, N.M.-based Horizon is a leading post-acute-care provider.
Robert Wood Johnson University Hospital in New Brunswick, N.J., and Muhlenberg Regional Medical Center in Plainfield, N.J., have entered an affiliation agreement. The deal expands Muhlenberg's access to tertiary-care services. Robert Wood Johnson Health System, the university hospital's parent, now covers five New Jersey counties.