Crisis looms for L.A. health care

July 27, 2010 

The Los Angeles County health care system needs some intensive care—STAT.

That was the message Thursday as officials sounded their most dire warning yet about the state of the deficit-plagued Department of Health Services. The county will have to drop hundreds of thousands of patients and significantly downsize its health care system unless some pending state and federal funding decisions break in its favor—a prospect that is looking less and less likely as Sacramento and Washington hunker down in contentious budget struggles of their own.

“This is a situation that’s increasingly looking like it’s in freefall without a parachute,” said Supervisor Zev Yaroslavsky, as the Department of Health Services looks to bridge a deficit of up to $429 million this fiscal year.

Of the 730,000 patients now treated each year, some 420,000—more than half—could be turned away, according to a motion by Supervisors Gloria Molina and Yaroslavsky. The cuts would seriously harm some of the sickest people in the county, and also would hamstring the county’s ability to transform itself to meet the demands of federal health care reform, the motion said.

Supervisors approved the motion, directing officials to provide a detailed worst-case analysis in 15 days, after budget updates from the health department and Chief Executive Office provided only a general overview of what will happen if federal and state funding relief does not come through.

The reports did not mention closing hospitals or other health facilities. But the discussion during the meeting made it clear that those actions and others may be on the horizon soon.

“What facilities are going to close? What kinds of facilities are going to close?” Yaroslavsky asked CEO William T Fujioka and Health Services interim director John F. Schunhoff.

The county is looking at three possible ways out of its predicament. There will still be a big deficit to confront, however, even if all three come through.

One hope is to obtain from Congress an extension of the “enhanced FMAP Medicaid matching rate” that would provide some $33.8 million. (FMAP stands for Federal Medical Assistance Percentages.) The measure was not included in the recent vote to extend jobless benefits, however, and it is unclear whether it will be reintroduced in another form.

Another option involves obtaining a favorable decision on the hospital provider fee the county would receive from the Centers for Medicare and Medicaid Services (CMS.)That could mean $115 million in fiscal 2010-11.

Finally, county officials have been hoping for an additional $150 million from the so-called “1115 Waiver,” which would provide support to public hospitals that treat needy patients. (1115 refers to a section of the Social Security Act that deals with how Medicaid services are provided in states.)

But those funds could end up being siphoned off by the state of California, which previously had been seen as an ally in negotiating with CMS for the waiver.

“The state’s key interest is helping to solve their budget problem for [fiscal year] 10-11,” Schunhoff told the board.

Molina, the board chair, said it is unrealistic to count on the three options coming through.

“I think we’re being overly optimistic because we haven’t solved last year’s deficit,” she said.

Yaroslavsky noted that the situation is growing worse as the health department continues to spend—with no deficit solution in sight—in the new fiscal year.

“We’re in a very serious situation,” Yaroslavsky said. “We now have 11/12ths of the fiscal year remaining, and we are still spending as if assumptions [of new revenue] are going to come to pass.”

“The longer we wait, the deeper the cuts are going to be,” said Supervisor Michael D. Antonovich.

Supervisor Don Knabe asked the CEO and Health Services chief not to simply propose shutting specific facilities, but to spread the pain throughout the county health system.

And Supervisor Mark Ridley-Thomas asked that the report include information on county departments, such as the sheriff and probation, that receive unreimbursed health department services.

Underscoring the discussion was the reality that officials here will have to work through the looming crisis, with or without outside help.

“Should the federal and state governments fail to help Los Angeles County obtain essential revenue streams…then this board must be prepared to implement these cuts,” the Molina-Yaroslavsky motion said.

Posted 7/27/10

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