Two private not-for-profit hospitals in inner-city Los Angeles want to jointly "lease" nearly 200 of their beds to Los Angeles County.
Their goal is to help themselves financially by generating money from empty beds and help the county by offering a cheaper alternative in caring for the county's indigent patients.
"We basically took a look at our excess beds (and some) creative financing options, created a report and a cover letter, and we sent it off to (County Health Services Director) Mark Finucane," said Beth D. Zachary, chief operating officer of White Memorial Medical Center.
White Memorial, with 375 beds, submitted the proposal with 310-bed California Hospital Medical Center.
"The purpose was to engage the county in some productive, meaningful and creative discussions in terms of how we can save money," she said.
Subcontracting with private hospitals for inpatient care has been bandied about informally by local industry consultants for several years, particularly in the wake of Los Angeles County's recent annual fiscal crises. Topping the list of woes is a projected $433 million deficit in the health services department for fiscal 1998.
The 35-page proposal, submitted to Finucane's office in December, touches on several points:
The service areas of the two private hospitals, both just south of downtown Los Angeles, overlap with the service area of the county's flagship hospital, LAC-University of Southern California Medical Center.
The hospitals have long-term experience with managed-care payers, while the county is expected to encounter severe difficulties as it moves most of it Medicaid recipients into HMOs.
Both hospitals also have vast experience treating Medicaid, indigent and emergency patients, mirroring the county's patient traffic. Jointly, they absorb more than $8 million in bad debt annually.
According to the proposal, White Memorial has a residual capacity of 102 beds, while California Hospital has 91 spare beds.
The hospitals have proposed leasing them to the county at a rate of about $1,000 a day, about 20% below what the county received per bed under Medi-Cal, the state's Medicaid program. Presumably under the plan, the state would pay the county and the county would sublease the beds from the hospitals and keep the extra money.
The plan assumes an average daily census of 100 patients, with annual treatment costs of $36.5 million.
The proposal concluded such an arrangement would allow the county to scale down its planned $1 billion reconstruction of County-USC by some 220 beds, from its proposed capacity of 750 beds.
The current Depression-era campus, east of downtown Los Angeles, was badly damaged in the 1994 Northridge earthquake and is licensed for more than 2,000 beds, of which only half are in use.
Finucane and the Los Angeles County Board of Supervisors apparently are taking the proposal seriously. The board, which has shown reluctance toward spending the money on a new 750-bed county hospital, late last month recommended studying the offer at length.
After a Jan. 31 meeting with Zachary and Melinda Beswick, California Hospital's chief executive officer, Finucane hired a consultant to determine the extent of the proposal's viability.
"I feel he was very receptive," Beswick said.