Private Bids Sufficient for Takeover of County Clinics, Official Reports

County health czar Burt Margolin said Monday that private medical providers have submitted enough bids to take over the entire county health clinic system, but he cautioned that some proposals are unacceptable and that it is unclear how much of the big clinic network can be spared from budget cuts by being turned over to outside contractors.

Margolin said 75 hospitals, doctors groups, private clinics and others applied to run six county comprehensive health centers and 39 neighborhood health clinics. All of the comprehensive centers and 28 of the smaller clinics are targeted for closure Oct. 1 under cuts approved by the Board of Supervisors.

The clinics record more than 2 million visits each year from low-income residents, and health experts have predicted a wave of unnecessary deaths among the poor and a resurgence of contagious diseases among all socioeconomic classes if the clinics are shuttered.

The bidders included a number of non-profit and church-owned hospitals in low-income areas, among them White Memorial, Daniel Freeman and Queen of Angels-Hollywood Presbyterian. Although such hospitals traditionally have cared for the poor, they fear that a collapse of the county clinic network will leave their emergency rooms overrun with people with nowhere else to turn for medical attention.

Margolin, appointed by the supervisors to find ways to hold the county’s besieged health system together, said county officials will soon start negotiating with bidders on taking over the clinics and that they hope to present supervisors with recommended contracts by the middle of next month.

“The county in the days to come is going into a very difficult and intense negotiation process where hopefully we’ll get a significant portion of the system covered,” Margolin told reporters at a news briefing. “We have no guarantees as yet as to how much will get covered.”

Margolin reiterated that the county, facing a $1.2-billion budget shortfall, has no money to pay private operators. But he held out the possibility that intense lobbying by county officials in Sacramento and Washington will produce additional state and federal funds that could be used to reimburse outside contractors.

He said some bidders will be rejected because they expect county repayment immediately, have too little capital to run county facilities or are interested only in treating patients covered by Medi-Cal, the state’s insurance program for the poor, while ignoring those without insurance.

Given just nine days to prepare their bids, private providers hurriedly delivered 106 proposals before a county deadline Thursday afternoon. Those documents were given a preliminary evaluation over the weekend by teams of county medical and financial officials assisted by private health-care experts, Margolin said.

A list of bidders released Monday ranged from Cedars-Sinai Medical Center, which treats celebrities and many other affluent people, to the Venice Free Clinic, which treats the homeless. Other bidders included a group of San Fernando Valley hospitals and physicians groups that want to assume control of seven clinics in that area.

Margolin said bidders who expect government reimbursement on “day one” of their contracts will get little consideration from county officials. Those willing to run clinics on the assumption that state and federal dollars may materialize later, he said, are likely to be more favorably received.

County officials are pressing the Clinton Administration for a waiver of federal rules that restrict spending of Medicaid money largely to hospitalized patients. The county wants such funds made available for more outpatient care, including health clinics.

But executives of even large private hospitals that made bids said they could not afford to run county clinics indefinitely without some government reimbursement. Many hospitals in the Los Angeles area have been badly hurt by the recession and managed care and are filling less than half their beds.

Terry Bonecutter, chief operating officer of Childrens Hospital Los Angeles, said the hospital will lose a “considerable” amount of money if it wins contracts for all seven clinics it bid on in conjunction with other hospitals and doctors groups.

The county, he said, should use some of the $500 million to $600 million it receives annually for indigent care in block grants from the federal government to pay operators of private clinics.

“In a true business sense, the clinics at this point do not come close to breaking even,” he said. “The private sector will have a hard time stepping up to this without some help from the county, state or federal government.”

Margolin said some bidders were clearly interested only in Medi-Cal patients but that preference will be given to bidders who have a history of providing quality care to the poor and uninsured.

County officials said they will monitor private clinic operators to make sure they don’t try to dump uninsured patients after winning a county contract.