Published: 05/12/2002, Volume112 No. 5834 Page 31

The cash-strapped public hospital system in Los Angeles county is facing the threat of closure - can others be far behind? Howard Berliner reports The public hospital system in Los Angeles county, California, is the second largest in the US (after New York City) and consists of six hospitals and 18 ambulatory care clinics to serve the population of almost 10 million.

Over 3 million (30 per cent) Los Angeles county residents are uninsured and virtually the only place they can seek care on a regular basis is at one of the public facilities. It should not be surprising that the hospital system is in financial trouble. In May 2000, when I last addressed this issue, the county had appealed for a renewal of a federal waiver programme that was to give it money in advance of expected savings for the federal government down the road.

1At that time, the US economy was doing very well and both Los Angeles county and the state of California had significant budget surpluses. Though it eventually got the waiver, it was for less then it had asked, in part because the federal government thought the state and the county should bear the burden of their own health system rather than asking (in essence) for the rest of the country to fund it.

The amount the county received in 2000 should have kept its health system reasonably stable for at least three to five years, but the declining economy, the energy crisis that California experienced during summer 2001 and a variety of other factors have brought the issue to the table earlier than expected.

By January 2002, the county was projecting a $364m deficit in 2004 and a $688m deficit in 2005.

To deal with these shortfalls, county administrators initially suggested closing five small clinics for a saving of $8.5m, and delayed the decision on making more major cuts for several months.As part of negotiations over the county budget at the end of June 2002, the board of supervisors voted to close 11 clinics, end inpatient services at one hospital and lay off 5,000 workers for an expected saving of $150m.

At the same time, they agreed to appeal to the federal and state governments for relief, and if that was not forthcoming by the end of October they would eliminate emergency rooms and inpatient services at two other hospitals. They also agreed to privatise a renowned county rehabilitation hospital.

In addition, the board of supervisors agreed to sponsor a referendum in the election to increase property taxes to provide $168m to the county emergency and trauma care system. Advocates for the uninsured, health workers and others began strong lobbying of county, state and federal officials for financial relief - but to little avail.

State officials were sceptical of their ability to help out the county, given a projected state deficit of $10-11bn.The federal government was more direct.

Centers for Medicare and Medicaid Services director Thomas Scully was quoted in the Los Angeles Times as saying the county request for a third bailout was 'dead on arrival'.He added: ' We do not want to create a meltdown of the LA county hospitals, but I have to explain to Houston and New York and St Louis and Nashville why LA county is getting a special deal. I do not think It is our responsibility to just write them a cheque and bail them out.'

California has been strongly Democratic and Los Angeles is perhaps the most Democratic area in the state.This is one reason why the Clinton administration was willing to bail out the system in the past and perhaps an explanation as to why the Bush administration is not so forthcoming.

The board of supervisors was to vote on the cuts at the end of October (before the ballot referendum), but under strong criticism decided to wait until mid-November to take that vote and see if in the interim the property tax bill passed (it did) and the state was willing to contribute some money to the cause (not yet determined).Mr Scully visited one of the hospitals scheduled for closure but still refused more than a token sum to the county.The newly passed property tax assessment for trauma care may postpone the closing of the hospitals, but does not provide enough money to rescue the county system for very long.

These events in California are happening as the government reports an increase in the number of uninsured (now up to 41.5 million), and benefit consulting firms claimthat health insurance premiums will increase by more than 12 per cent this year.

The safety net of public hospitals that maintains this deplorable situation is fast unravelling. If the hospitals in Los Angeles are closed, it is likely that other cities in similar financial straits will also seek to reduce health services.How people without access to the private sector will then receive healthcare remains to be seen. l Howard Berliner is professor of health policy and management, Milano Graduate School, New School University, New York.

REFERENCE 1West side story. Berliner H.

HSJ 2000;110(5703):27.