Hospitals to Get $150-Million Infusion

Los Angeles County’s public hospital system will receive an additional $150 million from the federal government over the next two years, effectively ending the health department’s immediate funding crisis, officials confirmed Tuesday.

Combined with a voter-approved property tax hike, the shuttering of 16 health centers and the impending closure of two public hospitals, the federal money should forestall additional cuts for at least two years, said Dr. Thomas Garthwaite, director of the county Department of Health Services.

“It gives me and the rest of the department here time to really dig down into the weeds and fix” chronic problems, he said. “It’s a significant step.”

The infusion of federal money also means that Olive View-UCLA Medical Center in Sylmar and Harbor-UCLA Medical Center near Torrance, which had been considered for closure, will be spared.

So will the county’s network of private outpatient clinics that treat uninsured patients and the Edward R. Roybal Comprehensive Health Center.

The federal aid is not enough, however, to keep the doors open at High Desert Hospital in Lancaster and Rancho Los Amigos National Rehabilitation Center in Downey. These hospitals, approved for closure last year, don’t have emergency rooms, so they were considered more expendable than the four full-service county hospitals.

The new funding is part of an agreement finalized Tuesday between state and federal officials, according to people familiar with the negotiations. It might be announced later this week when U.S. Health and Human Services Secretary Tommy Thompson visits Los Angeles.

“We’ve worked out an arrangement with the state, and we’ll be announcing the details later on,” said Rob Sweezy, spokesman for the U.S. Centers for Medicare and Medicaid Services.

The deal represents major progress for a health system that in June predicted a deficit of $709 million within three years. Many experts said the actual tally was likely to be even higher than that for the department, which serves 800,000 people each year, most of them uninsured.

Of the new federal aid, $50 million will come from a long-delayed lawsuit settlement over reimbursement rates for outpatient care at state hospitals, officials familiar with the deal said. The other $100 million comes from the renewal of a 20-year-long federal program that gives extra money to California hospitals that care for large numbers of poor patients. That program was set to expire at midnight Tuesday.U.S. Rep. Jane Harman (D-Venice), who helped broker the deal, said the agreement is “a long-awaited step forward.”

It “offers much of what we need to get our vulnerable system off of life support and back on its feet,” Harman said in a written statement.

Harman said that keeping the hospital system viable is critical, especially if the county’s airports or ports are attacked by terrorists.

Even so, the $150 million falls far short of the $1.4 billion the county requested last year. During the Clinton administration, the health system received two bailouts totaling more than $2 billion, the first in 1995 when the system’s woes threatened to pull the entire county into bankruptcy.

But Bush administration officials said a third large bailout was too much to ask.

The turning point in the funding discussions may have come in November, when voters passed the new property-tax increase, dubbed Measure B, which will raise $168 million annually for the emergency and trauma system. The initiative, which earned more support than any other measure or candidate in the county, apparently resonated with voters.

It also demonstrated to federal officials that L.A. County residents were committed to saving the nation’s second-largest health system from collapse.

County supervisors showed some commitment as well by voting to slash some popular programs and institutions. This fiscal year, they expect to save $241 million from the closure of the 16 health centers, converting High Desert to an outpatient center in May and closing Rancho by July.

The county’s decision to close Rancho has set off a scramble to raise millions of dollars in donations to keep its doors open and eventually convert it to a nonprofit hospital.

Meanwhile, state and county officials still are seeking other concessions from the Bush administration. In particular, they want to ensure they will keep receiving federal funds for the care of poor patients as they move from expensive hospital care to less costly outpatient treatment.

The present deal does not solve costly structural problems within the health department, and Garthwaite said L.A. County may have to look anew for cuts in a couple of years.

“In and of itself, this doesn’t get us completely fixed,” he said. “It doesn’t make us stable, but it significantly helps.”

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Times staff writer Daren Briscoe contributed to this report.