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Troubling Questions

October 19, 1986

Serious questions remain as the County Board of Supervisors prepares to take up on Tuesday a complex tripartite agreement that would clear the way for construction by the University of Southern California and National Medical Enterprises of a new private acute-care hospital in conjunction with the USC School of Medicine and the Los Angeles County-USC Medical Center.

Most of the questions fall into two areas: (1) The impact of adding 283 new hospital beds at a time when most hospitals are operating far below capacity, and (2) how to assure that the new hospital will enhance existing indigent health care and not diminish it.

White Memorial Hospital, within a mile of the new facility, has been outspoken in its opposition. The impact will reach other hospitals in the region, where USC presently has programs that will be transferred to the new hospital. But the impact on most hospitals may be minimized to the extent that the new hospital can be developed, as NME and USC hope, as a tertiary-care facility, that is, a place for applications of the most sophisticated and technologically advanced forms of medicine on referral from specialists in the region's primary- and secondary-care hospitals. USC argues that there is a shortage of tertiary-care beds in the region.

The proposed new hospital holds the potential for enhancing medical education, indigent care and specialty services in new medical technologies, all of which could be positive additions to the health system in Southern California. For USC in particular, the arrangement with NME assures an additional facility for private patients that will increase compensation for its medical faculty, facilitating both recruitment and retention of top physicians. For the university, the only capital outlay will be the $15 million to purchase the 15-acre site, conveniently located close to both the medical school campus and the County-USC Medical Center. The land presently is owned by the Los Angeles Board of Education and the county. About half the land will then be rented to NME which will pay for construction. The balance of the site will be used by USC for its own programs, including expanded medical research facilities and eventually perhaps a geriatric research center.

The agreement among the county, USC and NME is only a framework for the more detailed agreements, not yet negotiated, on which the continuation and adequacy of indigent care depend. One of these unresolved problems is cause for particular concern: NME has not yet agreed to the USC wish that the staff of the new hospital be made up exclusively of USC faculty. If the facility fails to attract sufficient tertiary-care patients to meet the profit requirements of investor-owned NME, the secondary-care facilities almost certainly would be enlarged with non-faculty physicians in direct competition with other hospitals.

No guarantee has yet been drafted to assure the continued quality of care at the Los Angeles County-USC Medical Center, or of access for indigents to special services that may be available only at the new NME-USC hospital. One promising development has been agreement by NME, under pressure from the county, to use some profits to provide, at discount, indigent patient services not available at County-USC.

One major reorganization, shifting the USC Medical School staff from the county payroll to the USC payroll, had been under negotiation prior to the NME-USC proposal. It is consistent with the policy of a majority of the supervisors to shift more county services to contract workers, thus easing the burden of fringe benefits, including pensions. The County Department of Health Services favors the new plan on grounds that it will provide for better accountability of medical staff work and also produce additional revenue, notably from Medi-Cal, Medicare, and private health insurance not now always collected. Some supervisors have indicated that they are not yet convinced.

At least one lesson has been learned from the controversy surrounding this project: There is no effective health policy or plan for this region. And things are likely to get worse, rather than better, as state authority to determine need for health facilities expires at the end of the year. But there may be a gleam of possible improvement in terms of coordination and cooperation in the future in the consultations USC has undertaken, albeit after the fact, and in the commitment of the medical school leaders to work with other health-care providers in trying to minimize what negative consequences there may be in the plan for the new hospital.

The priority for the supervisors on Tuesday is to minimize any negatives while making sure the new facility enhances indigent health care. Only then could they justify entering the tripartite agreement and selling off the lands they hold in public trust.

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