Colton Public Hospital’s Fiscal Diagnosis: Stable

A disheveled, dark-haired woman shuffled into the bustling hospital emergency room, complaining of stomach pains. She was 42, but looked 60.

Groaning in pain, she told ER director Dr. Rodney Borger that she downed about a pint of liquor each day. Borger’s diagnosis: cirrhosis of the liver.

She complained that when she had gone to other hospitals, “they tell me it’s chronic and they can’t help me.�

“Because you have no insurance, right?� Borger asked.

“Right,� she said, before she was treated and directed to a social worker and a county clinic. The cost for her care at the hospital was about $3,000, a bill that will be picked up by taxpayers.

The scene at Arrowhead Regional Medical Center in Colton is typical of public hospitals across California, which are struggling to serve a growing surge of uninsured patients.

But this San Bernardino County hospital, a 372-bed facility that opened in 1999 to replace a smaller, aging county facility, has been recognized in healthcare circles for its efforts to keep costs down and stay on a sound financial footing.

The hospital treated more than 157,000 uninsured patients last year. Only Los Angeles County-USC Medical Center and Harbor-UCLA Medical Center in Los Angeles County and Santa Clara Valley Medical Center in Santa Clara County treated more uninsured patients in 2003, according to data submitted to the state. About half of the 66,000 patients treated at Arrowhead’s emergency room last year were uninsured.

But unlike many struggling public hospitals, Arrowhead is not draining millions of tax dollars from the county’s general fund. In fact, hospital officials plan to add nine emergency room beds next month and hire more than 132 additional people next year.

Arrowhead’s fortunes are due in part to its unique circumstances, and in part to the way it does business.

Hospital administrators said they have been heavily scrutinizing day-to-day expenses, cutting costs by contracting with private-sector physicians, capitalizing on being one of only two trauma-care centers in the county, and drawing more money from insurance carriers.

Arrowhead also benefits from being a relatively new hospital with state-of-the art medical equipment, modern facilities and a reputation for good treatment. Such qualities help attract good doctors and insured patients, said Denise Martin, president and chief executive of the California Assn. of Public Hospitals and Health Systems.

“Arrowhead has a reputation as a center of excellence,� she said.

But comparisons with other public hospitals can go only so far, experts said. Arrowhead tends to treat fewer uninsured victims of shootings and automobile accidents than large public hospitals in Los Angeles, like Martin Luther King Jr./Drew Medical Center and County-USC Medical Center, which serve some of the poorest communities in the state. These patients typically cost more to treat because their wounds or injuries are so severe.

“It’s the patient mix in every case that makes the difference,� said Jim Lott, a spokesman for the Hospital Assn. of Southern California.

Like many public hospitals, Arrowhead Regional receives heavy state and federal subsidies to treat poor and elderly patients. But for several years San Bernardino County has not needed to use general fund money to subsidize the hospital’s day-to-day operations. The hospital has an annual budget of about $274 million and has not had to rely on county funding to balance its budget for several years.

That is not the case in some other counties. Riverside County Regional Medical Center took in nearly $17 million in county funds last year to stay in the black.

Los Angeles County spent about $144 million last year to subsidize the five county-run hospitals.

San Bernardino County officials credit Arrowhead’s former chief executive, Mark Uffer, with keeping costs down.

Uffer, who became Arrowhead’s chief executive in 1998 after heading the privately run St. Luke Medical Center in Pasadena, attributes the hospital’s financial stability partly to a private-sector mentality. (St. Luke’s administrators closed the facility in 2002, citing overwhelming competition from larger and better-equipped hospitals in the area.)

Uffer recently left the hospital when supervisors promoted him to be the county’s top administrative officer.

As head of the hospital, Uffer recounted how he stopped hospital officials from letting discharged patients take home the telephones assigned to their rooms. Officials gave the phones away, fearing germs would be transferred to the next patient. In less than a month, Uffer said the hospital gave away more than 2,000 telephones, at a cost of nearly $10 each. He ordered hospital staff to clean the phones with alcohol.

Uffer also attributes some savings to hardball negotiations with contractors that provide the hospital’s physicians and surgeons. In 2000, Uffer slashed $2 million from the hospital’s cost of $22 million for physician contracts.

The hospital staff has bristled at the cost cuts. In September, nurses joined the California Nursing Assn. in hopes of increasing their clout at the bargaining table. Beginning nurses at Arrowhead earn about $21 an hour, about $3 less than counterparts in two nearby privately run hospitals, association officials say.

“They don’t believe their salaries are up to standards,� said Jill Furillo, Southern California director for the California Nurses Assn. She said the lower wages make it hard to keep nurses from leaving for higher-paying jobs in private hospitals.

Nursing salaries have been an issue at public hospitals throughout California. Public hospitals generally offer lower salaries than private competitors, making it hard to recruit and retain nurses.

Arrowhead administrators say they will address such complaints in upcoming contract negotiations. Still, county administrators say such staff complaints do not diminish the quality of the care at Arrowhead.

“I don’t think the quality of care is a question here,� Uffer said.

Part of Arrowhead’s financial stability also comes from having one of only two trauma centers in the county and the largest burn unit in the Inland Empire. Uffer also capitalized on Arrowhead’s dominance by canceling nearly all contracts between the hospital and insurance providers. Under such agreements, insurance companies direct their patients to particular hospitals but pay only a portion of the cost of the services provided.

Without such agreements, insurance companies pay a larger share for services, which could lead to higher charges to the insured patients, depending on their insurance policy.

Healthcare experts say it is financially prudent to end those agreements but only if a hospital has little competition for treating paying patients.

“You have to have close to a monopoly situation for that to work,� said Glenn Melnick, a USC professor of healthcare systems and finances.

When Arrowhead was built and opened in 1999, at a cost of more than $600 million, it included many state-of-the-art amenities -- such as a computerized system that stores and displays digital X-rays -- to attract insured patients.

But a vast majority of the hospital patients are like a 67-year-old Rialto man who showed up at the emergency room recently complaining of shortness of breath. The man said he had been treated previously at the hospital for pneumonia.

His wife sat on a plastic chair next to him, looking worried.

“He has everything,� she told Borger, the ER director, ticking off a series of her husband’s ailments, including asthma, high-blood pressure, diabetes and arthritis.

What the man did not have was private insurance. Borger nevertheless examined the man, ordered several tests and admitted him for treatment of congestive heart failure. The patient was sent home the next day, feeling better.