Idea of County Hospital Pact Gains

After 32 years of discussions and study on how to replace the aging County-USC Medical Center, the Board of Supervisors on Wednesday agreed to formally consider something new--a proposed partnership in which private hospitals would take partial responsibility for indigent patients.

That decision, made without a vote, came as the supervisors officially began deciding the future of County-USC, the linchpin in the health services safety net for the poor and the trauma network for all county residents.

Although some of Wednesday’s lengthy discussions focused on how big the replacement hospital should be, the supervisors spent most of their time asking questions about the viability of a partnership with private hospitals. They concluded the meeting by telling Health Services Director Mark Finucane to hire private sector health and legal experts to help him begin negotiating the best possible deal for the county with two hospitals that proposed the partnerships.

The supervisors did not set a timeline, but told Finucane to report back to them as soon as possible so they can finally plan a replacement for the mammoth medical complex on the eastern edge of downtown that was damaged in the Northridge earthquake.

The first meeting between county officials and private hospital leaders is set for Friday, representatives of both sides confirmed Wednesday.

“The stars are lined up for a deal, if both the county and the private nonprofit hospitals can think unconventionally,” said Board of Supervisors Chairman Zev Yaroslavsky, who added that he is intrigued by the potential of such a partnership.

“We need to find out how serious the private hospitals are, and what kind of agreements we can reach,” Yaroslavsky said. “This is going to be an ongoing negotiation process.”

The Times reported Wednesday that California Hospital Medical Center and White Memorial Medical Center have quietly proposed leasing as many as 200 beds to the county and the medical staff that goes with them. County-USC is licensed for more than 2,000 beds but uses only about half of them./ Such a plan would allow the supervisors to build a downsized and far less expensive replacement hospital for County-USC, and help the private hospitals fill their empty beds. Some health officials say local private hospitals have vacancy rates of as high as 40%.

The supervisors agreed in principle that such a public-private arrangement might help reconcile their huge patient load with the $213-million deficit in next year’s health care budget.

But the proposal was not without its critics.

Supervisor Gloria Molina and Finucane warned that the county must use extreme caution in even discussing such partnerships.

The private hospitals are subject to what Finucane called “the invisible hand” of the marketplace and its unforeseen ups and downs, and may be out of business or merged in a few years. That would leave the county with a hospital system too small to accommodate all of the sick and injured patients that rely on it as a last resort, he and Molina both said.

“Where are we going to be in the year 2000? Those [private hospital] beds aren’t going to be there,” said Molina, who represents the district that includes County-USC.

The lease proposals are “just a promise that will never be met,” Molina said. What’s more, she added, such negotiations could further delay the county’s efforts to proceed with a replacement for County-USC, a decision that all of the supervisors said Wednesday needs to be made within the next few months.

Although she is supportive of exploring the proposal, Molina said she was especially suspicious of the hospitals’ suggestions that they could lease the beds to the county for about $1,000 per bed per day. She predicted that rate was a “loss leader” designed to get the county locked in, after which the rates could go up, making the whole deal far less attractive.

Melinda Beswick, president of the California Hospital Medical Center, said she was pleased about the county’s interest in the proposal. She said the $1,000-a-day rate is “a very reasonable figure.”

“But until there has been dialogue and a true exploration of facts, it’s too early to tie one to any figure,” Beswick said. “There has to be a lot of research done and a real look at what makes sense in terms of reducing expenses and providing services.”

One thing that seemed certain in Wednesday’s debate--which is certain to escalate in the coming months--is that the supervisors want an even smaller replacement hospital than the 750-bed, $1.1-billion facility that Finucane has proposed.

Yaroslavsky said Finucane’s 750-bed proposal is simply too costly--and too much hospital--given the dwindling number of patients in county hospitals and the health department’s continuing budget crisis. Supervisor Yvonne Brathwaite Burke said the county should look at other municipalities up and down the state that have privatized much of their hospital systems.

And Supervisor Mike Antonovich called for a replacement hospital that could be as small as several hundred beds, with the private sector making up the difference. He said the county shouldn’t spend much more than the $450 million it will get from the Federal Emergency Management Agency for replacing the earthquake-damaged hospital because it needs to make sure it can afford to run the hospital once it is built.

As several of board members noted Wednesday, the supervisors are still smarting over the embarrassment of building the $373-million Twin Towers jail and then having to watch it sit unused for a year because there was no money to run it.

“These public-private partnerships coming before us have to be used,” Antonovich said. “The idea that everyone has to have their own Taj Mahal, that has been rejected. We have to use whatever resources we have at our disposal, and spend within our means.”