A report criticizing Los Angeles County's extravagant spending joins the chorus of recommendations to close some of its six underused hospitals.
The report was prepared by the Rose Institute at Claremont McKenna College for the Howard Jarvis Taxpayers Association in Los Angeles. It blames the county's bloated bureaucracy, excessive pay raises and half-empty hospitals for its fiscal woes.
In response to a $750 million healthcare budget deficit last year, the county's budget director recommended closing giant Los Angeles County University of Southern California Medical Center. Although supervisors rejected that proposal, they were ready to close 28 outpatient clinics until the Clinton administration came through with a $364 million bailout in the form of a Medicaid waiver. The administration announced earlier this month that it will provide an additional $172 million in waiver form.
Private operators now run six of the clinics, but efforts to find partners for the others have stalled because the county lacks money to pay private companies.
The new study, by Steven B. Frates and Eric S. Norby, found that "the huge increase in county employee salaries and benefits" is the biggest factor in the county's financial woes. Salaries have increased 15% since 1990, while personal income in the county increased only 6% from 1990 to 1994.
The research showed that the county "has over 2,400 employees who make more (at their top pay step) than the base pay of a U.S. Navy one-star admiral," or more than $7,000 a month. The Navy, a top local employer, has a total of 320 active and reserve admirals and six times as many employees as the county.
A number of those "county admirals" are in the health department, the study showed.
A second factor in the county's fiscal woes is that "the supervisors have chosen to continue to operate and subsidize the county hospital system despite the fact that there is tremendous excess hospital capacity in both the county hospital system and in private hospitals....Even incremental changes in this area should save the county many millions of dollars a year," the study showed.
In the year ending June 30, 1995, the occupancy rate of the 139 hospitals in the county was 47.9%; for the six county-owned hospitals it was 53.8%. "Los Angeles County would benefit from emulating other counties and contracting with other entities to provide such medical services," the study said.
Budgeted appropriations for county-operated hospitals increased 526% to $2.2 billion in fiscal 1996 from $351.2 million in fiscal 1978. Had the appropriations increased only as much as inflation and population growth, the increase would have been 229% to $1.2 billion, the study showed.
The board of supervisors has faulted the study's occupancy figures, saying they are based on licensed beds rather than beds in use, a county spokeswoman said. County officials are preparing a response to the survey, she said.