Now that the nation's largest tobacco companies have ended years of state litigation by agreeing to multibillion-dollar state settlements, public and private healthcare providers in Ventura County, Calif., are suing each other to determine how the money will be spent.
But private providers have the upper hand after a Ventura County Superior Court judge late last month allowed a controversial initiative, which will determine how tobacco funds will be spent, to be placed on the November ballot.
The money is part of a November 1998 settlement in which tobacco companies agreed to pay 46 states about $195 billion to reimburse Medicaid costs for treating smoking-related diseases. California will receive $25 billion, paid out to counties in semi-annual installments that began earlier this year.
The Ventura County Board of Supervisors wants to use the region's projected $10 million-a-year share during the next 25 years to balance the county budget and pay $15.3 million in fines levied against county-owned 162-bed Ventura County Medical Center by HCFA for improper Medicare mental health program billing.
Meanwhile, executives at Community Memorial Hospital of San Buenaventura, a 217-bed private not-for-profit hospital in Ventura, have a completely different idea for the money: They've sponsored a voter initiative that would allow the county's eight private hospitals--two of which are for-profits--to share the funds. The initiative would all but guarantee that Ventura County Medical Center would receive far less tobacco money than the private hospitals.
"This is meant to curb the supervisors' tendency to spend money in an unbridled fashion," said Michael Bakst, Community Memorial's chief executive officer.
Although the initiative received enough signatures to be placed on this November's ballot, the five-member Board of Supervisors in late June voted unanimously against putting it to a public vote and declared it unconstitutional.
The county then sued Community Memorial Hospital in Ventura County Superior Court on June 20, seeking to keep the initiative off November's ballot. The hospital immediately countersued, claiming the county is acting illegally.
Although Ventura County Superior Court Judge Henry Walsh ruled on July 28 that the initiative couldn't be kept from the voters, he expressed "grave doubts" in his ruling about its legality, suggesting to county officials that he might invalidate it in future legal challenges should the voters approve it.
"It's a shock to me to see such hostility working back and forth," said Harry Hufford, the county's chief administrative officer and author of a scathing report on Community Memorial's tobacco ballot initiative released in late June. "The private and public hospitals should be working more closely together."
Hufford has offered another proposal that would back off on using tobacco funds for debt service and spend more on public health initiatives, but Bakst said he and other private providers have rejected it as too vague.
Bakst sponsored the initiative after Ventura County officials decided last year to use its share of the funds to pay the fines and balance its budget.
"To my amazement . . . no other monies would be going to the county hospital or healthcare in the county," he said. "I was very much alarmed."
Under the formula proposed in the initiative, the county's private hospitals would be allotted funds annually based on a formula that calculates their unreimbursed annual costs for treating patients.
According to Bakst, five of the county's eight private hospitals would be immediately eligible to receive tobacco funds, with the sums ranging from $125,000 to $2 million per year. Community Memorial Hospital would receive about $1.2 million per year.
Staff physicians would receive 20% on top of that amount. Bakst said that two not-for-profit hospitals wouldn't be immediately eligible--180-bed St. John's Pleasant Valley Hospital in Camarillo and 230-bed St. John's Regional Medical Center in Oxnard--because of a lack of data reported to regulators about their bad debts. Another facility, 116-bed for-profit Ojai Valley Community Hospital in Ojai, would be ineligible because it hasn't met the threshold of 360 reported self-paid adjusted patient days per year.
Ventura County Medical Center would be reimbursed only for taking indigent patients transferred from private facilities.
"It incentivizes them to act as a county hospital," said Bakst, who noted that private hospitals treated nearly half of the county's approximately 3,600 indigent patients in 1998, according to figures available from state regulators.
Remaining tobacco funds would be allotted for immunizing children, training nurses to work in the region and smoking-cessation programs.
Meanwhile, the five-member Board of Supervisors in nearby Orange County sued on July 20 to block a similar pending ballot measure.
Like Ventura County's lawmakers, the Orange County board contends the measure is unconstitutional. The Orange County initiative would require at least 80% of the county's $30 million-a-year share of tobacco funds be spent on healthcare and smoking-cessation programs.
Unlike the Ventura County dispute, the Orange County board unanimously approved the initiative earlier this month for the November ballot, saying it was compelled by state law to put it on the ballot. Board members then decided they would fight the initiative in court.
An Orange County Superior Court judge is expected to hear arguments on the block attempt on Aug. 30.