HEALTH & SCIENCE

Rebuilding on a fault line

For four years, Los Angeles officials have been restructuring the county public health system. But even as they wrestle with long-standing problems, new challenges emerge.

By Deborah L. Shelton, AMNews staff. Aug. 2, 1999. - Additional information.

In 1995, drowning in more than $650 million of red ink, health officials in Los Angeles County desperately searched for a lifeboat. Rescue came in the form of a massive federal bailout.

Four years later, the nation's second-largest public health system still struggles to keep its head above water. Officials are asking for an extension of the five-year Medicaid demonstration project waiver that has kept the system afloat, seeking almost twice the current $220 million in annual federal funding. The waiver expires next summer.

The public health system serves almost a million people annually in a sprawling county that stretches about 4,000 square miles.

It hasn't been all gloom and doom since 1995. Since then, health officials have successfully shifted the health system from costly inpatient care to community-based primary and preventive care.

Emergency department visits have fallen by 27%. Ambulatory care visits have increased by 600,000 and inpatient hospitalizations are down, all signs of improvements in health care utilization. The average daily census at county hospitals has declined 24%, a rate that is five times higher than the statewide trend and three times the national trend.

Other trends, however, have been more difficult to turn around. The number of uninsured people continues to rise. With 2.7 million of its 10 million residents uninsured, the county tops the nation in the number of uninsured, and the number grows an average of 150 people daily.

Another ominous sign is a drop in Medi-Cal enrollment.

After 20 years of steady increases, the number of people enrolled in the state's Medicaid program has fallen from 1.9 million in 1995 to about 1.7 million in 1999.

It also hasn't helped that southern California has become a managed care war zone. "Medi-Cal patients have been moved into [Medicaid] managed care with a woefully inadequate level of capitation -- $75 per member per month," said Rex Greene, MD, an oncologist and president of the Los Angeles County Medical Assn. Insufficient physician reimbursement has had a chilling effect on doctors' ability to provide charity care, he said.

L.A. County has not been immune from the public health, political and market forces that have bombarded the rest of health care, said Mark Finucane, director of Los Angeles County Dept. of Health Services. "While we have been going through our own changes, we've faced a competitive managed care environment, welfare reform and a dramatic increase in the uninsured population. Despite good economic times, there are a lot more people in Los Angeles who have no source of health care than when we started this."

County hospitals still provide more than 85% of the uncompensated care. Yet, the county hospital system has lost 132,000 Medi-Cal reimbursed inpatient days since 1994, a 26.1% drop.

"Despite reducing inpatient and inappropriate emergency services, current Medi-Cal funding creates a 'Catch-22' for the county," says the health department's report officially requesting a waiver extension. "A decline in inpatient care yields very little net savings to the county due to losses in federal and state revenues."

In fact, most of the county's federal funding outside the demonstration project remains tied to inpatient care, says Rene G. Santiago, director of the health department's Medicaid demonstration project office. "Almost 70% of funding is still in the hospital setting. It's an issue we need to grapple with."

Even with the critical waiver money, total federal funding to the county health department has declined from $1.2 billion to $1.1 billion in the past four years, with the proportion of the department budget composed of federal funds dropping from 50% to 47%. Moreover, funds from the federal Disproportionate Share Hospital program are scheduled to decline by 19% in 2002. And funds to federally qualified health centers will decline and ultimately expire by 2002.

New way of doing business

The series of events that led to the near-collapse of the health system demonstrated the seriousness of the situation. "We could not and cannot continue to provide services for all people the way we used to," Finucane said. "We had to rethink the way we were approaching the care of the indigent patient."

The cornerstone of that change has been establishment of public-private partnerships. Through contracts with private doctors, community clinics and health centers, the county has increased the number of primary care sites in the past three years from 45 county-operated sites to 149 partnership arrangements.

Under the waiver, the county has not only expanded access for the targeted population, but changed the way facilities operate. Some facilities have been turned over to private practitioners, and others are being jointly operated, with the private-sector practitioners supplying primary care and the health department providing traditional public health services. "We have reconfigured some of our health centers into primary care centers, and we've maintained public health services in other facilities, even restoring public health services [that had been cut back] in others," Santiago said.

The next step will involve further increases in ambulatory care sites, greater integration of services and improved disease management efforts "so we can better manage the patient population that's using this broadened system," said Jonathan Fielding, MD, MPH, county public health officer.

Bumps and bruises

Public-private partnerships are bringing private clinics and physicians into the safety-net system in a much more formal way, said health department consultant Michael R. Cousineau, PhD, an associate professor at University of Southern California's Center for Policy, Planning and Development. "There's been a remarkable effort on the part of both the public and private sector to try to work together and figure out how to do a better job."

But there have been bumps and bruises along the way, especially as the restructuring moves beyond primary care into specialty care, he said.

The problems are enormous, said Beth Osthimer, a senior attorney at San Fernando Valley Neighborhood Legal Services, an agency that receives about 2,000 calls a month from low-income individuals and families who can't get tests, specialty care or surgery despite having received the appropriate referral. The agency links poor families to county services through public-private partnerships.

"Overall, patients are very confused," she said. "They don't know how to access the system, and there is little in the way of outreach or education about services."

Barbara Frankel, a supervising attorney with the agency's consumer health center, cited a patient with a painful rectal abscess who was given the runaround for two months before he was finally scheduled for surgery.

Health director Finucane acknowledged there are long waits for some services. "Some of it has to do with the elective nature of the procedure or with cutbacks we had to implement to balance our books during the crisis," he said. "But waits have been improving over the last year, and we have set a benchmark of 85% of specialty clinics having waits of six weeks or less."

Patients who are eligible for free care are often told they have to pay charges they can't afford, Frankel said. "We're finding that clinics fear running out of money because the county is not paying them on a timely basis or the claims are being rejected for various reasons."

Inadequate reimbursement has been an ongoing issue, said Mandy Johnson, executive director of Community Clinic Assn. of Los Angeles County, which represents private clinics that operate about 80 primary care sites, 32 under public-private contracts.

"Providers have experienced financial hardships because reimbursement rates are inadequate," she said. "Costs for pharmaceuticals, lab tests and x-rays have put all the private partners at risk. ... Providers are finding they have to subsidize county rates from other funding streams."

Jeffrie D. Miller III, MD, knows the problem firsthand. As chief executive officer of Metro-South Provider Network Medical Associates Inc., he has operated five clinics under public-private partnerships in Los Angeles and the surrounding communities of Paramount, Compton, Inglewood and Long Beach.

But private practice physicians have dropped out of the network because of high pharmaceutical costs. "County reimbursement was not enough to cover costs," Dr. Miller said. "We sustained losses of up to a half-million dollars."

The relatively sick patient population accounted for the high costs; half had diagnoses of diabetes or hypertension. Funding under the public-private partnership was about $8 per member per month, including radiology, lab tests and medications, Dr. Miller said. "That's just not enough. The effort was doomed."

Getting to the core

A lesson learned from the restructuring experience is the importance of fully committing to public health, Dr. Fielding said. About $20 million has been invested in the past three years in basic prevention and core public protection programs, such as communicable diseases, environmental health and well-baby care.

"At some point, if you're serious about getting a handle on the long-term health care of the indigent population, you have to bring public health into the picture," Finucane said. "You have to address the prevalence and cause of disease in the communities you're trying to treat."

To do that, health officials took a step backwards to better understand what the community needs are. As part of a new planning process, they started conducting biennial population-based telephone surveys of about 8,000 county households. "Changes [in the health system] should be made using good information that candidly reflects what people think about your system," Finucane said.

The data will also be used to determine how to reduce the frequency and severity of disease. A new division of disease prevention and health promotion will develop a plan.

Initially, six conditions will be targeted that disproportionately afflict the population, including diabetes, pediatric asthma, HIV/AIDS and congestive heart failure. "We have to get at the front end of the curve," Dr. Fielding said.

The question has often been asked whether the county can continue to try to do all things for all people.

"One of the challenges now is, what should the county let go of and what should it focus on?" Dr. Cousineau said. "Should it get out of primary care and let private clinics and private doctors do it? Should it just provide specialty care and trauma services?"

The answer lies in focusing on core public health services and better disease surveillance, he said. "That's something that the county can't let go of. Nobody else will do that."

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