Emergency Room Cutbacks Set Off Debate on Causes

Cutbacks in emergency services at two large downtown hospitals last week have sent shock waves through the entire Los Angeles County health-care system, igniting a debate over the true causes of the crisis.

Three other central Los Angeles hospitals have also given strong indications that they plan to curtail emergency room service. Many hospitals say they are suffering huge losses from growing numbers of emergency room patients unable or unwilling to pay their bills.

Yet some health-care advocates are skeptical of the hospital outcries over the cost of so-called “uncompensated care.� They say that big debts incurred by aggressive hospital building campaigns, low occupancy rates and other internal financial decisions may be as much to blame for a hospital’s financial squeeze as poor patients who cannot pay their bills.

Tax Breaks Noted

Furthermore, they point out that many hospitals get big tax breaks by virtue of their nonprofit status. In curtailing emergency services that help the poor, some assert that the hospitals may be shirking their charitable responsibilities.

A different view of the problem was taken by the chief emergency room physician for the nonprofit California Medical Center, which along with the Hospital of the Good Samaritan, another nonprofit center, will stop accepting rescue ambulances June 1.

“The problem is that people expect a service, and they don’t want to pay for it,� said the physician, Alan Heilpern. “If you go to a grocery store and you don’t have any money for food, they don’t give it to you for free. But if you go to an emergency room, the law says you’re entitled to free care.�

Standley Dorn, an attorney with the National Health Law Project, countered: “The medical business is not like the grocery or hardware business. There’s a special public interest component. California taxpayers are subsidizing these (nonprofit) hospitals because they’re performing a public service. When they close their emergency rooms to protect their bottom-line profits, it raises serious questions whether they deserve a continuing subsidy.�

Several years ago, government officials might have been able to use a state “certificate of need� law to prevent the emergency room curtailments, some health-care advocates said. But that law, which required hospitals to prove there was no need for services before eliminating them, has been repealed.

Now, however, hospitals cannot be prevented from downgrading their emergency rooms to “standby status�--meaning that paramedic ambulances will be rerouted to other hospitals but that walk-in patients will continue to be treated, said county health official Virginia Price Hastings.

‘Cannot Pay for Their Care’

Hospitals are closing their emergency rooms and trauma centers “because the majority of the emergency care patients have no medical insurance and cannot pay for their care,� according to the president of the Los Angeles County Medical Assn., Dr. Gary Krieger.

The five central Los Angeles hospitals that have either announced plans to downgrade their emergency rooms or have indicated that they intend to do so shoulder varying burdens of “uncompensated care� costs--that is, debt run up by patients unwilling or unable to pay their medical bills.

The great bulk of this debt is shouldered countywide by the large public hospitals such as County-USC, County-Martin Luther King Jr./Drew and Harbor-UCLA.

The burden at the California Medical Center, 1414 S. Hope. St., amounted to $3 million, or 5.1% of the hospital’s total operating expenses for a year ending June, 1987. At the Hospital of the Good Samaritan, 616 S. Witmer St., the burden amounted to $2.8 million, or 3.2%.

These figures were determined by a Times analysis of financial disclosure reports submitted by the hospitals to state health authorities.

Figures varied for the three other hospitals that may be planning emergency room cuts. For both the private, for-profit Linda Vista Community Hospital in Boyle Heights and the nonprofit French Hospital of Los Angeles in Chinatown, the burden of uncompensated care was less than 2%. For the nonprofit Hollywood Presbyterian Medical Center, it amounted to 5.7%. A spokesman for the Hospital Council of Southern California predicted that “it’s just a matter of time� before other hospitals with large burdens of uncompensated care move to curtail their emergency services.

Several nonprofit hospitals with large emergency rooms have uncompensated care burdens greater than 5% of their total operating expenses, The Times found.

These hospitals include St. Mary Medical Center in Long Beach, Daniel Freeman Memorial Hospital in Inglewood and UCLA Medical Center in Westwood.

Competitive Pressures

The latest fiscal crisis for Los Angeles hospitals comes at a time when hospitals throughout the state are faced with increasing competitive pressures. This has been caused in part by new fiscal restrictions in the Medicare and Medi-Cal programs designed to increase hospital efficiency, as well as competition from health maintenance organizations and pressures from private insurers. In addition, many Los Angeles hospitals are suffering from low patient occupancy rates.

More than 50% of the hospitals in the state are expected to suffer operational deficits this year, according to Stephen Gamble, head of the Hospital Council of Southern California.

A principal reason, he said, is that the state’s hospitals are no longer able to absorb bad debt by shifting the cost onto private insurance carriers and government health-care programs.

“The net result,� according to Glenn Melnick, a RAND Corp. consultant, “is that hospitals are finding it increasingly difficult to raise their prices to insured patients to subsidize the costs of treating uninsured patients.�

With the “slack being taken out of the system,� Melnick said, hospitals are being forced to economize. “I don’t think it’s fair to expect them to be more efficient and at the same time to expect them to operate losing departments.�

Considering California Medical Center’s long record of public service, Melnick said, the emergency room cutbacks signal that the hospital officials really had their “back up against the wall.�

Melnick said hospital officials demonstrated their commitment to the poor and homeless in central Los Angeles by deciding several years ago to rebuild the hospital’s campus downtown rather than “fleeing to the suburbs� in search of wealthier clientele.

Projected Losses

The medical center lost $2.6 million last year. This year officials have projected losses of about $500,000 a month from patients entering the hospital through the emergency room.

The hospital’s financial problems have been further complicated by a $60-million debt from the rebuilding campaign and a patient occupancy rate that was only 55.5% for a year ending June of 1987.

But hospital officials deny that a soon-to-be-completed merger between the Lutheran Hospital Society, which owns the hospital, and HealthWest Foundation of Chatsworth played any role in the decision to downgrade emergency services.

It is “pure coincidence� that the merger will take place the same day as the emergency room curtailment, said Samuel Tibbitts, president of LHS Corp.

With the curtailment, California’s emergency room will continue to treat walk-in patients--about 1,200 a month--but about 800 rescue ambulances a month that often bring the sickest and poorest patients will be rerouted elsewhere. The hospital spokeswoman said an emergency room physician will be on duty around the clock, although under “standby� status this is not required.

The downgrading of the emergency room at the Hospital of the Good Samaritan will require an additional 450 ambulances a month to be diverted to other hospitals that are ill-equipped to pick up the additional load.

Local health-care officials are predicting longer ambulance response times and longer emergency room waits that may seriously downgrade the quality of emergency care. Some have forecast a domino effect knocking out emergency rooms throughout the county.

Trustees of Good Samaritan, which had an occupancy rate of 54.8% for a year ending June, 1987, have expressed an interest in participating “in discussions aimed at countywide solutions to the problem.�

As for what government officials can do, Gov. George Deukmejian has long maintained that the cost of treating medically indigent adults should be subsidized by the county rather than the state.

But Robert Gates, director of the county Department of Health Services, has reiterated that the county does not have the money to prop up private hospital emergency rooms.

THE BURDEN OF UNCOMPENSATED CARE

These are estimated costs of uncompensated care for some major Los Angeles hospitals from July, 1986 through June, 1987. Together, these hospitals accounted for about 90% of the uncompensated care provided in the county during that period. Uncompensated care is defined by health-care researchers as including both charity care and bad debts, bills left unpaid by insurers or non-charity patients. Hospitals in central Los Angeles that are downgrading--or considering downgrading--their emergency room services are highlighted.

Uncmpenstd Care Costs Hospital Beds Type in millions LOS ANGELES COUNTY 24,317 $371 County-Martin Luther King Med Ctr. 480 Public $48.7 County-USC Medical Center 1860 Public $115.4 City of Hope National Med Cent, Duarte 212 Nonprofit $19.1 CareUnit Hospital of Los Angeles 104 For-Profit $1.4 Harbor-UCLA Medical Center, Torrance 553 Public $32.6 Ranchos Los Amigos Med Cent, Downey 735 Public $18.7 County-Olive View Med Cent, Van Nuys 350 Public $6.1 St. Mary Medical Center, Long Beach 590 Nonprofit $6.8 Santa Marta Hospital 110 Nonprofit $1.2 Daniel Freeman Memorial Hosp, Inglewd. 403 Nonprofit $6.3 Hollywood Presbyterian Med Ctr 395 Nonprofit $4.3 Orthopaedic Hospital 162 Nonprofit $2.0 UCLA Medical Center, Westwood 711 Nonprofit $13.0 California Medical Center 327 Nonprofit $3.0 Northridge Hospital Medical Center 345 Nonprofit $4.2 Serra Memorial Health Center, Sun Vly. 264 For-Profit $0.8 Dominguez Medical Center, Long Beach 250 For-Profit $1.1 Queen of the Valley Hosp, West Covina 272 Nonprofit $2.9 East Los Angeles Doctors Hospital 128 Nonprofit $0.6 Brotman Medical Center, Culver City 566 Nonprofit $3.4 Cedars-Sinai Medical Center 1201 Nonprofit $11.2 Queen of Angels Medical Center 404 Nonprofit $1.6 Saint John’s Health Cent, Santa Monica 551 Nonprofit $3.5 Hospital of the Good Samaritan 411 Nonprofit $2.8 Saint Joseph Medical Center, Burbank 647 Nonprofit $3.8 St. Francis Medical Center, Lynwood 515 Nonprofit $2.0 Pomona Valley Community Hospital 389 Nonprofit $2.6 Childrens Hospital of Los Angeles 331 Nonprofit $3.9 San Pedro Peninsula Hospital 436 Nonprofit $1.4 Memorial Med Center of Long Beach 998 Nonprofit $5.4 Saint Vincent Medical Center 386 Nonprofit $1.8 White Memorial Medical Center 377 Nonprofit $1.8 Glendale Adventist Medical Center 604 Nonprofit $2.1 French Hospital of Los Angeles 155 Nonprofit $0.4 Little Company of Mary Hosp, Torrance 327 Nonprofit $1.2 Linda Vista Community Hospital 150 For-Profit $0.2 Valley Presbyterian Hospital, Van Nuys 363 Nonprofit $1.1 Santa Monica Hospital Med Center 399 Nonprofit $1.6 Torrance Memorial Hosp Med Center 330 Nonprofit $1.1 Huntington Memorial Hospital, Pasadena 606 Nonprofit $1.6

Percent Hospital Hospital Expenses LOS ANGELES COUNTY 6.0% County-Martin Luther King Med Ctr. 31.4% County-USC Medical Center 25.9% City of Hope National Med Cent, Duarte 24.4% CareUnit Hospital of Los Angeles 21.4% Harbor-UCLA Medical Center, Torrance 19.8% Ranchos Los Amigos Med Cent, Downey 16.3% County-Olive View Med Cent, Van Nuys 8.6% St. Mary Medical Center, Long Beach 7.8% Santa Marta Hospital 7.0% Daniel Freeman Memorial Hosp, Inglewd. 6.2% Hollywood Presbyterian Med Ctr 5.7% Orthopaedic Hospital 5.2% UCLA Medical Center, Westwood 5.2% California Medical Center 5.1% Northridge Hospital Medical Center 4.8% Serra Memorial Health Center, Sun Vly. 4.3% Dominguez Medical Center, Long Beach 4.2% Queen of the Valley Hosp, West Covina 4.2% East Los Angeles Doctors Hospital 3.9% Brotman Medical Center, Culver City 3.8% Cedars-Sinai Medical Center 3.7% Queen of Angels Medical Center 3.4% Saint John’s Health Cent, Santa Monica 3.3% Hospital of the Good Samaritan 3.2% Saint Joseph Medical Center, Burbank 3.2% St. Francis Medical Center, Lynwood 2.8% Pomona Valley Community Hospital 2.9% Childrens Hospital of Los Angeles 2.9% San Pedro Peninsula Hospital 2.7% Memorial Med Center of Long Beach 2.5% Saint Vincent Medical Center 2.4% White Memorial Medical Center 2.3% Glendale Adventist Medical Center 2.0% French Hospital of Los Angeles 1.9% Little Company of Mary Hosp, Torrance 1.9% Linda Vista Community Hospital 1.8% Valley Presbyterian Hospital, Van Nuys 1.7% Santa Monica Hospital Med Center 1.6% Torrance Memorial Hosp Med Center 1.6% Huntington Memorial Hospital, Pasadena 1.2%

The Times prepared cost estimates from hospital financial disclosure statements compiled by the Office of Statewide Health Planning and Development. The analysis was based on hospital’s estimated actual costs, as opposed to full “charges� on hospital bills, which health-care researchers say inflate the true expense of uncompensated care by 25-50%.

The Times used a calculation method similar to the one developed by Lewin and Associates, a Washington-based health-care consulting firm. A Lewin study of uncompensated care in California and four other states was published in the New England Journal of Medicine last week.