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A Bitter Competition for Medi-Cal Patients : Health: County says crisis is fueled by private hospitals that lure the people and the financial bonuses that now accompany them.

CODE BLUE. The Crisis in Los Angeles County Health Care . One in a series


The billboard directly across from Women's and Children's Hospital urges pregnant patients receiving prenatal care at the county-run facility to deliver their babies at a private hospital less than a mile away.

The sign for White Memorial Medical Center shows a healthy, round-cheeked baby under a caption in Spanish: "With Medi-Cal, Mama and I have a private room." Left unsaid is that at the aging county hospital across the street, most new mothers find themselves two or even four to a room.

A White Memorial spokeswoman says the billboard is part of a neighborhood-wide ad campaign to inform residents of the availability of services at her hospital.

But to county officials the in-your-face billboard is just one irritating sign of private hospitals' attempts to lure relatively low-cost, high-revenue Medi-Cal patients away from public facilities.

This increasingly bitter competition for patients has contributed to the financial problems of the county's health care system, which is being scaled back in response to a crushing budget deficit.

The county has lost out on more than $100 million a year in special bonus money to private hospitals who have increased their share of Medi-Cal patients.

"I think it is predatory," said Don Petite, chief financial officer for the county's Department of Health Services, referring to White Memorial's billboards, which surround the county hospital complex. "It's an attempt by White and other hospitals to bring in additional Medi-Cal revenue."

That was cash, Petite says, that the county depended on to take care of uninsured patients--often the working poor--who do not qualify for government programs and have no medical coverage. Unlike the county, the private hospitals "aren't using the money to take care of indigent patients," he said.

The private hospitals offer free infant car seats, tote bags and special dinners in addition to private and semi-private rooms as inducements because pregnant women represent "guaranteed payment," said Maria Elena Sanchez, administrator of women's and children's services at Los Angeles County-USC Medical Center.

Yet just a few years ago, these were the patients nobody wanted. Medi-Cal, the state and federal program for qualified low-income patients, did not pay enough and did not cover illegal immigrants.

As a result, in the late 1980s, county facilities such as Women's Hospital, which are required to serve all residents regardless of ability to pay, were so swamped with pregnant patients that some women were giving birth in the corridors.

No more. After considerable publicity in the 1980s about the plight of overburdened public hospitals caring for Medi-Cal patients, state and federal agencies came to the rescue. Today, thanks to laws giving hospitals substantial financial bonuses for taking Medi-Cal patients and paying for prenatal care for undocumented immigrants, private facilities have started enticing pregnant women into their programs. And their success has gravely wounded the county's public health delivery system.

For the private hospitals the new competition is part of a struggle for survival. There are too many empty hospital beds in Los Angeles County--most private hospitals hover around 50% occupancy. Those unable to compete are likely to shut down, said James T. Yoshioka, president and chief executive officer at California Hospital Medical Center in central Los Angeles.

The private hospitals such as Yoshioka's, which generally offer more amenities to patients, are bound to win the competition, he said.

"Patients would rather come here," he said. "We have semi-private rooms. We have a TV in the room. Maybe the food's better. We're getting down to choices, and when the Medi-Cal patient has a choice of going to the county or coming here, they come here."

County officials contend that this movement of patients--and the loss of the substantial revenue that goes with them--has been a primary contributor to the financial squeeze that has threatened to destroy the Los Angeles County health care system.

One result is to give Medi-Cal patients--particularly pregnant women--many more choices than they had five years ago, county officials say. But the private hospitals do not share the county's commitment to care for the uninsured poor. They "skim off" or "cherry-pick" those covered by Medi-Cal and other paying patients and leave it to the county to care for high-cost patients and those without any health coverage.

And the county's money problems are expected to get worse as more private hospitals qualify for a state and federal program that gives bonuses to hospitals that serve a "disproportionate share" of Medi-Cal or other low-income patients.

To be eligible, at least 43% of a hospital's patients must be enrolled in Medi-Cal. A hospital also qualifies if its Medi-Cal payments and charity costs add up to 25% or more of its total revenue.

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