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Health Policy Advisory Center No. 51 April 1973 HEALTH / PAC BULLETIN TURNING POINT FOR PUBLIC HOSPITALS City and county hospitals - the major source of health care for low income - peo- ple are - in deep trouble. Local taxes can't keep up with the hospitals'ever mounting - costs. In despair of improving their hospi- tals, some cities and counties are figuring out ways to get rid of them. A number of city and county hospitals will close altogether. Several California county hospitals are on the brink of clo- sure. Madera General Hospital already shut its doors, forcing patients to seek care in other counties. In 1970 and '71 Chicago's Cook County Hospital came within a hairs- breadth of shutting down. The New York City Health and Hospitals Corporation ini- tiated plans to close or lease up to seven of its eighteen municipal hospitals (see BULLETIN, May, 1972). The 1972 Airlie House Conference on Public Hospitals, at- tended by an impressive array of public hospital experts, concluded that " The clos- ing down of large public hospitals in major cities is an unpleasant but very possible result if indifference and inaction remain the cornerstone of federal policy. " Federal and state hospitals are also threatened. The Nixon Administration is trying to phase out its Public Health Serv- ice hospitals. And California's Governor Reagan hopes to eliminate the state's men- tal hospitals. Two major factors are operating through- out the country to deepen the crisis of city and county hospitals: cutbacks in Med- icaid and changing needs of private hospi- tals. In both cases, powerless public hos- pitals have little choice but to react to situations produced by the dominant pri- vate health sector. The Medicaid program has played a crit- ical role in public hospital financing. Fol- lowing its passage in 1965, Medicaid paid the hospital bills for a significant propor- tion of city and county hospital patients, thus shifting health financing from local budgets toward state and federal govern- ments. However Medicaid encouraged hos- pitals, nursing homes and private doctors to rapidly raise their fees and grossly over- charge the program. A series of fiscal crises and a rash of Medicaid cutbacks resulted. Though the greed of the private sector caused the cutbacks, the consequences fell heavily on the public sector. Part of the financial burden for public hospitals was shifted back to local governments. With hospital costs inflating faster than any other item, city and county officials are looking for ways to get the hospitals off their backs. At the same time that changes in Med- icaid are returning the financial burden for public hospitals to unwilling local gov- ernments, private hospitals have been hit with falling occupancy. The average na- tional occupancy rate (percent of beds filled) for acute care hospitals fell from 78.0 in 1970 to 74.8 for the year ending September 30, 1972. The resulting 25,000 empty beds are mostly in private hospitals, both non profit - and profit making - . In the five Pacific states the slide was even greater: from 73.3 percent occupancy in CONTENTS 3 California County Hospitals 13 Medi - Cal 20 San Francisco 1969 to 63.6 percent in September, 1972. At the start of 1973, California's Health Plan- ning Council chairman Thomas McMur- ray estimated that the state has a general hospital surplus of over 19,000 beds. This drop means financial trouble, for empty beds produce no income yet cost money to maintain. In the cities and towns of California, privates are pressuring county governments to close or reduce in size their hospitals and to pay private hos- pitals for the care of low income - patients. Thus everything is stacked against pub- lic hospitals. Local governments face in- creasing financial responsibility for the care of the poor and private hospitals are confronted with an increasing need to take poor patients. In California, where Med- icaid cutbacks have been greatest and hospital occupancy rates are lowest, these conditions have already closed or nearly closed several county hospitals. And in four out of five of the state's largest coun- ties the hospitals are on their way to be- coming quasi private - institutions. What is wrong with closure or private acquisition of public hospitals? Don't these hospitals give poorer care in America's two class - health system? And won't their demise help initiate emergence of single class health care? In fact, the closure of county hospitals has nothing to do with a one class - health system; it is a response to financial pres- sure on local government and on private hospitals. The two class - system will con- tinue as long as there are low income - peo- ple who cannot pay for their health care or cannot find care in their communities. The new Medicaid amendments (HR 1) represent a cutback in health programs for the poor, and Washington observers feel that national health insurance is many years away. Meanwhile medical man- power in poor urban and rural areas is diminishing and these areas must increas- ingly rely on public hospitals and clinics. Public hospitals must be preserved for several reasons. (1) Twenty million or more people without Medicare, Medicaid or private insurance are unable to pay for private hospital care and depend on pub- lic hospitals. (2) Private hospitals have always refused " undesirable " patients (such as alcoholics, drug addicts and the chronically ill) even with Medicaid cards; the privates have done this whether or not a public hospital exists in the area, and there is no reason to believe that they will change. (3) Most doctors in private hospi- tals have private office practices and come to the hospital only to see their private patients. So the hospitals, even those with empty beds, have few or no physicians available to care for low income - people who don't have access to private doctors. (4) The decline in private hospital occu- pancy may be temporary, suggesting the possibility that Medicaid patients now sought - after by privates may be forced back to public hospitals in a few years. (5) Private hospitals are comparatively immune from public pressure whereas public hospitals must have some accounta- bility for their actions. Low income - communities in California are choosing to support the continued ex- istence and improvement of their county hospitals. Groups in San Francisco, San Mateo and Tulare counties are fighting to keep their care from disappearing or going private. If strong enough, such popular pressure could delay the destruction of the small but important portion of our health system that still belongs to the public. But successful struggle will require deal- ing with a more fundamental issue: the Published by the Health Policy Advisory Center, 17 Murray Street, New York, N. Y. 10007. Telephone (212) 267- 8890. The Health - PAC BULLETIN is published 8 times per year; January, February, March, April, May, Sept- tember, October and November. 3 special reports are issued during the year. Second - class postage paid at New York, N.Y. Subscriptions, changes of address and other correspondence should be mailed to the above address. New York staff: A. Sandra Abramson, Constance Bloomfield, Oliver Fein, Marsha Handelman, Nancy Jervis, David Kotelchuck, Ronda Kotelchuck, Howard Levy and Susan Reverby. San Francisco staff: Elinor Blake, Thomas Bodenheimer, Judy Carnoy. San Francisco office: 588 Capp Street, San Francisco, California, 94110. Telephone (415) 282-3896. Associates: Robb Burlage, Morgantown, West Virginia; Desmond Callan, New York City: Vicki Cooper, Chicago: Barbara Ehrenheich, John Ehrenheich, Long Island: Kenneth Kimmerling, New York City. 1973. 2 relation of public hospitals to the dominant private health sector. Private profiteering in Medicaid has largely caused cutbacks that now overburden local governments. Private hospitals continue to use public hospitals for their own purposes: to dump patients when they don't want them and to grab patients when they do. And local taxpayers, predominantly working fami- lies, are forced to pay in three different ways: for their own health insurance al- lowing them to use private hospitals, for the billions in public money that pays through Medicare and Medicaid for more than 50 percent of private hospital budgets, and for the local public hospital to care for the cast - offs from the privates. Private hospitals have overwhelming advantages over public hospitals in attract- ing money and manpower. The privates. began with capital from rich churches or philanthropists and with private doctors to admit paying patients to them. With the ability to get paying patients, private hos- pitals had a source of income that public hospitals, which couldn't attract paying patients or were legally prevented from accepting them, were denied. Medicare then provided large sums of tax money that private hospitals, with their superior resources, could also pull away from pub- lic hospitals. It is the usual up down - or - spiral characteristic of an economic system based on private capital: institutions and individuals who start out with money can always attract more money whereas those without money remain impoverished. As long as a small, underfinanced pub- lic system coexists with a large, wealthy private one, the private system will suc- cessfully compete for paying patients, doc- tors, money and power. Thus the struggle to preserve the public system is more than the preservation of a rundown, half empty - , understaffed city or county hospital. It means fighting to divert resources from pri- vate to public control. It means attacking private hospitals when they take public money but leave behind the public respon- sibility to care for everyone. Eventually it may mean forcing the new, well staffed - local private hospital to become public. DISMANTLING CALIFORNIA'S COUNTY HOSPITALS Many struggles to improve health care have occurred in and around public hospi- tals: Cook County in Chicago, Lincoln and Harlem Hospitals in New York City, San Francisco General, and Los Angeles County Hospital. And it's no surprise. Most public hospitals are inadequately staffed and equipped and grossly underfinanced. And each large urban hospital has many different elected bosses - officials, appoint- ed health and civil service administrators, medical school deans and department heads each running a small part of the show. But public hospitals have had one enor- mous virtue: millions of people could seek care there without worrying what it would cost. From now on, people will have to start worrying. Some public hospitals are being closed down entirely. Some are be- ing removed from public control. And in others, people are being asked to pay for care formerly delivered free. This nationwide trend is most visible in California. San Diego's county hospital was turned over to the University of Cali- fornia in 1966, Sacramento is going that route this year, and Orange County may 3 follow. San Francisco is debating a plan to turn its hospital into a quasi private - corpo- ration. Madera County has closed its hos- pital and other counties - San Mateo, Humboldt, Yolo, Butte, Tulare, Kings and more are planning closure. In fact, almost every small county in the state has con- sidered closing its hospital. A profit - mak- ing hospital chain is operating Siskiyou County's former hospital; another profit for - chain came close to getting Merced's. Los Angeles County is discussing contracting out some services to private hospitals. And almost every county has tightened up billing and collection practices. By the time the dust settles, it looks as if California's free public hospital system will be largely dismantled, county by county. How Hospitals Began From the very beginning, America's health care system was based on economic class. Wealthy and middle class people were attended by private physicians in their homes. Care for the destitute, on the other hand, was left to public poorhouses, used like jails to separate the undesirable and the contagious from society. The coun- try's first hospitals typically - dirty, over- crowded and poorly ventilated - were never used for the treatment of well - to - do patients. In fact, since medicine had little to offer the sick, they were not a place for treatment at all, but a place to die. The discovery of antisepsis and sterile procedure in the 1840's reduced the high hospital mortality. At the same time the development of anesthesia gave hospitals a curative purpose: surgery. With these technical advances, hospitals became a place for middle and upper class people to go. In the late 19th and early 20th cen- turies, many new hospitals were built, most of them private. Until this day the origins of public and private hospitals haunt us: public hospitals are still seen by many of their users as places to die whereas private hospitals are considered places to get well. With the emergence of scientifically- based medicine, university medical schools began to use urban public hospitals for teaching and research. Poor patients re- ceiving free care were in no position to object to being used as teaching and re- search subjects. The medical schools would supply cheap medical manpower to the city hospitals, and the cities in return would foot the bill for a great deal of the schools ' operations. The Depression of the'30's threw private 4 hospitals into financial crisis; people could not afford to be hospitalized. It was Blue Cross and commercial health insurance that bailed out the private hospitals. But these were unavailable to patients of pub- lic hospitals, which were left dependent on local property taxes. These taxes don't tap the country's real concentrations of wealth and cannot expand fast enough to keep up with public hospital needs. So public hos- pitals have never emerged from financial crisis. California's County Hospitals Since 1855, California's counties have been responsible for the health care of poor people. The oft cited - Section 17000 of the State Welfare and Institutions Code states that " Every county and every city and county shall relieve and support all incompetent, poor, indigent persons, and those incapacitated by age, dis- ease, or accident, lawfully resident therein, when such persons are not supported and relieved by their rela- tives or friends, by their own means or by state hospitals or either state or private institutions. " Until recently, county hospitals in Cali- fornia were generally open only to the medically indigent; people able to pay had to be referred to private doctors and pri- vate hospitals. This was first established in 1933 when a group of Bakersfield doc- tors sued to stop Kern General Hospital from admitting paying patients. The doc- tors won. In 1939 another court decision held that county hospitals could admit pay- patients only if sufficient private facilities did not exist in the area. In essence, Cali- fornia courts determined that county hos- pitals were not to compete with private facilities but were to fill in the gaps unpro- vided by them () 1. In this way the private sector would not receive competition from tax supported - public institutions. Medi - Cal and the " County Option " By providing federal and state funds, the California Medicaid program (Medi - Cal) was supposed to relieve the burden placed on counties (see Medicaid article, page 13). But to the counties, it wasn't that sim- ple. First, they had to contribute a signifi- cant portion of the Medi - Cal budget through yearly lump - sum payments to the state. Second, with Medi - Cal, patients would gravitate to private care, leaving county hospitals with the medically indigent who were ineligible for Medi - Cal. So in the California legislature, the coun- ties won the passage of an all important - clause in the Medi - Cal law: the " county option. " The state agreed to pay all ex- penses for county hospitals above the base year 1964-65. For example, if a county spent $ 20 million for its hospital in 1964-65 and spent $ 30 million in 1968-69, the state would reimburse the county for the addi- tional $ 10 million. As Gordon Cumming, former county hospital administrator in Sacramento and the author of the county option, said, " The county option is the best deal the counties ever got. " It meant that county hospitals could acquire all the equipment and new personnel they wanted and the state would pay the bill. In addition, the Medi - Cal law overturned previous court decisions and allowed coun- ties to open their hospitals to private pa- tients. However, the dream of Medi Cal's - creators failed to materialize. Governor Reagan soon limited funds for the county option so that county hospitals by and large failed to upgrade their facilities, at- tract private patients and become " com- munity hospitals " for rich and poor alike. Private patients and doctors continued to view county hospitals as institutions only for the poor. Yearly Medi - Cal cutbacks reversed the 1966 shift toward federal - state financing of county hospitals and the final blow came with the 1971 Medi - Cal " Reform " Act. Though the Act placed more people on Medi - Cal, at the same time it abolished the county option, raised the county's contribu- tion to the Medi - Cal budget, and lowered rates at which Medi - Cal reimbursed county hospitals. In Los Angeles, for example, lo- cal taxes provided 80 percent of the county hospital budget prior to Medi - Cal; after 1966 the local contribution dropped to 50 percent; and following the " Reform " Act rose again to 60 percent. Since hospital budgets have shot up since 1966, the re- newed burden is a heavy one. More than any other factor, this shift back to local support has made county boards of super- visors (California's local governing bod- ies) anxious to get rid of their hospitals. Occupancy Rates When county supervisors took a new look at their hospitals they were in for a big surprise: many of the hospitals were half empty - . Kern General had a 1971 occu- pancy rate of 61 percent, Contra Costa County 65 percent, Merced General 51 per- cent, Orange County 67 percent, Sacra- mento Medical Center 70 percent, Santa Clara 59 percent, Santa Rosa 42 percent, Fresno 42 percent, Yolo 32 percent, Kings 24 percent. Had large numbers of Medi- Cal patients deserted these county hospi- tals for private medicine? The answer is " No. " Between 1965 (be- fore Medicare and Medicaid) and 1971, the number of admissions to Kern General Hospital diminished by only 6 percent; at Contra Costa admissions increased by 27 percent; Merced showed a 33 percent rise. There are exceptions: Yolo and Kings dropped their admissions by 40-50 percent. But public hospital admissions in Califor- nia's four largest cities dropped only 5-10 percent. And out patient - visits are increas- ing. Then why are the occupancy rates down? The main reason is that patients are staying in the hospital less time. Some hos- pitals have phased out their chronic pa- tients, thus cutting down the patient census. In addition, Medicare and Medicaid are pressuring hospitals to get patients out. The average length of stay dropped dramati- cally in some county hospitals; San Fran- cisco General's fell from 13.2 to 7.1 days in 9 years. Changing Role of the Privates On May 10, 1971 the San Francisco Chronicle's front page proclaimed an " Empty - Bed Crisis for SF Hospitals. " The article could have been written in Boston, Los Angeles, Minneapolis, Seattle or Den- ver. The average national occupancy rate for private hospitals is declining for the first time since World War II. Length of stay has dropped, as has the rate of admis- sions. But the most significant factor is the expansionism of the private hospitals themselves: in the 1960's hospitals grossly overbuilt. According to the Wall Street Journal (November 2, 1971), " The number of beds in general - care hospitals has grown about three times faster than the nation's population, " rising 33 percent from 1960 to 1970. Private hospitals have always exploited their public counterparts. In the past they have taken paying patients and sent non- paying and " undesirable " patients to pub- lic hospitals. This " patient dumping " has reached enormous proportions; in Chicago, 18,000 emergency patients were refused admission to private hospitals in 1970. The most fortunate ended up at Cook County Hospital; the unlucky - at least 50 people - died in the course of transfer (2). With the drop in private hospital occu- pancy, however, the relationship may be 5 reversed. Rather than using public hospi- tals to dump non paying - patients, private hospitals are looking to them as a source of more paying patients. There is tension between the need for more paying patients and the desire to pick and choose which patients are cared for. But in California, private hospitals are pressuring county governments to close or reduce their hos- pitals and to contract with them instead for the care of the poor. Five Ways to Get Rid of a Hospital With costs climbing and occupancy fall- ing, county boards of supervisors are anx- ious to get out of the hospital business. There are several ways of doing this: clos- ure, " contracting out, " transfer to a medical school, takeover by a private corporation, and creation of a quasi public - corporation. Short of this, counties are looking to tighter billing to stem the tide, and, not inciden- tally, make public hospitals act more like private ones. Although local conditions determine the fate of any particular hospital, these mech- anisms are being considered throughout the country. California is trying them all. Closure Madera County, located in the heart of the agricultural Central Valley, is Califor- nia's sixth poorest county in per capita in- come. In 1972 the Board of Supervisors de- clared that the county had no more medi- cal indigents and closed down the county hospital. Patients with incomes above the Medi - Cal level were assumed to be capa- ble of paying their own hospital bills. At the same time the new private Ma- dera Community Hospital opened across town, and patients without money or insur- ance were turned away. In fact, according to Manuel Perez, the county hospital ad- ministrator in neighboring Fresno County, Madera Community Hospital actually put patients in ambulances and sent them 25 miles south to Fresno. Madera patients also showed up at Merced General Hos- pital 30 miles to the north. Merced's admin- istrator, Jay Akin suggested that, " Some- one ought to sue the hell out of them. " Other counties and some Madera con- sumers are putting pressure on Madera Community Hospital and the hospital is now admitting more people. But with no out patient - department, no full time - doctors and a practice of first served - pay - first - , Ma- dera Community Hospital is not going to serve a large number of poor Madera residents. 6 Will the Madera story be repeated throughout California? Manuel Perez, in addition to heading Fresno's Valley Medi- cal Center (the county hospital with a new name), is President of the Association of California County Hospital Administrators. " A couple of dozen county hospitals (out of 54) will survive; all the rest will go, " predicts Perez. " The reason is economy. " " Fresno itself is an example of the ten- sions placed on county hospitals. The city of 200,000 is overbedded, with occupancy in one private hospital going from 88 to 73 percent in the past four years, another dropping from 68 to 44 percent, and Valley Medical Center going from 56 to 42 per- cent. Mr. Perez is working energetically to make his hospital into a regional referral center by bringing in a medical school affiliation. He admits that " private hospi- tals and private doctors are trying to stop our expansion and improvement pro- grams. " If hospital occupancy in Fresno. continues to fall, someone will be closing down. Tulare County, south of Fresno, just had a close call. The Board of Supervisors had decided to close the hospital on February 1, 1973. But in late 1972 several hundred community residents stormed a Board meeting to demand that the hospital re- main open and several thousand signers petitioned for the continuation of the hos- pital. The Supervisors backed down and set up a committee to study the situation. After another large turnout of community people and hospital employees, the hospi- tal has been spared pending further study. However, the Supervisors did not commit themselves to improving the hospital's in- adequate services. Next door - Kings General Hospital is nearing its end. It is close to disaccredita- tion by both the Joint Commission on Ac- creditation of Hospitals and the California Medical Association, and the Supervisors refuse to appropriate money to fix it up. The hospital's retired medical director, Dr. Paul Murphy, suspects that a private hos- pital has played a role in the impending closure: " Sacred Heart wants the county's money, but they don't want the county's patients soiling up their marble floors. They're making the laundry into an out- patient clinic, building little cubicles, you know. They'll have the poor patients go in and out through the back door. " The same process is taking place in Cali- fornia's northern counties. Down the street from Yolo General Hospital sits private Woodland Memorial, whose occupancy rate has dropped from 80 to 67 percent in four years. Woodland Memorial has built an emergency room to attract new patients and it is strongly represented on a commit- tee to study the future of the county hospi- tal. Yolo General's administrator, Walter Atkins, was bitter: " A multitude of people can't go to the private sector. It'll be a sad day in California when we lose the county hospital system, and we will lose it. " " There are too many hospital beds in the country, although the Association would never want me to say so publicly. " _ the late Dr. Edwin Crosby, former vice president - of the American Hospital Association Ironically, Atkins has left Yolo to be- come administrator in another troubled county hospital. In 1972, Butte County vot- ers approved a proposition requiring con- tinued operation of the county hospital, but they turned down the bond issue to fund it. The hospital will lose accreditation by July if money is not voted; a new referendum is scheduled for May. Humboldt County, on the northern coast, will probably close its hospital next year. Mendocino County is talking about doing the same. Contracting Out A less dramatic way to close a county hospital is to do it little by little. One of the chief quises for this is called " contracting out whereby " counties contract or form agreements with private hospitals to take county hospital patients. Contracting out is an issue at the two largest county hospitals in the country: Cook County in Chicago and Los Angeles County. In February, 1970, administrator James Campbell of Chicago's Presbyterian - St. Lukes Hospital proposed that the Cook County Hospital patients covered by Med- icaid and Medicare (70 percent of the hos- pital census) be cared for by 46 private hospitals throughout the city. Cook County Hospital would be left with patients no one else wants - those without third party cov- erage and " troublesome " patients like prisoners, alcoholics and drug addicts. The plan was not implemented, but the Health and Hospitals Governing Commission's ex- ecutive director, Dr. James Haughton, is thinking about cutting down the county hospital and contracting out the care of poor patients to private hospitals. " I am not saying this will happen, but it is certainly one of the options available to us, " said Haughton in a recent Chicago Daily News interview. Apparently private hospitals with financial and occupancy problems are pressuring Haughton for contracts; he has been negotiating with Mary Thompson Hospital (occupancy 68 percent) for sev- eral months. Los Angeles County has just reorganized its health and hospital system and one of the hottest issues is contracting out. The county already pays some private hospi- tals for emergency care of medically indi- gent people. But the privates hope to divert more patients into their empty beds and want the county to guarantee that they will be covered (if they do not have Medicaid or Medicare). The county's Medical Direc- tor Dr. John Affeldt is worried that, " Pri- vates will pick and choose patients and reject those they don't want. It could de- stroy the basic core of the county hospitals. We'll lose our staff and deteriorate. You can destroy the county hospitals little by little and you'll never be able to get them back. " County Health Services Director Liston Witherill, however, claims that con- tracting out is many years away. "The county has no money to pay the privates. " Contracting out, though ideal for private hospitals, is a problem for starved money - county governments. If counties pay for everyone without Medicare, Medicaid or private insurance, their health care costs could soar. Consequently " contracting out " will involve primarily Medicare and Med- icaid beneficiaries, but few " medical indi- gents " except possibly in emergencies. And unless the privates make more physi- cians available to care for patients under county contracts, these contracts will be empty promises. Medical School Transfers Medical schools have traditionally formed " affiliations " with county hospitals: the school provides doctors to give service and the county supplies an equipped, staffed facility for teaching. The medical school obtains virtual control over the 7 health care delivered, yet has no respon- sibility for the hospital's financing. In San Diego and Sacramento, however, the Uni- versity of California is taking over the en- tire operation of those counties'hospitals. In both cases the major factor in the trans- fer was the county's desire to get out of the hospital business rather than the Univer- sity's wish to engineer a takeover. Around 1960, Dr. W. W. Stadel, adminis- trator of San Diego's county hospital, de- veloped a plan to make his hospital into a university medical center. But he realized that a county - run hospital with university teaching programs would be an expensive undertaking for the county. So Stadel ar- ranged for the University of California to finance and operate the hospital with a minimum of county dollars. The fiscally conservative San Diego Board of Super- visors, of course, agreed. The hospital was transferred to Univer- sity management in 1966. The county paid the University for patients not on Medi - Cal whose incomes fell below a certain level. Since the Medi - Cal " Reform " of 1971, how- ever, few patients are eligible for county support and the county puts little money into the hospital. For San Diego's Board of Supervisors there are no medical indigents; people above the Medi - Cal level are ex- pected to pay. Now San Diego has no county hospital. The medically indigent, who make up at least 10 percent of the county's 1.3 million people (see box, Page 15) can no longer receive free care. Some patients are simply turned away. Others receive care and ig- nore the bill. But untold numbers are intim- idated and never seek care in the first place. An assistant administrator at Uni- versity Hospital (the former county hospi- tal) explains that " We negotiate with the patient about how he'll pay. " If payment is not completed within six months or a year the bill is sent to a collection agency. On non emergency - admissions the hospi- tal tries to collect a down payment - before admission. Dr. Stadel commented that the University handles patients " like any other private hospital, making some arrange- ment for payment. Before Medi - Cal, many private hospitals took some charity cases; now no hospitals do. Those patients are in worse shape than five or ten years ago. " Even though people are treated like pri- vate patients when it comes to paying the bill, they don't feel like private patients when they are getting medical care. Al- most everyone who goes to University Hos- pital continues to call it " county hospital. " 8 Waiting lines are still long; it takes three weeks to get appointments in the clinics; and patients don't have a personal physi- cian but go to several of the 57 specialty clinics for fragmented care. Even though San Diego has no county hospital, it still has a two class - system of health care; University Hospital is the hos- pital for the poor. The most visible change since 1966 is that the financial barrier for poor patients has become worse. In Sacramento County the University of California Medical School at Davis (lo- cated 15 miles from Sacramento) has signed a contract to buy Sacramento Med- ical Center (the county hospital) and to begin to operate it on July 1, 1973. As in the San Diego case, the prime moving force behind the transfer was the county's desire to get out of the expensive hospital busi- ness (see box, Page 10). And as occurred in San Diego, medically indigent patients can be expected to suffer financial hard- ships as a result of the transfer. For medically indigent patients, univer- sity transfers are little different than county hospital closures. In San Diego and Sacra- mento there is no longer a hospital that welcomes people who cannot afford pri- vate care. Private Takeovers In 1968 Siskiyou County, on the Oregon border, cast off the burden of its county hospital. The Board of Supervisors leased the hospital to a non profit - corporation which in turn contracted with Beverly En- terprises, a for profit - hospital chain, to manage the hospital. Although the county is now free of the burden, the hospital administration is in a real financial bind. It has a hard time col- lecting from patients without third party coverage, yet it needs the money to pay the high management fee that feeds Bev- erly Enterprise's profits. The hospital's emergency room is the sole out patient - clinic for people without private doctors. While the administrator claims to turn no one away, people are asked for cash be- fore being treated. Because a high per- centage of people lack insurance for am- bulatory care, the absence of a free, pub- licly supported - health facility is a real hardship. Four hundred miles to the south, Merced County's Board of Supervisors commis- sioned a study in 1972 to determine the feasibility of selling its modern county hos- pital to private interests. Performing the study was the California Taxpayers Asso- * 1 * 2 * 3 * 5 CALIFORNIA: The Picture in 16 Counties KEY CO = contracting out U = university transfer C _ = closure, possible closure PT = private takeover PC = possible corporation .7 .8.9 . 10 * 11 * 12 1. 1. Siskiyou (PT) 2. Humboldt (C) 3. Butte (C) 4. Yolo (C) 2. 5. Sacramento (U) 6. San Francisco (PC) 7. San Mateo (PC) 8. Merced (PT) 9. Madera (C) 10. Fresno (C) 11. Kings (C) 12. Tulare (C) 13. Kern 14. Los Angeles (CO) 15. Orange (U) 16. San Diego (U) ciation, a lobbying organization backed by the state's largest corporations. The rec- ommendation? To sell the hospital, prefer- ably to a profit making - hospital chain. The study favorably cited National Medical Enterprises, a chain that operates a nearby hospital. Curiously enough, National Medi- cal Enterprises had already submitted a proposal to buy the Merced hospital. The study precipitated a major battle. Three of the five supervisors, convinced they could have half a million dollars a year, wanted to sell. But with a four fifths - vote needed for the sale, it appears that the county will keep its hospital for the time being. Hospital Corporations By the mid 1960's - in New York City, it was clear to anyone who cared to look that the city's 18 municipal hospitals were anti- quated, bureaucratic, inferior, second - class institutions. For several years, in fact, vari- ous politicians did look into the affairs of the city hospitals. They succeeded not only in getting their names on page one for * 13 * 14 * 15 * 16 weeks on end, but they also uncovered a multitude of abuses of the affiliation pro- gram under which medical teaching cen- ters are paid to provide professional serv- ices in the hospitals. Abuses included the mistreatment of patients for teaching and research purposes, as well as financial rip- offs of grand proportions (hijacking of equipment, no show - jobs, etc.). Suggestions were made from various quarters that the city sell its hospitals, close its hospitals, or give them away lock, stock and enema bag. The only proposal that met with serious consideration was one made by the Mayor's committee to look into this embarrassment - the Commission on the Delivery of Personal Health Services (also known as the Piel Commission, its chairman being Gerard Piel, publisher of the Scientific American). The Piel Commis- sion side stepped - the issue of the affilia- tions by arguing that what was wrong with the municipal hospitals was public incom- petence, bureaucracy, and lack of author- ity. The Commission argued for the crea- tion of a quasi public - corporation which 9 Sacramento The main problem with Sacramento Medical Center (Sacramento's county hospital) was that no one wanted to run it. From 1966 through 1973 the nearby medical school of the University of California at Davis had a traditional affiliation with the hospital: the school provided the doctors and the county provided the building, the non physician - employees and the money. The cost of teaching was partly responsible for the enormous inflation in the hospital's budget: from $ 11.5 million in 1967 to 28 $ million in 1972. The affiliation succeeded for one reason only: the " county option " under which the state picked up county hospital ex- penses above the 1964-65 level. So the county taxpayers didn't pay for university teaching programs. By 1970, Sacramento Medical Center administrator Gordon Cumming saw that Governor Reagan would soon abolish the county option; it was costing the state too much. Cumming convinced the Sacramento Board of Supervisors that they should remove themselves from the hospital business; if the county option disappeared, Sacramento's taxpayers would suddenly be paying for the Univer- sity's educational costs. So the county approached the University about taking over the entire operation of the hospital. The last thing Davis Dean C. J. Tupper wanted was to run the county hospital in Sacramento. He and his research - minded faculty were hoping for a super- specialty hospital on the Davis campus. Sacramento Medical Center was too far away for the convenience of professors in laboratories and libraries at Davis. And the hospital's image would attract poor people, not specialized private cases from all over the region. The affiliation agreement was relatively ideal: use of the hospital without responsibility for it. But Sacramento's supervisors and shrewd administrator Cumming had other ideas. On November 30, 1971, the Board of Supervisors gave notice that its affiliation agreement with the University would be cancelled in one year. The University had two choices: take over the hospital or leave. As he expressed it to Health / PAC, Cumming's posture had been " We'd better kick the University out on the street. They can pack up their students, their faculty and their microscopes and set them up on the curb. " Both he and Supervisor Patrick Melarkey now say would theoretically bring modern manage- ment techniques to the hospitals as well as bridge the gap between public and private, and thus somehow bridge the gap between the two classes of hospital care. So in July of 1970 the created state - New York City Health and Hospitals Corpora- tion took over management of the city's system (see BULLETIN, December, 1971). Since that time, the Corporation has man- aged to alienate patients, doctors, workers, civic leaders and community groups alike. While it has the rhetoric of decentraliza- tion, the Corporation's own well paid - staff increased by leaps and bounds while the hospitals lost at least 1,300 workers in an unprecedented job freeze; authority once delegated to hospital executives has been taken away and returned, to be taken away again as the confused leadership of 10 the Corporation vacillates on almost every issue. Public accountability, which was not to be sacrificed by this semi private - organi- zation, has suffered some setbacks. The community advisory boards, which were only mandated after community protest, are only now starting to function. The Board of Directors of the Corporation meets in private and does not even show its com- plete minutes to the public. Finally, even though the Corporation is required to hold annual public meetings, only one has been held since it took over in 1970. The Corporation has not been able to do anything about the fiscal crisis of the hospitals. During its first two years, it was unable to handle collections from third- party insurance reimbursements, losing hundreds of thousands of dollars. Its books were so badly kept that two different au- Medical Center that they never really intended to throw the University out. But the medical school, with no other teaching facility, couldn't take any chances: the University agreed to take over a hospital that Tupper claims it didn't really want. Negotiations about the hospital transfer were long and painful, once breaking down completely. The main issue was money, and one focal point concerned that unwanted group - the medically indigent. Since 1966, Sacramento's Medical Center had billed most patients, but as administrator Cumming put it, " We had a lot of bad debts. If a guy doesn't have the money the county won't collect. " So the hospital ended up each year with a deficit of uncollectable bills, the county option paid for them, and patients had access to care. Who will pay for the medically indigent now? According to Cumming, the University will. University Vice Chancellor - Elmer Learn has a different idea, " The University can't become a welfare agency. " Under the recently signed con- tract the county will pay for absolute emergencies, if the University cannot collect the money from the patient. But most cases are not defined as emergencies, and each feels that the other should be responsible. It is not certain who will win this fight, but it is clear who will lose. A March 2, 1972, document on which the University - county relationship is based states that " the University would reserve the right to refuse care to any patients, particularly to patients the cost of whose care is not guaranteed by the county. " Vice Chan- - cellor Learn admitted " We're going to have to operate pretty much like a private hospital; if a patient can't pay he won't be admitted. " Regretfully he added, " Patients may have to sell their homes to pay for care. We can't deprive a student of his education to finance a patient who can't pay. " Learn doesn't like being in this position. " If a patient who can't pay shows up at Moffitt [the University Hospital in San Francisco] they load him in an ambu- lance and send him to'County.'We won't have a'County'to do that with. " So patients who presently worry about doctors first and dollars second may find that under Sacramento Medical Center's new management the dollars will have to come first. dits condemned the management process. The city for its part is balking at increasing its appropriation to the Corporation, and the Corporation has taken the city to court in order to get more money. New York City was not the first city to go the corporation route. Kansas City, Mis- souri formed a corporation for its hospital in 1962 and the city pays for 65 percent of the corporation's budget. Though Kan- sas City has not experienced the chaos of New York, the city's commitment to the corporation is now faltering: in 1972-73 the city failed to increase its appropriation over the year before. If the city defaults this spring, the corporation could be in serious trouble. It might seem surprising that given - the apparent failures of the New York City. Health and Hospitals Corporation - San Francisco General Hospital may soon be turned into a similar corporation (see arti- cle, Page 20). Tighter Billing The history of California's county hospi- tals shows a gradual retreat from the con- cept of free health care. In 1957, 20 out of 47 county hospitals sent bills to all patients. regardless of ability to pay; the other hos- pitals only billed patients with incomes above a certain level. By 1960 all but ten counties had patients sign a property lien, stipulating that if the patient's house or other property were sold either before or after the patient's death, the county would collect the hospital bill out of any money earned from the sale. However, relatively little money was actually collected from these bills and 11 liens. Collection from people totally unable to pay would not stand up in court, and many people who signed liens had no property to start with. So in spite of the harrassing bills, county hospitals have never made people pay before receiving medical care and have allowed most bills to go uncollected. In recent years, some county hospitals in California have begun to act more like privates in their billing and collection pol- icies. The Medi - Cal law requires hospitals to have the capacity to bill all patients, though the bill need not be sent out. Fol- lowing the Medi - Cal " Reform " Act of 1971, almost every county declared that patients above the Medi - Cal eligibility level (about $ 3,600 for a family of four) should be billed for county hospital care, and most coun- ties are preparing to collect those bills. Los Angeles County, with 35 percent of California's population, is one example of tightened billing and collection. In the 1950's Los Angeles sent bills only to peo- ple above a certain income level; the level was not clearly defined but was worked out by an eligibility worker based on diag- nosis, cost of care and the patient's re- sources. Following Medi - Cal, Los Angeles County began to bill everyone. A sign in a County General clinic waiting room states: " Notice: By law, this hospital must charge for medical care given. " Thus far the county only presses collection from those above the ill defined - income level. But it is now studying ways to tighten up its collection policy. Merced County may go one step further. It is setting up a new hospital accounting procedure called the " enterprise fund. " The hospital will no longer receive its en- tire budget from the county (with Medi- care and Medi - Cal reimbursements return- ing to the county's general fund), but will bill Medicare, Medi - Cal and patients them- selves, receiving from the county only what it cannot collect from these sources. A number of counties are turning to the enterprise fund system under which, ac- cording to the California Taxpayers Asso- ciation, " the public hospital operates very much like a private hospital. " Merced's administrator Akin hopes to free the county of the hospital altogether. Patients without insurance may be asked to pay a $ 100 de- posit before elective admission, and non- urgent emergency room drop - ins will prob- ably have to pay cash before being seen. " Our billing department is a very lax oper- ation, " Akin says, " we'll have to tighten up. " 12 Keeping Public Hospitals Public Underfinancing and fragmented admin- istration plague the city and county hospi- tals of California and the nation. Closure of public hospitals solves these problems for local politicians, but creates enormous new problems for patients who are left to their own devices. Private hospitals and doctors show no willingness or capability to take care of everyone. " Privatization " of public hospitals, through the mechanisms described above, may smooth out administrative tangles but fails to create new sources of money. " Pri- vatized " public hospitals take on the fiscal characteristics of fully private hospitals. The profit incentives of private institutions and the service orientation of public ones are fundamentally different. Whether profit or " profit non -, " whether quasi public - or entirely private, hospitals whose patient revenues must equal expenses become pri- marily concerned with collecting money. They have a tendency to reject, or restrict the care of, patients with no source of pay- ment or with chronic disease. And they are tempted to cut back on services that fail to produce income. Governmental institu- tions, whose income from services deliv- ered is not expected to match expenditures, do not think about money at the point of patient care and therefore do not distin- guish between profitable and unprofitable patients. Legally, the public has control over the resources of governmental hospitals. Peo- ple must fight to maintain this control since it can slip away into the hands of complex bureaucracies, private contracts such as medical school affiliations, or bought - off public officials. But, as the reversal of the Tulare Board of Supervisors on the closure of that hospital demonstrates, strong com- munity pressure can influence the policies of public hospitals. Private hospitals, on the other hand despite - attempts at gov- ernment regulation - are unaccountable for their actions. The widespread belief that health care is a service rather than a business implies that health institutions should become in- creasingly public, not increasingly private. The closure or private takeover of public hospitals is an assault on that belief. -Thomas Bodenheimer References 1. Greenfield, M., Medical Care for Welfare RecipientsL California (University of California, 1959), p. 31. 2. Pierre de Vise, cited in Roemer, M. and Mera, J. " dumping'Patient - ' and other voluntary agency con- tributions to public agency problems, " Medical Care, January February -, 1973. MEDICAID: THE FADING OF A DREAM When Medicaid went into effect, everyone expected that the " freedom of choice " it supposedly offered would lead benefici- aries away from " charity care " into the " mainstream " of medicine. Private hospi- tal spokesmen predicted that county and municipal hospitals would become obso- lete. Public health administrators, on the other hand, looked to Medicaid as a source of funds to upgrade their hospitals to the level of the best private hospitals. Both were wrong. In the first year of the program, county hospitals did see fewer patients, but the decline was small and of short duration: many patients who sought care in the private sector returned to county facilities soon after. Cook County Hospital in Chicago and Charity Hospital of New Orleans report no decrease in out- patient visits as a result of Medicaid (In 1). Los Angeles, Harbor General Hospital ex- perienced a 23 percent outpatient decline after the first six months, but after twelve months the figure had returned to near- normal - only 6 percent less than before the program began (2). Inpatient utiliza- tion was similarly unaffected: an Ameri- can Rehabilitation Foundation study of 14 large municipal hospitals around the coun- try revealed a decrease of only 9.5 percent in admissions between 1965 and 1968, most of the decrease occurring immediately after 1966 (3). These figures reflect in large part the re- fusal of many physicians to participate in Medicaid, and the inaccessibility of others to Medicaid patients. Overwhelmingly, private hospitals admit only those patients. who have private physicians. A mere 100 out of Cook County's 9,000 physicians cared for more than half the county's 275,000 Medicaid patients in 1968. In a city with 80 hospitals, half the black population received treatment from Cook County Hospital (4). " Mainstream " rhetoric aside, Medicaid patients do not have as many places to go as private paying patients. Even for pro- viders who treat some Medicaid benefi- ciaries, race, class and language or a dis- tasteful health problem are often reasons to turn away others. Nor does Medicaid provide financing for all those who need it; half the states restrict their Medicaid programs so that only welfare recipients are eligible, excluding tens of millions of other people too poor to pay for their own medical care. The public hospital administrators'dream of converting their facilities into institu- tions competitive with the private sphere faded as Medicaid quickly threatened to bankrupt state and federal treasuries. To slow down the outpouring of funds, cut- backs ensued in state capitols and in Washington. With each cutback, fewer people were eligible, for fewer services. As fees went down and paperwork went up, providers became less willing to give care. Altogether, financial responsibility revert- ed increasingly to county and city gov- ernments. The Origins of Medicaid Medicaid is only the most recent in a series of limited federal health insurance programs which began in 1950. That year the government initiated a program which provided states with very limited matching funds to pay for the care of welfare recip- ients. Some 20 states participated. Ten years later Congress enacted the Kerr- Mills amendment to the Old Age Assist- ance welfare program, increasing federal matching funds for elderly welfare recip- ients. Called Medical Assistance for the Aged (MAA), it made funds available for the first time to some older people who 13 were not eligible for welfare. But designed by conservative legislators, it helped only 148,000 in its third year of operation (5). In 1965 the liberal Congress replaced the pro- gram with Medicare for the elderly and created Medicaid for low income people. Medicaid just expanded the inadequate Kerr Mills - program to include the remain- ing federally - funded welfare categories, established by the Social Security Act of 1935: Aid to the Blind, Aid to the Perma- nently and Totally Disabled, and Aid to Families with Dependent Children. What Is Medicaid? When Medicaid, Title 19 of the Social Security Act, first became law its goal was to provide a single standard of medical care characterized by freedom of choice on the part of patients and providers alike. States were mandated to expand their programs until by 1975 they provided com- prehensive care for everyone unable to pay. The federal government agreed to give matching funds to participating states for health programs previously provided (if at all) entirely at state or local expense. Medicaid offers federal funding of from 50 percent to 83 percent of the cost of services, the exact percentage dependent on the relative wealth of each state. For instance, California, Massachusetts, and New York receive 50 percent federal dollars; Georgia, New Mexico, and Utah about 70 percent; and Mississippi's medical costs are paid 83 percent. Only Arizona has declined to develop a Medicaid program. Each state decides - within federal guide- lines - how to administer its program, which services to give and to whom, and how to pay providers. At a minimum, a state's program must cover all people re- ceiving money from the federally - financed welfare programs and must include speci- fied basic services, including physician services, inpatient and outpatient hospital services, and laboratory and X ray - serv- ices among others. In addition, a state may choose to extend coverage to people who fit the description of any of the welfare categories but whose incomes or assets are too large for them to receive welfare. For example, a blind person with an income higher than al- lowed for Aid to the Blind is not eligible for welfare but might be eligible for Medicaid if his income is judged too small to cover his medical bills. Those who qualify for Medicaid but not for money from welfare programs are referred to in bureaucratese as " categorically - linked medically needy. " 14 Persons who don't fit into one of the four welfare categories are excluded no mat- ter how poor they are; notably, men and women under 65 who are neither blind nor disabled and who have no children under 21. (A state is free to include in its Med- icaid plan people who don't fit into a wel- fare category, but the federal share for " There is valid doubt as to whether people are pro- tected from the risk of impoverization by medical expenses under spend - down since (eligibility) levels are unrealistically low, spend - down only reaches those who are already poor. " -A Study of the Medicaid Spend - down Experience, Urban Systems Research & Engineering, Inc., for HEW, February, 1973 them is so minimal that virtually no states have taken up the option.) Only one more concept is involved: " spend - down. " It was added to prevent states from ignoring the size of an appli- cant's medical expenses when determining eligibility. A categorically - linked family or individual may have any income and be- come eligible for Medicaid if so many med- ical bills are incurred that, after subtract- ing them, the income is " spent down " to the eligibility level. For example, if a state's standard for a medically needy fam- ily of three is $ 3,000 a year, a family of three with a $ 4,000 income would be eligi- ble after incurring $ 1,000 worth of medical bills. The family is responsible for that first $ 1,000, but Medicaid will pay the pro- viders for any additional health care costs. Medi - Cal California was one of the first states to take advantage of Medicaid. The Califor- nia program, called " Medi - Cal, " offered (next to New York) the most generous services and standards of eligibility in the nation when it went into effect in early 1966. Since then it has had the more ques- tionable distinction of national leadership in ravaging the program. Proclaiming fraud by providers, excessive use by pa- tients, and incompetent administration by fiscal intermediaries, the Reagan adminis- tration laid the groundwork for a long se- ries of harsh cutbacks in California and throughout the country. (see box, Page 18). The attack on Medi - Cal began in the fall of 1967. Announcing a pending fiscal crisis, the Reagan administration eliminated non- emergency surgery and limited private hospital stays to eight days without the prior authorization of a government - hired " Medi - Cal consultant. " Drugs not on the state formulary were excluded from use; outpatient psychiatric care and outpatient physical and speech therapy were ended. Dental and optometry services were essen- tially discontinued. The list goes on. Three months later the State's highest court ruled the cutbacks illegal, but the toll was great. Unwilling to risk not being paid, even pro- viders who had been treating Medi - Cal patients refused to continue pending the court's decision. State records show that over two thirds - of the care which would ordinarily have been provided during the three month - cutback period had still not been provided as late as six months after restoration of services (6). Calm was maintained for nearly a year. Then in late 1968 the State Attorney Gen- eral's office issued a report charging that The Medically " Indigent " The term " medically indigent " refers to people who cannot afford medical care although they may not be indigent with respect to food, clothing or shelter. City and county hospitals are an essential source of care for medically indigent peo- ple and their closure would have drastic effects. How many Americans are medically indigent? Good data is hard to come by. That is not surprising since the number depends on the definition of the term. " Medically indigent " can be defined as people without third party cover- age: Medicare, Medicaid, other governmental programs or private health insur- ance. The vast majority of such people have low incomes. But this definition is overly restrictive. People on Medicare and some on Med- icaid have out pocket - of - expenses (insurance co - , deductibles, uncovered services) which may reach hundreds of dollars. Private health insurance is always limited so that many people have insurance and are still unable to afford being sick. Whereas 78 percent of people under 65 have hospital insurance, only 48 percent have insurance for out patient - care; yet out patient - care can cost hundreds of dollars. And many with hospital insurance have plans that pay a meager $ 20 or 50 $ a day, leaving hundreds or even thousands of dollars of a major hospital bill uncovered. Even taking the most restrictive view of medical indigency as people without third party coverage, the number nationally is over 20 million. Two million of these live in California. So a low estimate places medically indigent people at 10 percent of the population. Dr. Samuel Wolfe, Professor of Community Health at Meharry Medical College, writing in the October, 1972, American Journal of Public Health, estimates one fourth of Americans are " medically indigent in the presence of substantial health care costs. " Whatever the exact figures, the number of people unable to afford care is growing. Judging from present trends, national health insurance seems further and further away. As medical costs rise faster than personal income, more people will be unable to afford private care. And as HR 1 takes effect, many Medicaid patients will be left with medical expenses they cannot pay. In any case the ranks of the " medically indigent " are growing not shrinking. 15 Medi - Cal was being victimized by fraud and unethical practices by providers of health care who were accused of filing false claims, performing unnecessary sur- gery, and indulging in kickbacks among themselves and with suppliers of medical goods. Kickbacks flourished between nurs- ing homes and grocery suppliers as well. Health, Education and Welfare Depart- ment (HEW) Secretary Wilbur Cohen said he was " very disturbed " by the California charges and noted that such problems might be occurring elsewhere. He laid the blame not so much on those who might be perpetrating the fraud as on those sup- posed to uncover it Medicaid's - fiscal in- termediaries. These organizations, such as Blue Cross and Blue Shield, contract with states to receive claims, screen them for abuses, and send out appropriate pay- ments, essentially performing the state's Medicaid paperwork. The debate was bit- ter. California Blue Shield assailed the ability of the Attorney General's office to perform an accurate review; Chief Deputy Attorney General Charles O'Brien replied, " As for our competence to judge business management practices, fiscal administra- tion and claims processing, we have stated that we are not experts. On the other hand, in the country of the blind, the one eyed - man may be king. " In these early events may be seen the two complementary but separate forces at work in California. One is the political am- bition and ideology of the governor and his staff. The other is the massive cost of Medi - Cal. The program has been expen- sive, but the administration repeatedly ex- aggerates its problems and manipulates figures to justify extreme " corrective " measures. Enter Earl Brian Governor Reagan ushered in the'70's by appointing as head of the Medi - Cal pro- gram Earl Brian, Jr., described as a young, 29 year - - old MD, flight surgeon and Viet- nam war hero. To celebrate his first day on the job, Brian apprised Medi - Cal recip- ients and providers that prior authorization from Medi - Cal consultants would be re- quired for all non emergency - hospitaliza- tion, to make certain that only people " really needing hospitalization would get hospitalization " -and to preclude a pro- jected $ 15-20 million defiicit. He subse- quently issued a new set of regulations which, while granting new benefits to the categorically - linked medically needy, at the same time lowered their eligibility 16 level. So while extending new services with one hand, with the other Brian made it more difficult for them to receive Medi- Cal benefits at all. These cuts proved just the beginning. Fresh from a victorious election to his sec- ond term, Governor Reagan announced in December, 1970, that the state faced " in- evitable bankruptcy " if welfare spending were not curtailed. Dr. Brian gave notice that physician's fees would be sliced by 10 percent and prior authorization would be required for more than two emer- non - gency physician visits a month, more than two drug prescriptions a month, more than one psychiatric visit every six months, and virtually all optometry and dental care, to list a few of the affected services. To top it off, Brian declared that prior authoriza- tion would be denied unless failure to pro- vide treatment would result in " significant disability or death. " Patients and Providers Unite Such a sweeping assault on the care of lower income Californians and on the prof- its of health care providers elicited a huge controversy. It was widely believed that another wave of doctors would quit the program, turning patients back in the di- rection of the county hospitals. The various groups of providers held protest meetings, each delivering press statements on the problems resulting from cutbacks in their respective fields; the California Medical Association's president charged that physi- cians were being deprived of the right to provide good medical care for poor pa- tients; the University of California decried prior authorization as " interference " with its health science teaching programs; nurs- ing homes planned to protest by transfer- ring their patients to county hospitals; in San Francisco, the Board of Supervisors predicted $ 15 million in additional costs to the county for services private providers would now refuse to offer. And California Rural Legal Assistance filed yet another in its series of lawsuits againt the state on behalf of Medi - Cal recipients. By January of 1971 it became clear that the administration had covered up fiscal problems until after the state elections and had then manufactured an emergency sit- uation to justify excessive cuts. But it was six months before a state court ruled the December cutbacks illegal, noting that " it appears to this court that many of the conclusions recited by the defendant [Brian] are not established by the evidence and in some instances are repudiated.... " The judge added that the administration had deliberately delayed asking the legis- lature for help so that the matter would reach crisis proportions, allowing the gov- ernor to institute cutbacks by fiat under a special " emergency " clause. Down to the Last Dollar Even while in the throes of battle over cutbacks, Dr. Brian hatched another scheme for reducing the availability of care to Medi - Cal beneficiaries. Speaking before a businessmen's luncheon, Brian as- serted that recipients must " share in the responsibility for the services they want " by paying " some token amount, " and sug- gested a 50 cent charge for prescriptions and one dollar for physician visits. The proposal was in direct conflict with the pro- visions of Medicaid law, which permitted no co payment - for welfare recipients and only income - related co payment - for the medically needy. On the whole, states had not used the latter provision (7). But pleased as always to have California as a proving ground, the Nixon administration tailor made - an exception in a blatant and rather ingenious circumvention of the law: it granted a waiver for a " demonstration project. " Until then demonstration projects had been used for the benefit of welfare recip- ients never - to their detriment (8). A co- payment of even 50 cents or one dollar is a significant amount for people already in dire financial straits. Its sole effect is to deter them from needed care, especially for such services as natal pre - exams and other preventive measures which people are tempted to forego (9). Perhaps equally serious, the introduction of even nominal co payment - amounts is an opening wedge to more onerous financial barriers. Reform - Reduction Co payment - was one of several new fea- tures embodied in the so called - Medi - Cal Reform Act of 1971, passed by the legisla- ture after months of wrangling. It was the final touch to the increasingly restrictive nature of the program and contained bu- reaucratic procedures certain to drive away the last die hard - providers and thor- oughly confound their patients. The Act makes law most of Brian's regulations of the previous December, including the two- a month - limitation on outpatient physician visits and prescriptions unless the pro- vider contacts the Medi - Cal consultant for prior authorization. Authorization is no longer automatically withheld, but without NEXT MONTH NIXON'S HEALTH BUDGET it the provider does not get paid. Like other restrictions which appear aimed at provid- ers, the real weight falls on Medicaid pa- tients who have to scramble for treatment as fewer and fewer physicians put up with Medicaid regulations. The " Reform " Act does appear beneficial in one respect. It now permits people who are not categorically linked to one of the welfare programs to qualify for Medi - Cal. The notion of bringing all the state's medi- cally indigent into a unified program is a good one. Unfortunately, the Act sets the eligibility level so low that vast numbers are still excluded. The state initially an- nounced that the Reform Act would extend benefits to an additional 800,000 Califor- nians; but as of now, only 250,000 are re- ceiving aid under the new clause. Medi - Cal " Reform " Goes National Federal activity has tended to follow the California lead. Mounting anxiety over the cost of Medicaid first led Congress to place restrictions on the program effective in 1968, after California's first " crisis. " At that time, New York's generous eligibility level 6,000 - $ for a family of four - was wreak- ing havoc with Medicaid funds (and the sensibilities of some politicians). Congress added a formula to the Medicaid law limit- ing the financial resources a person or fam- ily might have in order to qualify for Med- icaid as medically needy. By 1969, New York had lowered its maximum allowable income 20 percent, to $ 5,000. If that figure seems reasonable at first glance, remem- ber that a widely publicized report issued at about the same time concluded that a New York City family of four required $ 10,000 a year to live even moderately. The legislature again weakened Med- icaid in 1969 by granting states the right to reduce the amount and scope of benefits offered, within certain limits. The original legislation had specifically prohibited any 17 such reductions. In an action carrying more serious symbolic overtones, the law- makers also pushed back the deadline for Medicaid's original goal of furnishing comprehensive medical care to those un- able to afford it from 1975 to 1977. The Social Security Amendments of 1972, formerly known as HR 1, have elim- inated this goal altogether. The section of Title 19 embodying that ideal is deleted from the legislation. Other amendments seem to implement the deletion: states are now legally free to lower eligibility stand- ards and eliminate services, except that they must still provide welfare recipients with coverage for the program's seven minimum required services. Moreover, Congress took Earl Brian's " sharing responsibility " notion a step fur- ther. Not only are states now free to insti- tute co payment - for many patients, but in addition the law requires states to collect premiums from the medically needy. Just what this means will not be clear until reg- ulations are issued. One possibility is that people who might become eligible for Med- icaid through spend - down will be required to pay the state a premium on a regular basis, as if it were an insurance company, in order to receive Medicaid, if and when the time comes. If the time doesn't come, they just lose their money. Many people not wanting to take that chance will end up needing Medicaid, but will be ineligible because they failed to pay the premi- ums (10). The new law also allows states to con- tract with Health Maintenance Organiza- tions (HMO's) to provide care to Medicaid beneficiaries and gives HMO's certain ad- vantages over other providers in attracting patients. But in California, at least one type of HMO has thus far proved a disaster. Set up in response to this provision, so called - " paid Pre - Health Plans " (PHP's) receive a monthly flat sum from the state for each Medi - Cal patient who signs up, but give in return as little care as possible (see BULLETIN, February, 1973). Even if a PHP is technically " profit non -, " it can purchase all supplies, insurance, maintenance, lab- oratory and X ray - services, etc. from for- profit companies all wholly owned by one single corporation. So the bulk of the state's money goes to a few people, and " non- profit " is a legal sham masking a profit- making enterprise. The state benefits by paying the PHP 10 percent less per patient than it pays other providers; the PHP bene- fits by pocketing a lot of money. The pa- tients don't benefit at all. The California 18 Undercutting Medicaid Throughout Medicaid's first four years states other than California also experienced drains on their treasuries and subsequent reductions in serv- ices, eligibility levels, and funds. In- terestingly, besides California, Mary- land, governed at the time by Spiro Agnew, was an early forerunner in these respects. In mid 1968 -, the Mary- land Dental Association withdrew from the state's program because Agnew had allocated only $ 650,000 for dental care. The following month he ordered 22,000 persons dropped from Medicaid by lowering the eli- gibility level for the categorically- linked medically needy. At about the same time, Louisiana and Oklahoma reduced services and shortened the maximum hospital stay. In 1969, Massachusetts cast out 40,000 medically needy families and then cut fees, also issuing new and longer forms for doctors to fill out after each visit. However, the most dra- matic move of the year came from the New Mexico State Legislature, which voted to cancel its Medicaid plan al- together and replace it with the nar- rowest possible program that would still receive federal funds. The scheme was vetoed by HEW as a violation of the Medicaid law. The next year New Mexico instituted other cutbacks, as did Utah, Kansas, and North Caro- lina. Council for Health Plan Alternatives, a union funded - organization, has described California's PHP's as " a new and rapidly growing form of profiteering medical care organization designed to exploit our mem- bers, the poor, and anybody else who be- comes a member. " Killing the Golden Goose With each federal or state cutback in Medicaid, patients return to the county hospitals. Reduction of services, tightened eligibility, prior authorization, co payment - , premiums, and PHP's that don't provide care all contribute to the public hospital patient loads and to rising health expenses for local governments. Medicaid is a case study of the failure of financial insurance alone to guarantee adequate health care. Possession of a Med- icaid card does not mean a person can find a doctor. Even if every physician agreed to treat Medicaid patients, the maldistribu- tion of doctors geographically and among specialties would leave large numbers of people with no primary physician, as is al- ready the case. Those lucky enough to secure an appointment would, like every- one else, still have to wait weeks for it. Moreover, paying for health services does not assure that services will be available in emergencies, or on weekends. Medicaid highlights, but is not able to correct, the inadequacies of our health care system. Medicaid also shows how the private sector responds to public money. A New York grand jury concluded that Medicaid there had wasted one billion dollars in nursing home bills for dead patients, phar- macy claims for existent non - prescriptions, and kickbacks among providers. In Cali- fornia, testimony before a legislative com- mittee recounted stories of physicians col- lecting $ 50 for each referral to home health service agencies. Hospitals too are serious offenders. Medicaid includes a provision just for them, requiring states to pay what- ever they bill. Hospitals have been the largest consumers of Medicaid money, tak- ing 40 percent of its budget for inpatient care (11). But the private providers went too far. By exploiting the Medicaid program be- yond its toleration level, they have not only dried up their own Medicaid income but have soured even some traditional friends in government circles on the private prac- tice of medicine. Earl Brian is waging war on cost reimbursement - for hospitals and fee service - for - payment for doctors. Through prior authorization, limitations on physician visits, and fee cuts, Brian hopes to ease private doctors out of Medicaid and channel patients into county hospitals and PHP's. And if county hospitals disappear, private corporate PHP's will be the chief source of health care for the poor. As this strategy develops, Ronald Reagan and Earl Brian grow more and more unpopular with the California Medical Association. So in California, private physicians and conservative politicians traditional - allies -are now at each other's throats. Fiscal conservatives are interested in limiting funding for social programs. Hospitals and fee service - for - physicians, by overcharg- ing and over hospitalizing - , make these pro- grams far too expensive. Corporate PHP's are eager to establish themselves in the health care field and will provide care at less cost to the government than will phy- sicians and private hospitals. Thus a new alliance emerges between fiscal conserva- tives and profit oriented - PHP's, with Cali- fornia a critical testing ground. Though Earl Brian may rate low on a physicians'popularity poll, he has won high favor in Washington. Rumors abound that he was seriously considered for Under Secretary of Health in HEW, and that he was actually offered the second biggest health job running the Health Services and Mental Health Administration (HSMHA). HSMHA oversees Indian and migrant health services, Comprehensive Health Planning, Regional Medical Program, and neighborhood health centers, among other projects. Heading HSMHA, Brian would likely have been a practicing cousin to Of- fice of Economic Opportunity executioner Howard Phillips. He reportedly turned down the job, preferring to build a political base in California where he is now Director of Health and Welfare, and controls two- thirds of the entire state budget. But sev- eral other Reagan administration stars have accepted health and welfare posts in Washington, with Caspar Weinberger, chief of HEW, heading the bill. For people who look to profit making - as a spur to competition, efficiency, and im- provement of service, Medicaid is quite a setback. The private sector has improved the state of its pocketbook, but not much else. When making money is the primary goal - as it is even for most " profit non -" entities - good health care is at best a sec- ondary concern. - Elinor Blake References 1. Cook County Hospital, Report of the Illinois Legislative Investigating Commission, November, 1972. 2. Kisch, A. and Gartside, F., " Use of a County Hospital Outpatient Department by Medi - Cal Recipients, " Med- ical Care, November December - , 1968. 3. Ellwood, P. and Hoagburg, E., " Problems of the Public Hospital, " Hospitals, July 1, 1970. 4. Medical Care Review, December, 1968. 5. 5. Newman, H., " Medicare and Medicaid, " Annals of the American Academy of Political and Social Science, January, 1972. 6. Gartside, F., " The Medi - Cal Cutbacks of 1967 Revis- ited. " Medical Care, January February - , 1971. 7.8 .7 .B uNetwlmearn,, PH..,, O"p .D ciivte.r ting the Mainstream: Reducing the Utilization of Services under the Medi - Cal Program, " (unpublished). Written as a guide for lawyers, this comprehensive review of the Medi - Cal cutbacks and relevant state and federal law is available from the National Health and Environmental Law Program, 2477 Law Building, 405 Hilgard Avenue, Los Angeles, California 90024. 9. Scitovsky, A. and Snyder, N., " Effect of Coinsurance on Use of Physician Services, " Social Security Bulletin, June, 1972. 10. National Health and Environmental Law Program, Memorandum, January, 1973. (Describes briefly changes in Medicaid under the Social Security Amend- ments of 1972 (HR 1). For copies, see # 8, above.) 11. Numbers of Recipients and Amounts of Payments un- der Medicaid, 1970, National Center for Social Statis- tics, HEW, October 16, 1972. 19 A CORPORATION FOR SAN FRANCISCO GENERAL? Over the past three years, San Francisco General Hospital (SFGH) has been the focal point for grievances of San Francis- co's poor and minority communities and of groups of workers inside the hospital. Sometimes separately, sometimes together, consumers and hospital workers have pushed for more power, more staff, a more personal relationship between doctors and patients, and a more responsive governing structure at the hospital. The problems re- main. But the pressure created by consum- ers and workers has brought the already- severe strains of an underfinanced public hospital to the breaking point. Most seg- ments of San Francisco's health leader- ship now agree that the hospital needs fundamental restructuring. In March, 1973, the Coordinating Coun- cil, a liberal, government - appointed com- mittee studying the hospital, made a pro- posal: SFGH should be removed from city government and run by a quasi public - , profit non - corporation similar to the New York Health and Hospitals Corporation. But community members and employees are skeptical. They wonder if the corpo- ration will really mean improved patient care and working conditions. Or will San Francisco, following the example of other county governments in California, use the occasion to wash its hands of the expen- sive and troublesome hospital? SFGH is the major inpatient and out- patient facility for San Francisco's poor and minority population. The hospital is operated by the City and County of San Francisco, with day day - to - administration in the hands of the Department of Public Health. Final control rests, however, with the city's legislative body, the Board of Supervisors. The hospital's budgetary and spending processes must pass through numerous steps so that months elapse be- fore new equipment can be bought or per- 20 sonnel hired. Non physician - employees obtain their jobs through a complex civil service system, and many workers have temporary positions with no job security or benefits. Through a contract with the city, the medical school of the University of Cali- fornia at San Francisco (UC) supplies doc- tors to work at the hospital and largely determines what kind of medical services are delivered. UC picked - and city paid - in- terns and residents provide the bulk of the patient care. Since they rotate from one part of the hospital to another every month or two, most patients have no assurance of seeing the same doctor twice. Residents actually rotate through two other UC con- - trolled hospitals so that most of them work at SFGH only four months at a time. Origins of the Coordinating Council In March, 1970, a major strike and widely publicized - interns'protest high- lighted SFGH's problems (See Health / PAC BULLETIN, July August - , 1970). With community interest in the hospital at a peak, the idea of changing the hospital's governance took shape. The Bayview Hunters Point Community Health Services pressed the Board of Supervisors to set up a committee that would study the hospital. On June 8, 1970, the Supervisors resolved that " the governance of San Francisco General Hospital include a strong compo- nent of participation by the community which is served by the Hospital, " and cre- ated a committee " to develop and recom- mend to the Board of Supervisors a work- able plan for transformation of the San Francisco General Hospital into a Com- munity Hospital. " The resolution called for an unusually democratic process: people at a series of open meetings would choose a Coordinating Council to write the plan. The fiery meetings of Summer, 1970. were heavily attended by leaders of such community organizations as Centro de Sa- lud (a free clinic), Bayview Hunters Point Community Health Services, Western Ad- dition Community Organization, a black caucus of the public bus drivers, and Wel- fare Rights Organization, in addition to the UC medical school dean, the San Fran- cisco Medical Society president and SFGH's administrator. The consumers felt that control of the Coordinating Council could mean eventual control of the hospi- tal, and a fierce fight erupted over the com- position and manner of selection of the Coordinating Council. The community won a partial victory, gaining 12 slots for con- -three sumers- black, three brown, three Asian and three white - out of 19. The other seven included UC, the Medical Society, the Comprehensive Health Planning Coun- cil, an " expert in ghetto medicine " (pre- sumably a minority physician), a hospital representative and two at large - members (business and labor). The community, however, lost the right to select the 12 consumers. Instead they would be appointed by the Board of Super- visors. With the issue in the Supervisors ' hands, community interest in the Coordi- nating Council disappeared. The Super- visors took months to choose the Council members, and it did not begin serious work until the spring of 1972. In the meantime, events were taking place inside the hospi- tal that would bear heavily on the Coun- cil's work. The Joint Commission In March, 1971, interns, other hospital workers and consumer groups joined to- gether to present the realities of SFGH to the Joint Commission on Accreditation of Hospitals (JCAH). In a jam packed - audi- torium, including TV cameramen, kitchen workers, medical school professors and elderly Chinese patients, members of the JCAH heard a recitation of the hospital's ills complete with slide show and individ- ual patient case histories. Participants in the hearing asked the JCAH to disaccredit the hospital, thereby forcing the city and UC to make improvements. In August, the JCAH placed the hospital on one year pro- bationary accreditation (see Health / PAC BULLETIN, February, 1972). Soon thereafter, a small group of social workers, ward clerks and doctors began to meet at noon on Thursdays to discuss how they could improve the hospital. The JCAH report required an expanded emergency room as one condition for re accreditation - . Using this requirement as a lever, the " Thursday Noon Committee " and emer- gency room workers put together a de- tailed plan for a drop - in clinic next to the emergency room with a proper triage sys- tem and increased personnel to shorten long waits. The emergency room plan was eventually implemented in full, due no doubt to the threat of disaccreditation. In January, 1972, an external threat to the hospital compelled the Thursday Noon Committee to re evaluate - its assumptions. San Francisco Supervisor Quentin Kopp, apparently responding to pressure from the city's private hospitals, many of which operate under 60 percent occupancy, in- troduced a resolution to stop the construc- tion of a new facility for SFGH. The resolu- tion was tantamount to closing the hospital altogether and contracting for the care of low income - people to private hospitals. After only slight pressure from Thursday Noon Committee and Public Health Direc- tor Dr. Francis Curry, Kopp realized that three fourths - of the money for the new hos- pital had already been spent or obligated and withdrew his resolution. But the event was instructive; sometimes it is necessary to defend one's hospital, not attack it. When private interests are pushing for a county hospital to close, bad publicity can provide ammunition. The JCAH Returns On June 27, 1972, the SFGH auditorium was again packed to overflowing to wel- come the return visit of the JCAH and its Director, Dr. John Porterfield. This time a coalition of Thursday Noon Committee, a group of nurses and community groups had decided against demanding disac- creditation which could mean closure of SFGH. The coalition instead pushed for another one year - probation and agreed not to create any front page - scandals about the hospital. Each hospital worker testify- ing quoted from the JCAH published stand- ards and gave non rhetorical - evidence of violation of those standards in his or her department - nursing, pharmacy, X ray -, out patient - clinics, emergency room and social services. Dr. Porterfield must have faced a real dilemma as he flew back to Chicago to decide on SFGH's status. On the one hand, he had informally indicated to Dr. Curry that full accreditation would be granted. On the other hand, ample evidence of vio- lations in standards had been presented. Adding to his woes, a federal judge in 21 Washington was hearing a lawsuit filed through California Rural Legal Assistance by three San Francisco consumer groups alleging that the JCAH, a private body, was not strict enough in its accreditation process. And Senator Kennedy, head of the Senate Health Subcommittee, had been im- pressed by recent testimony given by Dr. Kenneth Barnes of SFGH and by lawyer Fred Hiestand on the failure of the JCAH to use its full power to improve SFGH. In September, 1972, the decision came: another one year - probation. This time the probation report, though mildly worded, required some basic changes in hospital management (see box, Page 23). And in a cover letter to SFGH administrator Charles Monedero, Dr. Porterfield warned, " Plans will be made to conduct another survey of your hospital in a year's time... it must achieve accreditation for two years on the third survey or be reduced to non accredi- - tation. " No more probationary periods are allowed. Disaccreditation means loss of millions in Medicare and Medi - Cal money and the probable withdrawal of UC's medi- cal staffing. The hospital administration was very upset by its failure to win full accredita- tion. Administrator Monedero blames Thursday Noon Committee for the hospi- tal's probationary status. While agreeing that Thursday Noon is " very interested in improving the hospital, " he said " it's their approach that's different. I feel it's best to work in the system. Their approach is to create a crisis... I don't feel the need to call them into consultation all the time. We run the hospital. They don't. " The Council Gets to Work In the meantime the Coordinating Council had been working several months to trans- form the governance of SFGH. The con- sumer members of the Council are more " established " than many of those active in the 1970 meetings, but more " grass- roots " than typical hospital study commit- tees. Among the consumers are a lawyer active in mental health politics, a commu- nity woman who helped create a neighbor- hood clinic, the director of a million - dollar OEO health project, and a representative from NAACP. But most Council members were unfamiliar with the hospital, so that important decisions were made by the full- time staff and a small number of the best educated, most persuasive people. Shortly after the JCAH probation report the Coordinating Council began to move more rapidly. It offered alternative gov- 22 erning structures for the hospital - a dis- trict hospital, UC control, a non profit - cor- poration, a hospital commission, or the streamlining of city management. The dis- trict hospital concept exemplified - by the county hospitals of Houston and Dallas and some suburban and rural hospitals (county non - related) in California - al- lows for an elected hospital board autono- mous from the city and with the power to levy property taxes. Several Council mem- bers favored this concept, but dismissed it as politically unfeasible because the prop- erty tax is so unpopular. With little discus- sion, the Council made a quick final deci- sion: remove SFGH from the city bureau- cracy and operate it as a non profit - corpo- ration. The Corporation The corporation would produce impor- tant changes in management: no longer would the hospital's budget require ap- proval item by item by numerous city offi- cials; hiring, firing and promotions would be done by a hospital - based civil service system; procurement of supplies theoreti- cally would be freed of delays and red tape; and Medicare and Medi - Cal money would be reimbursed directly to the corpo- ration rather than its present payment into the city's general treasury. The corporation would contract with UC for physician services as the hospital does now. Though community physicians would be allowed to join the staff and to admit private patients, UC would retain virtual control over patient care. The corporation's board would be ap- pointed by the Board of Supervisors and would as consumers had anticipated in the 1970 meetings - reflect the composition of the Coordinating Council itself: signifi- cant representation of community mem- bers but no stipulation that they be SFGH users. The corporation would be financed by Medicare and Medi - Cal and other bill- ing plus a yearly lump - sum appropriation from the city. The concept is modeled di- rectly on the disastrous New York City Health and Hospitals Corporation (see Page 9). Perceptions of the Corporation In early February the Coordinating Coun- cil distributed 300 copies of its preliminary corporation proposal. Reaction was imme- diate. Many community health organiza- tions debated the proposal at their meet- ings. The Coordinating Council set up three mass meetings for hospital workers On Probation OE Governance: " The distribution of administrative authority among loca- tions remote from the hospital... works only to dilute the uses of the resources ... The actual utilization of resources, physical, fiscal and personnel, should be vested in the immediate position of the chief executive officer [of the hos- pital] with suitable accountability. " OE Budget rigidity and freezes on spending: " The budget should be de- veloped and implemented so that it is related to hospital patient needs and departmental objectives rather than to non hospital - purposes. The funds made available to the hospital should coincide with the approved budget. " OE Working conditions of tempo- rary employees and the crippling job freezes: " The practice of hiring em- ployees on temporary limited tenure and instituting job freezes as vehicles to control expenses has serious draw- backs and is detrimental to employee morale and hospital operations. A procedure should be established whereby limited tenure employees may be transferred to permanent status without loss of job security. " OE Lack of continuity of care by UC residents: " The needs of community service cannot be completely neglect- ed for excessive concern for the other elements [teaching and clinical re- search]... The medical staff should seriously consider the disadvantage to effective patient care of the practice of four month - rotation of residents. " Joint Commission on the Accreditation of Hospitals Report on SFGH, September, 1972 to discuss the plan. And on a few occasions community members and hospital workers got together to consider the corporation. On February 21, twenty - five members from Thursday Noon Committee, Mission Coalition, Asian Community Health Clinic, Centro de Cambio (a drug program), Po- trero Hill Health Committee and Medical Committee for Human Rights met together. Concern about the corporation focused on two major areas: financing and control. The corporation would depend on the Board of Supervisors to appropriate one- third of the hospital's budget in a yearly lump sum. People at the meeting strongly attacked this mechanism. Whatever the positive motives of the Coordinating Coun- cil in proposing the corporation, it was feared that the Board of Supervisors would use it to get the hospital off its back. And if the corporation became desperate to bal- ance its budget, it would be forced to lay off workers, cut services and tighten the billing of patients. The February 21 meet- ing, therefore, proposed that " The city must continue to subsidize the full amount of any deficit... If any initial " lump sum " is not adequate, the city must be legally re- quired to supply the rest rather - than the hospital having to cut back on services, refuse admissions to sick persons, or bill poor persons. " The Coordinating Council's proposal for an appointed governing board also came in for hot criticism at the February 21 meet- ing. A counter proposal - stipulated that: @ " There must be a substantial number of community persons on any Board of Governors with these specific require- ments: (a) They must be actual users of the hospital; (b) They must be elected; (c) Any elections must have stringent campaign - spending requirements... to al- low poor persons to run on an equal footing with other candidates.. @ There must be a significant number of non supervisory - hospital employees on the Board selected by hospital - wide elections. OE All Board meetings must be open and public, with adequate opportunity for com- munity and worker input and testimony. " People at the meeting favored elections over appointment of the hospital corpora- tion board, but realized the imperfection of elections in communities with relatively little awareness of health care as a politi- cal issue. What Now? The Board of Supervisors will soon hold a public hearing on the proposed corpora- tion. The plan's fate will depend on the line - up of forces. The administrator of Unity Hospital (occupancy 40 percent), who claims to speak for other private hospitals, favors the shrinkage of SFGH and contract- ing out of care to empty private beds. Di- rector of Public Health Curry appears to favor the status quo since the corporation would remove the hospital from his depart- 23 ment and leave him with little power. The University will probably back the corpo- ration since it could streamline the hospi- tal's management without threatening the medical school's power over patient serv- ices. Big business and big labor will sup- port it as a move toward efficiency and economy. Mayor Alioto and members of the Board of Supervisors have not ex- pressed their feelings. Consumers and hospital workers wor- ried about the corporation find themselves in a difficult position. The February 21 pro- posals were rejected by the Coordinating Council and some such as adequate fi- nancing are impossible to guarantee. Yet a simple anti corporation - position will serve to support the status quo. Some peo- ple feel that the needed reforms in budget- ary and personnel practices could be achieved by retaining the hospital within city government but amending the City Charter to decentralize management func- tions to the hospital, and, re working - the contract with UC to reduce the medical school's enormous power at the hospital. Thursday Noon Committee and other workers are discussing another alterna- tive: a district hospital with funds raised through progressive taxes rather than re- gressive property taxes and with an elected board dominated by hospital users and workers. New Stirrings But the dilemma facing community and hospital worker groups goes far deeper than what to propose at a Board of Super- visors hearing. The corporation may be a diversion from the hospital's central issue: improving patient care. The patient care issue requires a serious questioning of UC's role. Though the technical quality of doctors may be high, that quality often does not reach the patient because of rushed conditions, resident rotations and overemphasis on specialization teaching and research. Until the 1972 testimony on resident rotations, the city - not UC took - almost all the blame for the hospital's problems. Energy expended on the corpo- ration issue might eventually bring changes in patient care. But a hospital corporation board, sandwiched between the Board of Supervisors'money and the University's doctors, could end up with little power. Pressure on UC, not the corporation, could be a more direct line to the desired im- provements. The use of probationary accreditation as a lever to force changes seems no longer viable. In 1973 the hospital will be accred- ited fully or not at all. As Thursday Noon Committee member Carole Dicker says, " We don't want the hospital to get disac- credited. We're not interested in closing the place. " But even the previous accreditation successes may have had the questionable effect of paving the way for the corpora- tion. The corporation does answer many of the JCAH's objections to the hospital's management. Before the Board of Super- visors, corporation supporters can use the argument, " if you don't corporatize the hos- pital you will disaccredit it. " Alternative options for consumers and hospital workers will depend upon over- coming previous shortcomings of SFGH organizing. The Thursday Noon Committee failed to actively involve large numbers of hospital workers, and the issues of hos- pital governance and financing are not generally raised in the largest hospital worker organizations, the unions. Greater involvement of all hospital workers in hos- pital policy requires discussion of hospital issues where the workers are: on each ward and in each clinic. Meetings now take place in three SFGH clinics and one ward. Ending doctor dominance must be an im- portant part of these meetings: otherwise they become little more than briefing ses- sions from the head doctors to their sub- ordinates. Greater involvement of consumers must also take place where the true consumers are: in the hospital itself. At least one SFGH clinic and one ward hope to add pa- tients to their worker meetings. Such meet- ings can break down the blame that pa- tients may naturally place on workers for ills really caused by understaffing. For example, an appointment clerk serving a long, slow line of patients is the natural object of anger of the patients, and the clerk most easily vents his or her frustra- tion on the people in the line. Discussions between patients and workers could illu- minate how the system is set up to pit one against the other and what to do about it. The JCAH hearings and the joint meet- ings about the corporation are a beginning of patient worker - cooperation at SFGH. The clinic and ward meetings are a contin- uation. Significant improvement in patient care and working conidtions will come not from a corporation or any other top down - management reform; it requires thorough- going changes in relationships among hos- pital workers and between workers and patients at every level of the hospital. -Thomas Bodenheimer 24