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Gambling with public health: How government officials brought Los Angeles County to the brink of disaster

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Gambling with public health: How government officials brought Los Angeles County to the brink of disaster

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GAMBLING WITH PUBLIC HEALTH: HOW GOVERNMENT OFFICIALS
BROUGHT LOS ANGELES COUNTY TO THE BRINK OF DISASTER
Copyright 2000
by
Roger Gunnar Gustafson
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(RELIGION)
August 2000
Roger Gunnar Gustafson
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UMI Number: 3041460
Copyright 2000 by
Gustafson, Roger Gunnar
All rights reserved.
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UNIVERSITY OF SOUTHERN CALIFORNIA
THE GRADUATE SCHOOL
UNIVERSITY PARK
LOS ANGELES. CALIFORNIA 90007
This dissertation, written by
Roger Gunnar Gustafson
under the direction of h.\$........ Dissertation
Committee, and approved by all its members,
has been presented to and accepted by The
Graduate School, in partial fulfillment of re
quirements for the degree of
DOCTOR OF PHILOSOPHY
Dean of Graduate Studies
D a te ...... _M ar ch _ 30A _ .2000
COMMITTEE d is s e r t a :
Chairperson
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Roger G. Gustafson Donald E. Miller
Gambling With Public Health: How Government Officials Brought Los Angeles County to
the Brink of Disaster
The growing crisis in public services is frequently met with calls for privatization and
de-politicization. Such opinions were voiced by eighty-five prominent leaders of Los Angeles
County’s health care community in response to the threatened demise of the nation’s second
largest public health care system. Yet, this dissertation argues that such attempts would
ultimately subvert civic responsibility and political accountability. Starkly put, policy choices that
contract out governmental services to private sector organizations or that attempt to insulate
public decision-making from political forces may ultimately sacrifice social responsiblity for strict
utility, substantive rationality for mere instrumental effectiveness and, ultimately, justice for
efficiency. As alluring as the neat certainty of economic theory is, public institutions, unlike then-
private counterparts, have a duty to safeguard non-economic values such as due process, justice
and equality, and are charged with the responsibility to work for the advancement of the common
good. In doing so, they forge a culture o f reason within the institution, one characterized by the
principles of scientific management and rational planning. Yet, often forgotten are the political
considerations: the human interactions and relationships that sustain moral discourse and preserve
the process o f collective ethical reflection by which society crystallizes its core values and
determines its self-identity. Without politics, moral discourse becomes a vacuous utilitarian and
economic rarefaction, reason becomes mere rationalism, and individual conceptions of the good
become simple expressions of will-to-power. In short, society must come to view both economics
and politics as essential ingredients in the process o f defining the common good. If the integrity
o f the community’s evolving narrative and discursive traditions is to be preserved, public
institutions should not be distorted into single-minded creatures of efficiency. Instead, they must
take seriously the full range of all moral claims asserted, especially those emphasizing the
historical consciousness of the community itself and the sense of stability and civic pride that at
one time bolstered the community’s time-honored public institutions.
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The Poor and Uninsured Residents
O f Los Angeles County
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Acknowledgements
It is with deep respect and gratitude that I collectively thank all o f the physicians,
executives, administrators, policy experts and other health care professionals for their
time and fortitude in sharing their opinions about health care for the poor and
uninsured in Los Angeles County, and for opening their doors to an impoverished and
unknown graduate student in need of their wisdom. Without their generous gifts, this
dissertation would not have been possible.
I would also like to thank my dissertation advisor, Donald Miller, for the numerous
hours o f scholarly and emotional support he gave. His guidance and advice were
endless sources o f encouragement and inspiration.
Finally, I wish to express my gratitude to my dissertation committee for laboring
through such a lengthy dissertation, to the Institutional Review Board for approving
my research project, to Linda Wootton for receiving a seemingly infinite number of
phone calls about administrative matters, to my fellow graduate students for sharing
their scholarly friendship and to my wife and daughter for putting up with my selfish
work habits.
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Table of Contents
Dedication............................................................................................................ ii
Acknowledgements........................................................................................... iii
Introduction
A Forgotten Promise.......................................................................................... 1
Chapter One
The Drama o f Health Care: An Historical Primer.......................................25
Chapter Two
Shock Waves: How Insiders of the County System Reacted.....................51
Chapter Three
Defect of the Will: The Dulling of Public Resolve..................................114
Chapter Four
The Politics o f Institutional Destruction......................................................175
Chapter Five
The Politics o f Estrangement: Public and Private Health Care ..............271
Chapter Six
Moral Convergence and Clashing Visions:
The Conflicting Values o f the Medical Community.................................. 335
Chapter Seven
The Problem of Solidarity: A Theory of Public Bureaucracy,
Politics and Moral Discourse........................................................................422
Chapter Eight
Bricks and Mortar: Taking a Stand............................................................. 474
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Bibliography..................................................................................................498
Appendix I: Methodology...........................................................................510
Appendix II: Interview Guide..................................................................... 517
Appendix HI: Solicitation Materials.......................................................... 523
Appendix IV: Informed Consent Form ......................................................525
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Introduction
A Forgotten Promise:
On a starless October morning in the unseasonably cold predawn hours
Mary Smith made her way up the steps leading to the public entrance of County
General Hospital. Dressed in worn out clothes too thin for the bitter cold, the
black woman shuffled slowly through the time-honored front doors of the hospital
and down the hallway to suite 1050. Cold and bare, the smell of institutional
indifference permeated the air. She had come because no one else would take her.
Rounding the comer to what she knew would be an arduously long wait,
she bumped into Ron Kaufman, Chief of Staff. Every morning about this time
Kaufman would visit the gourmet coffee bar in the main hall of the hospital, a
routine he had come to look forward to, especially on mornings like this one. Cup
in hand, he would make his way down to the emergency room and greet the staff,
searching out an update on the previous night’s events. As a matter of habit, he
would stop to talk with patients and their families, trying to understand their
problems and offer whatever reassurance he could muster.
Tall and lanky with greying hair uncharacteristic for a man o f his age,
Kaufman was a formidable sight. He met her with a smile and noticed her
discomfort. As good doctors always do, he offered to help. But Mary was not
really sick, at least in the ordinary sense. Her ailment was far more basic, one that
lay at the crossroads of health and welfare, where system and humanity meet. And
in her affliction, rested the failure of health care reform, public policy and the very
political process on which society’s confidence rests.
Outwardly sympathetic and ordinarily animated with an arid sense of
humor, this morning Kaufman was restrained, more reserved than usual. He
seemed to be holding back and appeared haggard. Indeed, he had been through
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the ringer in the past few months, ever since that Friday evening near the end of
June when he had taken his fifteen year old daughter to an important soccer game.
Sitting on the tailgate of his green Toyota 4Runner, watching her warm up while
scanning the County’s health care budget for the new year, Kaufman suffered a
staggering blow. His jaw dropped as waves of injury, panic and exasperation swept
over him. It was “just unthinkable,” he recalls. “As clear as the assassination of
Kennedy, as clear as that remembrance is, sitting in the car reading the budget
before my daughter’s soccer game was every bit as clear and every bit as
significant.”
It was a personal trauma for Kaufman. His love of medicine, of the people
his hospital serves is evident in his management style. “I feel [healthcare] one
person at a time,” he muses.
Almost everyday, I start my day walking through the emergency
room where the ambulance traffic is, seeing people one at a time,
not looking at the numbers o f patients we have in beds, but looking
at individuals within the facility, talking to the employees, talking to
the patients who are there, talking to people who are waiting for
patients and their families. I think it’s those episodes— one person
at a time— that shapes my view o f what this organization does.
His “are true stories, true people, true issues, true families, true losses,” he says.
In fact, his encounter with Mary Smith is one of the most vivid in his collection.
“She wasn’t ‘sick,” he pauses dramatically, ready to draw a stark distinction, “she
was starving.” Living on the street, she had scarcely eaten in three weeks. Her
plight most keenly reflects the mission of Los Angeles County’s General Hospital.
“We are at the intersection of health, social and legal problems,” Kaufman
explains.
They all come here. We get people [who have been] arrested [and]
who are dangerous to themselves or others; we get criminals who
are injured in the process of committing a crime; we get domestic
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violence patients; we get hunger, poverty, homelessness and [we
get] health issues.
It was for all of these reasons— the stories, the mission, his personal
commitment— that Kaufman sat Tuesday morning following the soccer game glued
to the speaker in his office, the one hard-wired into the County Board of
Supervisors’ hearing room downtown. Monday, nothing much had happened.
Not so much as a murmur was heard inside the hospital. Amazingly, no one
seemed to know. On Tuesday, however, Kaufman silently marked time until the
announcement would come. Abruptly and without warning, shutting down once
the nation’s largest hospital, padlocking her doors, terminating her nearly nine
thousand employees and leveling her structure would signal a permanent
abandonment of the County’s mission to provide health care to all citizens
regardless of their ability to pay and would constitute a complete and irreversible
halt to health services provided to many of the poor and uninsured of the County.
Their numbers had swollen to nearly three million— nearly one third of the County’s
total population— and the gap between their needs and the system’s ability to meet
those needs was growing at an alarming rate. Once the announcement had been
made, everyone would know. There would be mass chaos inside his organization.
He listened intently as the onslaught never came. Instead, the Board of
Supervisors choked and hastily assembled a Health Crisis Task Force to study the
catastrophe and render a range of solutions.
Even inside the hospital, denial of the impending doom was pervasive.
“There was a kind of laughter, like ‘yeah sure,”’ recalls Father Chris Ponnet the
director of the hospital's fifteen member volunteer chaplaincy. “It was like, ‘the
hospital might close? Oh, no, not this hospital. That’s just talk downtown.
They’ll figure it out at the last moment. They’re just scaring us.’” Indeed, a long
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history of political maneuvering with recurring threats to execute draconian cuts in
the health services budget had fostered a sense of disbelief and an absence of alarm
among many insiders. But from Ponnet’s perspective, “the Titanic was going
down” and the staff were just “rearranging the chairs.”
As it turned out, Ponnet became a pivotal figure during the Summer of
1995, powerfully advocating for the survival of County General. Assigned two
years before by the Catholic Archdiocese to minister to the County’s sick and
injured, Ponnet’s tour of duty had been brief compared to the long history of
priests vigilant at the bedsides of County patients. Since 1865, when County
General first opened her doors as a tiny, two story house on El Camino Real, the
Church has unfailingly served her. The offspring of that commitment, was the
birth of St. Camillo’s parish in 1952. Constructed across the street from the
towering white monument that is County General, the pastorate is close enough to
afford Father Ponnet a rapid response time to the bedside. “It is very normal for
me on a daily basis to walk through life and death with eight to ten people in a
twenty-four hour period,” Ponnet ponders soberly. “I feel really blessed to journey
with people and their families. . . . I find in being present during those critical
moments in peoples’ lives, there is a real moment of blessing. I feel honored to
share those moments.” As part of his ministry, he joins with patients in grappling
with the reality of disease and the imminence of their mortality. Mass offers hope
and comfort. Each Sunday morning, on the order of two hundred missionaries
from a variety of parishes around Los Angeles make a pilgrimmage to the
“People’s Cathedral,” the only county hospital in the nation, according to Ponnet,
that permits worship services on its grounds. Volunteers transport patients in
wheel chairs and stretchers to the chapel. “It looks a lot like Lourdes or Fatima,”
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he proudly explains, referring to the tiny villages in eastern Europe where stories
of miraculous healings were validated by the Church.
At the culmination o f the crisis, however, his role became much more
confrontational. A long time activist for a variety o f causes, “people here within
both the hospital and the chaplaincy were afraid of what I was going to do when I
arrived,” he says. When the crisis erupted, however, doctors, nurses and patients
turned to him for leadership. “Most of them were grateful that I happened to be
here at the time.” From his quiver o f well-tested activist strategies, he drew his
bow, firing his most poignant arrow at the hearts of politicians during the many
public hearings on the crisis. He told story after story of how the patients would
suffer if County General were closed. “T knew I couldn’t change their votes,
bottom line,” he recalls. “But I just needed to let them know that there are real
patients here whose lives are affected by decisions that are being made.”
Ron Kaufman was also compelled to get the message out. As soon as the
Board of Supervisors had adjourned their meeting on that fateful Tuesday, he
began to field calls from reporters and talk show hosts. Sally Reed, the County’s
chief administrative officer who, with one swift stroke of her budgetary pen, had
unflinchingly recommended closing the flagship of the County health system’s
flotilla of hospitals and clinics, began to make statements to the press in defense of
her position. Soon, Reed and Kaufman locked horns in a cordial, but adversarial
debate. “There is a financial discussion,” he remarks, “and then there is the health
of the community. . . . Sally Reed made a very good financial proposal to the
Board.” But, for Kaufman, it was an act motivated by financial desperation and
fraught with danger for the community. “If you were talking about where you
wanted to sell cheese at discount rates,” he jabs, “it made sense.” But such a
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myopic vision neglects the overall health o f the community and recklessly puts all
County residents at risk.
Unfortunately, it seemed easier to convince an abstract audience in radio
broadcasts and newspaper articles than to convince his own house staff. Kaufman
calls to mind those days:
There was a great sense of impending doom. This organization was
invincible prior to [the crisis]. She was always here. She was
always asked to do more than she had resources to do. She always
met the call. She was never unable to meet any challenge. But this
was the challenge that really brought her to her knees. And we have
been reeling ever since.
In fact, the morale among the staff of the hospital had plummeted in the few
months since Sally Reed’s unprecedented recommendation. Today, it still
oscillates, waxing and waning in response to the Board’s decisions. As with any
threat, a natural instinct is to lash out and blame. Kaufman himself became a
target. Appointed as Chief of Staff only ten months prior, for many, he became a
convenient scape-goat. In order to reverse the rapid spread of misinformation and
accusations o f a scandel and to prevent a downward-spiral in the organization’s
collective attitude and confidence, Kaufman held a series of faculty meetings for
the attending physicians. “There was always an accusatory tone,” he recalls.
‘They wanted to find the one person responsible,. . . [the one] who imbezzled the
funds.” Every administrator was under suspicion. “I’m standing there,” Kaufman
remembers, “being accused with everybody else for causing this situation because
of lack of vision and foresight.”
Luckily, cooler heads prevailed. At one meeting, Kaufman had even been
able to negotiate a positive turn in morale. He thinks back to that meeting, a sharp
memory for him:
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I called together a meeting of the house staff. We had 924 interns
and residents at that time. . . . In an auditorium that holds 250
people, it was overflowing. We were talking about their future.
This was in September after we had signed employment agreements
in June that were good for a year.
At that time, a variety of proposals were raised recommending ways to close the
enormous $655 million budget gap for the year and keep the system afloat. One of
them suggested eliminating psychatric services that would have terminated sixty
residents and interns. But Kaufman refused and stood his ground. For him, it was
a moral imperative. Without any viable strategy for doing so, he remembers
committing publicly to meet the obligations o f the contracts. That unwavering
commitment became the Titanic’s ballast, stabilizing her keel at least temporarily.
“It was an extremely symbolic statement,” Kaufman says. “Because I was willing
to support them, they increasingly were willing to meet the demands that were
going to be put on them by this budget problem over the next couple of months.”
Although he admits that vestiges of skepticism and pockets of fragmentation still
exist, for the most part a solid core of support has formed around Kaufman at the
helm.
But if the shifting weight of staff discontent had been steadied, it was only
temporary. By the end of September, the situation took a turn for the worse.
Grim reality had set in. The Health Crisis Task Force had completed its intense
two month study and, having jettisoned the idea o f closing down County General,
proposed a complete shut down of all thirty nine o f the County’s out-patient health
centers, a seventy-five percent reduction in out-patient specialty clinics, and a
severe curtailment in the County’s health care work force. The death knell had
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been sounded. More than 2,500 jobs and one million out-patient visits were slated
for elimination, rendering the system virtually inaccessible in the months to come.
Beth Osthimer, a public interest attorney and health advocate for the poor,
wasted no time in reacting to the crisis. “A high number of clinics and the bulk of
the people that this County sees at the specialty level are disabled, very sick [and]
have complicated medical conditions for which they were receiving treatment on
an out-patient basis,” she protests. Under Option C, as it was called, indigent and
uninsured patients with no where else to turn would have overrun the emergency
rooms o f both public and private hospitals throughout the County. But even those
channels to access medical services would be dammed as Osthimer recounts.
“There were precious few avenues as it was,” she says, “but that was going to tip
the thing over to the point where it would tube the trauma system and bring the
whole thing down.” Even during the months of September and October when
County officials had just begun the forbidding process of closing down clinics,
turmoil erupted. “Notices had already gone out for clinic closures,” Osthimer
recalls. “People who were ongoing patients weren’t being told where they were
going to go, where their records were going or anything. It was a nightmare! A
total nightmare.”
In response, she fired off a motion to the court requesting injunctive relief
from the austere cutbacks in health services planned by the County. One o f the
key plaintiffs was Alex Flores, a seventeen year old patient with Down’s Syndrome
and a serious thyroid condition whose only caregiver was his mother, herself
debilitated from a severe form of arthritis. Recovering from open heart surgery
just two years before, “he could easily die from things that other kids could
weather,” Osthimer explains. The clinic at County General where Alex had been
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receiving treatment was in the process o f being dismantled. Without proper
treatment, Alex’s heart would have worsened and perhaps failed, according to the
County physician who had cared for him since birth. “Other doctors have refused
to care for Alex because they cannot provide the treatment that he needs,” she
writes in a motion pleading with the court to take action. “If the County
implements the service reductions, Alex will be left without any medical care.”
Sadly, his fate now rested in the hands of a single judge because, in those few
months of pandemonium, a simple promise that he had relied on since his birth had
been forgotten in the clamor.
Instrumental though she has been in advocating on behalf o f the poor, to
Osthimer, her efforts have been limited, her victories sporadic. In her mind, her
services provide only a make-shift haven from the storm of political forces.
“People survive because they have to,” she reflects.
I don’t think that what I do is all that integral to poor people’s
lives. . . . There are all these political forces out there that are
going to dictate whether funds come or not that are independent of
any decisions about whether people will die or whether health
policy is good, bad or indifferent.
She renders a fatalistic summary: “Reality is, we are just little, tiny pieces. This
thing has a political dynamic all of its own.”
Despite her humility and gritty realism, she plugs along day after day,
confident in the goodness o f human nature and hopeful that things will change.
I tend to think that people will not do those things that are just so
cruel and devastating. . . . I always think that people don’t
understand the impact o f what they are doing. Most people want
government to use their resources wisely. . . . But when push
comes to shove, they don’t want children [to go] hungry, they don’t
want old people abused, [and] they don’t want sick and disabled
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people to go without healthcare. That’s probably why I do what I
do.
Her face then darkens, her mood becoming more somber.
Maybe it isn’t true. Maybe the majority of the people know all of
that and they don’t care. . . . They always think there’s fat. They
always think the government cheats, that there must be people who
commit fraud. They don’t really know the facts and no matter how
they are put, it seems that it doesn’t sink in until they see some real
evidence that affects them. And then they say, ‘No! That’s not
what we wanted. We didn’t really mean to deny health care. We
didn’t mean for people to be pushed out of their beds from nursing
facilities into the street with no where to go’. I guess I thought that
if we could make it clear what the impact would be, then it
wouldn’t happen.
The hours were inhuman. The strain was enormous, welling up in waves of
angst, dread and guilt. ‘T have never felt this much stress in my entire life having
worked in poverty law,” she recalls. “You had this sense that somehow if you just
worked a little harder or could focus a little more and get people to understand,
then you could stop this from happening.” The trepidation seemed unbearable. “If
you didn’t work another hour, so many more cancers were going to metastasize or
so many more people were going to stroke out because they weren’t getting
access,” she says conveying her self-imposed guilt. “If you were just better at i t . .
. or if you could just make people understand the consequences, they wouldn’t do
it. They would be up in arms.”
But the public wasn’t up in arms. Silence swept over the community,
leaving Ron Kaufman to feel quite alone in his grisly task. Spending lonely hours
isolated in his office, he detested his mandate from the Board of Supervisors to lay
off 1,200 of his staff by October 15 th. But his greatest grief did not come from
inflicting the painful cuts that would drain the hospital’s “lifeblood.” Rather, his
“heartache” was planning the incisions. The faces he had seen so many other days
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in the corridors and wards were now on the chopping block and he was the grim
reaper. “These were real people,” he says. ‘They had real lives. They had real
mortgages. They had real children.” To make matters worse, the County’s Civil
Service rules required that layoffs cascade throughout the system in order to
protect seniority This meant that Kaufman’s scapel would often be felt across
town in another hospital Feeling trapped by his immutable circumstances,
Kaufman had no choice but to proceed in his gory assignment.
Kaufman took it personally. “This is my institution,” he declares in a vexed
and protective tone. Clawing tooth and nail for survival, he made an
unprecedented move. Chief of Staff o f the largest hospital in the nation, a
vertically integrated, all inclusive system, he now found himself, hat in hand,
knocking on the doors of small medical clinics in the community. “I was scurrying
around trying to develop partnerships with free and community clinics where I
could have the patients taken care of by my trainees and their faculty.” He had
hoped to float his residency and intern training programs “on a patchwork system
between the County hospital and the free clinics.” Admitting to shooting from the
hip and being unsure of the outcome, Kaufman is not apologetic. The clinics “saw
working with the Med Center as extremely important for their future,” he says. As
the health care industry becomes more and more consolidated, being a part of an
integrated health care delivery system where patients seamlessly transition across
settings will become increasingly important for community clinics. Indeed, these
spontaneously formed and rudimentary relationships became harbingers of the
County’s official public-private partnership program fashioned the following year.
The story just told is illustrative, a microcosm o f the events that rippled
through the vast County system in the Summer and Fall of 1995. At a time when
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the entire medical community was paralyzed in the grip o f an insurmountable,
intractable crisis, three unlikely heroes stepped forward. They set aside their
customary functions, surpassed the demands of their typical duties, denied the
safety o f their job descriptions and followed a riskier path. They all did something
extraordinary. All took on thankless tasks, desperately working to negotiate a stay
o f execution for the condemned health system using whatever limited means they
had at their disposal.
Osthimer worked sixteen hour a day and seven days a week for the three
months between July and September. In record time, she filed a class-action
lawsuit against the Board o f Supervisors as a last ditch effort to force them to
salvage the dying system. She put together four thousand pages of testimony from
doctors and their patients on the potential impact of the crisis. She endured
seemingly endless meetings “that just went on for days and days and days and days
and Saturdays and Sundays and nights.” But she wasn’t a doctor. She didn’t have
a direct stake in the system. She fought only to protect her clients.
Father Chris Ponnet also never had a stake in the system. Instead, he had a
moral obligation, a divine imperative to “jump in and do something.” He became
the mouth-piece for many whose careers and livelihood were in peril, but who
were reticent to speak out for fear o f reprisal Only two years into his pastoral
assignment, he could have looked the other way and ignored the distress spreading
throughout hospital departments and patient wards. Instead, he collaborated with
the employee union to erect a tent city in front o f the hospital. He facilitated
candlelight vigils and led protest marches. He distributed information, bandaged
bruised egos and healed broken spirits. He lobbied at the state legislature in
Sacramento, led prayer services and held masses. Risking arrest, he even
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participated in a “die in” at the governor’s office. For the patients, he provided
reassurance. For the nurses, he was their activist and confidant. But he was also
just a simple parish priest.
Ron Kaufman could have easily curled into the bureaucrat’s fetal position,
locking himself away in his office, pointing fingers and searching for scape-goats
Instead, he put gamesmanship aside. Political gambiting would have to take a
back seat. The health o f his patients, the careers of his residents and interns, the
agonal pulse o f his organization and even, unbeknownst to itself, the health of the
community was at stake. He met eye to eye an angry mob of faculty, residents,
interns and staff ready to convict him personally, “Mr. M.B.A.,” o f incompetence,
imbezzlement and malfeasance. He withstood the insult of an aloof County health
department that compiled data for the proposal to close down his hospital without
even the courtesy of a warning. He single-handedly negotiated collaborative
alliances with several private clinics, a relationship historically colored by discord
and mistrust. Self-protection and political posturing would have been the easiest
avenue, but Kaufman opened himself up to the community and his staff, his
singular objective to rescue the sinking Titanic.
In that memorable summer, County officials, for a variety of reasons and
causes, brought public health to the brink o f disaster. Three individuals mustered
their resources and did whatever they could to preserve the safety net in Los
Angeles County. One may only imagine if patients knew of their efforts. After all,
who they were fighting for was a nameless, faceless and voiceless crowd of
“expendable people.” Daylight finally broke in late September when Bill Clinton
stood on the tarmac of the Santa Monica airport and promised a $364 million
bail-out of the system. Sally Reed had loaded the gun, spun the chamber and held
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it to the collective head of the poor and uninsured. The Board of Supervisors had
cocked the hammer. The Governor had left the table. But President Clinton
blinked. “It was one of those days where you throw your hand in the air and say
‘YES!’” Kaufman recalls. “Oh, it was exciting. . . . It was a big relief.”
Yet, the bulk of those funds was a loan and certainly not enough to cover a
$655 million budget deficit. With all the jubilant celebration, the crisis had only
begun. It had left a wide trail of destruction in its path, and it would take the
County many years to repair the damage. Patchwork would be insufficient.
Nothing less than a complete overhaul o f the system, its leadership, values and
structures would be necessary. For the time being, Mary Smith, Alex Flores and
others similarly dependent on the County’s failing health care system were safe,
but County General’s jugular still lay exposed and a forgotten promise had only
been partially restored.
This dissertation is a story about health care. It is also a story about
politics. In it, I highlight the intricate details of a public health system gone awry,
bogged down by a swamp of political factors and agents. To many, the narrative is
a warning, a parable for other local health systems to teach the importance of
divorcing politics from health policy. For me, however, the events comprise a
fascinating microcosm of a national occurrence and an engaging and intriguing
case-story. Although the facts and details of the story are specific to a particular
time and place, the lessons learned transcend the local setting in Los Angeles near
the end of the twentieth century. Indeed, the intersection of health policy and
politics is an almost ageless reality. In this story, however, a microscope is applied
and a vivid tale is told of how politics and health policy really interact.
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I picked up the newspaper near the end of June 1995 and realized that a
profoundly disturbing event was about to occur. A budgetary disaster was forcing
politicians and health officials to reluctantly put forward proposals so austere and
so stringent that not only would the almost 5 million residents of the County who
are either uninsured or on Medicaid be adversely impacted but the health of the
entire community jeopardized as well. In short, it seemed to me that government
officials were both gambling with public health and bringing the County’s health
system to the brink of disaster. I wanted to understand not so much what the facts
were, but how the facts were perceived by the medical community and by the key
leaders who are saddled with the responsibility for shaping health policy. My
research began on a small scale. Initially, I intended to interview ten or fifteen
physicians working within the County’s vast health care system to better grasp
how they were reacting to the crisis shaking the very foundation of their careers.
They had dedicated their lifework to taking care of poor patients, training new
generations of medical professionals and conducting research. Their future, at
best, seemed hazy. How did they feel about the developments that were rapidly
unfolding on the political stage? Why did the crisis arise? What were they to do
about it? These were simple questions. But what I began to unearth was far more
complex, far more intriguing and far more pivotal to understanding the massive
tectonic plates shifting underneath the raging national debate on health policy than
I had ever imagined.
Talking with these physicians stirred their emotions, as if they had been
awakened from a somnolence imposed by a feeling of powerlessness to change the
course o f events swirling about them. Finally, someone was listening to them.
Their pulse visibly quickened and their responses were often passionate and
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moving, their statements frequently animated and, at times, fierce. Their anger and
sense of betrayal was palpable and the interviews drew out their true feelings in an
environment of trust and confidentiality. As they grew increasingly comfortable
with me and more assured o f my objectivity, they referred me to more and more of
their colleagues and I began to amass a “snowball” sample of more than eighty-five
interviews for my research. As the excitement over talking about the crisis built, I
was invited into the offices o f high ranking public health officials as well as high
powered executives in the private medical community. For instance, I spoke with
the Director of the Department of Health Services who manages a budget of
almost $4 billion, the medical director of Kaiser Permanente in Southern California
who supervises a staff of three thousand physicians caring for more than 2 million
members, and the chief executive officer o f Health Net, one of the nation’s largest
HMOs.
In the private sector, I also talked with a broad cross-section of hospital
administrators, chief executive officers and medical directors of managed care
organizations and medical groups, presidents of charitable foundations as well as
executive directors and medical directors of non-profit, community clinics. In
eight different focus groups, nurses, social workers, administrators and other
employees o f the Medical Center spoke candidly about their feelings toward the
County health system and its working conditions. Representatives from the
community, including health advocates, health policy experts, a health insurance
manager for a very large southern California employer and a former health reporter
for the Los Angeles Times also spoke with me. But the bulk of my conversations
were held with physicians in varying capacities. Some were individual
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practitioners while others worked for HMOs or practiced in large medical groups;
some were patient-focused while others were executives and more entrepreneurial.
These later interviews like the early ones were both spirited and ingenuous,
their candor betraying their feelings o f frustration and anger. They, too, were
infuriated by the workings of the County’s health system. Though far less
informed, they nevertheless harbored strong convictions about public hospitals and
clinics. As the interviews progressed, I realized that by talking with so many
different leaders in health care, I had put together a makeshift roundtable for
discussion about health policy in Los Angeles or a de fa cto discourse community in
which participants would communicate their diverse and wide ranging ideas and
opinions through me. I deliberately avoided setting too narrow an agenda for each
interview. In the same vein, I eschewed crafting a set of research questions in
advance that would unnecessarily confine the commentators, artificially restricting
them to my preconceived notions of what was involved in the health crisis.
To my surprise, I discovered that the medical community was galvanized
with moral energy. They were profoundly uninterested in discussing questions of
fact or quantitative health policy and consistently migrated toward a moralist’s
point of view and away from that of a medical economist. They spoke of ethics
and morality, of shared values and community, of common faith and civic virtue, of
cooperation and discourse, of rights and social obligations. They voice arguments
that society has an unconditional responsibility to provide health care to all and
that everyone should have an inalienable right to medical care including those who
work in this country illegally. Based on personal conceptions of the common
good, universal principles in addition to a strong sense of compassion for the sick
and injured, their arguments are persuasive. A moral convergence in the medical
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community began to emerge, a fountainhead pooled from deeply held religious and
humanitarian convictions. They were doctors and health care professionals, after
all. How could they ignore the pleas o f a sick person, even one who is cannot pay
for the services or one who is an illegal alien? Also, physicians in the County
health system share a poignant and touching sentiment, one that moves them to
devote their lives to caring for the poorest o f the poor in Los Angeles.
But the medical community also spoke o f rivalry and betrayal, of
competition and injustice, of animosity and division. Physicians and others inside
the County health system did react defensively to the fiscal raid on their medical
stronghold with intense emotional responses of anger, disbelief, resentment, fear
and depression. In an almost vindictive tone, they predict dire consequences in the
grim wake of the crisis and lash out at politicians, administrators and the public.
Overall, the medical community has a negative perception of public opinion. An
erosion o f faith in politics and a decline in civic awareness has sparked a kind of
political indifference to vulnerable groups, they say, that is the fulguration of
anti-immigrant and anti-welfare sentiment in society. To their minds, it is a
striking contrast to the “golden era” of the fifties and sixties when the community
seemed more willing to rally around the County’s health system, honoring it as a
local treasure among world-class medical institutions. Similarly, local, state and
federal political posturing ignited and fueled the crisis while exacerbating the health
system’s financial difficulties, and a profound distrust between public and private
health systems generated by years of estrangement and enmity so ingrained the
hostility has become virtually instinctive. In short, the diverse members of the
local medical community share the same ethical vision but also the same political
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reality; they express similar moral sentiments but are also hopelessly entangled in a
web of politics that paralyzes and ultimately divides them.
But it is precisely their distaste for politics that unites them. They despise
the kind of irrationality in politics that they perceive engenders a suboptimal health
system. The views and opinions o f those I interviewed are indeed morally
charged. But, they are also distorted by the economist’s unyielding abhorrence of
politics and corresponding glorification o f efficiency, utility and rational planning.
Health policy, they say, is so crucial to people’s lives that it cannot be subjected to
the caprice of obsequious politicians pandering to public opinion. It should be
created by the experts instead and based on sound reason and careful analysis.
With the simple clarity of absolutists, they scorn politics and blame it for the near
collapse o f the County’s health system. They need only point to factors such as
flagging public support, apathy and indifference by state and federal lawmakers
and the bitter antagonism between public and private health care providers to make
their case. Out of sheer frustration, they see the system’s salvation lying in what is
really an exaggerated form of rationalism devoid o f any political influence or other
ostensibly irrational claims. Repulsed, they embrace one of two commonplace
proposals for reform: privatization or depoliticization. Visions to privatize
County health operations find their ally in classical economic theory whereas those
of rational planning and social engineering divorced from the vagaries of politics
are buttressed by images from the tum-of-the-century progressivist era in
American history. Indeed, virtually every commentator I spoke with argued that if
the County’s moribund health system is to endure as a viable institution in the next
millenium, one way or another, it would have to permanently slough off its
political skin.
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Yet, the overarching story that emerges from these conversations is itself
intensely political and intensely normative. It is a grand narrative about the people
of health care and their values, the common faith they share in medicine, and the
coherent pattern of beliefs a community develops over time which, for Los
Angeles, began to unravel in 1995. As much as the medical community would like
to realize their moral convictions in the neat certainty of the economist’s wares,
their own narrative is, at rock bottom, a political story about their deeply held
values. It is, therefore, not an economic or quantitative analysis, nor does the tale
offer much in the way of specific policy recommendations. Instead, the story
makes a normative contribution, the shape of which is not sculpted by elaborate
economic formulas crafted to maximize social efficiency or a tortuous cost-benefit
calculus designed to optimize social utility. It looks instead to the rich fund of
moral ideals and principles that animates and unites the local medical community in
Los Angeles even as a nefarious political environment depletes that fund and
fragments that community.
In fact, my argument challenges the rather dull assertions that publicly
provided services like health care ought to be thoroughly privatized or
depoliticized. I attempt to demonstrate how these twin proposals are mirror
images of each other as the key goal of both is to fumigate the health system,
ridding it of its political vermin. Yet, the pesticide itself is lethal and ultimately
toxic to political accountability and to the community itself. In the final analysis, I
will argue that politics is not a malignancy to be excised, but rather an ingredient
essential to fostering a vibrant and healthy public life. In this view, public
bureaucracies like the County health system are not warehouses for inept
government officials. They do not merely produce an unnecessary friction on
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economic productivity, but are, in fact, justice-seeking institutions that take a
leadership role in shaping public discourse and advancing the common good.
There is no question that, in order to formulate a workable vision for the
future, county health operations must be restructured to reduce waste and
transform the relatively inert bureaucratic culture. Antiquated funding mechanisms
must be overhauled and diverse revenue streams should be consolidated into a
single financial pool to guarantee universal access to medical services in the local
community. Also, public and private health care providers must put to rest their
historic feud and endeavor to forge meaningful public-private partnerships in a
blended system that moves beyond a patchwork of singular and isolated contracts
between a handful of providers.
Yet, real change requires not merely a transformation in structural and
organizational realities, but a change in attitude, mentality and spirit as well. Local
planning requires genuine cooperation, a substantial investment in social capital,
and an enduring public forum for moral discourse and shared fiscal responsibility.
In this sense, health care reform is an onerous task. The seeds of social solidarity
must be sown, diverse communities and institutions organized and a common
dialogue between diverse stakeholders with contending interests sustained.
Indeed, civic and religious leaders, employees and their unions, patients and their
advocates, government officials and politicians, special interest groups as well as
physicians and the private sector health care industry all have a stake and a say in
designing the public health landscape. It is a responsibility that surpasses in
complexity and difficulty the more straight-forward and abstract development of
sophisticated, rational models of medical econometrics or statistically based health
policy.
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Thus, health care in the twenty-first century must be infused with a new
understanding of itself as a universal social good that reinforces a vigorous
commonality between all individuals, one that is determined to construct a set of
architectural signposts and monuments made o f real bricks and mortar to dot the
landscape as a testimonial of the community’s shared commitment to sustaining the
life and health of all people. Reforming our national health system one
neighborhood at a time, then, means resurrecting the kaleidoscope of caring
covenants we once made with each other to heal the sick and injured. In doing so,
we must endeavor to preserve the historic and traditional practices and public
institutions crucial to providing essential human services in the community. We
must also restore public trust and faith in government across-the-board and revive
the lost virtue of civic responsibility and political participation.
This is true politics. By discarding it in headlong abandonment of all that is
not quantifiable or obviously rational, we also discard the lifeblood of the
community itself. In fact, politics is the lifeblood o f the community because it
sustains moral discourse and preserves collective ethical reflection and
argumentation by which society crystallizes its core values and determines its
self-identity. Without politics, moral discourse becomes vacuous. It loses its
substance, the very stuff that makes dialogue possible. When the public square is
entirely coated with a flat utilitarian or thin economic varnish, the normative claims
and moral assertions promulgated in the political arena by the many cultural and
religious traditions in a pluralistic society are effectively crowded out. They are
marginalized to the periphery of the polity in the vain attempt to make social policy
more rational. In the admittedly noble endeavor to catalog a common set of
universally accepted moral axioms, discourse sanitized o f politics rejects genuine
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ethical reflection while falsely exalting utility and efficiency as the community’s
overarching ideologies. By clearing the public forum of all purportedly irrational
moral claims, not only are political considerations abandoned, but the very process
of ethical discourse itself is corrupted and the moral fabric of the community is
rent. Public institutions, in turn, are conquered by the hegemonic presuppositions
of the neo-classical economist masquerading as universal principles. Regulatory
analysts turn to quantitative cost-benefit analyses as a substitute for agreement on
social norms and human rights. As a result, public bureaucracies are demoted. No
longer the venerable bearers of social justice and forums for free and open public
discourse, no longer honorable vehicles dedicated to shaping social values and
advancing the common good, they are forced to accept their more ignoble and
mechanistic role as rational instruments singularly devoted to maximizing
efficiency and social utility. In the end, political accountability is replaced by mere
economic efficiency, social responsiblity by strict utility, and justice by financial
expedience.
Thus, the future o f Los Angeles County’s health care system will be
preserved not only by transcending politics, but also by deliberately immersing
itself in the disorderly process. Politics alone, of course, spawns many of the
problems about which members of the medical community complain. But the kind
of decontextualized, high falutin rationalism that is rooted in efforts to depoliticize
or privatize essential human services is too far removed from the everyday values
and moral principles that are accepted without proof or objective validation but
nevertheless resonate within the various religious and cultural communities of
larger society. Thus, within the framework o f public dialogue, both purely political
assertions and strategies as well as purely rational claims of the type made in law
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are necessary to preserve the authenticity of the community’s evolving narrative
and discursive traditions. In short, society must come to view law and politics as
social icons and public bureaucracies as justice-seeking institutions that strive to
advance the common good and restore a sense of togetherness by virtue of their
institutional centrality and significance.
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Chapter One
The Drama of Health Care: An Historical Primer
It could be accurately said that politics is the archenemy o f rational
planning. It is the nemesis of social progress and industry. Politics slows down
crucial decisions, sometimes even to a grinding halt. Such proclamations find no
more truth than in the formulation of health policy, that endeavor which doctors,
hospital administrators, public officials, ethicists, clergy, employers, consumers and
health care providers characterize as the culmination of rational thought borne out
of humanitarian concern. Although these actors may differ on the outcome of that
process, virtually all will agree that politics, especially that of the worst kind, has
no place in devising an efficient, effective and fair health care delivery system.
Personal strife and vengeance, self-interested gamesmanship and self-serving
lobbying efforts in a pecuniary political system to the exclusion o f the common
good and the good of patients cripple and disfigure progress toward a system of
high quality and equitable medical care.
Yet, medicine is not practiced in a vacuum. As with any social endeavor,
the central actors play out a story, a human drama, on a communal stage. The
shared narrative that results becomes the community’s political story and the lived
heritage of the people that own it. Health care, then, is not merely a process or a
system; it has realized its own narrative, evolved a plot of its own that is the
unique combination of many kinds o f individual and organizational forces. Indeed,
any story-line, any human affair is the amalgam of both self-sacrifice for the
common good and self-aggrandization for personal wealth and power, solidarity
based on reason and conscience as well as hoggish individualism. Martin Buber
aptly pointed to the dual forces o f the universe— the turn inward for
self-preservation and the turn outward for engagement and relationship— and both
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of these movements pointedly characterize both social drama in general as well as
the particular story of health care and medicine in the American community.
This dissertation will attempt to tell the story o f one local community
struggling to come to grips with its imperiled health care system and the potentially
disastrous effects its demise could have on the public’s health and the health and
welfare o f millions of residents. This will be the story of the Los Angeles County
health care crisis. At times, the story will be sordid, disgraced by shameful and
seemingly unforgivable acts; at times, it will be heroic, an epic of courage and
valor in the face o f insurmountable affliction and distress, at times, a chronicle of
events so moving and heart-rending in their tragedy that it will become clear that
health care delivery is about more than social utility, even more than equity and
justice. It is a theater o f success and failure, a touchstone o f the community’s
moral character and a story that touches the lives of each resident of the polity.
The narrative begins on the national stage. It certainly would be no
surprise to most health care experts and commentators to suggest that health care
in America is undergoing and has undergone a series o f crises that have, to some
extent, shattered the faith of the public in doctors, hospitals and politicians alike.
Double-digit inflation, questionable quality, flaws in insurance and the rising
universal antagonist managed care have set the stage for the national dialogue. As
John Iglehart points out, the growth in health care expenditures has exceeded the
growth in expenditures for all other goods and services with an average growth
rate o f 12 percent per year between 1970 through 1990, roughly double the
Consumer Price Index for those years (“The American Health Care System:
Introduction” 964). In fact, in 1994, health care represented 14 percent of the
Gross Domestic Product and predictions go as high as 18 percent of the GDP by
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the year 2000 (Starr, The Logic of Health Care Reform 15). Government
spending on health care ($212 billion) actually exceeded spending by employers
($186 billion) and almost matched that of private households ($224 billion) in 1990
(Iglehart, “The American Health Care System: Private Insurance” 1716).
Health care analysts spend a great deal of time examining and discussing
the data to determine how such gargantuan cost increases have occurred in
American medicine. Structural factors such as population growth, sophisticated
and costly technological advancements as well as demographic changes evident in
the burgeoning older population are one source of the inflation. Yet, others
contend that such explanations account for only a small proportion of the cost
increases. Rather, as Paul Starr argues, “perverse incentives to overbuild,
overspecialize, overcharge and oversupply the health care market were built into
the system by policy choices made in the 50s and 60s” and such incentives have
been the driving factor in the explosive growth in medical expenditures (The Logic
of Health Care Reform 25). In the traditional fee-for-service system, where
doctors and hospitals are paid for the number and amount of services they provide,
no one had the incentive to control costs, especially after the passage of Medicare
and Medicaid in 1965. Physicians controlled both the supply and the demand for
medical care and would pass the costs of sometimes unnecessary tests and
procedures on to insurance companies who, at that time, were willing to cover
them. Hospitals were reimbursed for Medicare and Medicaid based on a 2 percent
surcharge of the operational costs it could attribute to caring for beneficiaries of
these two programs and so had little incentive to cost cut. Also finding it
expedient to shift unreimbursable costs for treating the poor and uninsured to
paying patients, hospital charges for patients with indemnity policies were often
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significantly more that the actual cost of providing those services. In turn,
insurance companies simply passed on the additional costs to employers in the
form of premium increases. Although some employers began to complain as early
as 1973, the 175 percent increase in premiums between 1970 and 1989 went
unheeded by most for several decades because the costs of providing health
insurance to employees were fully deductible on corporate income taxes returns
(Starr, The Logic o f Health Care Reform 11). Finally, consumers did not question
the rise in medical costs because their portion of insurance premiums and medical
bills were both small-averaging 25 percent for physician bills and only 10 percent
for hospital bills— and tax deductible. In addition, patients in time o f illness, often
experiencing significant anxiety and self-doubt, turn to the physician for advice and
trust in his or her recommendations. Yet, as growth in wages has leveled off since
1970 and health insurance premiums account for 50 percent of all wage and benefit
increases, it is actually the American worker who ultimately has paid the price of
rising health care costs (Starr, The Logic of Health Care Reform 11).
For all of the increases in costs, studies show that the United States does
not have a healthier population than other industrialized nations who spend 40-150
percent less per capita (Starr, The Logic of Health Care Reform 15). In fact,
measuring the quality o f health care has proven to be puzzling. For years, health
care providers have focused on process and structure in measuring o f quality, that
is, how many and what kinds of tests and therapies were performed on patients
who exhibited certain symptoms and diagnostic findings. Understanding the
process o f delivering medical care, however, has eclipsed understanding the
connection between process and outcomes (Lee 378; Brook 391). Calls for what
is termed “evidence based medicine” recommend that physicians integrate
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“individual clinical expertise with the best available external clinical evidence from
systematic research” (Sackett 395). Fortunately, health researchers are
increasingly developing data sets used for evaluating health plans and medical
groups. For example, the National Committee for Quality Assurance (NCQA) has
developed the Health Plan Employer Data Information Set (HEDIS) which
incorporates 65 measures to evaluate health plans. In addition, powerful alliances
have formed between large employers, government agencies and other information
groups which have been able to compel health plans to distribute more information
to employers, consumers and other interest groups on quality of care (Luft 346).
The thorniest problem in American health care delivery, however, is found
in the disheartening saga of the uninsured and underinsured populations which are
reaching epidemic proportions. Although 80 percent of full-time workers were
covered by some type o f employer health plan, only 60 percent of the plans
covered the employee’s dependents in 1982 (Iglehart 1716). The root of the
problem lies in the tight link between insurance and employment which means that
timely and equitable access to health care often rests on employment and even the
type o f occupation. For instance, service sector jobs typically provide little if any
insurance coverage, whereas manufacturing and professional jobs do. In addition,
hinging insurance coverage on employment endangers personal privacy, creates
arbitrary and overly narrow risk pools based on the group’s past medical costs and
can engender excessive administrative costs amounting to 13 cents on every
premium dollar up to 40 percent for small employer groups (Starr, The Logic of
Health Care Reform 60). Glaring gaps in insurance coverage such as pre-existing
conditions and arbitrary terminations of coverage by self-insured corporations that
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are exempt from state insurance regulations have done much to shatter the public
trust in health plan security, an ironic outcome indeed.
The result is a marginalized population of uninsured individuals today
amounting to aroudn 42 million people, 75 percent o f whom are full-time,
year-round workers. In 1996, the American Hospital Association estimated that
the total would reach 46 million, or 16.2 percent of the U.S. population, by the
year 2002 (Rosenblatt Al). In addition, it is estimated that approximately 40
million Americans are underinsured (Starr, The Logic of Health Care Reform 5).
And although the 1989 Omnibus Reconciliation Act (OBRA) required states to
extend Medicaid to all poor children by 2002, coverage of families with incomes at
or below the Federal Poverty Level (FPL) has ranged from a high of 60 percent to
as low as 40 percent in the recent past, and, even with coverage, Medicaid is often
not accepted by private physicians in the community (Davis 406; Tranquada 307).
Furthermore, the inadequacy of Medicaid coverage for poor people and the
increasing number of uninsured families in the U.S. is aggravated by a marked
maldistribution of medical resources, especially in poor geographic regions that the
federal government has labelled as medically underserved. The incongruence
between demand and supply is striking. In American suburbs, the average ratio of
physicians to the general population is 1 to 300 but falls as low as 1 to 15,000 in
some inner cities (Ginzberg 465).
For California, the story is even more stark. In 1993, almost 23 percent of
Californians were uninsured and 25 percent of all California children were on
Medi-Cal, the state’s version of Medicaid. O f the uninsured, 80 percent were
working, 59 percent were working full-time but just 16 percent were unemployed
(Brown 118). Only 40.8 percent of families with incomes less than 200 percent of
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the FPL with at least one member working in a full-time, year round job had
employer sponsored insurance (Brown 118ff). 50 percent o f Medi-Cal
beneficiaries under the age o f 65 in working families had incomes of 200 percent
or less of the FPL, and 40 percent o f the non-elderly population in California had
incomes at 200 percent or less of the FPL. Much of this occurs as a result of
falling incomes, decreasing job opportunities, a shift toward low-paying service
sector jobs, spiralling health insurance premiums and cut-backs in public programs
like Medicaid (Brown 118ff).
The rapid growth in the uninsured and underinsured population can have
detrimental effects on personal health.
Shortfalls in health insurance coverage and the limited availability of
uncompensated care in Los Angeles County and throughout the
United States have a demonstrable adverse impact. . . . Lack of
adequate insurance makes it more difficult for individuals to get
reasonable, timely and dependable private health care. (Tranquada
318)
One recent study sampled insured and uninsured populations and found that 45
percent of the uninsured had had at least one episode of not receiving needed
medical care, the frequency of which increased for those respondents in poor or
fair health, whereas only 11 percent of the insured reported similar episodes
(Donelan 287-90). Other studies confirm that the uninsured receive fewer
preventive screenings and early detection procedures, and that patients who lost
Medi-Cal coverage showed a deterioration in the control of high blood pressure
and diabetes (Tranquada 318-9). Finally, another study showed that lack of
insurance was positively correlated with hospitalizations that could have been
avoided if early detection or intervention had been provided (Task Force for
Health Care Access in Los Angeles County 17).
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Widely praised among medical economists as a potential solution to many
o f these problems is the emergence of managed care and large-scale health
corporations. Both are viewed as more efficient than individual practitioners or
single hospitals. Consolidation o f the industry into larger and larger medical
systems seems not only to be the trend, but also the counsel o f many health care
management consultants. Prepaid insurance plans began early in the twentieth
century when employers would hire physicians to run clinics at the job-site,
particularly in those industries, like coal mining, which suffered a high incidence of
on-the-job injuries. Soon, several groups of physicians formed and offered prepaid
medical plans to the general public. The earliest managed care plans were offered
by Group Health o f Puget Sound, Kaiser Permanente and Health Insurance Plan of
New York (Iglehart, “The American Health Care System: Managed Care” 743).
Managed care has been shown to save, on average, between 10-14 percent
in the cost o f employer-paid premiums by integrating financing concerns with the
delivery o f medical care. Plans use contracts that compensate physicians, hospitals
and other providers in advance on a per-capita basis, sometimes adjusted based on
the level o f risk inherent in the particular population. If the cost o f providing
medical services to this population exceeds the capitated payment, the provider
absorbs the loss, thus providing an incentive to keep its population healthy and to
minimize the number of tests and procedures performed on patients. Often plans
will apply treatment protocols and utilization review strategies as well as financial
incentives such as capitation and profit-sharing formulas. The future, as John
Iglehart in the New England Journal o f Medicine points out, lies in the creation of
a physician-manager hybrid within the mindset of the individual doctor to “bridge
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the different ‘cultures’ o f management and medicine. . (“The American Health
Care System: Managed Care” 747).
Yet, as will be demonstrated later, managed care has earned a sullied
reputation in much o f the medical community. Scores of news stories highlighting
the personal tragedies of individual members of health maintenance organizations
(HMOs) have also tarnished its standing in the general community. Many of these
anecdotal tales, however, are not consistent with some scientific studies that show
similarities in quality when comparing traditional indemnity insurance with
managed care plans. Yet, other studies have shown that the modest decline in
health premiums with managed care is not attributable to better risk selection or
lowered benefits, but rather from significantly less cost-shifting to pay for
uninsured and indigent patients. Economic research has shown that HMOs could
reduce costs further but fail to do so because of shadow pricing strategies. Many
decrease their premiums just low enough to induce consumers and employers to
switch from traditional fee-for-service plans to managed care plans but not low
even to reach the point o f real efficiency in the marketplace, where marginal costs
are equivalent to marginal benefits in economic parlance (Enthoven & Singer;
Buchmueller & Feldstein; Shewry, et al). Paul Starr argues that HMOs, instead of
providing efficient, yet comprehensive health coverage, skim the lowest risk
patients from the general population, deny and reduce benefits and services and
use their market power to coerce discounts from providers (The Logic o f Health
Care Reform 40). Thus, the success of managed care in curtailing premiums can
be credited to excluding poor and indigent patients, cutting services and profiting
from market power in addition to improving utilization strategies and cutting
waste.
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Whether fair or not, the public’s trust in HMOs, and in much o f the medical
system in general, has been stretched thin. In research conducted by the OECD,
the United States had both the highest per capita spending on health care and the
lowest public approval rating o f ten industrialized nations (Starr, The Logic of
Health Care Reform 5). In various polls compiled by Gallup and other
organizations, the American public, by a three-to-one margin, overwhelmingly
support national health reform on a grand scale (Iglehart, “The American Health
Care System: Introduction” 964). Such promise, however, waned in 1994 when
President Clinton’s Health Security Act suffered a surprising, last-minute defeat
and was subsequently characterized as a dismal failure.
Briefly, the Clinton plan would have created a national health board to set
standards, oversee benefit provision, consumer protection and the overall
operation of the system as well as place regional caps on premium increases to
prevent inflation. At the state level, regional alliances would certify local health
plans, regulate insurance and license health professionals (Starr, The Logic of
Health Care Reform 76). But the key is employer and individual mandates. The
Clinton plan would have required employers with less than 5,000 employees
-full-time or part-time— to pay up to 7.9 percent of their payroll to the regional
alliances or commit to directly insuring their employees. For their portion of the
insurance premium, individuals would have been required to pay up to 3.9 percent
of their income to the regional alliances, depending on their ability-to-pay which is
measured against the FPL. In turn, the regional alliances would manage a
framework of providers and health plans that compete with each other based on
cost. There would have been a standardized, comprehensive benefits package,
accountability for quality o f care, premiums based on broadly defined risk pools
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(community rating) and no restrictions on enrollment. Mirroring the original plan
proposed by Stanford medical economist, Alain Enthoven, individuals would have
been encouraged to be cost-conscious when choosing from a panel of health plans
as employer subsidies would cover only 80 percent of the average-priced health
plan that just met the minimum federal standards; in addition, employee
contributions to the premiums would have no longer been tax deductible. Thus,
under Clinton’s plan, all American citizens would have enjoyed comprehensive and
secure health insurance coverage, employers providing health insurance prior to
the Plan would have paid $59 billion less in premiums and the total savings to all
employers by the year 2000 would have been $27 billion because of improved
administrative efficiency (Starr, The Logic of Health Care Reform 116). In
addition, the economic principles o f competition and individual choice would have
been preserved as only those health plans with premiums exceeding the average
premium of all health plans by 20 percent or more would have been excluded and
individuals would have been enjoyed free choice in selected a health plan (Starr,
The Logic of Health Care Reform 86T
With such enormous promise seemingly bolstered by public support, it is
difficult to understand how the Clinton plan failed to pass. Nevertheless, the story
continues as health reform, by default, has been pushed to the state and local
levels. Although minimal incremental reform has been passed by Congress in the
years since 1994, it is unlikely that any comprehensive change will occur in the
near future. Political eyes look to Social Security for the 2000 election, not health
care, and medicaid reform seems to have, once again, expired as a salient political
issue.
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National health care reform has been an issue ever since the 1912 elections
when the American Association for Labor Legislation introduced a model bill for
the provision of compulsory health insurance to cover the working class (Starr,
The Social Transformation of American Medicine 245). It was defeated because
Roosevelt was defeated by Woodrow Wilson. The issue resurfaced in 1917 but,
even though the American Medical Association (AMA) supported it, was again
defeated because of growing anti-German propaganda and anticommunist rhetoric
(254). In the 1920s, an ad hoc committee— the Committee on the Costs of Medical
Care (CCMC)— was formed to study the growing insecurity, variability and uneven
distribution of medical costs. Its twin recommendations to rationally organize
medical care and ensure universal coverage based on capitated payments to
physicians, “utterly failed and persuaded political leaders that health insurance was
an issue to be avoided” (266). In the early 1930s and again in the late 1940s,
proposals for compulsory health insurance were effectively blocked by
conservative alliances (267-79). When Truman won the Presidential election in
1948, he presented a national health bill which was quickly quashed by the AMA in
a “huge, largest-ever public relations campaign against national insurance ...”
(285).
With potent forces like the AMA having trained their sights on any bill that
suggested national health insurance as a solution to the problems of health care
delivery, the second half of the twentieth century witnessed a notable expansion of
publicly operated health care delivery vehicles to provide care to the medically
indigent. In particular, the number and scope of public hospitals increased around
the country after World War n , even as economic affluence and the growth of
private indemnity plans made access to health care more readily available for the
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middle class. Yet, from the poor and uninsured came an “urgent demand for
primary, ambulatory care [which] fell disproportionately on public hospitals . . .”
(Shonick, Government and Health Services 220). Loosely based on the model of
poor houses in England where the “deserving” and industrious poor were put to
work, American poorhouses emerged in the 1700s and 1800s as asylums for
throngs of the “economically non-viable.” They were essentially colonies devoted
to their custodial and purgation from mainstream society (216-9). In the early
1900s, they evolved into prestigious public and voluntary hospitals where
middle-class patients would come for expensive tests and therapies which they
could not afford to pay in the private sector or for hospitalization in general.
Affiliated with medical schools, public hospitals before WWII grew in prestige and
prominence in the medical community and it was membership on the medical staffs
o f these institutions and voluntary hospitals that signalled the success or failure of
individual medical careers.
Despite the growth in political support for academic research and training
o f new doctors and the reputations o f academic medical centers affiliated with
them in the decades following WWII, urban medical centers and public hospitals
experienced multiple waves of criticism. The suburbanization of metropolitan
areas coupled with increasing use o f private hospitals and facilities by the
middle-class had left a population in the inner-cities that was predominantly
minority, immigrant and poor and these institutions were typically located in the
heart of these pockets o f poverty. Because they treated mostly poor and uninsured
patients and increasingly relied on foreign medical graduates to fill vacant
residency slots, further eroding their status, public hospitals suffered a precipitous
loss of public support and prestige. (Shonick, Government and Health Services
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219-20). Branded as inefficient and bureaucratic, “investigators were finding
urban public hospitals to be overcrowded, underfinanced, inaccessible and
providing care of questionable medical as well as humane quality” (Shonick,
Government and Health Services 222). Various reform proposals were offered.
Some suggested that affiliation with powerful medical schools would improve the
standing o f public hospitals in the medical community. Others advised authorizing
special hospital districts, creating public benefit corporations as was attempted in
New York, or merging public hospitals with other government agencies as was
done in Denver and Los Angeles. Still others demanded divestituture, calling for
the transfer of management, ownership or governance— or some combination of the
three— to community boards or private hospitals (222).
All of the proposals were tried in various locales. But, the Piel Report in
1969 criticized the affiliation plan, and the results from New York City’s public
benefit corporation were less than praiseworthy. Thus, referring to New York’s
implementation, William Shonick concludes, “. . . there is no clear evidence that
use of the affiliation plan, the public benefit corporation and a very weak version of
the merger plan, succeeded in solving the ‘plight’ of the City’s public hospitals”
(Government and Health Services 227). Indeed, Denver was given the ability to
consolidate all of the funds it received from federal categorical grant programs into
a single funding stream, proceeded to construct a municipal hospital with
integrated neighborhood health centers and community medical health centers, but
was still unable to avoid severe cutbacks and curtailments in the early 1980s as a
result of federal and state funding reductions (228-30)
Pressures in the 1970s to strip public hospitals and clinics from local
governments and transfer ownership to other entities or close them down entirely
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were reinvigorated (235). In 1978, “The Future o f the Public-General Hospital:
An Agenda for Transition” was published by the Commission of Public-General
Hospitals argued for integrating public hospitals into the mainstream of health care
delivery systems through local and regional planning, saying “it is no longer
appropriate for the public-general hospital to serve only the poor” (as quoted in
Shonick, Government and Health Services 238). During this time, these two
harbinger proposals— privatization and rational planning— emerged and have
endured ever since as the classic remedy for the afflication of public hospitals. It is
the source o f the malady that also divided the medical community:
In 1983, a major report issued under the imprimatur of a leading
“mainstream” research institute with hospital industry collaboration,
specifically departed from deeply entrenched health services lore
that the urban public-general hospital’s problems are explicable
mainly in terms o f internal managerial and organizational factors,
and attributed the root o f its problems to insufficient funding.
(Shonick, Government and Health Services 239)
And, as illustrated later, it is this debate that even now animates the public’s and
medical community’s perception of the public-general hospital.
Today, public interest and support for government provided health care
still flags. A large segment of the middle-class hold negative attitudes toward
public hospitals, typically informed by mythical and stereotypical impressions about
the types of patients that seek care there, the calibre of physicians and staff who
practice there and the quality o f care provided there. Furthermore, private sector
physicians and hospitals, largely avoiding Medicaid patients in the last several
decades because o f the program’s insufficient payments and byzantine billing
procedures, have displayed a renewed energy in trying to attract them. That
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competition has ushered in a new era, one in which public hospitals would be
increasingly forced to contend with private medicine for patients and funds. The
single most disturbing threat, however, is the long-term restructuring process that
the industry is now undergoing from a fee-for-service system to managed care.
As more and more states experiment with enrolling their medicaid beneficiaries in
pre-paid group medical plans, public hospitals are finding themselves increasingly
locked out o f the HMO networks.
To make matters worse, public hospitals rely almost exclusively on
politically vulnerable financing programs such as Medicaid and other sporadic
state-run programs for the indigent and uninsured. The caprice of these
ephemerally funded programs took center-stage in 1995 when Congress put at risk
over 8 billion dollars from Medicare used for graduate medical education and over
7 billion dollars from Medicaid used for treating the poor and uninsured (Fein 1).
Overall, the budgeted growth of the Medicaid program was slated to be slashed by
$182 billion and Medicare by $270 billion by 2002 (Goldstein 4+). Since public
hospitals, by necessity, recruit substantially more foreign medical graduates to staff
their wards and clinics than private hospitals, they would bear the brunt of
Congressional plans to reduce hospital subsidies to pay for foreign trained
residents by 75 percent in three years (Goldstein 4). All three cuts would have
incapacitated public hospitals who primarily depend on residents and interns to
provide medical care to their patients and who overwhelmingly rely on Medicaid to
reimburse them for unsubsidized charity care.
Public health systems throughout the country are in jeopardy. For
example, in both Washington, D.C. and New York City cutbacks and hospital
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closures are planned. In 1995, the Washington Post reported that “D.C. General’s
future is uncertain” (4).
In recent months, the hospital has been hit hard by the District’s
budget crisis. Its medical staff has dwindled by one-third through
layoffs, retirements, and resignations. It has closed beds and
sporadically run out of basic medicines and supplies. Patients have
faced long waits in the emergency room and clinics, and sometimes
have been unable even to get an appointment. (4)
In that same year, the New York Times carried a poignant plea from an AIDS
doctor at a public hospital in the Bronx:
Mayor Giuliani said he wants New York City to get out of the
hospital business . . . the strategy appears to be to strip all
municipal hospitals o f personnel and services. . . . Those without
insurance will have no alternative but to seek care in poorly staffed
municipal institutions offering minimal services. (Kalkut A29)
The severity of those two crises and the precarious circumstances of many
other public hospitals throughout the country notwithstanding, it is Los Angeles
County’s perilous health care system that stood at the brink of collapse in June of
1995. The sheer volume of medical demand unfulfilled in the private sector is
staggering. For example, in 1992, the Board of Supervisors commissioned the
Task Force for Health Care Access in Los Angeles County to study the growing
barriers to access for uninsured, undocumented and poor residents and propose
recommendations to “close the gap”. During that meeting, Supervisor Edelman
summed up the enormous need for County health services:
Today, Los Angeles County leads the nation in the number of
medically uninsured persons. Nearly one in three persons has no
private, Medicare, Medi-Cal, or other health care coverage. A
significant portion of these uninsured are children, minorities, poor
and indigent. . . . In the absence of insurance, these persons are, in
increasing numbers, looking to County services as a safety net and
provider of last resort. (Task Force for Health Care Access 43)
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Indeed, 33 percent of the population under the age of 65 are without health
insurance in the County which amounted to 2.7 million people reported in the 1990
census figures. These Californians are disproportionately young, male, black,
hispanic and unemployed (Tranquada 309). Yet, only 56 percent of workers in
California receive insurance from their employers and 87 percent o f the uninsured
are working or dependents of workers (Tranquada 310). The County has more
medically uninsured residents than forty-nine of the fifty states, excluding
California. Of those persons in California and nationally who are not covered by
medical insurance, 40 percent and 8 percent, respectively, live in Los Angeles
County. In addition, as o f September 1994, 1.8 million residents were Medi-Cal
beneficiaries, bringing the total number of residents in Los Angeles County that are
either uninsured or underinsured to more than 4.4 million, a figure that represents
nearly half of the 9.4 million population count estimated in 1995 (Medicaid
Demonstration Project 12-16). An estimated 21 percent o f the population in 1995
were poor and one in three County residents lived below 200 percent o f the FPL
(13-14). There are more than 43,000 homeless persons, 20 percent o f the
population now receives some kind o f public assistance and 10 percent of the 1995
population received welfare payments under the federal program formerly known
as Aid to Families with Dependent Children (AFDC).
The menace o f these pressures had been looming for several years prior to
the summer of 1995. But, it was on June 19, 1995 when the Chief Administrative
Officer of the County, Sally Reed, announced her recommendation— Option A— to
close at one time the nation’s by far largest and busiest general hospital. As one
County official who was intimately involved in engineering a response to the crisis
recalls:
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It wasn’t until Sally Reed presented the budget saying either shut
down half o f the system here or half of the system there . . . [that
the Board o f Supervisors] started making decisions about triggers
and dates and cuts and layoffs and things like that.
More than a mere catalyst, her recommendation sent shock waves throughout the
Medical Center. One physician angrily comments:
When Sally Reed says, ‘I want to close County/USC medical
center,’ Sally Reed doesn't know what this medical center
represents and Sally Reed doesn't work here on a day to day basis;
Sally Reed doesn't see the faces of the numbers that her cuts on the
budget represent. We see real faces attached to those numbers; we
see real patients with real pathology .... To me, that means she
does not understand, that she is ignorant o f what happens at L. A.
County because anyone who is intimately familiar with our
operations would understand that it would be catastrophic to close
a medical center o f this size in this community.
Indeed, Reed’s proposal touched off a series of debates, both privately and
publicly, between her and leading medical experts in the County. It quickly
evolved into a standoff between the fiscal prudes and medical idealists. Physicians
and public health officials saw her proposal as a “bottom-line issue,” an
unnecessary and potentially dangerous fiscal austerity that disregarded the lives
and health of needy patients. Some say Reed, on the other hand, considered
herself a realist, a lone voice o f prudence calling to end aN enfeebling financial
dependence on state and federal governments and return to local financing of
health care with whatever funds are available. One commentator observes:
All she could see was that this costs money . . . it was consistent
with her view that anything that costs money [for the County]
should be gone regardless [of] what you would lose in terms of
revenue and what it would do to the health care system.
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And it was the health care system that critics were so crucially concerned
about. Fearing dangerous gaps in medical care, a menacing decline in public health
and the intolerable prospect o f patients languishing or even dying from poor
health, physicians took on Sally Reed. Dr. Ron Kaufman, the Medical Director of
County-USC hospital debated her on the local radio show “Which Way L. A.”
Another medical director of a private, not-for-profit hospital accused her of
indifference toward the health and welfare of the community.
She is the first one to say close down this hospital or close down
that hospital without any concern for the healthcare consequences
of those acts. She has never once said why we have those places in
the first place. She has never made any effort to describe the
consequences o f her budget recommendations. She just says close it
down.
As far as her concern for increases in morbidity and morality, this physician recalls:
“I have...told her that people might die. She says, ‘oh, no. That’s speculative.
They might and they might not.’”
The immediate response of the somewhat bewildered Board was to
assemble a crack team of experts, called the Health Crisis Task Force (HCTF) to
examine Reed’s proposal and suggest alternatives, if any. Burt Margolin, a former
state assemblyman experienced in health care issues and legislation, was appointed
to be the task force leader. Most agree that Margolin was unusually adept at not
only selecting members and galvanizing the group, but also facilitating an
intelligent response. One outside commentator commends Margolin:
He was able in an amazingly short period of time [to] pull together
really, really bright people . . . [and] generate a whole lot of
information. . . . He is very skilled at linking policy with data and
with an assessment of clear options.
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His seeming neutrality and distance from the particular eccentricities o f the local
political environment also permitted him to be straight-forward with the
Supervisors.
The time was short; they only had four weeks to conduct hearings, sift
through evidence and achieve consensus on a coherent and comprehensive strategy
to diffuse the potential ruin o f the system. The meetings spanned entire days and
included evenings and week-ends. At one point, a summit meeting was held at the
White House with officials from the Health Care Financing Administration
(HCFA) and the chief health person from the Office of Management and Budget
(OMB) which one County manager described as a high-pressure event with
“everyone sweating.” ‘There were people who knew that if there wasn’t a
solution that could be constructed . .. the system was, in fact, going to go into a
phase of melt-down.”
On July 24, 1995, the Task Force submitted its report to the Supervisors in
which it proposed option C. The alternative did just the opposite o f Reed’s initial
proposal— it recommended shutting down all of the comprehensive health centers,
29 of the 39 health centers and privatizing six clinics (Margolin 4). In addition,
they advocated slashing ambulatory, outpatient services at all five o f the County’s
public hospitals, a reduction o f over one million outpatient visits annually, and
closing one hospital: High Desert. At the same time, the report advised the
County to begin immediately to draft plans for long-term restructuring by pursuing
a special waiver from HCFA, called an 1115 waiver, to exempt the County from
the usual regulations o f the medicaid program in lieu o f a proposed budget-neutral
experiment to improve access to health care among the County’s poor and
uninsured residents.
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The proposal was the subject o f immediate criticism. One County
physician called it “back-door rationing” and complained that admission rates to
the County’s hospitals— the most lucrative, money-making medical services— would
suffer and hospital census would drop. Others thought it wrong-headed because it
curtailed the most cost-effective health services— outpatient care— and left in tact
the most expensive and least needed of health services— inpatient care. In a time
when the entire health care industry is moving toward a community,
population-based, ambulatory system, Los Angeles County seemed to be, once
again, heading in the wrong direction. Yet, a close advisor to the Task Force
members defends the proposal by pointing out that at least 70 percent of the
County’s budget is derived from hospitalizing Medi-Cal patients and the proceeds
are shifted to subsidize uninsured patients and outpatient services for which
Medi-Cal reimbursement is miserly:
. . . If you close the inpatient [side], you would kill yourself and the
whole place goes into a death spiral. So, they made the
counterintuitive argument that says, until the federal government
changes its reimbursement rules, you have to keep the expensive
inpatient [side] open to generate revenue ....
A second argument buttressed the first. If the hospital were closed, the reasoning
went, because o f the innumerable regulations governing hospital licensing, it would
be impossible to re-open County-General once closed because the facility would
no longer be grand-fathered under recent law. A legal advocate explained that
Margolin knew that the Task Force’s proposition ran against the grain of recent
research in health systems development:
Margolin understood. We went in saying, ‘he’s telling you its bad
health policy. Nobody thinks this is a good idea.’ But as a practical
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matter, it was probably one o f the most reversible things that could
have been done . . . it bought him time.
In fact, it bought him two months. Margolin told the Supervisors that,
based on calculations made by their Arthur Anderson consultant, two months was
all they had to implement the plan-shut down the clinics, scale-back inpatient and
outpatient hospital services and privatize six clinics— in order to avoid a fiscal
calamity. By Friday, October 13th, even though President Clinton met the
Supervisors on the tarmac of the Santa Monica Airport on September 22nd to
promise a $364 million federal bail-out o f the system, three-thousand physicians,
nurses, administrators and other staff members received layoff and demotion
notices. The money simply was not enough, and the County was still forced to
dramatically shrink its workforce. It was called Black Friday among employees,
the day “. . . County officials brought the ax down on public hospitals and clinics”
(Chu A l). One senior nurse who was spared her job coined an apt simile: ‘I t ’s
like saying you’re the only one to have survived a plane crash and there are 300
dead people lying around you” (Chu Al). Over 1,300 doctors, nurses and social
workers, 500 clerical workers, 280 ancillary staff 200 managers and 500 nursing
assistants, lab attendants and laundry and food service workers were dismissed or
demoted in the largest work force reduction in the County’s history (Chu A21).
Yet, perhaps the system was fortunate. The Board had originally intended
to make $339 million in curtailments, a mandate that was to have ordered almost
5,200 workforce reductions and scale down outpatient services by 2.5 million
visits, more than half of the 4 million visits normally provided (Medicaid
Demonstration Project 41) In addition, the bail-out was enough to spare the
planned termination of ambulatory services. By September 8, 1996, the County
still operated thirty-three clinics, having handed over six of them to private
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partners. At the same time, government officials were busy negotiating contracts
to open the doors of other private medical providers and clinics to indigent and
uninsured County patients. By the end of 1996, health services had predicted the
addition of thirty-six new private clinics that would be accessible to former County
patients, and, at the hospital specialty clinics, roughly 500,000 outpatient visits
were slated to be restored (Rabin, September 8, 1996 A1+). In the backdrop,
high-level County officers were engrossed in preparing a several hundred page
demonstration waiver request document to be negotiated between federal, state
and County administrators that would call for consolidation of categorical funding
streams, relief from certain onerus financial restrictions imposed by Congress and
exemption from the standard medicaid reimbursement rules in exchange for a shift
in health service priorities from inpatient to ambulatory services and a fundamental
redesign in the system. In the hopeful words of the demonstration waiver, Los
Angeles was to be the vanguard in developing a system to provide universal health
care to all poor and uninsured residents in the County,
a national testing ground for the transformation o f a large,
decentralized public health care system into an integrated system
that will focus on the provision of comprehensive ambulatory and
preventive health care to Medicaid and indigent populations
through both public and private providers. (Medicaid
Demonstration Project 1)
The plan involved two phases. The first phase, the “Stabilization o f the
County Health Care Safety Net,” planned to restore cuts made in outpatient clinics
and other ambulatory services to 90 percent of the prior level at the comprehensive
health centers and 75 percent at 22 health centers; hospital outpatient services
would be consolidated into “super clinics” focusing on primary care, especially for
women and children (Medicaid Demonstration Project 57). In addition, an
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oversight committee was to be formed filled by federal, state and local officials and
other experts with a charge to restructure the system and to develop ways to close
an expected $230 million budget gap for the following fiscal year (60-1). Phase
II’s blueprint was dedicated to a deep structural transformation and the vision of a
universal, seamless system o f care. Outpatient services are to be increased both in
the public sector and in the private sector by contracting with private providers to
augment the County system of care. Public-private partnerships are to be formed
with clinics and other providers sharing the same mission as the County. Other
specific proposals suggest: integrating public health services and personal health
services in one face-to-face medical encounter; accentuating a managed care or
medical group practice mentality in teaching residents and medical students so that
primary care is emphasized and speciality care is “time-limited as specialists learn
to return their patients to the primary care providers” (71); increasing primary
care and decreasing specialty care residency slots; relocating the teaching
environment, as much as possible, to the community clinic setting; and developing
efficient information and marketing systems (68-73).
Realistic about their prospects, County officials made it clear that “this
vision can only be realized by solving the severe structural and financial problems
that precipitated the current crisis” (Medicaid Demonstration Project 68). Thus, at
the root of the restructuring process is the acknowledgement that federal and state
financing mechanisms must also radically change. One of the essential tasks for
the oversight committee was to seek ways to unify diverse funding streams and
categorical grants into a single pot of money “to establish a single level of
eligibility for all medically indigent persons” (Medicaid Demonstration Project 69).
Such dramatic changes require the cooperation o f state and federal agencies and a
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commitment to financially assist the County by making funds available for
outpatient visits that would meet the level of costs incurred for those services.
Yet, if recent legislation hostile to public health and welfare is any
indication, the state and federal governments may be compromising the recovery of
Los Angeles County. The Congressional welfare reform act, passed in August
1996 is, as the Director of the Department of Health Services told the Board of
Supervisors at one meeting, like a “missile” aimed at the heart o f public health
services. Only four months later, California’s governor Pete Wilson denied
payment for pre-natal care o f undocumented women through the Medi-Cal
program. The President of one hospital foundation, recalling Governor Ronald
Reagan’s uncompleted vision to decentralize mental health services by releasing
patients from psychiatric institutions, is skeptical of the outcome:
It is my considered opinion that there is going to be hell to
pay...The idea here is that you get five years [of welfare] total in
your life. . . . We are going to help people find employment. Are
we really going to do that? Or is it just going to be another mental
health catastrophe where we wind up with large segments of the
American population without any health insurance at all? We’ll see.
What remains to be seen is how effectively the County is able to navigate a
new route for the system, how much their efforts will be impeded by conflicting
state and Congressional legislation, how much collaboration will actually be
possible with private, safety net providers and how much public support will be
available to sustain change and growth. The County’s plans are ambitious. The
course they have chosen is like skippering a ten-ton ocean liner through narrow
port channels without the skills of a nimble channel master. It will require
flexibility, communication, a visionary outlook, some luck and a lot of political
maneuvering. They have laid plans that appear to be rational and efficient, a
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composite o f some o f the best thought in health policy-making. But, will they
have the right political climate or will they run aground in those murky waters?
This dissertation seeks to respond to that question only indirectly. Time
alone will bear the answer. What is of most concern is the story: how the medical
community has responded to the crisis and what its vision is for resolution, what
confluent factors, both direct and indirect, brought about the crisis, what the
aftermath may be and what it could have been and how close the system really
came to the brink of disaster. The implications of that story will help to
understand better the complex swarm of factors shaping the provision o f public
services like health care in large, urban areas and, hopefully, to respond more
judiciously to crises and perhaps even endeavor to prevent them in the first place.
To properly understand what is wrong with health care in America today, the
hidden warning signs o f a system on the verge o f collapse must be detected and
brought to light. Beyond policies and economics is the politics, the interconnected
web of relationships, expectations, values and reciprocal dependency that shore up
intricate public delivery systems as well as public health on a grand scale. It is
these to which the discussion now turns.
Chapter Two
Shock Waves: How Insiders of the County System Reacted
The A ffliction o f a D istressed System:
This chapter unravels the dramatic story of the shocking conditions at the
hospitals and clinics of the public health system. Yet, the tale is complicated by a
set of factors that make placing the blame a difficult task. For instance, the sheer
volume, or as one physician called it, the “bare-bones humanity of it” is halting.
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An administrator o f several medical groups sums up the problem: “There is only
twenty-four hours in a day, but from what I understand, there have been times
when it [the County system] is just extraordinarily overtaxed where waiting rooms
have just been overflowing for hours and hours on end.” In fact, what sets the
public system apart is its unique position in the medical community. The five
public hospitals in Los Angeles County are the only ones that provide consistent,
universal access to health care for everyone alike-rich or poor, insured or
uninsured, chronically or acutely ill, very sick or only mildly so. “There is a
particular role for the public hospitals and for the public system,” remarks one
health advocate, “because they are the provider o f last resort who gets everybody
that’s left who doesn’t get services in those other [private] systems.” For instance,
the oft-cited difference between the United States Postal Service and other private
mail carriers is that the government operation is legally required to deliver mail
even to the most remote areas of the nation making it somewhat more inefficient,
whereas private carriers are able to limit their service area to those that are most
profitable. The President of a health care foundation put it this way:
It’s sort o f like the Fire Department. . . . I think the County has
had that kind of responsibility. They are the last ones in the safety
net. They have a responsibility for the whole community. The
private for-profit and the not-for profit [hospitals] don’t have that
same kind of responsiblity to the general public.
The number of patients and their health care needs, however, is not the
only complicating factor. Patients who seek medical attention at the County’s
public hospitals and clinics tend to be sicker with more intricate medical problems.
Although numerous stereotypes circulate in the popular media like the Los
Angeles Times and in the general community, the medical community seems to
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have a striking uniformity in their understanding o f the type o f people County
patients are. Most remarked that they were hardworking families, leading difficult
lives, and trying to rise above poverty or meager means. “Most o f them are very
poor,” says one physician who no longer attends at the County. “. . . It’s just
heart-breaking how much these people are working . .. and are just barely
scraping by.” Another physician and the chief of one of the medical services at
County-USC Medical Center articulates the kind of reality endured by these
patients:
They are all the bus boys and housekeepers and gardeners and gas
station attendants and even store clerks, secretaries and part-time
workers and all the people who work at all these little restaurants,
and waiters who don’t work full-time. All the people who have
hard lives, who have jobs that don’t give benefits come here.
As many of these patients work in part-time jobs or full-time jobs that do
not provide sick or vacation benefits, each medical episode, each illness or injury
regardless o f the severity, presents the prospect o f unemployment. O f course,
seeking medical care at most physicians’ offices and clinics may take several hours,
County patients face even more daunting obstacles. One physician instructed her
residents and interns:
I want you to think about the fact that everytime they come here,
the only bus that can take them here gets them here at 10 a.m. and
they are not seen by the doctor until 3:30 p.m. and after they see
you 15-20 minutes, they go wait in line at the pharmacy for another
4 hours and then they take the bus back and that takes them 3
hours.
The result is delayed care. Many of the people the County physicians and
nurses care for hesitate before going to the doctor or the emergency room out of
fear of losing a job or not being able to afford the visit. One official at the
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Department of Health Services cited evidence that up to 60 percent of the people
seeking care in the County hospital’s emergency rooms had medical conditions
which did not warrant emergency treatment. Yet, these were also not frivolous
cases. Patients often seek non-life threatening care in the emergency department
because of their inability to afford or access health care in other contexts. The
administrator of a private clinic recognizes the fiscal constraints many patients are
under.
In some families we see . . . the choice of going to see the doctor
meant that maybe one or two or three o f them wouldn’t eat lunch
for a week. We have had patients say . . . ‘I had to decide if I was
going to scrimp on food the whole week or should we just try to
see if he will just get better by giving him a little Tylenol.’
But, putting off medical care often times only aggravates the underlying
condition, leading to more costly care in the fixture. For instance, the number of
ruptured appendices removed at County facilities is more than double the number
removed by most private hospitals, testifying to the fact that many patients wait to
receive care until it is no longer possible to postpone treatment. The product is a
disproportionately sick patient base. “As people slide down the scale of
functioning,” says one private clinic administrator, “they end up at the County’s
doorstep.”
To cope with such pressing need and seemingly insurmountable access
difficulties, the County, like all overburdened systems, developed an accomodating
structure, an organization uniquely tailored to dealing with overwhelming demand
in the face of insufficient resources. One official at the Department of Health
Services (DHS) clarifies a distinction between the relationship between insured
patients and their health care providers as opposed to that o f uninsured patients:
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In an insurance relationship, there is a clear connection between
who pays the premium and who gets the benefit. Indigent health
care services . . . is not an insurance relationship. It is a welfare
relationship. . . . [But] we don’t want to confront the issue of
rights, of full coverage, o f spreading risk. . . . So, it has up and
down financing [and] cyclical financing problems. It has
discretionary features to it. It has means testing at the front end.
All that type o f stuff. When you compare it against insurance
delivery systems, it has irrational features.
Indeed, publicly provided health care, like most government services, is not
based on market forces and pricing signals. There is no other method to determine
the accomodation of supply to meet demand than to ration a predetermined and
politically fixed level o f resources. Since willingness-to-pay as a criterion for
distributing health services is unintelligible to a public bureaucracy charged with
providing universal access and services to all in need, other methods of wrestling
with overwhelming need have evolved. A professor of public health and former
dean of a local medical school explains:
One o f the realities o f the public system is that since its inception, it
has always been confronted by a substantially greater demand than
it could ever respond to. And so you have an organization that is in
that setting always having more people at the door than it can
physically deal with. What do you do? You create an inefficient
system or one that appears inefficient so that people who aren't very
sick have to wait a long time to get care. But the holes in it are
such that people who really are very sick get in and get good care.
And its the only kind of coping defense that you can put there. If
the citizenry says, ‘you're responsible for this huge mass o f people’
and then gives you half o f the resources . . . to do that properly,
you cant organize a user friendly [system]. And all of a sudden the
County apparatus is being held accountable for that. ‘Why are you
so user unfriendly?’ Because you have no choice.
In this way, the County system is intentionally irrational. Medical care is
apportioned in restricted allotments based on the principle of triage or
prioritization o f health need. Yet, the alarming circumstances under which the
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hospitals and clinics must operate have, even before the crisis began in 1995,
degenerated to the point where, many times, even serious medical conditions
worsen while patients wait to receive specialty care. One physician declared the
wait for echocardiograms, a very specialized diagnostic procedure used to detect
structural abnormalities o f the heart and surrounding blood vessels, averages eight
months. Needless to say, that long o f a delay could have a detrimental impact on
the health o f patients suffering from cardiac distress. Another physician said that
hernia surgeries needed immediately were, at the time of the interview in
November 1995, being scheduled in 1997. Yet, a third physician, the medical
director of a local, private hospital stated that clinic appointments for pediatric
neurology at Martin Luther King Medical Center averaged sixteen months and
assailed the long waits, saying “you put their lives at risk; you increase the cost of
care; it’s self-defeating; it’s stupid.”
In the emergency department— room 1050— the most notorious ward of
County General Hospital, the wait can be arduous for many patients. One
emergency physician speaks o f the extreme conditions:
We have had waiting for days; we have had patients here the
longest I know on life support for three days. . . .Can you imagine?
You get a little fidgety when you are at the doctor's office and they
keep you waiting 15 minutes. Imagine being told, ‘Go back. We'll
call you in 6 hours; we'll call you in 12 hours’.
He refers to a study in the Journal of the American Medical Association (JAMA)
conducted at the Harbor/UCLA Medical Center that quantified the extremely long
waits in saturated County emergency rooms which can range from six to
twenty-four hours to several days.
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Private clinics in the surrounding community find it particularly difficult to
refer their patients to the County system. Many complain that the only way to
access the system is through the emergency ward and that tests are unnecessarily
repeated and care is further delayed. The executive director of one of these clinics
recounts what in other circumstances might be a comical story. Yet, it illustrates
the great concern in the private community over access to the County system and
the frustration over the lengths which they must go to ensure entry into the system
by their patients:
A few years ago there was this gentleman who had wandered from
emergency room to emergency room. His brother realized that he
was getting sicker and sicker and nobody had diagnosed him. They
realized that he probably had spinal meningitis. . . . Our doctors’
concern was that he needed to get to the County emergency room.
He had no dollars. The concern was not the forty-five minute trip
to Harbor [Medical Center], but the possible two day wait in the
emergency room. And, he was rapidly declining. So, they said to
his brother: “Drive quickly to this hospital, but safely”. They put a
sign around this gentleman’s neck describing exactly what he
needed and exactly what he had and said, “Please, start an IV
immediately.” And then they called to say that he was coming. They
gave numbers and said, call us back when he arrives. And they
called again to make sure he had arrived. And it worked. He
didn’t have to wait 2 or 3 days. . . . It was crazy. But, he got seen.
Everyone was so happy.
The effects on patients can be devastating. One health lawyer for the poor
told a tragedy o f unparalleled enormity. She represented several indigent patients
in a class-action law suit against the County to force the County to meet a
“community standard” of medical care, as state law required until 1991. One
indigent woman faced an unimaginable dilemma. Doctors at a County hospital
detected a mass in one patient’s uterus but could not perform a biopsy to
determine if the mass was cancerous because o f the inordinate wait for that
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procedure. On the other hand, they could perform an immediate hysterectomy. If
she chose to wait until the biopsy were available, she would risk almost certain
death— if the mass was malignant. But, if she chose to have a hysterectomy, she
would risk an unnecessary, and emotionally devastating, removal of her uterus.
She chose the hysterectomy, her uterus was removed, and tests showed that the
mass was not cancer.
One County emergency physician told an equally heart-rending story:
. . . a neighbor of mine in South Pasadena... developed gall stones.
She is about 30 years old with a marginal job [and] lives in an
apartment there. She came here because she has no medical
insurance. We diagnosed the fact that she had gall stones. We set
her up and booked an appointment. She blocked . . . [two w eeks].
. . to be off work and they hired replacement people to cover her.
She booked herself in here and right away she was cancelled and
told to come back three weeks later. They did this to her three
times until finally she lost her job because she was off work all of
the time and she had no income and she was at risk of becoming
homeless. . . . I wouldn't blame her if she harbored a lot of
resentment towards us [because of] the fact that we screwed her
life up.
Thus, temporal rationing and restricted access are both realities for public
hospitals. Resources are rationed, facilities are strained and patient care may at
times be compromised. Los Angeles County’s system is, as are most public health
systems, stretched beyond capacity, a system afflicted with an ever increasing work
load and a meager supply of medical means. Yet, it is the patient who suffers the
most. As one discerning County physician astutely put it: “There’s few things in
this world worse than being poor; but being sick and poor is really the low.”
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The Stone M other o f Us A ll:
Despite its imperfections— overcrowded conditions and limited access— the
public system, especially its flagship hospital County General, is the subject of a
great deal of devotion, even affection, from both current and former residents,
attending physicians, staff and patients. Even gang members, according to one
surgeon, see “El General” as hallowed ground because it is at “The Rock” that
their compatriots in the gangbangers’ “Gun and Knife Club” are stitched up and
tacked back together with amazing precision and skill. According to almost every
person interviewed who is familiar with it, County General is regarded with a kind
o f animating warmth that breaths life into the institution. One department chief
explains:
This hospital is the big hospital on the hill that is looked at by all of
East L. A. . . . When they get into trouble because of drive-by
shootings or traffic accidents or when their children are sick and
something happens to them— they fall down the stairs— they come
here. It has really been the promise of Los Angeles. It’s ‘Mother
County’; everybody calls it ‘Mother County.’ To destroy that is
really disheartening to the people. It’s been here for years; it’s part
of the community. . . . People talk about it: ‘oh, yes, my mother, I
was bom here over on this side’, or ‘obstetrics used to be in this
building.’ TheyH tell me, ‘and before women's hospital was opened
I was bom up on the eighth floor.’ That's cute. This is part of the
life of East L.A.
Thus, the hospitals and clinics of the public health system impose a sense of
continuity and constancy on the surrounding, sometimes tumultuous, community.
The staff residents and physicians experience that sense of stability. One o f the
chaplains boasts that some community members have volunteered consistently for
decades. “We have doctors who have been here for twenty-five years. We have
volunteers that have been going every Sunday since 1932.” Another physician tells
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o f her own personal pride in the central hospital. She was one of the many
children who, before the vaccine was discovered, suffered from polio. At that time,
the second floor of the mammoth institution had its own pool as therapy for polio
victims. She learned to swim there; she experienced the art of healing there. From
those childhood moments, she continued her career by attending medical school at
the University of Southern California and completing her resident training at the
County. She now works as an attending physician training future generations of
residents. “I feel that I am a child of the County,” she says. “I am here because I
am very proud to work here. I feel that there is a purpose in this place.”
It is the “sheer humanity” of it, the drama and pathos of this immense
theater that evokes such positive images o f County General. The permance and
stability galvanize the individuals who work there everyday. One emergency
room doctor tries to summon his feelings and translate them into words. It is the
historical significance, the intergenerational steadfastness that he finds so
inspirational.
It’s just that ‘ghost’, or the feeling that you get that so many people
have trod down these hallways ill or injured .... It’s a node on the
planet; a lot o f life gets played out in this place. . . . a lot of people
get their medical care and have their life crises played out here.
And so its very intense in terms of the vibes.
Others see the County hospital as a safe haven, a “Stone Mother” of the
kind that nurtures and suckles her infants from the netherworld to reality with
soothing lullabys, that nurses her children from infirmity to health with gentle
compassion, that scrupulously tutors unsure students in the art of healing, and that
faithfully guards those for whom nothing more can be done, keeping a somber vigil
over the forlorn, heeding the grim sound of a Cimmerian death march piercing the
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darkest recesses o f that ghostly building. “I think that this hospital symbolizes . . .
a place that you can come to in need,” a physician affirms, “as you would come to
a mother. And you would feel safe and secure and know you would be well taken
care of.” The sleepless watchfulness of the “Granite Mother” brings hope and
inspires trust in the community. One accustomed to following the healing call of
the matriarch, a trauma surgeon speaks of its emotional quality: “. . . it gives a
sense of security to the people around this area. Critically injured, the
unemployed, the poor, see this place and know that they have somewhere to go
when there is a problem. They trust.” It is a trust bom out of the promise that
society made to its people, especially the poor and vulnerable, to provide a
sanctuary for those in need, a vow promising, as one physician puts it, “that
society is not so cruel as to totally turn them away into the gutter, that we are
going to take care o f our indigent ill.”
Much o f the local community responds to that guarantee with respect and
admiration for the institution and the people who dedicate themselves to her. One
surgeon remembers a satisfying experience:
You never wake up in the morning and say, ‘Damn, I'm well today.
Thank God I don't have to be in County hospital.’ But, people who
have been there, think that. I was looking to rent a place and I ran
into a woman who was bom at County hospital and had a breast
tumor taken out at County hospital and her breast reconstructed at
County hospital. And I said to her, ‘I'm one of the docs at the
County.’ ‘Oh, you're from County? IH hold the place until you're
ready to see it. I love that place.’”
“You know,” he muses with a pregnant pause, “it’s different.”
As a “beacon of hope” to the mostly minority population in its immediate
vicinity, the community has attached affectionate nick-names to the building, over
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the years referring to her as the “Grey Mother,” the “Rock,” the “People’s
Cathedral” and the “Stone Mother o f Us All.” Moreover, the facility enjoys an
international reputation, not only among medical practitioners, but among the poor
o f other countries as well. “In Central America, it’s call ‘El General’. . .,” he
continues.
We've had patients where [sic] the family in the community gets
them on an airplane with a ticket and they take a taxi and collapse
in front of the hospital. The whole community took up just to get
them to L.A., to get them to General [Hospital] because they know
they are going to get cured there.
A cardiologist at County sees its international prominence as an ambassadorship:
“We are good will ambassadors to the world because of the services that we
provide on a broad basis . .. ”
Thus, County General summons strong feelings from all those whose lives
she touches. She stands atop an East Los Angeles hill gracing the skyline with her
now ashen facade, her glory days having past, defiantly battling her flagging
abilities. But, to the people inside the institution, her exterior may have faded, but
not her grandeur. “It’s just such a symbol,” sums up another physician.
When you create a TV show that’s going to be called ‘General
Hospital’, this is the hospital you show on the intro; and it is
General Hospital. It is the ultimate general hospital. . . . The
building just evokes so much feeling to a lot of the people that have
worked here. It works its way into your soul somehow.
To Mother surgeon, part of the hospital’s defiance is her stalwart refusal to
disappoint even as she faces dwindling financing streams and a cynical reversal of
public confidence. “It is the hospital which theoretically never shuts its doors,” he
asserts, “always capable of taking one more, one more, one more ...”
Unfortunately, that idea has become a mere theoretic construct.
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If the physicians and staff treasure the hospital for its tradition and history,
for its unwavering duty to provide an asylum for the forsaken and for its
prominence in the community, many speak even more excitedly about its medical
accomplishments. The facility is the only consistent source of primary medical
care, including pediatrics and obstetrical services, for many in the East Los
Angeles area. It houses one o f only three bum units in the County, provides fifty
percent of all health care for persons with Acquired Immune Deficiency Syndrome
(AIDS) in the County, staffs the poison control unit which serves a 16 million
population base in southern California, and operates a highly accaimed trauma
center. In fact, County General’s trauma center is the only Level I service east of
downtown Los Angeles extending to the next County line, a distance of more than
thirty miles, and given that sixty percent o f the uninsured population of the County
lives within a ten mile radius o f the hospital, that trauma service-one o f only
thirteen— is critical in maintaining the emergency medical service (EMS) network.
A health policy expert for an industry trade group agrees: ‘T or certain types of
care— bum care, neonatal intensive care and other types o f tertiary intensive
care— you will find very few organizations who will match them as centers of
excellence.”
The utter diversity o f exotic and alien diseases, many brought by
immigrants through the ports o f Los Angeles, make the hospital fertile ground for
medical training and often a curiosity to the uninitiated. For instance, the last
leprosy clinic in North America as well as a Shagas’s disease clinic dedicated solely
to the treatment of the South American imported disease o f the heart are housed at
the Medical Center. . . Because it’s such a third world spectrum of patients
[here],” says one emergency room doctor,
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a lot o f people that have immigrated here recently have brought in
endemic diseases [and] parasitic diseases. . . . For example, a
quarter o f the cases o f malaria in the U.S. are seen in this hospital.
A quarter o f the cases of tetanus in the U.S. are seen in this hospital
every year.
The trauma center, in particular, is singled out for praise. According to
one surgeon, the trauma center is the largest in the County, the state and the nation
and “jewel” worthy of protection. Indeed, approximately sixty percent o f all
trauma cases are seen at only three County hospitals and thirty percent o f all
trauma cases are seen at County General. With around the clock coverage
provided by attending physicians and their resident doctors as well as nurses and
medical technicians, the center is capable of handling multiple trauma cases
simultaneously with “enough resources to put three or four doctors on each of
those cases,” maintains an emergency room doctor. “If you did that in any private
hospital, it would be disaster,” he says. Another health policy expert agrees: “If
the County’s three main facilities— Harbor/UCLA, County General [and Martin
Luther King]— took their trauma centers off-line, the studies that we have
conducted . . . suggest that their would be melt-down of the entire EMS system in
this community.” Moreover, a task force assembled by the Board o f Supervisors
in 1992 to study the growing gap in unfulfilled medical demand, found, according
to one of the lead researchers, that, if County General were to be closed, an annual
shortage o f more than 400,000 emergency room visits and 175,000 critical
emergency room visits that could not be provided in other public or private
facilities.
County physicians are passionate about the system’s well-deserved medical
reputation for its highly specialized surgical, gynecological and obstetrical,
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pediatric, trauma, bum and neonate services. One obstetrician, angry at County
officials and fearful that her reputable programs would be dismantled, explains that
her hospital, Women’s and Children’s Hospital located immediately adjacent to
“Big County,” had been picked every year in the U.S. News and World Report
annual ranking o f hospitals. “We have a world famous department and a very high
academic standing,” she says. ‘W e are the only public hospital in the top ten [list].
. . . I think people live here that would die in other places.” Another surgeon,
sitting in his private office a few blocks away from County General, echoes those
sentiments:
I think that we can give them the best medicine that this country has
to offer in that hospital across the street. There’ s just no better
place; I don't know if you realize this but its world class stuff. . . .
Everybody there has worked to make it the best. It’s an
unbelievable hospital. . . . A couple of years ago it had the lowest
complication rate of any hospital for surgery in the L. A. basin. And
we take care of sicker patients. So for a cholecystectomy [gall
bladder removal], while we're seeing horrible disease, we still have
the lowest complication and death rates.
Perhaps, a neonatal critical care specialist sums it up most precisely. She pledged
that if she became gravely ill or were seriously injured, despite the noisy rooms and
cold meals and long waits, she would insist on being taken to Mother County
“because I think they would put their heart and soul into it.” Adamant about this
principle, she says she wanted a placard tattooed onto her chest saying, “if I can’t
talk, take me to L. A. County and fix me!”
The public hospitals of the County also provide valuable training and
research services. Educating future generations of physicians and committing
resources to the advancement of medical care and treatment are premiums for
which many private institutions and patients reap the benefits but are unwilling to
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pay. Research and training have historically been linked with public hospitals for
precisely the advantageous attributes elicited earlier. Poor patients with no other
treatment options, suffering with high levels o f acuity and complicated illnesses or
multiple injuries are, as one health expert puts it, “good clinical material for
training in a County environment.” County General is no exception. In fact,
almost every physician interviewed for this study was trained there. “We have a
wonderful history . . . o f training the largest number o f physicians in L. A. County
better than anybody else,” contends one long-time physician-administrator. “They
are prepared to take care o f people medically as well as and probably better than
any other training institution in the County ...” The hospital, through its
affiliation with the Los Angeles Unified School District’s high schools and
vocational colleges, also trains a significant number of allied health professionals,
including radiology and laboratory technicians.
These functions also explain some of the intense loyalty County hospitals
experience from their career doctors. The “academic flair” of a large teaching
hospital, not to mention the prestige of a top-flight medical school with its world
renowned specialty centers such as Doheny Eye Institute and Norris Cancer
Center, attracts many physician-scholars searching for the heart of the profession’s
intellectual and cultural life. “All of us for one reason or another [came here] to
make some kind of a contribution or impact, to develop new knowledge or
influence the care o f patients or [to have] some involvement with education,”
explains one academic physician. “We made a fundamental decision not to make as
much money because it wasn’t as important as the intangibles of being in an
educational group.” One infectious disease specialist noted the innovations in his
job description he is able to produce as medical trends evolve. Seeking to
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surround themselves with the avant-garde in their respective disciplines, these
doctors pursued a less lucrative career path in exchange for occupational
autonomy, personal freedom, professional flexibility and job satisfaction that has,
at least in their eyes, made them more analytical, less hurried, more humane
physicians.
Physicians and other health professionals stay at County hospitals for a
variety o f personal reasons, most o f which are related to its intellectual work
environment or unparalleled mission in the community. A particularly cheerful,
young attending physician, in his recent residency experience, became “enamored
with the environment and the pleasure in providing care to a population in this
crazy, gigantic, bureaucratic, lumbering institution” and “got a kick out of it,” at
the same time noting the sense of fulfillment he experienced being involved in the
community and working in an environment from which others shrink. Other
individuals registered equally weighty motives. Most shared a self-imposed duty to
give back a portion of their good fortune to the community. Aware of the
potential o f gifted physicians to earn double, or even in some cases, triple their
modest salary in the private sector, they make a substantial medical tithe of sorts.
One E/R doctor told of the job offers he frequently receives from in the private
health care industry: “I could literally turn this tape recorder off and be working
full-time in two seconds. I would have five or six offers, [but] I don’t want to go.”
Many experience a personal identification with poor minorities. “Being a
Mexican-American immigrant,” one surgeon says,
it meant a lot to me to at least be someone who would take care of
that community’s needs in a sensitive way . . . taking care of
indigent people and also taking care of people of my own ethnic
background who often find medical care in this country very hard,
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very insensitive. Hopefully, I am seen as someone who cares,
[someone] that can be communicated with.
Others harbor unfulfilled desires to help the poorest of the poor in third world
countries which have been at least partially consummated in the small, developing
nation o f East Los Angeles. “I always wanted to go to a different country like
Nepal or Mexico or some place like that. But I don’t have to here; this is the third
world imported . . .” Another physician admits that she came to County General
spurred on by an “Albert Schweitzer ideal.” She wanted to take care of people
that had nowhere else to go. Yet, unlike traditional missionaries, these medical
evangelists spread the good news o f health and healing. An experienced trauma
surgeon preaches enthusiastically about the joy o f miracles:
To save life is a fantastic, unique experience. You have guys who
arrive here at your door who are practically dead. If they are not
dead, they will be dead in a few minutes. You make the right
decision; you do the right thing at the right time and this person
gets a second chance at life, this person who walks out of this
hospital alive and well six or seven days later. This is a fantastic
experience; this is a unique experience. You cannot buy this
experience with anything. We have guys that I can show you— slides
over there— who were dead on arrival. They were dead. When I say
dead, I mean dead. The heart stopped. We opened the chest over
there in the ED [Emergency Department] and we did the right
things, the patient woke up and walked out of this hospital alive.
What a unique experience; what a fantastic experience.
Abandonment o f Care
Growing out of the abiding devotion much of the staff and cadre of
physicians feel toward County General, the distress and hardships these
respondents believe they and their patients face in the future becomes all the more
difficult. Predictions of the aftermath in the wake of the system’s massive
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upheaval vary from a spirited optimism to grim prophecies o f doom and terror.
Some point to the etymology of the word “crisis” as a turning point in the course
o f events many times for the better, others foresee patients abandoned by the
system and dying on the streets. Some believe an army of private physicians will
open their office doors and come to the rescue of patients; others anticipate a mass
shut-down of emergency rooms and withdrawal of services by private hospitals in
response to an invasion of indigent and uninsured patients spilling forth into the
private sector. Some, feeling isolated, betrayed and helpless, have simply lost
hope.
On the positive side, a few physicians and health care advocates are
optimistic that the system is really at a crossroads, poised to reform its structure
for the better. “I think in the midst of turmoil and change,” says one undaunted
doctor, “that’s always a time to make progress, be creative and come up with
innovative ideas.” A health policy advocate agrees, saying that Los Angeles
County, because o f its size and scope o f services, is the “bellwether,” the yardstick
by which other system’s are measured. As such, a great deal of potential exists
and some visionaries herald the crisis as an auspicious set of events because so
much attention focused on the system and its decision makers will compel changes.
For instance, some see this as an opportunity to convert to a population-based,
community-oriented system so that rather than having the patients come to the
mountain, the mountain will come to the people. Physicians would be able to see
the patients closer to their homes and training programs would be redirected
toward outpatient, ambulatory care in smaller, neighborhood settings. As one
former journalist suggests, the crisis may very well prove to be a divining rod that
forces “people at the point o f a gun to reexamine priorities and systems of
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delivering care. . . . And out o f that, it may rapidly propel the Los Angeles County
health care system into the 1990s and the year 2000.”
Some physicians, especially those in the private sector, view the crisis as
merely a deliberate and exaggerated strategy by County officials to rake off more
tax dollars from the County budget. One ENT specialist explains his stoic
disposition: “I just remained unconvinced and largely emotionally unmoved by the
‘health care crisis’ and the proportions o f it that were described by those who were
describing it.” But such phlegmatic indifference may be rooted in a more
pollyannish belief in the altruism of health care providers. “I think you can pretty
much count on the doctors to not just walk away . . . , ” asserts this same physician.
. . . Even if the County Board of Supervisors said tomorrow
morning [that] we are reducing all the doctors’ salaries to zero,
something would be done. The medical profession would rise to
the occasion. The altruism and the volunteerism, we are selected
out for that before we ever go to medical school. . .
Yet, other observers, like one medical practice manager, appraising the real
economic contraints already squeezing physicians and their salaries, paint a less
rosy picture claiming that physicians would move to another state before providing
free care to a mass of indigent patients. ‘I ’m serious. They are already being
pushed to the limit with reductions in reimbursement from all these different
payors.”
Still others predict a steady erosion, a slow death. There will be layoffs
and curtailments in services but the system will not be wiped out. It may be
hamstringed, but there will be some valiant efforts made to safeguard patients even
in the face o f declining resources and fading public support. Political in-fighting
will continue, according to these commentators. “You give up your hospitals
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[and] I’ll give up my hospital. . .,” or a quid pro quo kind of mentality will drive
closure and cutback negotiations. One pathologist suggested it would be like a
slow, gradual amputation, piece by piece dismantled and scrapped, left for dead in
the cemetery o f antiquated health systems.
Some of that deterioration had already been seen as early as a few months
after the crisis hit. The hospital census, according to respondents, had dwindled by
forty to fifty percent in the last ten years. For example, one person said that the
tally of patients hospitalized at the County’s Women’s and Children’s Hospital
averaged 136 toward the end of 1995, down from 353 in November o f 1988. And
with a decreasing census in most of the public hospitals, officials lost both political
as well as medical leverage. On the political side, layoffs were easier to justify and
preservation of the system seemed like a less viable solution. But, as an
emergency room physician pointed out, a decreasing patient population cannot be
accommodated by a corresponding or linear reduction in the workforce because
the patients who continue to arrive at the hospital’s front doors are sicker and
more complicated and require heavier staffing ratios that if the case mix is more
varied.
Several factors may explain the decline in the patient count. Media
coverage of the crisis and local rumors about layoffs and downsizing may have
discouraged some from seeking care in the system. In addition, closing many of
the comprehensive health centers and specialty outpatient clinics effectively locked
up the feeder system into the hospitals. “Once you tell people that the County is
closing and it’s not happening here, you drive away people from coming here who
might otherwise need to . . . .” Moreover, some patients may be apprehensive or
even afraid to seek care at the County in an environment of closures, cutbacks and
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intolerance toward immigrants and the poor. Perhaps, say some observers, they no
longer believe in the veracity of the inscription carved in granite over the front
doors of County General promising to provide medical care to all who cannot
afford to pay. “Probably there is an interruption of trust,” remarks a physician.
“The patients trusted us before and people knew that the hospital was here and
they could always come.” Now, he says, patients with Medicaid are being
welcomed with open arms at some nearby private hospitals, while the uninsured
simply delay care for chronic conditions. “Suppose you are a latina and you need a
pap smear. . . . Are you going to go to the County hospital? Probably not because
you figure, ‘Well, I heard they’re closing . . . I’ll put it off.’”
Far worse, however, than a gradual deterioration in the system’s
infrastructure are the severe effects that the crisis had on staff and patient services.
First, staff and physicians were lost either through layoffs or attrition as more and
more qualified health professionals sought jobs in the private sector. Although
many of the faculty were not released or terminated, their salaries were reduced as
much as 15 percent on an approximately $70 million annual contract. Says one
observer, “several of our physicians that have been here twenty five to thirty years
were part of the cuts this y ear. . . some of the finest doctors you’ll ever see. They
have lived and died here.” Moreover, many professors worry about the impact on
recruitment of talented faculty in the future. Many prospects, says one physicians,
will “feel too insecure and say, ‘I can’t base my future on that.’” Many professors
are updating their curricula vitae and testing the waters for jobs in other venues so
that what happened to this twelve year veteran of the system would not happen to
them:
I was told by the vice-chair, who came into my office and closed
the d o o r. . . that I could be expected to be let go . . . . I was
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devastated. And then two weeks later, he came back and said that
the chief o f staff said that he wasn’t going to make that requirement
and that my position was safe.
As predicted by many, the layoffs exhibited a creeping pattern of cuts; a
slow bleed from each laceration ensued. In 1995, by the end of October, 3,286
jobs were slated to be eliminated from the system (Chu A21). Again, April of the
following year, another 1,200 employees were released from duty (Meyer,
“Planned County Budget to Cut 1,200 Health Jobs,” A24). Finally, in September
o f that same year, one more round o f cuts o f400 jobs brought the grand total to
just under 5,000, representing the largest series of layoffs in the County’s long
history (Rabin and Williams, September 11, 1996 A20). A hard decision for
administrators, one key official explained his dilemma of conscience:
To begin with there is no question that laying someone off is
probably the hardest decision you can make. And it doesn't matter
whether it's one person or 500 people. It is still very very hard.
But. . . the Department's workforce is going to get smaller in the
years to come. I think that is inevitable. How I can reconcile it
with my own conscience, is knowing that if I did not do this, if I
stood pat and simply tried to fight to keep every publicly sponsored
job that I possibly could, I would lose that fight. I would lose more
people if I looked at it that way . . . Secondly, I would be [in the]
long-term denying patients access to more conveniently located
providers who are expressing interest in treating them. So I have to
keep my eye on the workforce and the patients and try to do this as
delicately as possible to try to make accommodations for retraining.
There are a variety of ways to mitigate the impact on the
workforce. . . . This is the current state of affairs in healthcare at
least for the next 15 years.
More than the cuts themselves, many vehemently criticized the procedure,
how the layoffs were distributed among the staff. First, physicians and employees
perceived an injustice as more employees dedicated to direct patient care were laid
off than administrators and managers. “ . . . None of the administrators seem to
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have gotten laid off or transferred,” complains one clinical department head. The
self-dealing and disparity involved in distributing the layoffs was obvious to her.
. . . A lot of the nurses and technicians and lab assistants, people
who really do a lot o f work, who come in and put their eight hours
work and are clocked and monitored and their productivity index is
measured to the nth degree, these people got laid off. And I go
down to the offices and everybody’s fine.
On that black Friday the 13th in 1995, however, 219 managers among the five
hospitals and four clusters of health centers and clinics as well as 114
administrators at the central headquarters o f the Department of Health Services
were released or demoted, approximately 10% of the total (Chu A21).
The pink slips were parcelled out based on a cascade system, one required
by the Civil Service Administration and protected by the Service Employees
International Union~in effect, a seniority system. The more tenure an employee
has, the more likely he or she will be retained. Yet, as less senior workers are
released, those having a longer tour of duty must be transferred to fill the empty
slots throughout the system. With highly specialized staff such as physicians and
nurses, it can create a problem. Explains one obstetrician:
Nurses in today's nursing environment are highly specialized
professionals. Labor nurses aren't transferable; ICU nurses aren't
transferable; renal dialysis nurses aren't transferable. .. . People
end up picking their specialty that they like to work in based on
personality and desires and also they undergo training and
education in that area.
Without any warning or notification or even consultation, she complains, the
County took the scapel to her department and effectively disabled her diabetes
education program serving over seven hundred patients.
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Furthermore, as many of the emergency room, operating room and
intensive care nurses are disproportionately younger with less seniority, the
computer-generated cascade creates a void to be filled by nurses who may not be
as qualified or accustomed to the rigors of these departments, a void that could
prove to be dangerous. “They’ve really done terrible things when they’ve messed
with our nursing staff,” she protests. ‘T o cascade nurses like they’ve done is [to
sound] the death-knell.” The result could be a downward spiral in the caliber of
professional employees as the more highly qualified staff members retreat to the
suburbs to find “cushy” jobs at more affluent private hospitals, leaving behind
those less skilled. Opines one intensive care physician:
I feel pretty dismal about the situation because the County . . . has
demoralized so many people that those that were ever committed
and felt the mission are fleeing elsewhere and many that have been
there for twenty to thirty years that have kind of vegetated in the
system and have not produced or felt the spirit as much, they are
going to remain.
With the remains fossilizing into geo-medical sediment, that shared spirit,
many say pervaded the Stone Mother, was in jeopardy. Anxiety began to mount
among the employees as more and more curtailments signaled an ever increasing
workload for those awarded the continuation of their jobs. One department head
tells the story:
. . . The people who work here are just demoralized completely.
Programs that we had built are just being destroyed and they are
having to do more work with less. At the same time, they are told
very exclusively not to work overtime because that costs the
County money. . . . The technologists are stressed because they are
worried about the quality o f their job. They are worried that they
are making errors. It’s really stressful.
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Indeed, physicians described the sensibilities of their colleagues and staff as
one of “devastation” or “helplessness.” The sense o f powerless desolation seemed
to permeate the institution and creep into every corner of the hospital, according to
respondents. For many, over time, anger turned into frustration, frustration into
impotence, impotence into apathy. “After a while,” remarks one former faculty
member, “you lose your capacity for outrage.” “It doesn’t happen [all at] once,”
she explains, comparing the gradual erosion of indignation against “shocking”
patient care to the progressive indifference of Nazi Germany to the persecution of
the Jews:
It happens bit by bit and people get used to the idea that you can’t
do anything else. They are in that system . . . and just go on with
that system because, [if] you try to fight the system, you never get
anywhere.
That shared comraderie, the “war mentality” as some referred to it, was
decaying at an increasing rate. Whatever had brought together these ragtag and
bobtail advocates for the poor— as many outsiders affectionately viewed them—
seemed to be lost forever. It was, in fact, their sense o f unity and singleness of
mind toward providing the best medical care for the most vulnerable patients with
whatever resources they could muster that kept the institution afloat. As one
surgeon recalls:
I think before we had sort o f an almost ‘devil may care’ attitude
that we could withstand any external problems. We would just band
together and take care of the patients and screw everybody else.
As long as we took care of the patient, well then, nothing else
mattered.
As the crisis gathered in strength, however, that internal bond began to
unravel as a “lifeboat ethic” of greater individualism, less idealism, more cynicism
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increasingly defined the spirit of the once great hospital. Such a progression is not
unusual. As more and more resentment against government bureaucracies build
among community leaders, politicians and the general public, self-assuredness and
confidence begin to wane in these departments. Government agencies, public
bureaucracies, do, in fact, run on public “juice,” an electricity, when present, that
tends to galvanize accomplishment and excellence in the public sector. But, as
James Freedman points out in his book on the crisis of legitimacy in government
institutions, “the collective morale and self-esteem among members of a
bureaucracy can be damaged severely by critical and disparaging public attitudes
toward bureaucratic organizations” (40). As will become evident later, public
opinion on the public health care system in Los Angeles, and on publicly provided
services in general, quickly grew cold.
Some tried to stop the ebb of trust and optimism among the staff. One
physician who had left a prestigious position in one o f the world’s largest public
hospitals in South Africa to come to County General, insists that he will not lose
hope even in the worst moments of the crisis. “I never expected my road to be
paved with roses . . . , ” he says. “The worst thing that can happen to you is to get
demoralized. . . . It’s a recipe for disaster.” His admonitions unheeded, many
physicians and staff members, the very thing that brought them happiness having
been taken away, spiralled downward in their disposition and outlook. For them,
the possibility o f losing their job, the many programs they had built and seen come
to fruition over the years and the opportunity to practice medicine in a way that
would not compromise their personal standards was all too much. “The more
likely scenario,” says one despondent surgeon,
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is that the job that I am supposed to do and that I would like to do
can’t be done in a normal fashion and . . . I might either have to
drop my sights and standards and continue to do the work, or be
very frustrated, become depressed and go onto Prozac or
something like that. Like a lot of doctors are. There are many
doctors at the Medical Center who are terribly depressed by the
events that have happened over the last couple o f months and they
are on anti-depressants now. They are so emotionally involved in
their jobs.
Indeed, many said that it was the patients and their medical care as well as
the overall quality o f the teaching and research programs about which they felt
most frustrated, more so than the potential loss o f their individual jobs. Numerous
faculty members fear the decline in the reputation of the graduate medical
education program. Medical students, in the summer of their third year of school,
submit a list ranking their preferences for which post-graduate residency programs
they would most like to attend. Teaching hospitals also submit to the national
registry a list detailing the number of slots open, the specialties available and the
attributes of the residents they seek. The result is called a “match” or a list of
residents whose preferences and credentials match the number, type and
requirements of the positions available at the various hospitals.
As threats to close or severely curtail services at the public hospitals in Los
Angeles mounted, the number o f students requesting a match to those institutions
dropped precipitously. “House staff come here to work at horrible wages and
long, long hours . . . and they will apply to a program to give literally four years of
their life to this process based on [the] reputation [of the program],” explains an
emergency room physician. “And all this publicity about how we are going to
close the hopsital, the faculty are leaving, programs are shutting down is having a
very negative connotation on the match.” Indeed, the nationally recognized
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maternal-fetal fellowship program at Women’s and Children’s Hospital received
only three applications in 1995 for these once pretigious posts, a drop from the
usual twenty to forty, according to one of the obstetricians in charge. A
colo-rectal surgeon remarks that because of the events surrounding the crisis, the
training program in general surgery, once considered to be the very best on the
west coast, is now in jeopardy. The immediate effects could be serious. As an
opthalmologist points out, . . there is a real possibility that we could become the
‘University of OB/GYN and Trauma’. . . because you can only cut things in half so
many times until you get down to nothing.” But, the long-term effects are even
more grave. With the discomfiture of teaching hospitals all over the country by
fiscally conservative politicians, another faculty member warns, “we are
dismantling the best medical education complex in the world.” To those cynical of
such alarmist propositions, it is not the immediate future but rather the next
generations that are imperiled, admonishes this physician. ‘The result of that won’t
be felt for fifteen years when people look around and say, ‘Where are all the great
doctors?’”
Research is also on the cutting block. As house staff and patient census
continue to diminish in size and diversity, unprecedented research efforts are lost.
As many surgeons boasted, when the trauma division was established at County
General, the measures of morbidity and mortality subsequently and significantly
decreased, in part, because of the round-the-clock availability of trauma surgeons
housed on site, but also, in part, because of the research done to improve methods
and establish more effective medical algorithms and protocols, such as the use of
antibiotics for the treatment of critically injured patients as well as improvements in
clinical care resulting from studies attempting to abstract patterns of injury from
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various types of trauma. The outcomes were published in a leading article in the
Archives of Surgery (February 1995, Volume 30) of the American Medical
Association that compared the mortality rate o f severely injured patients before
and after the implementation of a “well-funded dedicated trauma program” at
County General (216). The results demonstrated that, in a span of only two years,
death rates plummeted in a range from 18 percent to over 40 percent, depending
on the type of trauma (216). Furthermore, Women’s and Children’s Hospital was
at the forefront of national studies and selected as only one o f ten hospitals in the
country to be funded by generous grants from the National Intitutes of Health
(NIH) for their “world-renowned” diabetes program. As a result of the events
surrounding the crisis, according to the one o f the obstetricians producing that
research, that grant was terminated.
Yet, what concerned doctors most was what they perceived to be the
accelerating erosion of patient care in all areas. First, as the crisis came to a head
and the specialty hospital outpatient clinics and health centers were closed upon
the recommendation of the Health Crisis Task Force made in July 1995 and
executed two months later, County doctors found it increasingly difficult to refer
patients from the emergency rooms for follow-up care or from hospital beds to
long-term care facilities when they were discharged. Attending physicians recall
frustrated residents asking them what to do. “My answers at this point,” says one
attending, “are woefully inadequate.” He would tell them the only thing he knew
to say: “Just do your best.” An emergency room doctor expresses his
exasperation by mocking what he would be forced to say to a seriously injured
patient freshly released from the emergency room but still in need of continuing
care: “Well, it’s been fun working with you and good luck out there, sir.” O f
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course, emergency care is much more expensive than other forms of outpatient or
preventive medical care.
As more and more patients were left to fend for themselves in the vast,
uncoordinated, and underfunded health care system, the consequences for some
could be harsh. Chronic patients with long-term, degenerative diseases, like high
blood pressure or cancer, would have to be repeatedly recycled through the
emergency wards only to receive piecemeal medical care. Only so much can be
done, says one physician. “I am confronted with the same problem that I can’t
solve over and over again.” Because the clinics and specialty outpatient centers
were closed for a time and were delayed in reopening by lags inherent in starting
up any operation, some patients may have become sicker having been denied
access to prompt medical attention. “We see people who failed referral,” says a
lugubrious emergency room doctor. “They were told to go somewhere and they
come back two months later instead of three days later and they are dramatically
ill.” The patient population, he says soberly, is “sicker than ever before.” An
infectious disease specialist told the story of one patient suffering from leukemia
who implored the doctor to find a clinic for him. The patient pleaded: “I have a
two year old, my wife is working, but we don’t have insurance. They told me I
have a chance to beat this disease. But if you close the clinic, where am I to get my
care?” Another physician in the division of geriatric medicine struggled to find an
adequate referral for a patient at risk for developing Tuberculosis but who,
because of his recalcitrance refused to take his anti-TB medicine. His five year old
daughter was caring for him in the home, but his wife had just evicted him and now
he was living on the street, refusing to take his medication and potentially exposing
hosts of other people to the illness.
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Other services felt the pinch as well. According to one pathologist, the
error rate in lab tests has increased. Inpatient mental health services at the
psychiatric ward were reduced by 50 percent with a 33 percent decrease in the
mandated limit for length of stay; the attendant effect will be an increase in
emergency mental health interventions performed in the psychiatric emergency
department. Community education and outreach efforts have also dropped off.
The only nurse taking care of patients in the hospital’s pain service was taken
away, leaving one physician to attend to the agony of suffering outpatients. On
call twenty-four hours per day, she recalled the situation: “The people going down
on those ships are my poor patients,” she said trying to describe her emotional and
ethical dilemma. ‘T couldn’t find anyone who I really trusted to take over the pain
service and I felt really bad . . . that the pain service was going to disintegrate and
all these people in pain weren’t going to get adequate pain control.” Caught at
impasse o f protecting her own welfare in the long-term and abandoning her
patients or, as a martyr, stomaching the long hours, low pay and what she saw as
intolerable working conditions and poor patient care, she finally succumbed,
surrendering even in bad conscience and leaving her patients to make their own
way in the system.
Another physician tells a story that unsettled his sense of right and wrong.
Prenatal care is normally considered to be one of the most promising investments
health care can make in preventive medicine. It is often said that one dollar spent
on prenatal care saves seven dollars in complicated pregnancies and disastrous
deliveries in the fixture. But, in that crisis window o f six or seven weeks, one
obstetrician says his function as a member on the bereavement team that meets
with families to help them grieve over stillborn or expired babies became
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increasingly disconcerting. “When our inability to provide a continuum of services
seems to have played a part in that disastrous outcome, that’s even harder.”
Continuity of care was a problem for many services at the hospital, the intensive
care unit not excepted. It had lost two beds and two more were soon to be closed
because staff abandoned their posts and sought jobs at other hospitals. One patient
was even forced to move from ICU to a general ward to make room for a newly
arriving patient in worse condition. On the ward, he languished and later in the
day was rushed to emergency surgery.
Physicians are brimming with tragic episodes. ‘I ’ve got somebody who I
have a cross-clamp on their aorta and my hands on their heart,” recalls one
surgeon who was desperately calling the operating room suite only to be rebuffed.
They were too busy. Before the crisis, he says he never had to wait; the operating
room staff, whatever arrangements had to made, would find him a room when he
really needed it. “I said, ‘Come on guys, I’m not joking here.’” They knew he
wasn’t joking, but staff had been slashed and morale had been shaken, that “esprit
de corps to make it work,” as he says, was destroyed. So, he had to wait; and the
patient died.
Quality patient care at County General, with the severe layoffs,
curtailments in services, gaps in continuity of care and erosion o f common bonds
and trust within the institution, gradually gave way, leaving a more ineffective
infrastructure in the eyes of many. To most observers, the once proud institution
had been hobbled, the Stone Mother brought to her knees. “I have lowered my
standards,” said one ashamed critical care physician. “I have done things that I
haven’t done before to try to keep the system going, hoping that things will get
better soon.”
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On the other hand, many experts predict less concealed, more glaring
consequences. Public health, for instance, will be gambled on a risky game of
neglect and omission, say these doctors. The budget for those activities that
ensure pure drinking water and sanitary dining facilities, monitor and contain
outbreaks of contagious diseases, immunize children from potentially
life-threatening childhood diseases and improve the overall health of the
community from an aggregate, not an individual, standpoint has, itself^ been
slashed. One physician recalls that in the mid 1980s, the County’s budget for
public health expenditures reached $400 million whereas in the mid 1990s it had
dropped to under $200 million. Over the past twenty five years, according to
another physician in the private community, the number of public health clinics and
officers have been cut in half. “If you look at the history of medicine,” says one
prominent expert, “it is incontestable that public health has saved a lot more lives
in personal care than all us doctors taking care o f people one person at a time.”
Yet, as he laments, reimbursement for public health services are woefully
inadequate compared to personal health services, a false economy and bad public
policy as a former public health expert calls it. Grants are available through the
federal government and some revenues are collected from licensing and health
fees, but neither Medicare nor Medicaid will reimburse local governments for
public health activites. For instance, the fiscal year 1998-1999 budget for the
County’s public health services department reflects that the County contributed 44
percent to fund the $192.6 million overall budget, whereas, it contributed only a
mere 11 percent of the health department’s total $4 billion budget that includes
public hospitals and clinics.
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“It’s unpopular,” reflects one County physician-administrator, “because
everyone is focussed on preserving personal care services. . . . As doctors
working in an acute care setting or in a clinic setting, we don’t often think about
health or illness prevention.” Indeed, historically, physicians have marginalized
public health activities from the center o f medical care because they were not
profitable as were personal services. Ironically, they have traditionally been
apprehensive, even suspicious, of public health officials, desperate to make sure
that follow-up testing and diagnosis from community health screenings, for
instance, were directed to private physicians’ offices instead of the public health
agency. They denounced free vaccinations as “municipal socialism” and bucked
mandatory tuberculosis reporting requirements. All in all, “extending the
boundaries o f public health to incorporate more o f medicine seemed necessary and
desirable to some public health officials, but as one might imagine, private
practitioners regarded such extensions as a usurpation” and endeavored to protect
their economic interests with moral and philosophical vehemence (Starr, The
Social Transformation o f American Medicine 181).
Thus, public health dollars are especially vulnerable to the political ax.
Such drastic reductions, however, while politically safe because the effects are
usually indetectable by the public, effectively hamper the ability of the County to
respond to potential threats. Dwindling funding streams, physicians across the
board in these interviews say, imperil the public health machinery and put
populations at risk. For instance, County General experienced numerous cutbacks
in its laboratory section including the loss o f its only parasitologist, leading one
pathologist to warn of a significantly reduced capability to identify microbial
threats. “We are going to lose the ability for viral cultures which means we won’t
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be able to identify enterovirus infections, rubella infections, measles infections,
except clinically,” she said. Public health in Los Angeles County, she exclaims, is
“going back to third world medicine.” Another doctor explained the very present
danger of tuberculosis which, in Los Angeles County, is double the national rate
(Medicaid Demonstration Project 17). In addition, when patients begin a course of
antibiotics and then discontinue it, often because of the lack of funds or the
inability to access public health services, an increased risk of multiple drug resistant
tuberculosis is introduced into the community, carrying with it a much higher
mortality rate.
Children are especially vulnerable to lapses in public health spending as
many poor and uninsured infants and toddlers are not properly immunized against
contagious and potentially debilitating diseases. The problem is immense. In
1992, estimates indicated that 850,000 poor children live in the County and 28
percent of all children in the County are uninsured. As of 1995, 60% of children
under the age of two living in the County were not adequately vaccinated
(Medicaid Demonstration Project 19). As one emergency room doctor pointed
out, the outcome can be detrimental to the health of the community. For example,
Los Angeles County experienced a measles outbreak several years ago. Yet,
measles is a condition that is so rare, most physicians in North America have never
seen a case, he says. Outbreaks of microorganisms that have learned to adapt to
the water systems occured in Milwaukee and Chattanooga sending many people to
the hospital stricken with dysentery, cholera, which threatened an epidemic in Los
Angeles a few year ago, and other infectious diseases, according to a prominent
community physician, create “a serious potential on the horizon.”
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Aside from contagious disease outbreak, other public health functions me
also at risk. As one physician and former public health official explained, the
County has been out o f compliance for fifteen to twenty years with a state
regulation that requires it to maintain an occupational disease control program
working in conjunction with the federal Occupational Safety and Health Agency
(OSHA). Also, he says, no epidemiological unit exists to study and work to
control chronic diseases such as pediatric asthma, which disproportionately affects
minority children, as well as high blood pressure, cancer and heart disease, the
leading killers of much o f the American population.
Some doctors begin to count the social costs as well. Abseenteism from
work or school harms productivity while lost wages and resulting unemployment
can hamper economic growth. Rising chronic disability and degeneration, one
professor of health policy explains, will place an increased burden on government
health and welfare agencies, furthering the burden on taxpayers. Declining quality
of life for individuals as well as a general social malaise are other problems. “I
think that you not only see a personal tragedy for the individuals who are
involved,” he says, “You also see a societal tragedy for the deferred maintenance
that we will have to pick up.”
The potential, these experts say, is enormous; epidemiological threats are
teeming, waiting to be unleashed by an ill-equipped and impeded health
department. But, because menacing threats may not be visible for many
years— hanging around like a listless cloud— public concern is wanting. Explains
one administrator of a large medical group:
If you are hungry and you cut somebody’s food off, you know the
next day that they are hungry or in several weeks you know they
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are hungry because they die. Health care is one o f those strange
things in that sometimes the occurence of not getting adequate
health care doesn’t show up in the population until somewhere
quite far down the road. . .. [But], the risk is just sort of lurking,
waiting to bubble up to the surface.
The implication is that the danger cut across socioeconomic and racial
lines; if manifested, it would impact the health and welfare o f rich and poor,
insured and uninsured, white or minority. Many physicians argue that even though
affluent families may have adequate health insurance and take reasonable
precautions to protect themselves against communicable diseases, their domestic
help, their gardeners and nannies, are usually uninsured, putting them in the “same
boat.” One health care executive explains:
I don’t think it’s something for us to be too pompous about and
say, ‘Well, that’s only the poor that that’s going to get hit’ because
our kids sit next to those poor kids in school. Our kids go to
Disneyland with some of those poor kids. Our kids are just as
likely to catch diseases and some of the problems that spring from
their lack o f care. To me, it’s important for the community to really
understand that it’s not something we are immune to just because
we happen to make above the median income in the community we
live in.
A big mistake, these experts say, is to think that geography, income, insurance or
emploment status or intelligence, for that matter, will protect individuals from the
sweeping grasp of epidemics and plagues. As one neurosurgeon succintly declares
when speaking about the far reaching effects of the health crisis: “It’s going to
affect every single person in our community. . . . And if it hasn’t already, it will in
time. Nobody is safe.”
Aside from public health worries, other more patently negative
consequences of the crisis alarm many physicians. They predict a dramatic
reduction o f services provided to patients in the public system if the crisis
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continues to unfold in the same manner as it has, leaving the poor and uninsured in
a “lurch” and fending for themselves. They are troubled by what they believe will
be a significant increase in negative health outcomes from delaying care for chronic
diseases. More people will have preventable strokes, heart attacks and cancer,
they fear. For example, one County ophthalmologist, in an unpublished editorial to
the Los Angeles Times, argued that with impending cuts in the public system, the
estimated half million Latino diabetics and scores more of other ethnic origins,
most o f whom do not even know they have diabetes, will be placed at immediate
risk for blindness. “It is a matter of absolute certainty,” he says, “that detecting
eye diseases early can prevent blindness. Left undetected, diseases such as
diabetes and glaucoma cause blindness . . . ” Work abruptly stopped on an
important diabetes screening campaign to be carried out by County General, the
physician claims that “a huge growth in the number of blind residents in our
County” is imminent. Furthermore, as was mentioned earlier, growing evidence
from medical studies is demonstrating that the negative effects of restricted access
to health care have an intimate connection to early death and prolonged disability.
Increased probability of unnecessary hospitalizations for care that was
inappropriately deferred as well as a higher risk o f heart attacks, strokes, high
blood pressure and cancer are evident in the literature. As the crisis progresses,
“We can predict, I think,” says a health policy expert, “an increasing burden o f
illness and disability in part of our population.”
The unintentional yet unavoidable abandonment of care for the poor and
uninsured by the public system would, in effect, put an enormous strain on the
private sector health care system. In particular, the closure of twenty-nine o f the
County’s health clinics and curtailment o f 75 percent of outpatient specialty care
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services at public hospitals, as was recommended in the Health Crisis Task Force’s
proposal, would have released hundreds o f thousands of indigent and uninsured
patients in need o f more than one million annual physician visits into the private
sector. As the only viable and consistent point o f entry, emergency rooms would
be overrun. One trauma surgeon explained, for instance, that if the AIDS
clinic— the now famous 5P21 clinic slated for elimination— were acutally closed,
12,000 patients would immediately flood nearby hospital emergency rooms. The
system would soon be jammed, ultimately bringing down the entire 911 system.
Such a catastrophe almost occurred in the early 1980s, according to one
health lawyer. When the state government reconfigured the eligibility
requirements for its Medicaid program, it did so in a way that withdrew coverage
for hundreds o f thousands of medically indigent adults. That touched off a ripple
effect as these newly uninsured patients sought care in private emergency rooms.
Because a 1986 federal law— the “COBRA” law— required hospitals with
emergency rooms to treat and stabilize uninsured patients before transferring them
to public facilities on pain of expulsion from the Medicare program, hospitals
responded by closing down their emergency room operations and, as a result,
constricted access for all patients. Indeed, as Robert Tranquada points out, almost
20 percent of private hospital emergency rooms shut down in the ten year period
between 1982 and 1992, a decrease from 103 to 85. Moreover, in the period
between 1983 and 1992, the number o f trauma centers decreased from 23 to 13
(316-7). As he suggested in a June 1995 interview with the Daily News using
statistics he was able to collect through his participation in the 1992 commissioned
Task Force for Health Care Access, if County General were closed, not enough
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capacity exists in the private sector to close the resulting gap between service need
and the truncated resources available (Bloom 4).
Indeed, if private emergency rooms become overcrowded and inaccessible
or reduced in number as a result o f the cessation o f ambulatory services in the
public sector, “you could have the gold card for insurance,” comments one medical
director o f a private, community clinic, “but... if there is no open E/R in your
neighborhood, I don’t care how much money you have, you’re in trouble.” Even
driving onto downtown freeways could become a risky prospect if the trauma
system is jeopardized. For instance, studies have demonstrated that for every ten
minute delay in receiving advanced medical and surgical care for a traumatic injury,
the death rate climbs by ten percent so that a thirty minute delay would signal a
thirty percent greater chance o f death, according to one trauma surgeon. If the
response time for parademics is between five and ten minutes, and time spent at
the scene ranges between five and fifteen minutes, before the ambulance ever
leaves the site o f the accident, the mortality rate o f trauma victims could have
already increased between ten and twenty-five precent. If the ambulance is then
forced to race to a far-flung trauma center because nearby centers are closed
down, the chance of unnecessary death could soar. Warns one emergency room
doctor. ‘Y ou’re going to feel as safe as you would in some third world country.”
Not merely reserved for the calamity in emergency room closures, the
impact o f the crisis, say many physicians, would have a ripple or domino effect on
the medical community in general, beginning with the private hospitals in the
immediate vicinity o f the Medical Center and spreading outward in tidal waves
billowing across the landscape. As the group of facilities in each concentric area
closed, the “undesirables” would seek access further and further away from the
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epicenter o f disaster. One specialist practicing at an affluent private hospital in the
Los Angeles suburbs likened it to deploying a small “A” bomb over the city.
The financial threat to the viability of the County system . . would
have a devastating impact on health care for a diameter o f many
miles. . . . It would flood local community hospitals with uninsured
patients, would essentially export and multiply the financial
problems of the County system and overwhelm those [private]
institutions which have traditionally been open to indigent patients .
The reaction o f private hospitals was not entirely unpredictable. They went
“berserk,” according to one physician who carefully gauged the political climate.
“They suddenly realized what was going to happen,” he muses.
They were going to be forced to care [for indigent patients], that
the patients would roll up at their emergency rooms or knock on
their doors. That would have had an enormous impact on health
care delivery for everyone in southern California, not just the
people who live in this neighborhood or access this hospital.
Indeed, unlike other cities such as Boston or Philadelphia which have one or more
large, urban private hospitals, another doctor explains, the health care map of Los
Angeles has always been dotted with small or medium-sized hospitals. There are
no large facilities in the general vicinity comparable to County General that are
capable o f soaking up the excess demand should it be closed or scaled back.
Instead, with the demand for health services by indigent and uninsured patients in
the inner city area so great, a network of small or medium-sized, non-profit, urban
hospitals was established in the early eighties to provide care to that population.
“Private Essential Access Community Hospitals” (PEACH), as they are known,
constitute a safety net of private providers for the poor and uninsured so
indispensable, yet so fragile, that, according to the medical director of one PEACH
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facility, if one hospital collapses, the entire system would break down as well.
“What if something happens to us” he asks rhetorically. “We are seeing 50,000
patients a year. Where are those 50,000 patients going to go tomorrow?”
Another physician in private practice, so overwhelmed by the proportion of the
problem, predicted an exponential increase in the consolidation of hospitals in the
County so that hospitals on the losing end of their financial crises would be
gobbled up by larger and larger systems. “Pretty soon,” she predicts, “we will end
up with two or three big hospitals per major city sector providing a lot of care for
a lot of people.” If these reports are undistorted, if the closure of one PEACH
institution really questions the durability of the safety net, then that of County
General would be unimaginable. The whole network, public and private, so
overburdened and precarious appears to be teetering on the edge of downfall, and
as the crisis progresses, the predictions of dire consequences become increasingly
troublesome.
“Here in America, we pride ourselves among being the best industrialized
country in the world as far as providing the best healthcare, having access to the
most innovative technologies,” says one incredulous physician. “Yet, here in our
[own] backyard . . . we are going to be having people that are literally dying on the
streets.” That, it seems, is the mantra of many health care providers: the prophecy
of a violent parousia and ruthless punishment for past sins. Diabetics will go blind,
they suggest, the lame will be abandoned, and sick, untreated patients will die
needless and excruciating deaths, their bodies left to rot in alleyways and
sidestreets. It is an ominous vision of apocalyptic annihilation, one marked by
hyperbole and exaggeration, and bom out of helplessness, utter desolation and
deep-seated feelings of betrayal. It would be our own domestic “Bosnia” cautions
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another irate doctor, or like “turning back the clock,” says another. Still another
warns of social upheaval: ‘I t may well be a precursor to something analogous to
the Watts riots of 1965. Why not? You get enough discontented people who
realize the shaft and what else is there for them to do?” The scope of the crisis’
aftermath is so hard to fathom for them, so far from the ordinary reality o f life in
affluent America, that they highlight their intent, signal the absolute, literal verity
o f their claims to make it clear that theirs is not merely a rhetorical overstatement.
“I mean that would create basically a Calcutta in the streets in Los Angeles,” one
emergency room physician seethes. “.. . The crime rate would increase, the disease
rate would increase, you would literally have people dying in the streets if you
substantially reduced this public hospital.” Seemingly simmering in their own bile,
many of them place the blame on society. One Kaiser physician draws a parallel:
It seems interesting to me that we now as a society tolerate, as an
example, the complete evisceration of mental health services.
That's just an historical example. We have just decided as a society
that if you are crazy and not too dangerous you can . .. roam the
streets and we don't have to take care o f each other. Well, if we
decided that about mental health, why won't we decide that about
people who can't get their strokes taken care of, and their diabetes
and ear infections and God only knows what. This was an
interesting experiment that we did in society in the '80s to see how
much we as a society can tolerate without saying it's not crisis yet.
Society has a great ability to close its eyes. I think that if we were
all thinking more clearly we would say this is not acceptable.
Several doctors can recall particularly disturbing stories about specific
instances where a lapse in the continuity of care or restricted access to care clearly
brought about the death of patients. The president of one non-profit health
foundation in Los Angeles recounts one of them. “I know of instances where
people literally died on the streets because they didn’t get the help they needed.”
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For seven years, he had been an inner-city Lutheran pastor down in the Vermont
and Wilshire area, a seedy and disproportionately poor area close to downtown.
In the course of his ministry, he operated outreach programs to the poor and
homeless in that community, and so was often confronted with destitute individuals
and desperate circumstances. “I remember I had one fellow come in one time,” he
recollects. “He said I’ve been to the County . . . and no one will help me. He
really fell into the cracks.” The homeless man described his pulmonary condition
to the pastor and all the agencies at which he had sought help, and although the
minister tried to assist, “the guy disappeared. He was sick and I know that he
died. Did I actually see the body on the street? No. He just disappeared. . . . He
just went out [and] that was the end o f it.”
The doctor who gave up her position on the pain service tells another
tragic story: this one inside the Stone Mother herself. On Easter weekend one
year, an African native visiting the United States came to the hospital. He suffered
from kidney failure and needed routine dialysis to stay alive. He was in complete
renal shut-down, according to the doctor. So, “they dialyze him. . . . And the
dialysis nurse goes home after he finishes dialysis. But then they re-check his labs
and it turns out that the dialysis was not effective.” His potassium levels were still
above safe levels, a life-threatening electrolyte imbalance that signaled the
immediate need to repeat the procedure.
They had no provision for getting an emergency dialysis nurse on
an Easter weekend. There was nobody that they could get. The
renal fellow, who is so used to being in the County system, thought,
‘well, that’s the way it is. They can’t get anyone,’ and let the
patient die.
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Twenty-three years old and deceased for want o f a four hour, routine procedure
that could have, without question, saved his life. “They should have been arrested
as far as I am concerned,” she fumes. “But, that’s the County.”
Indeed, that is the County: a system shockingly overburdened and
underresourced, a system that was on the brink of complete failure. The stories,
only a few examples from the vast archive these physicians and medical
professionals collectively possess, designed to wake and stir up a somnolent
public, shed light on the earnest nature of their despondent curses and
admonitions. If patients die when County systems are intact, if access to health
care for the poor and uninsured is already suffocated by a shortage of funds and
public support, how catastrophic might the results have been if Sally Reed’s
proposal, or the Task Force’s proposal had come to fruition. One physician
refuses to equivocate:
My own personal view is that people are going to die. . . I think
we're going to see some serious health consequences. Some of
them will be unapparent. People will die of strokes and heart
attacks and kidney failure and diabetes and things like that and no
one will know the difference. They will be unimportant people— the
poor.
He describes a “shell game, a bait and switch process” in which County
Supervisors will privatize County services as an underhanded contrivance to
deliberately underfund the County system and starve it into non-existence. He
hesitates briefly, and, then, in a moment that resembles the suicidal threats of a
rebellious teenager hoping to bring his desperate situation to the attention of
austere and seemingly indifferent parents, he says: c Tf we get lucky, somebody
prominent will die . . . and then maybe something would happen. Or if we had
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some spectacular failure such as an epidemic or a major health crisis that points out
the ineffectiveness o f the system,” that would show them.
An Institutional War Culture:
Such sedition not wholly unfamiliar to that “devil may care” attitude
spoken of earlier by one surgeon, the physicians and staff of County General have
always tended to band together during times of adversity and distress. They have
often been rebellious and defiant in the face of an external world who, in their
minds, devalues that to which they have put their energies and committed their
lives. It is more like a culture o f war than mere insurrection; the former is a
permanent mark of combat, the latter a fleeting representation of short-lived
movements. One physician describes the off-color comraderie and intimacy
shared within that colossal institution:
It’s like being in the trenches. When you do your residency and
internship anywhere it’s like being at war. There's wartime black
humor, people develop odd friendships with people that otherwise
would never meet and never be friends with, including their
patients, nurses and each other. And you develop this incredible
bond that comes from doing something very difficult and working
your butt off all the time doing it. It’s like people feel about the
army. You may have groused about it while you were there, but in
the end you have this sort of secret affection like a fraternity hazing.
So I think people have that feeling about the County. It is an
incredible place to be. . . . You have a feeling o f a shared bond of
working together against extreme odds and a certain amount of
pride from that.
Building equally alongside the lethal force of the crisis, however, were
feelings o f betrayal, fostered, in part, by an internal culture imploding on itself.
Physicians and staff feel unappreciated and misunderstood, cheated by politicians
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and an indifferent public. To their minds, misperceptions abound, held by
individuals in private sector health care as well as by the public at large. One of
the institution’s chaplains, at the time he was appointed to the hospital,
encountered some o f them when being bid farewell by his church community. “My
old parish had the impression that this is a place where only illegal people are sent
and that it’s dirty and it’s overcrowded and people are sleeping on the floors
outside and nurses don’t take care of you.” Many of those who live in better parts
o f town are afraid o f the area, reluctant to even go to the nearby affluent
University Hospital, fearful o f being shot by wanton gangbangers roaming the
streets and halls of the hopsital, according to one long-time physician. Another
embittered doctor suggests that County General is altogether ignored by the
mainstream population, citing the glaring omission of the hospital as a landmark in
travel guides and other reference books about Los Angeles. It is, he says, because
the hospital cares for “people that do not exist” in the eyes o f many upscale
residents. Yet, even if the facility is left out o f everyday dinner discussions, it has
nevertheless been the subject o f stereotypes and mythical recreations. “The
perception to the community at large that doesn’t come here [and] that lives in
other parts of town,” says one physician, “is that it’s some sort o f strange
combination o f both battle zone and Hollywood soap opera. That’s exactly how it
was portrayed for many years on television.”
In addition, the character of physicians and members o f the staff are often
assailed in the conventional images of County health workers. Two such images
seem typical. First, many perceive County doctors and nurses to be akin to the
typical government employee, possessing the characteristic “civil servant
mentality”. They are looking for a secure paycheck, good benefits and a leisurely
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work environment; they are marred by the usual bureaucratic indolence, seeking
only to protect their own jobs while avoiding innovation or any other risky,
creative endeavor. Many outsiders, according to one surgeon, think of County
doctors and nurses as quintessential public employees: “They think they are sitting
around, developing pressure sores on their buttocks, doing nothing and getting
their salary at the end of the month and waiting for their pension.” Second,
physicians who treat patients at County hospitals are sometimes viewed as inferior
or second-rate by some doctors in private practice, incapable of making it in the
free marketplace and unattractive in more lucrative medical settings. One
physician in private practice has heard whispers in the hallways where she works.
“They downtalk them as if they are second-class citizens,” she says. ‘“He used to
be a County physician, ”’ they would say in hushed tones muted by plush
carpeting. ‘“ You couldn’t get in anywhere else,’” they would say inwardly. “
‘That’s why you ended up at County.’”
Thus, County physicians seem to be the butt of much misunderstanding— at
least if you ask County physicians. “When I talk to my colleagues in other
institutions or where they are too polite to say it,” sums up one physician, “a lot of
them fall into two extremes: one group who thinks the only people who work here
are hacks who can’t get a job anywhere else and the others who think we are all
crazy cowboys.” Although it is difficult to dispute that stereotypes and
misperceptions may exist, the reality about how other professionals in the medical
community evaluate County health workers may not be so straight-forward or
one-sided. As could be imagined, the responses were multi-lateral and complex.
A few generalities, however, are discernible.
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Employees, in contrast to physicians, residents and, sometimes, nurses, are
generally held in low regard by many in the private medical community. Returning
to the mythical literature o f the archetypal “government worker,” staff members
are saddled with images of the pervasive union mentality. One private sector
physician describes it: “Some of these employees have this feeling of, ‘Well, my
job is to sit on my butt and I’m a civil servant and I’ve been here for 20 years and
I’m not going to do anything.’” Others describe it as an old, reified mind-set, one
bent on impeding change and progress. Immersed in such a static and listless
environment, younger, more energetic professionals quickly become frustrated
and leave, according to this physician. “Who’s left,” she wants to know and then
quickly answers. ‘The ones who always say, ‘oh, we tried that back in 1962 and it
didn’t work,’ or ‘that’s not the way we do it around here.’” Another physician in
private practice depicted these workers as consummate bureaucrats who “put in
their time” and “punch a clock.” Without a direct boss to answer to, he argues,
they are leaderless, almost aimless, without allegiance to any particular individual
or cause. In line with agency theory in classical economics, he suggests that
government employees, because there is no concentrated and immediate ownership
interest, are, by nature, less efficient. An ensuing laxity fills the institution and that
is why public enterprises are doomed to inefficiency. County employees could not
be the “cream of the crop,” asserts the executive of a large medical group who
admits he has no direct knowledge of County workers. He reasons that few, if
any, qualified and respected health professionals would work in the inner-city
under battleground conditions.
Some try to be balanced in their perceptions. One physician practicing in a
nationally regarded and preeminent private hospital, divided County employees
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into two classes: exceedingly good and miserably bad. “The incredibly good are
the dedicated, hard working, really talented people .... They view it as their
mission in life to tend and work with the poor population.” The incredibly bad
“ just sort of hang around and do their time.” Although this bell-shaped curve can
be found in the private sector, he says, it is more pronounced in government
organizations. Only in public institutions do the exceptionally mediocre
employees, or the “dregs” as he calls them, grow in number over time as more and
more ace caregivers escape to private hospitals with better pay and working
conditions during the inevitable times o f distress that mark publicly-financed
operations. Some viewpoints are more dogmatic and one-sided:
. . . The medical residents are terrible. It’s the largest medical
residency program in the country and they have trouble filling it.
So, they have to scrape the bottom o f the barrel. . .. They have
poor quality doctors taking care o f patients and that’s the truth.
And there is no amount o f supervision [by faculty members] that
can make up for the fact that in the wee hours of the morning, there
is often somebody who sucks. . . . Then, the people in
administration are morons; they are idiots; they are totally stupid
and not actually interested in making care better ....
Yet, such diatribes are unusual, especially when speaking about the merit
of attending physicians and faculty members. Only when singling out
non-physician employees or, in one case, residents are thoroughly disapproving
appraisals voiced. Most often, however, employees, residents and physicians were
lumped together in the responses of the private medical community. Particularly
praised is the teaching component o f the hospital. Said to recruit the best medical
candidates from a sea of applications, the calibre of physicians and residents is held
in high regard. One physician and manager of an independent practice association
(IPA) somewhat nostalgically recalls the long hours, hard work and paltry pay
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associated with his training at Cooke County Hospital in Chicago. Paid only
“twenty bucks a month and laundry,” he drolly offers an explanation for the rising
costs in the County system. “I guess laundry is more expensive these days,” he
smirks. Nevertheless, training at County General is given high marks by physicians
in the private sector. Speaking of the caliber of residents and their faculty, one
physician says: “These are very young, bright people who are learning . . . and
they are being supervised by physicians who are highly experienced and associated
with the University.”
Other virtues attributed to County physicians include flexibility and
creativity as well as idealism and dedication. Hailed for learning to adapt to
difficult circumstances and providing quality medical care even in the midst o f an
underfunded environment, their resolve and altruism seem to be esteemed by many
in the private sector. Some said they admired the sacrifice and regard it as one
worth making. “I think the physicians associated with the County system I have
known are probably the most idealistic, well-intentioned people there are,” says
the medical director for one of the largest HMOs in California. “It takes a lot to
devote your career to that. I didn’t.” Contrary to what many in the County
system would suppose to be the attitude toward their endeavors and commitment
to the care of the poor and uninsured, the chief executive officer of a highly
successful, for-profit HMO in California summed up his view of the public system:
I think the County health system is made up o f a large number of
incredibly dedicated, hard-working people who work under very
difficult conditions, serving a population as best they can with
limited resources. There is outstanding teaching that goes on there.
Outstanding teaching!
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After all, the successful executive is himself a product o f Mother County. “They
are heroes that are working there,” concludes a Kaiser physician. ‘‘Without much
resources they work hard, and they hustle, and they care.”
The “holy grail” of medicine, the precise measurement of quality in
delivering medical care has proven to be elusive to most providers. Yet, neophytic
methodologies are emerging, yet at a slow pace and with both adequate and
inadequate results. Objective definitions aside, though, private health practitioners
are able to subjectively judge the quality of care given at County facilities and a
consensus does seem to form. In general, the medical community looks upon the
public system as a center for medical excellence in highly complex and specialized
care. “Let’s face it,” says one adamant physician who is the president of a large
non-profit health system.
Most doctors train at County facilities. So, it would be unusual if
they somehow suddently changed what they did [in private
practice]. How they do it and what they are surrounded with and
how they treat patients, you could make an argument that, in some
ways, people outside [the County system] get worse care.
In addition, the chief executive officer of a downtown hospital remarks that “the
quality of care is as good or better than you would find most anywhere.”
On the other hand, patients may view the circumstances somewhat
differently. To put it bluntly, one physician remembers witnessing several
instances of patients “screaming,” pleading with attendants, as they are being
loaded into an ambulance, not to take them to County General because of the
“horror stories” they have heard about it. Some patients are particularly eager to
breakout from the public system, declares one County physician, hoping that they
will qualify for Medicaid so that private hospitals would be disposed to admitting
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them. But, he says they too readily equate quality medical care with less important
comforts like “being able to wear their own gown and choose their own menus and
have a telephone and TV in their room.”
County General is notoriously stark, however, noticeably missing such
accouterments. Notes one County doctor:
By comparison, I think we have fewer amenities. The bathrooms
aren’t as clean. It’s not as spic and span as a lot o f private sector
hospitals are. There’s not carpets on the floors. You know, a lot
of those amenities that people perceive as being luxuries or
comfortable are not here.
In addition, he says, you might end up next to “somebody who lives under a
bridge.” One prime example are the general medical wards. There, six to ten
patients huddle together in a very small area with only a thin curtain, often
lackadaisically drawn, to protect their privacy. Remarks one physician in private
practice: “You can hear every moan and groan and poke and fart and everything
else in there that your other roommates have or experience.” At one point, even
women in labor would coinhabit a delivery room with no chairs for family
members to use. O f course, phones are an absent luxury in most wards. One of
the chaplains relays an amusing story:
Someone calls and wanted to talk to a family member and said to
the nurse, ‘so, when is their phone being installed?’ And the nurse
kind of laughed. She hung up the phone and said, ‘where do they
think they’re calling?’
A more serious issue, however, is the state o f the physical building and
attached facilities. “It is an anachronistic, dangerous place to be,” comments the
president of a private medical group. “It’s old. The piping doesn’t work anymore.
It’s a grungy old pace that nobody wants to go to anymore.” Echoing that
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sentiment somewhat less bellicosely, the administrator of a suburban private
hospital points to the overall impression that antiquated facilities conveys to your
customers and the medical community in general. “You could get great care, but if
you are in an old building and the pipes are breaking, it gives you the impression
that you are coming to a second class place.” For example, one physician tells of
the ill-famed human fire alarm system that seems to be a genuine urban myth
among private health care providers. Because it is impossible to retrofit the
building with a modem fire suppressant system, the hospital uses human monitors
to patrol the hallways for fire and fire hazards. An obstetrician tells o f another
problem bom out of the inadequacy o f the physical facilities. For two years, she
says, a pneumatic tube system was nominally in place in order to rapidly deliver
blood and blood products from County General to Women’s and Children’s
Hospital located immediately next door. For two years, the system has been in
disrepair. Incensed, she says: “We’ve had people bleed to death because we can’t
get the blood down here.”
Perhaps the most disparaging comments concerning the quality of care
delivered at the County’s public hospitals concern the inordinate waiting periods
and the de fa cto temporal rationing o f medical services. “Somebody could die in
the halls or in a regular ward because they were on the ICU waiting list,” exclaims
one physician, having come from another large city where care was better
coordinated between public and private facilities so that if certain departments of
the public hospital were at capacity, agreements with private hospitals permitted
transfer of patients. She was “shocked” that patients would be allowed to receive
substandard care in a general ward while waiting for an ICU bed even though the
prestigious University Hospital, located just one block away, would have beds
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available. A former faculty member, she describes a prevalent attitude and
collective motto that, she believes, County health providers share: “Well, it’s
better than nothing.” Better than nothing are the eight hour waits for
appointments, better than nothing is the five hour wait for pharmacy services and
better than nothign is the six month wait for a cardiac echocardiogram, she implies.
“. . . It’s pretty hard to get enthusiastically behind that kind of moral philosophy of
the institution,” she says. In addition, a former health reporter for the Los Angeles
Times describes the scene when she first covered a story at County General. She
found:
. . . bodies all over the main corridor lining one side and another.
The chairs were filled. People were sitting on the floor. They had
young children with them. They had brought lunches. The
language was almost entirely Spanish that was being spoken in the
halls. It was just overwhelmingly crowded. And there were a lot of
people who were actually sitting in the hall outside the main
emergency rooms who were just moaning and in pain. And staff
was just walking by them obliviously. I was the one who was
standing there [thinking] I’ve never seen anything like this is my
life. Where is somebody with a wheel-chair to take this man who
was being attended to by his mother? But, it wasn’t as if somebody
was rushing up to him to see what was the matter.
All told, private practitioners and County physicians alike applaud the
specialized services like the trauma and bum departments or the emergency ward
and AIDS clinic, but criticize the more mundane care that is given in primary care
clinics. While the intensive care units are “state-of-the-art,” “the run of the mill
care there is bad to fair,” as one private oncologist points out. The consensus
seems to be that the overall quality of care is spotty, episodic and inconsistent. For
serious illnesses or critical injuries, County General far exceeds surrounding
private facilities, but for primary and secondary care, the medicine can be bitter.
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Everyone, it seems, agrees, even one of the highest ranking officials at the
Department of Health Services:
We provide, in many, many respects, some of the best quality of
care I believe any system in the United States provides. By the same
token, there are troubling spots in the system where we don’t do as
good a job as I think we should.
There are, o f course, other, more specific criticisms such as the occasional lapse in
faculty oversight, especially at night or during extremely busy periods. Scandals
and law suits, many o f them false or exaggerated, have come about as result.
Yet, the overall consensus among physicians both in the private and public
sectors is that County General and the other four hospitals o f the government-run
system deliver adequate to exceptional medical care, depending on the specialty.
Most agree that the calibre and qualifications of County physicians and faculty
members associated with the University of Southern California Medical School are
top flight. Some are world renowned researchers and surgeons; others are
proficient teachers and talented physicians who enjoy local prominence. The point
of contention emerges, however, when the conversation turn to the quality of the
staff and the internal culture of the institution on which opinions are more varied.
Most physicians in private practice consider the County system to be more of a
bureaucratic morass than an efficient health care delivery system, more inert than
vital and more discombobulated than streamlined.
Particular attention is paid to what private physicians and administrators
deem impersonal, assembly-line medical care. By reason o f the sheer size of
County General and other public hospitals, a frequent assumption is that the
personalities and feelings of patients are disregarded, merely incidental to the
practice o f objective medicine and the education of future doctors. Physicians
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round with residents at the bed-side virtually ignoring the patient, his or her name
or psychic well-being. A conversation as follows is typically envisioned:
A team of residents with faculty physician enter room. “So, what’s
wrong with Mr. . . . , ” attending doctor peeks briefly at the chart to
determine the patients name, “Smith?” Meanwhile, the patient’s
eyes dart nervously from physician to physician, hoping to make
eye contact with at least one real human being. Residents throw
out possible diagnoses. Attending takes a quick glance at x-rays or
lab results and rewards the keen physician who guessed correctly.
A second round of “Medical Jeopardy” is played to discern the
proper course o f action, and the entire team leaves the room with
abbreviated nods of thanks to the patient. If he is lucky, perhaps
the patient will be examined, sheets, bed covers and gown bruskly
thrown open with various body parts stared at by a co-ed crew of
puzzled residents.
Indeed, one physician in suburban private practice opines:
It’s a public facility. It is a large, collossal sort o f structure. The
environment there may be less personal. There is the feeling that
you are a small cog in a very, very big delivery system . . . [unlike]
the sort of things we see in private hospitals where more personal
relationships are developed.
On the other hand, in focus groups and interviews conducted with staff
members— ward clerks, nurses, nursing assistants, volunteers, administrators, social
workers, dieticians and chaplains— the quality of care is staunchly defended. In
fact, a “singleminded devotion and unselfish disposition toward patient care and
advocacy” was consistently reiterated by employees. Furthermore, patient care
was defined as technical and scientific expertise as well as touch, familiarity and
relationship, sympathy and a shared experience of healing on an individual,
personal basis. In truth, nursing assistants and licensed vocational nurses, those
caregivers closest to the bed-side, stressed the importance o f establishing personal
relationships with patients, an anathema to the objective delivery of medical care
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espoused by physicians and more professional staff members. They feel exploited,
commodified and objectified, never truly experiencing the rewards of their humble
work. They have less control over their jobs and working conditions and they
sense the vast gulf between their wages and benefits and those o f professional,
licensed employees. Yet, one nursing assistant, referring to the hierarchical
distance between himself and doctors or nurses, said: “They have all the cars and
the houses and they are miserable, but we are experience and sharing life with the
patients.” They work, for a mere pittance, they say, for the good of the patients,
on behalf of the “miracle of life.” They also share a personal identification with the
hospital’s disproportionately poor and more vulnerable patients, those with meager
resources who suffer from disease and injury or social indignity, humiliation,
alienation and injustice. For instance, one volunteer pointed out that, on numerous
occasions, she has seen staff members with tears in their eyes after a patient had
expired. They view patient care as an intrinsic good, a good unto itself, without
regard for external reward, recognition or career advancement. Altogether, one
could say that these are the poor caring for the poor.
Yet, even administrators at County General are deeply concerned with
fostering a sense of intimacy and personal care in the institution. “We don’t use
human words or heart-felt words,” laments one administrator. “Like, we have
never used the word ‘trust.’” To her, even the mission statement, “to provide
accessible, affordable, and culturally sensitive healthcare, one person at a time,” is
an empty and generic vacuity. “It is just that we are so robotic and so bureaucratic
and so totally tuned out,” she continues, “that we have discarded what touching
means, what eye contact means, what realizing what a person in a milieu that is
sick— what fright you must feel.” Nods o f heads from the other members of the
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focus group signal agreement. Ironically, the administrators seem to be unaware
o f this deeply rooted notion among the caregivers. In fact, this theme cut across
functional focus groups and was so strongly emphasized that it could accurately be
said to represent a core value o f the institution, that patients shall be treated
equally and with dignity, not as inferior, disabled or unworthy, and that employees
should strive to create “an accomodating, welcoming, secure, clean and responsive
therapeutic environment free from direct, or indirect, hostility or intimidation.”
Other values were shared. Responsiveness to the bed-side is absolutely
mandatory. Flexibility and openness to learning, patient advocacy, cheerfulness,
trust, civility, honesty, integrity, sensitivity and fariness are model virtues that
many employees say they exercise on a daily basis, but wish others would follow
suit. Perhaps two of the most surprising values embraced by the staff are
sympathy and foregiveness, a direct outgrowth of the institutional war culture
discussed earlier. Working in a chaotic and disordered environment, at a frenzied
pace with few labor- or time-saving resources at their disposal, in the context of
seemingly endless budget cutbacks and personnel reductions, sympathetic
appreciation and empathetic forebearance become key values. Having sympathy
for workers in understaffed departments, foregiveness for delayed test results,
temporarily misplaced charts, long response times for requests and other
peccadillos should be met with compassion and foregiveness by other employees.
Even patients should absolve staff for such offenses when it is clear they are doing
the best they can, say focus groups participants.
The internal culture, then, could be described as one aspiring to shared
authority and friendship, the type of friendship that is marked by collegiality and a
common sense of mission. Familiarity and enveloping concern for the other marks
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each relationship. When patients are scared or lonely, staff should be there to
console. Even when other staff members have reached their limit, small gestures
to comfort and soothe are those tender mercies that distinguish a web of personal
relationships from a mere collection of unattached individuals. One volunteer
recalls exiting the cafeteria one day to see a food worker in the hall crying with
another employee trying to calm her. Asking if she could help in some way, “the
one that was crying kind of looked at me and nodded her head. The other one said,
‘yeah, we’re okay.’ That’s the kind o f thing I mean. This is humanity to me.”
In an age of cynicism, self-reported data is, of course, suspect, riddled with
doubt concerning the authenticity with which responses are made. Perhaps all of
these employees were in denial, deluding themselves into believing that their work
environment is one characterized by mutual trust and reciprocal kindness. Perhaps
when they describe staff members as committed, fostering a “culture of care” or
the institution as being “remarkable,” they are merely mirroring aspirations of a
more noble human nature, a glint of their better selves. Conceivably, they may
truly believe they adhere to these high standards in abstract conversations about
values and ethics, but, when push comes to shove, self-interest and individualism
supplant a spirit of soldiarity. Indeed, many pointed out examples and
circumstances in which they, themselves, were not treated in a manner consistent
with these values, and criticisms of administrators, nurses and residents were
abundant. Yet, when examining all of the interviews together, the groups almost
unanimously agreed that County General was an exceptional place to work. Even
in the face of forbidding threats to its future viability, these workers seem
adamantly loyal and devoted to personal patient care and a compassionate and
understanding work environment. If a consistent articulation of ideal virtues and
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absolute values are any indication o f an underlying motivation and dedication to a
particular moral disposition that surpasses the ordinary realities of daily existence,
then it could with some accuracy be said that the employees and staff of County
General are deeply committed to their patients and to each other.
Backlash
The physicians and personnel of County General nevertheless felt besieged,
plagued by negative media attention and a falling public approval rate. Under
attack by apathetic and politically motivated leaders, their world was collapsing.
Far from passive, though, the employees, residents and physicians faithful to the
“Granite Mother” devoted many hours to trying to save her and, of course, their
jobs and research or teaching programs. Many engaged in full force political
activism, testifying at public hearings, picketing at rallies to protest the Board of
Supervisors actions and writing dozens o f editorials to newspapers and letters to
local, state and federal politicians, hoping someone would listen to their
impassioned pleas. The chaplains arranged candlelight vigils in the evenings
outside the hospital. Staff were requested to wear a “trash bag” armband “to
oppose the trashing o f L.A. County Health Care.” One chaplain recalls: “. . .
certain nights we would get together and have a candlelight march around the
hospital, tell the patients to look down so that they would be encouraged . . . [and]
the nurses that were working at night would see it.” A tent city was erected on the
front courtyard o f the hospital to maintain a consistent presence and attract the
media. They sang, prayed and chanted. “It was primarily a place for people to get
together, to update people on what was happening downtown,” explains the
chaplain. “We created an atmosphere so that people would get up [at the
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microphone] and talk about how they were feeling. They would get some of their
frustrations out.” At one point, the assembly moved up on the hospitals steps,
blocking the entrance to patients, and the police were called.
Nurses and other employees, acting alone, had no power, said the chaplain,
but together, they could make an impact. That is why, as waves o f layoffs swept
over County facilities, both employees and patients would make pilgrimages
downtown to the County’s Hall of Administration in an effort to convince County
supervisors from curtailing services or privatizing clinics and hospitals. The Los
Angeles Times reported one such march made by patients and workers from
Rancho Los Amigos, the County’s long-term rehabilitation center:
From his wheelchair, muscular dystrophy patient Gene Mitchener
told the board members that the words ‘downsize’ and ‘privatize’
do not accurately describe the impact of $28.8 million in planned
cuts in funding for Rancho Los Amigos. ‘The truth is capsize. We
can’t afford to capsize because I can’t swim,’ he said. ‘I need your
help to stay afloat.’
At one point, the Catholic chaplain at County General organized a “die-in” at the
state building downtown. Marching from St. Vibiana, the Catholic cathedral in
downtown Los Angeles, they lay prostrate, covering themselves with sheets
printed with the hospital’s name and prayed. Jesse Jackson flew in to testify and
“was able to rally some public press that got Washington to listen . . . ” Flyers
were distributed demanding that Governor Wilson “take leadership in the Los
Angeles health care crisis.” “Mr. Wilson,” it demanded, “return to California, lead
full funding of health care, honor the commitment.” Another leaflet, printed in
gothic-looking typeset, proclaimed: ‘TT’S TERRIFYING that the county’s Poor
and Sick will not be served! IT’S GROTESQUE how the supervisors are
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misusing the Clinton help! IT’S HIDEOUS that health care is not the priority o f
the supervisors, mayor, governor and Washington!”
Possibly the most publicized action occurred in September of 1995 when
emergency room nurses were suddenly struck ill in what was said to be a “blue flu”
work slowdown (Meyer, Rabin & Shuit, September 9, 1995 Al). As a result, one
emergency patient being transported by ambulance to County General was
re-routed to a nearby private hospital and the patient died. In the press, the nurses
were blamed and their actions were castigated as reckless and morally unjustified.
But, the nurses were at the end of their rope. ‘“They weren’t listening to us,”’
they told the chaplain. “Every time we took nurses down to give testimony [to
the supervisors],” he complains, “they were really rude. They were downright
rude.” Frustrated and angry, he doesn’t blame them for shutting down the busiest
emergency room in the country for a day.
Although there is widespread support in the private community for the
public health care system as measured by its positive appraisal of the medical
center on many counts, a type of war culture nevertheless permeates the
institution. Feelings of betrayal and abandonment run deep, resentment lingers and
righteous indignation dissipates slowly over the course of time. For so many
years, the system has been afflicted with an ever increasing need by poor and
uninsured patients coupled with a downward spiral in funding streams and the
resources necessary to meet the enormous demand for services. Despite shrinking
political and community support, physicians and staff have stood fast, defending
Mother County and her other hospitals and clinics from the sharp knife of budget
cutbacks and service curtailments. They were motivated by an intense devotion to
the institution and the profound conviction that she stands as the last bastion,
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faithfully vigilant over the most vulnerable patients, the poorest o f the poor. It is
out of this deeply felt affection that reactions to the crisis were so vehement and
impassioned. Predictions of the imminent collapse o f both the public and private
health care systems forewarned of public health disasters, dead corpses rotting in
the streets and other medical catastrophes. The war culture had roused the
institution’s foot soldiers, willing gladiators sent into battle to intercept the vicious
raid against the great walls of the Rock. In the end, they managed to hold off the
worst of the invasion and both sides settled for a compromise. Pared down,
trimmed back and partially dismantled, at least the hospital remained intact to serve
the patients needing her the most. For those who still clamor at her doors to enter
the bosom o f the great Stone Mother, she will, for now, endure.
Chapter Three
Defect of the Will: The Dulling of Public Resolve
It would not be much o f a tour de force to suggest that political
considerations often influence health policy. Yet, what may be somewhat more
surprising is that politics could actually create crises similar to the magnitude of the
one in Los Angeles County. The next three chapters will survey the political
dimension o f the crisis and demonstrate how the posturing and gamesmanship
played by local, state and federal officials as well as the capricious nature of
dealings between the three levels of government actually created the financing
problems that ultimately threatened to bring down the public health system.
Furthermore, they will detail the long history o f mistrust and discord prevalent in
the relationship between public and private providers in the County as well as the
shift in public sentiment against the system that permitted politicians to turn away
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their heads. The political dysfunction inherent in each of these domains
contributed something significant to the origin o f the crisis: loss of public
confidence in the competence and cost-effectiveness of the County system
engendered an atmosphere o f misgiving toward government-operated services that
took shape in the tax revolt o f the late 1970s; infighting by local political leaders
and the imperialistic practices of a hyper-politicized government agency impeded
advancement toward a system more aligned with the trends in mainstream medical
care; a listless unconcern for the needs o f health providers by state politicians
coupled with inflexible federal financing obstructions and reimbursement
regulations caught the County in an unsustainable funding squeeze; and deeply
divided mentalities along with a mutual, yet ingrained, distrust that made public
and private medical providers, on occasion, fiercely suspicious of each other
hampered the expeditious creation of innovative public-private alliances to achieve
a fundamental transformation of the system’s architecture and internal operations.
When considering the many possible culprits of the crisis, a minority of
respondents suggested the blame lies with structural, demographic and economic
factors. Specifically, several proposed that Los Angeles merely reflected the
national crisis in health care delivery. “This is just one o f the miniscule things that
is occurring in health care delivery systems all over the country,” argues one
physician-executive. “We are just seeing a little piece o f it in Los Angeles County.
It’s happening everywhere.” The crucial turning point in modem American
medicine came when Lee Iococca, the chairman of General Motors, made his now
famous proclamation that the cost of insuring his employees had begun to exceed
the cost of steel in manufacturing automobiles. At the time, medical inflation was
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far exceeding the Consumer Price Index and had already reached double-digit
territory.
His announcement opened the eyes o f enough employers to touch off a
quasi-revolution in health care financing and spark renewed vigor in finding
methods to reduce medical costs. But, there is a disparity between the demands of
employers and the general public to cut short the growth in national health care
expenditures and the entitlement mentality that most citizens, insured or uninsured,
seem to have. “. . . People want something for nothing,” says one physician.
“They don’t want to pay very much but anytime someone suggests, ‘OK, we’re
going to cut care,’ they freak out.” She points to the many criticisms of the
Oregon health plan, which, in the course o f developing a system to ration care to
Medicaid recipients by eliminating expensive procedures with an unacceptable
price to value ratio, decided to exclude organ transplants from the program. A
trauma surgeon highlights the contradiction between public disapproval over the
loss of tens or hundreds of thousands o f taxpayer dollars when critically injured,
uninsured patients are unable to pay the enormous hospital charges they incur, and
the uproar that would ensue if patients were turned away. “If we turn them away,”
he contends, “we would be on ‘Sixty Minutes’ next Sunday.” Other observers
criticize the medical establishment’s flawed treatment priorities, alluding to the
disproportionate amount of medical care devoted to the last few months of life and
experimental treatment options. “We do a lot of things that scientifically we know
we shouldn’t be doing,” says one surgeon, “but everybody has grown up with the
belief that medicine is a right and we all have a right to the best medical care
imaginable.” Conditions in other industrialized nations are quite different,
according to some commentators who emphasize that far fewer economic
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resources are devoted to medical care in those countries, but, yet, these countries
enjoy a far higher approval rating of the health care system by the general public.
To some, demand for inappopriate medical care is the key factor driving
both the national and local health care crises. “We have patients who have
overwhelming demands of the health care system that, in truth, have nothing to do
with health care,” asserts one physician in private practice. Excessive demand is
created by inappropriate education and outreach efforts encouraging patients to
see their general practitioners indiscriminately or failing to properly instruct the
patient about the results of public health screenings. In addition, when the media
broadcasts the results of medical research in an inadequate and decontextualized
sort of way, sensationalizing potentially benign information, patients flock to their
physicians’ offices needlessly.
Designed in part to overcome these excessive expectations, managed care
companies, specifically HMOs, were encouraged by enabling legislation during the
Nixon administration. In 1973, the Health Maintenance Organization Act was
passed into law, creating grants for new HMO start-ups. Today, over 95 percent
of health plans manage care in some way, limiting access to specialists or
reviewing expensive procedures to determine medical necessity and payment. Yet,
such developments have, in their own way, threatened the ability o f poor and
uninsured patients to receive treatment in private facilities. In the pre-Iacocca era,
hospitals and physicians could treat uninsured patients by passing the
uncompensated costs on to insurers, who would then pass them on to employers,
or to Medicare and Medicaid in hospital cost reports or inflated physician fees. As
employers began to demand lower premiums, however, cost shifting grew
increasingly difficult to accomplish. HMOs, in particular, stunted the practice
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because payments to physicians and hospitals were often not based on services
provided. Instead, they would receive capitated payments, or a fixed fee, for each
individual enrolled in the physician’s or hospital’s pool of patients regardless of
how many medical resources that individual consumed. With less and less
breathing room, the assets o f private hospitals became increasingly strained and
uncompensated care was scaled back. Indigent and uninsured patients, stabilized
in private hospital emergency rooms, were and continue to be transferred more and
more frequently to County or other public hospitals to alleviate the fiscal pressure
placed on the private hospital.
Thus, economic concerns both create and are created by demographic
changes. As premiums continue to skyrocket, more and more employers have
chosen not to cover their workers, contributing to the burgeoning uninsured
population in a significant way. Caught between the accelerating demand by
uninsured patients for their services and the increasing inability of private hospitals
and physicians to cross-subsidize uncompensated care with proceeds from
overbilling insurance companies, public hospitals found themselves in the position
o f almost single-handedly having to bear the brunt of the exploding indigent and
uninsured population.
The demographic statistics o f Los Angeles County are remarkable. In the
1990 census, 33 percent o f the population under the age o f 65 lacked any health
insurance coverage and 80 percent o f that population was employed or the
dependent of an employee. Referring to the health care crisis in Los Angeles, one
policy expert tried to put those astonishing facts in perspective: ‘T o see this crisis
in funding [and] in confidence occur at the height of a need that’s never existed
before is an incomprehensible kind o f challenge.” The very immensity of the
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numbers both desensitizes politicians and health care leaders to its enormity and
discourages them from making a proactive commitment to change, according to
one doctor who likens the situation to the threat o f nuclear war: “It’s so terrible
we just don’t think about it anymore. The politicians or the policy-makers seem to
think it’s not important. Certainly, the gorilla that’s changing the health care
system in this country— managed care— is not thinking about it at all.”
In addition, the uninsured population is fueled by an estimated 700,000
undocumented workers in the County, employed and contributing to the economy
but who usually lack access to health care by any other route than through the
County system. “We have a huge influx of people,” says one physician in private
practice, “who have no funds, no assets and are being ushered into the health care
system which covers them entirely.” For some, the inflow o f illegal immigrants is
thought to be a direct result of generous American social policy, and they are
angry about it “because it’s draining resources from those that are a part of this
culture or this community.” For others, generous social policy is only humane:
“They feel safe and comfortable here, knowing that they are not going to be
extradited if they show up for medical care.”
Undergirding these numbers, however, is a service-sector, small employer
economy that traditionally declines to offer health care coverage to their
employees. According to one professor of public health, over 90 percent of the
businesses in the County employ less than 50 workers. But any call to mandate
health benefits for employees is met with powerful resistance by small employers.
On a national level, moreover, some physicians scourge what they see as
insouciant disregard for the growing epidemic of uninsured patients:
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The Wall Street Journal, about two months ago, had an article
which pointed out that corporate profits in the U.S. since 1990
have gone up about 300 percent and the stock market is a reflection
of that. The article had a discussion about what ought to be done
with that money. Should it be given to the stockholders or should it
be reinvested in whatever the business aspects are to create more
business? There was not one question in that article [that] maybe it
should be distributed among the people who are creating the
wealth, that is, the workers o f the companies. Should you pay them
more for example? That wasn't even a consideration in that article.
And here we turn around and say, “we can't afford to provide
people with health benefits and we can't afford to provide them day
care or whatever the social benefits are that we all say are so
important". It doesn't make sense.
These demographic and economic factors, in addition to other structural
influences such as the rising cost of technology and malpractice insurance, may
partially, if somewhat incompletely, explain why public health care does not have a
“fighting chance” to keep up with the flood of uninsured patients seeking care at
those facilities. Lacking, however, is an explanation of how political decisions,
decisions, for example, that may not even consider health outcomes as a prominent
factor for consideration, not only influence health policy but may actually cripple
public hospitals in accomplishing their mission. The remainder of this chapter and
the next are devoted to understanding the complex political factors which have
arguably caused, provoked and aggravated the seriousness of the Los Angeles
County health care crisis.
A Golden Era:
Weakened public conviction for tax supported public services left a wound
on the charred political landscape ever since the California state tax revolt called
Proposition 13 was passed by a majority of the voters in the late 1970s. Crippled
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by a mandatory cap on the growth o f property taxes, local government services
languished under constant financial duress. Each year, whether or not enough
funds would be available to continue the production o f vital public goods was in
question, a period of intense anxiety at the start of every fiscal budget year. Many
health experts, however, recall a less acrimonious, more harmonious time in
California history. Tracing the shift primarily back to the 1978 tax revolt, they
argue that the 1950s and 60s, although periodically tumultuous and unpredictable,
were nevertheless times o f greater civic pride and solidarity, times of less
materialism. “Perhaps we weren’t going after material things so much,” muses one
physician.
So long as one was comfortable and could feel that life was not
endangered, then you [would] grow old and be respectable. That
was what was really important, that your children were
well-educated and had a good future. . . . It wasn’t such a question
of amassing wealth. I think those values have changed.
There was a focus on quality o f life and a sense o f togetherness, they say,
with greater investment in social programs and public services. Per-capita
spending on the education o f children or the medical care of indigent patients was
greater, they argue.
. . . Maybe twenty years ago or twenty-five years ago, the schools
were better [and] the roads were better simply because we had the
resources. . . . The schools were better because we could put that
much more money into kids. And I think health care was that way
too. We were able to put more money into folks.
Indeed, quite a few physicians cherish the memory of an age of
volunteerism among medical professionals when p ro bono treatment o f indigent
and uninsured patients was the norm. In fact, it was an expectation of any
prominent physician in the community. Many doctors would donate one or two
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afternoons per week at County hospitals and clinics treating the poor sick and
injured or they would open up their offices to indigent patients on a regular basis.
County hospitals were supported with enough resources to treat the uninsured in
the same measure as the insured so that, as one physician argues, “there was one
standard o f care in the community.” It was the same for everybody. Although
some physicians still honor such noble practices, many do not. “There was more
o f a sense o f community among physicians,” recalls the medical director of a
County hospital, “and medical services were not so expensive. So, even though
people didn’t have health insurance, they had no problem getting medical care.”
All told, it was the Golden Age of publicly provided services, say these
respondents. Today, nostalgic caregivers look back longingly, yearning for some
kind of a return to the mythical age when people were cared for by each other and
social capital was as strong as the type invested on Wall Street. “There was a real
togetherness I felt,” says one physician lugubrious over the loss of solidarity. “I
think people really did look after each other in the 30s and 40s [more] than we do
in the 80s.” He tenaciously hangs on to the biblical vision that each person is to
be his “brothers’ keeper” and that neighbors are to act neighborly, lending a
helping hand when fellow citizens are going through tough times. As a physician,
he cannot fathom an individualistic attitude that flouts the very notion of living in a
community. For another physician, such visions resonate. He recollects a sense of
civic pride and a certain self-esteem in the community. But, as he laments, “in the
60s, this all went to hell in a hand basket.”
Such a shift notwithstanding, the period between 1933 and 1978 could
correctly be described as one more often characterized by a commitment to social
infrastructure and a general regard for the plight of the poor than not. This is no
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more evident than in Los Angeles County and the tradition of public support for its
once world renowned complex of public hospitals and clinics. A brief revisit to
this epoch will help to chronicle the chain of events leading up to the apparent loss
of civic-mindedness that these physicians deplore.
As one physician points out, hospital care for those stricken by poverty
dates back to the middle ages in Europe. In America, public hospitals, miniscule
by comparison to today’s large urban medical centers, were prevalent in the
Colonial era. The first County hospital in Los Angeles was constructed in 1877,
yet, as one health policy expert says, County responsibility for indigent medical
care can be traced back to the early 1850s when a Catholic religious order— the
Sisters o f Charity— provided medical services to the poor on behalf of the County.
In the early decades o f the twentieth century, the state legislature passed the
oft-cited section 17000 of the Welfare and Institutions Code which legally
mandated the County to provide health care to those who could not afford it or
access it by any other means. In 1932, the current structure o f County General
was erected and has remained a landmark ever since.
The day the ribbon was cut on a sparkling, new County General was
momentous, a memorable event covered extensively by the press. Looking back
on newspaper clippings from that period, enough praise, it seems, could not be
extended to the great building. The local newspaper of the time, the Evening
Herald, published a moving piece fervent in its admiration, even awe, for the
magnificent structure. Reading more like a canonical consecration than an unbiased
news story, an exaltation to the high throne over all other medical institutions of its
day, the new County General was hailed as the “greatest single monument to that
divine command ‘Heal the Sick’ ever erected by the American Community”
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(Evening Herald as quoted in Eastman). One physician remembers his father, an
English professor, on trips around Los Angeles, pointing out County General to
him soon after it was built and commending the engineers, architects and planners
for creating such an impressive looking edifice.
Veneration for the hospital, it seems, was commonplace even several
decades later. In the 1950s and 60s, it was widely regarded as one the finest
medical institutions in America. A feature story in the Sunday edition of a 1956
Los Angeles Examiner said: “In the 78 years since it was started as a hospital and
poor farm, Los Angeles County Hospital has grown with the burgeoning city so
that today it stands as the largest and best general hospital in the world” (Clausen,
June 10, 1956 16). In a similar article, reporter Graham Berry declared:
Patients get the best care— without frills— at County General
Hospital. There are no paintings on the walls or curtains in the
windows and private rooms are only for those who need them for
medical reasons. But the care, skills and facilities at this hospital,
the biggest o f its kind in the nation, are as good as any and better
than most. (July 20, 1957 1)
Emergency treatment was “the very best to be found anywhere in the world,”
declares the Los Angeles Herald in a 1959 article (Hilgensluhler, June 1, 1959 C5).
Physicians and staff were trumpeted as “the best in their fields,” dedicated
and idealistic servants of the poor (Clausen June 11, 1956 2). “Here you will see
put into practice,” promises another story,
the most altruistic traditions of the medical profession. More than
1000 physicians and surgeons on the attending staff— who also are
in private practice— donate their skills to the hospital without any
charge. Among them are many of the area’s top names in all fields
o f medicine. (Berry, July 21, 1957 A l)
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Also, the facilities were considered to be state o f the art. For example, a 1956
story, one of three in a series commending the great hospital, described the new
254 bed Communicable Diseases unit, detailing the transfer o f 104 patients with
infectious diseases “from the scabrous old CD building to the new quarters in three
hours and five minutes without mishap or mentionable incident.”
The medical complex was also thought of as a cultural and intellectual
Mecca, a center for training and research and the cultivation of young medical
minds. To depict the impact the Medical Center had on the larger medical
community and the prestige it once had, one article, quoting the assistant medical
director of the hospital at the time, Leonard Rosoff, described the hospital as a
“pool into which a stone is dropped. The ripples spread out in ever widening
circles and ultimately reach all the doctors in the area” (Clausen, June 11, 1956 6).
The training program enjoyed national prominence and was recognized as the
leading institution of graduate medical education in the country. In 1953, the
hospital’s 280 residents and interns in varying phases of completing their training
hailed from almost every state in the U.S. and applied from 39 medical schools
across the nation. Each year during that time, 400 applications were received for
slots amounting to only a quarter o f that. “A senior medical student considers
himself indeed fortunate,” said Dr. Rosoff in a 1953 interview with the Los
Angeles Examiner, “when his application for internship at our hospital is accepted”
(Clausen, November 16, 1953 A l). With an annual research budget of half a
million dollars, enormous for that time, top flight research also propelled the
institution into national prominence.
Not forgotten in the articles is the sheer humanity o f the institution. The
life and death struggles fought on a daily basis and guided by skilled hands and
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caring hearts was frequently reported by newspapers of the period. In the few
decades surrounding its construction, the building tended to evoke romantic,
almost poetic descriptions. But, the affection for the Stone Mother as a structure
extended to the interior of her grand edifice, to the warm, loving care provided by
staff and physicians inside. This is from a 1956 article in the Los Angeles
Examiner:
At 6:30 a.m., when the night mists are reluctantly giving way to the
brightness of day, the struggle o f life takes up again in a city of gray
buildings which perch, symbolically, atop a knoll in East Los
Angeles. The hush of muted voices, the swish of rubber-soled
shoes in the corridors, the rumble o f a distant elevator, the
mutterings o f a feverish man— the immemorial sounds o f a hospital
at night— all seem to quicken and intensify. A nurse at her station in
the center of the corridor makes the final transition from night to
day by laughing brightly in response to something said to her over a
telephone. An hour before, in the darkness, she would have smiled
at the same remark, but now, as day comes on, she laughs and
patients all around hear her and stretch and lift their heads to await
the events the day holds for them. For some, it will be the last day;
for others, the first. . . . For this is Los Angeles County Hospital, a
city of despair and hope, a final stopping place for some; a starting
place for others. It is the largest hospital in the world. Very likely,
it is also the best.
Patients were treated like human beings, according to the articles. Staff
would affectionately tease patients, kidding with them to improve their spirits and
shift the focus away from their maladies. Photographs from a 1956 article,
subtitled “Warm Feelings Exist Between These Doctors and Patients,” depicted
rows of patients on stretchers lining the hallways attended to by determined,
prudent nurses donning brilliantly white, starched uniforms. Another picture— a
close-up— shows a suffering patient solemnly examined by a thoughtful young
physician, his stethoscope strategically, yet symbolically, placed over the patient’s
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heart while a compliant, older nurse takes the pulse. The atmosphere captured by
the photographs exudes an affable kindness, a serene charity radiating a feeling of
security and refuge (Clausen, June 11, 1956 3). “If we lose the warm person to
person feeling in our relationship with the patients,” the article quotes Roger
Egeberg, the hospital’s medical director, “we become a mill or a factory” (2). And
that is why, he says in another interview a year later, “we give them something of
ourselves” (Berry, July 21, 1957 Al). Racial tensions, a predominant concern of
that period, are only temporary lapses in the otherwise harmonious utopia of the
medical center, according to one reporter. The executive director of the medical
center in 1959 asserted to the Los Angeles Herald that, although fifty percent of
the patient population were non-white,
racial integration is no problem here. We have an occasional
Caucasian who is appalled at being treated by a Negro nurse or
doctor .... But after they see the kind of treatment they get, they
soon change their minds.
A sense o f community, of high morale and a fun environment, is generally
conveyed in these series of articles. Hospital tours were routinely held giving the
community an opportunity to visit the eighteen story monument. Judging by what
appears to be the customary announcement of the hospital’s open-door policy in
the paper, it was apparently as much a point of interest at the time as the Griffith
Observatory or Hollywood sign on Mulholland Drive. Parties on behalf of patients
were standard occurrences. One picture shows a puppet show, replete with large
stuffed animals and a majestic castle, regaling young children “to help while away
long hours” (Clausen, June 11, 1956 3). “The merriment spread from Ward 4300
up and down the wards and through the nurses’ quarters,” reports one article,
chronicling the party given for Cora Calhoun’s discharge from her 4 1/2 year stay
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at the hospital. Cora praised the excellent medical care she received and crowed
about finally getting “to see those beautiful rainbow cars and those freeways I’ve
heard so much about.” Still another article details the lengths staff members go to
in the “psychopathic unit” to make the ward seem cozy and amiable, more like
home. For example, patients are offered candy and a piping, hot cup of coffee
immediately after their shock treatments, apparently to sooth the agony o f the
experience. “Once a week there’s a ward party, and patients are encouraged to
take over as much o f the planning as possible. Movies are shown, too. Everything
is done to create a normal life for these people” (Bernal, August 25, 1955 B l).
The community also extends beyond the wards to the community. A “Rush of
Visitors” estimated between two and five thousand storm the front steps o f the
medical center each Sunday and Wednesday afternoon (Clausen, June 10, 1956 1).
Greeted by receptionists at an information desk, visitors are directed to their
destination along a dizzying array o f colored lines set into the hospital floor. The
picture o f thousands of well clad, suited up visitors beseiging the hospital’s
courtyard, in the Los Angeles Examiner’s feature article, is a striking contrast to
the empty patch of concrete that, by comparison, seems untouched. But, at the
time, in the hospital’s golden era, it was the heart of the medical community, a
focal point of social pride and a pilgrimage for the friends and relatives of millions
of patients.
The utter size of the medical complex in that period is staggering. “It is a
place so big with such an enormous variety of diseases encompassing all the ills
that man is heir to,” reports one exhuberant reporter, “that the mind boggles at
some of the statistics” (Clausen, June 10, 1956 16). At the time, twenty-five
percent o f the population used the medical center for their health care needs. On
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any given day, three thousand beds were filled, colossal compared to the
considerable smaller census of eight hundred today. Ten thousand babies were
bom each year, twenty-five percent of all babies bom in the County, and the
average annual flood of patients numbered over a million (Clausen, June 10, 1956
1; Clausen, November 16, 1953 Al). The sixty-three acre campus was graced by
150 buildings, including an integrated nursing school with a student body o f 275,
125 of them in residence. Paid medical and nursing staff totalled 5,000 and 1,335
physicians from the community made up the ranks of the volunteer medical staff.
Together, the 7,000 staff members, 3,000 inpatients as well as the scores of
outpatients visiting the hospital’s clinics made up a small city that was larger than
the entire Los Angeles population in 1878, the year the facility’s precursor opened
as a small domicile on El Camino Real, now Mission Road (Clausen, June 10,
1956 16).
Ancillary services were also enormous and frequently the subject of stories
by awe-struck reporters. The pharmacy mixed up enough IV solution each year to
overflow four swimming pools (Berry, July 21, 1957 Al). Pharmaceutical
employees prepared 828,105 prescriptions annually, handing one out every 30
seconds (Bernal, August 24, 1955, B2). Over 3.6 million shots are administered
annually, amounting to more than 8000 per day (Clausen, June10, 1956 16), and
the medical library houses over 11,000 tomes (Bernal, August 23, 1955 1). The
number o f medical records was also voluminous: “Because of the extensive
records kept by the hospital, such as 1,500,000 medical charts, 50,000 colored
slides and the largest autopsy record file in the world, scientists come from as far
away as Europe to study these” (Bernal, August 24, 1955 B5). In the gigantic
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kitchen, twelve thousand meals were prepared daily by over 300 employees with
“the precision of ballet dancers.” (Clausen, June 10, 1956 1).
Assembly-line methods are employed in the cooking of 1 ton o f
meat, 3 tons of fruit and vegetables, 700 pounds of potatoes, 3750
eggs and 240 gallons of soup each day. The grocery list also
includes 350 loaves of bread and 1800 quarts of milk. (Bernal,
August 23, 1955 1)
The ovens were immense, capable o f cooking 96 turkeys, or 2,500 pounds
simultaneously. In addition, the nursery mixed and served 78,000 bottles of
formula monthly (Scott, January 11, 1954 Al).
One of the hallmarks of the stories of this time featuring County General is
an undercurrent of trust in the authority and competence of County officials.
Much is said concerning the opinions and decisions of the director, medical
directors and nursing directors o f the hospital. But much of the attitude is left
unsaid below the surface, yet easily detectable when put into stark relief by the
sentiments insinuated in more current stories on the County’s public health system.
For instance, hospital leaders are called “brilliant” in one article (Clausen, June 11,
1956 2) and, in another, are described as competent administrators capable of
grappling with complex issues such as the voluminous size of the medical
institution (Berry, July 21, 1957 A l). Another feature story touches on the
number of difficult problems facing this team of proficient government officials.
Referring to one particular enigma, the shortage of adequate housing facilities for
residents and nursing students, the journalist recounts the methods administrators
used to crack tough dilemmas:
. . . Whenever Thomas and Egeberg get discouraged they think o f
some of the other, tougher problems that have been reduced in the
past. Then, Thomas, Egeberg and Dr. Leonard Rosoff, assistant
medical director, are likely to take a walk in the pleasant, private
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garden that adjoins the headquarters of the hospital. There, one
afternoon, grappling with a knotty problem, Rosoff broke the grim
reverie as they walked up and down. He looked up at the tall, gray
buildings that command the skyline like a sentinel. “Thank God,”
he said softly, “this is a great place”! (Berry, July 21, 1957 A l)
Even criticisms that today would touch off public outrage and calls for the
resignation of public officials were tempered by this underlying trust in the efficacy
of public institutions. Faultfinding was met with confident replies that would often
place the blame elsewhere, usually on poor funding levels, and not on the hospital
itself or its administrators. Indeed, the institution was subject to mixed emotions
and a broad range of opinions. Reporters of the time, in frequent strokes of
mellifluence, would liken the medical center’s imperfections to the antipathy of
illness. For instance, one feature story uses the guttoral cries of patients wracked
in pain from their maladies as a metaphor of the institution’s fading splendor:
God knew what he was doing when He created the human groan.
Whether it be a low whimper or a horrifying shriek, there is no
sound under the sun more penetrating, personal, or
right-to-the-point. It’s a universal language— an exclamatory
sentence, spoken in stress, and understood by all people through all
time. The one place in Los Angeles— or even the world— where you
can hear more of these soul-skaing utterances than anywhere else is
the 56-acre plant called the Los Angeles County General Hospital.
The main building, 20-stories high and called the Acute Unit, stands
out like a giant grey ghost against the hazy sky o f East Los
Angeles. Once pure white, when it was dedicated in 1932, it has
now turned to battleship grey because of the dark blotches on the
building’s exterior .... Like the work which transpires within its
four walls, the overall impression of the rectangular structure
vacillates between the beautiful and the brutal. . . . Looking
skyward from the front entrance, it has an uplifting, almost spiritual
effect. From another angle, it appears ugly and squatty. Just as the
architecture evokes a wide variety o f emotions, even more
important and prevalent are the tremendous range o f opinions
which the general public has about the human affairs which go on
inside the building. (Hilgenstuhler, June 1, 1959 C3)
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Another article begins its examination of the accusations against County General
as being an “unsavory place at times” by focusing on the grim mortality that is
common to all medical institutions: “Hospitals, bom in pain, suckled on suffering,
and wracked by grief, are not pleasant places to see. They were never meant to
be” (Hilgensluhler, June 2, 1959 C5).
Even in this golden era, striking contrasts in the institution’s quality were
accentuated. Complaints were made about the mediocre nursing standards and
second-rate chronic care when compared with the “phenomenal” scope of
physicians and the best acute and critical care in the world (Hilgenstuhler, June 3,
1959 C3). Yet, the defects o f the public hospital tended to be explained not by
impugning the competence o f administrators, blaming the efficiency o f the nurses
and doctors or condemning the politics of County officials as do contemporary
cavils; rather, the media responded to public criticism in a manner relatively
supportive of the institution. For instance, the high death rate is explained by the
severe acuity of many of the patients, the deterioration o f the facilities is ascribed
to a shortage of funds, and the somewhat sullied appearance inside is blamed on
“inconsiderate patients and visitors who throw papers, refuse and garbage
indiscriminately wherever they wander” (Hilgenstuhler, June 2, 1959 C3). Even
the general populace itself is charged with apathetic indifference and not so
gingerly chided in one article:
At present, the public cannot protest too loud or too long about
some of the unfavorable conditions prevailing at the County
hospital. Why? Because the people o f Southern California had a
chance last November to correct some of the evils which this series
has been talking about— and they failed to do so. (Hilgenstuhler,
June 3, 1959 C8)
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The most stunning difference in the way the media responded to County
General’s problems then and the manner in which it does so today comes in a 1960
article that, first, describes the hospital’s faults in excruciating detail and then
makes a surprising recommendation. In the article entitled “County General
Hospital Bulges at Same Old Seams,” the medical center is assailed with criticisms
of “intolerable” living conditions for staff members in residence, extreme shortages
of beds, space and ancillary services, unbearable waits for prescriptions and
physician visits and noisy surroundings “woefully lacking in privacy” (Los Angeles
Examiner, June 6, 1960). The answer, however, is not to shut down the hospital,
release patients onto the streets and hope for the best; rather, the article urges
voters to pass Proposition “A,” a $15.5 million bond issue to improve the public
hospital. In fact, the editorial sees only two alternatives: either pass the bond
measure or take the additional funds needed from general tax revenues.
Remarkable agreement on the proposition was forthcoming from many
sectors of the community. Supervisor Ernest E. Debs, health and welfare
committee chairman for the County Board, publicly supported the proposition at a
1960 luncheon with 400 community and business leaders, saying that tax money is
squandered on a daily basis because of the hospital’s substandard facilities (Los
Angeles Examiner. April 5, I960 14). A grand jury also supported the
proposition, advising voters that if it were not passed, a “seven cent tax rate
boost” would be imposed on property taxes, whereas the bond would only create
marginal taxes of “a fraction of a cent on each $100 of assessed valuation” (Los
Angeles Examiner, May 21, 1960). In a court ruling to determine whether an
oversight on the part o f the County Treasurer to publish notice of the bond
measure would nullify its passage, a superior court judge ruled to uphold the bond,
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saying that a clerk’s mistake could not “void the will of the people” (Los Angeles
Examiner. September 7, 1960). Finally, in a series of articles printed by the
Examiner entitled “Are the Taxpayers Getting a Fair Shake from the County’s
Multi-million Dollar Construction Program?,” the paper recommends the passage
of the proposition, comparing the frugal bond measure favorably to one for the
County Hall o f Administration, “a lavishly appointed structured filled with
prententious but needless luxuries.” “Now at last,” it says,
the voters o f Los Angeles County are in a position to get their
money’s worth in long-needed construction for government
activities vital to the health, order and progress of the community.
Among these are four units for the General Hospital, already
crowded beyond endurance and to the point of danger. . . .
Thus, an apparently positive attitude toward the quality of medical care,
facilities, staff, physicians and administrators put the health complex at the
forefront of the public’s attention and graced it with respect and admiration. The
very metaphorical, venerable language used by the media to convey its significance
transformed mere news stories into something more akin to allegories, the stuff of
legends and folk tales. As parables sermonizing the moral quality o f the great
Stone Mother, the articles illustrate the political complexion of the time as one of a
positive commitment to care for the poor, sick and injured. Physicians widely
regarded volunteer service in the hospital as an opportunity to return to the
community some of the exclusive benefits the medical profession enjoys. ‘This is
the realization o f a dream,” one physician said in an article that highlighted the
commemoration of November 18, 1953 as “County Hospital Week” by Mayor
Norris Poulson. “Service is the rent we’re expected to pay for the space we take
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up on this earth. The only way we can pay our debt to the past is by putting the
future in debt to us” (Los Angeles Examiner. November 18, 1953 Al).
Also, public officials and politicians seemed less weary o f public reproach
and more willing to praise the expensive system publicly. The media’s coverage
reflected this heightened civic pride. In a 1953 story, for instance, the hospital’s
total annual operating cost o f $13 million was reported without a figurative blink
of the eye (Clausen, Novemberl6, 1953 A l), whereas today, afraid of public
recoil, the health department more sheepishly admits to, even downplays, an
almost $4 billion budget. Similarly, in observance o f the health system’s one
hundredth anniversary of providing service to the community, the Board of
Supervisors commissioned a pictorial celebration even as late as 1978. Even the
hospital’s welfare quality, its embrace o f poor and uninsured patients who could
not afford medical services elsewhere is not berated or even soft peddled. “This
great hospital is theirs,” proudly chirps one reporter (Berry, July 21, 1957 2). And
another writer, in an outpouring o f respect and affection proclaims it as “.. . the
answer of a great city in a civilized nation in this 20th Century to the old question:
‘Am I my brother’s keeper?”’ (Clausen, June 10, 1956 1).
All of this is to suggest that even with the costly upkeep of a massive
government enterprise like County General and the clearly welfarist nature of the
services provided there and funded out of general tax revenues, a civic-minded
community seemed to permit, even impart its blessing, on this public institution.
Acclaimed as “amazing and complex,” that great purveyor o f “service to
mankind,” the people of that time considered the hospital to be a worthy tradition,
a sign of society’s conviction in the value of publicly provided services and
collective faith in each other (Bernal, August 23, 1955 1). One journalist of the
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time was able to eloquently sum up the revered place the institution held in the
emotional and physical geography o f Los Angeles and the full meaning it had for
the community. “The towering gray buildings o f the hospital, a little city in itselfj
loom like a watchman over the city, a watchman,” he wrote, “ . . protecting the
people of the city from the diseases o f man” (Clausen, November 16, 1953 Al).
Today, there are still reminders of that era. The architectural memory
endures even as the public’s proud memory fades. The hospital is still perched on
a grassy hill overlooking downtown. It still stands as a sentry over the city. And it
retains its place in the hearts of the staff and many of the patients. But, the human
architecture has corroded, the communed compact eaten away by a shift in values.
“I think we separate ourselves from other people more than we used to, ” protests
one County physician. “It seems to me that the main attitude that most people
have is TVe got mine and you go to hell and I'm not going to help you. If you are
having trouble, I'm not going to reach out to you.’” Disillusioned about
government and authority during the Vietnam War and the protest culture of the
late 1960s, according to some physicians, ushered in a conservative era both in
California with the election of Ronald Reagan as governor and across the country
when he ascended to the presidency. “It’s been a sea change in public policy,”
asserts one oncologist in suburban private practice and a “pungent critic” of the
failures of welfarism, referring to the Reagan victory. “He peddled nostalgia and
bologna while, at the same time, beginning the deconstruction of the whole
American welfare state.” Investment in social programs and services is waning,
warn physicians both in the public and private sectors. The public is no longer
concerned with maintaining a viable infrastructure of public health programs and
personal medical services for the poor and uninsured, they say.
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Even doctors have become more jaded and less willing to donate their skills
to the care of indigent patients. One physician, the medical director of a County
hospital, describes it as a mutation o f health care from a social to an economic
benefit and attributes it to the expansion of government insurance benefits from
programs like Medicare and Medicaid. As these programs grew in importance,
they became the engine for economic growth in health care. More expensive
technology, more physician training programs, more capital improvements
emerged in connection with federal incentives that were designed to solicit
acquiescence by hospitals and physicians opposed to the original legislation
establishing the two programs. It was the resultant economic strain that gradually
eroded the sense of obligation to the community once commonly held by
physicians, argues the medical director.
Thus, the change in attitude for both health professionals and the general
public stems from economic growth. For doctors, it was too much economic
growth in the seventies and eighties, and then its halting arrest by managed care
organizations abetted by employers obsessed by reducing their health premiums.
For the public, however, it was not enough growth, says one professor of health
policy and public health. With the stagnation of real wage growth and personal,
disposable income, optimism about the future subsided. “The great social
programs that were enacted from the mid-thirties through the mid-seventies,” he
explains, “came at a time when there was a horizon on everybody’s scope of
increasing personal resources.” He, as well as others, argue that self-interest and
self-indulgence has displaced values such as altruism, benevolence and concern for
the overall health of the community. “This is tough on human beings who tend to
have a short view,” he says, “. . . generosity is not inborn in the human being.” For
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these physicians, the change is not a good one. One doctor is able to put the
change in terrain in stark relief. ‘1 was a kid when Roosevelt was president,” he
broods. “And you see all these pictures of very hard-bitten people in the
Depression and after that you don’t see that for a long time until recently. Then
you see the same hard-bitten faces again. Roosevelt wiped that face off of the
country for quite a number o f years, and Reagan brought it back.” He pauses, and
then corrects himself: “The voters brought it back.”
The Seeds o f Destruction :
Indeed, the popular tax revolt of 1978 brought to completion the
anti-government campaign a few elite ideologues like Howard Jarvis had launched.
Its most successful victory was the enactment of Proposition 13 by a majority of
California voters, a signal that at least the positive effects on personal economic
gain, if not the philosophy, o f a legal constraint on the growth of property taxes
and local government had resonated with the voters. But, whatever gains
taxpayers have enjoyed over the last twenty-one years may have been ill-gotten,
especially from the perspective of crucial government services like public health.
One of the highest ranking officials of the Department o f Health Services explains:
Proposition 13 did two things. It not only eroded the funding base
for public programs in California, more importantly it eroded the
confidence base that the public had in public programs. Officially, it
began the era o f anti-government, snide remarks and the worship at
the altar o f private enterprise. I honestly believe that in passing
proposition 13, the backers of it knew that what they were doing
was not in one-year or two years changing the face o f locally
sponsored government programs, but they were letting hundreds
and hundreds o f termites loose into the funding base of programs
[so] that eventually it would all collapse. They were choking off
the revenue and that eventually government would get, whether
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good or bad, smaller, less dependent on public financing and that
would take time. . . . I think there are multiple reasons for the near
collapse o f the public health care system. The most fundamental
reason began with proposition 13: the loss of funding, the loss of
confidence, the atmosphere that those actions created.
Proposition 13 limited the annual growth of property taxes to 2 percent.
Far more damaging, however, was the reduction in actual amount o f property
taxes collected. Prior to the ballot measure, homeowners and other real estate
holders paid a composite property tax rate o f 3 percent (Paik 6), but after 1978,
tax rates were capped at either 1 percent of assessed value or the 1975 tax rate,
whichever was lower. Furthermore, under the new law, real estate could only be
appraised at the time o f sale or substantial improvements, so that owners who
retained their properties over long periods of time or resisted developing them
further would experience an increasing gain on the accumulated difference between
the actual market rate o f the property and its assessed valuation. In the frenzy to
lop off overly burdensome tax assessments, gift and inheritance taxes were also
trimmed back by the Legislature in 1978. Although in a few instances the courts
ruled in favor of them, new property tax rates or increases in other forms of local
taxation such as taxes imposed by special districts and city sales taxes required
approval by two-thirds of the voters in a special election (Richter 72).
The results were devastating for local governments. In just one year, fiscal
year 1978-79, the state Controller’s office reported that total property tax
revenues dropped from almost $7 billion to less than $3 billion, and, even though
income from property taxes slowly increased over the next twelve years, by the
1992-93 fiscal year, it had been restored to a scant 80 percent o f its
pre-proposition peak (Paik 6). Moreover, over this period, property taxes
accounted for an ever smaller portion of total County revenues, a percentage that,
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in 1992-93, was less than half o f the 1975-76 level, making up a somewhat
insignificant 17 percent of the total County income (Paik 14).
As Lester Thurow points out, distribution o f social goods usually winds up
following the pattern o f a zero-sum game; there are winners and there are losers
and Proposition 13 produced its share of both. The clear loser, over all other
parties, is local government. Yet, more nuanced, and unanticipated, side-effects
developed that supporters explained away as merely incidental. As a five year
assessment of the proposition by a team o f reporters explains:
The middle-class homeowners who led the rebellion have been big
winners in the tax-cut sweepstakes .... Yet, in treating themselves
to a feast of tax cuts, these middle-class Californians also dished
out vast sums to others, including Uncle Sam, non-Californians,
businesses and the wealthy. (Richter 79)
For instance, the federal government went home with an estimated $12.5 billion
medal, between 15 and 25 percent of the total savings from the tax reduction. The
national coffers were filled as the amount taxpayers could claim for property tax
deductions on federal income tax returns slowed to a trickle and the personal
income of more affluent real estate holders expanded in the face of a decreasing
tax burden. So, although the growth in personal income tax expanded from 0
percent to 300 percent between 1975 and 1982, in that same period, growth in
property taxes, having increased at a similar rate to income and sales taxes,
deflated sharply after 1978 (Richter 72).
In addition, a growing disparity between commercial property holders like
farmers or landlords and middle-class homeowners became even more uneven.
Although the savings from the tax revolt were estimated to amount to
approximately $50 billion for California across the board, “for every $1 that the
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homeowner gained in gross tax relief, he gave nearly $1.75 to businesses,
landlords, and owners of agricultural property” as the substantially higher average
value of industrial real estate forced down property taxes and multiplied the tax
savings for companies (Richter 81). Inequity between homeowners also followed
the tax measure. New home buyers suffer a significant disadvantage in two ways.
First, the considerable roll back of tax rates from 1975 levels inflated the California
housing market by allowing buyers to translate the annual tax savings into higher
mortgage payments and permitting sellers to demand more for their homes.
Second, purchasing a home can touch off an enormous increase in property tax
liability for the buyer over what the seller was paying because property, by law,
can only be re-assessed when sold or improved. In this way, “two homeowners
with identical properties can pay wildly different property taxes” (Richter 81-2).
Furthermore, Proposition 13 pitted rich counties and cities and against poorer
ones. Those with a more affluent citizenry living in higher priced homes could
more easily afford the curtailment in tax revenues than those governing a
population with more meager incomes and modest homes. Poorer communities,
oftentimes faced with only 30 percent of their former property tax revenues, found
it an ever increasing struggle to scrape together enough money to fund vital public
services like local school districts, police departments and fire services.
The proposition had several profound effects on local public agencies and
their relationship to state and federal governments. First, the tax revolt strangled
local finances and, in doing so, centralized decision making power to the state and
federal levels. As a result, local governments have become utterly dependent on
funding from federal and state programs. “The only thing the County could do
was that which could be funded by the state and/or the federal government,” says
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the former medical director o f DHS. “You can’t hold the County responsible for
doing things that you don’t permit the County to raise the necessary funds to
provide.” Today, Los Angeles County controls only about 14 percent of its more
than $12 billion budget. The rest is used to leverage federal and state
appropriations for categorical programs or specific projects.
Thus, the voters failed to get what they may have been really after: a
reduction in state, not necessarily local government spending (Richter 183).
Ironically, one o f the central outcomes in the aftermath of the “Spirit of 13” ballot
measure was the solidification o f the trend toward centralizing political power at
the state’s capital, the exact result voters wanted to avoid or at least minimize.
Despite earlier efforts by state legislators, big business and labor interests to
concentrate power in Sacramento such as the 1972 law (SB90) which set certain
limits on property tax rates, restricted spending by local school districts and
promised funding o f local services mandated by the state government, Proposition
13 accelerated that trend exponentially. “Immediately after Proposition 13,” one
commentator notes, “power was transferred from city halls and County buildings
to the state capital” (Richter 99). In most cases, the ballot measure had severely
restricted the ability of local governments to raise taxes or assess new ones without
the permission o f the voters. Faced with dwindling income streams, local officials
had no choice but to rely on assistance from state legislators to finance local
health, welfare and public safety programs.
The state bail out of local governments began in 1978 with Assembly Bill
154 (AB 154) passed as an emergency resolution until AB 8 was implemented in
1979 and remained in effect, largely unchanged, until the 1991-92 fiscal budget
year. The statute created a County Health Services Fund at the state level which
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would make payments to local governments to offset lost tax revenue as a result of
Proposition 13 and partially compensate counties for the provision o f essential
public health services. State assistance was based on a formula that allocated to
local governments both an annual per capita grant of three dollars per County
resident and prospective payments to match half the 1977-78 net costs to the
County o f providing health services to its residents adjusted by the Consumer Price
Index (CPI). For instance, in the 1979-80 fiscal budget year, Los Angeles County,
with its population over 9 million people, received a per capita state grant of $21.3
million and a distribution of state matching funds of $92.5 million. The total state
funds approriated totaled 54 .8 percent of the net cost to the County and 38
percent of total health expenditures (County Health Services Report 19). The
remaining costs were covered by other compensation programs such as Medicare
and Medicaid that pay public hospitals for specific services rendered. The intent of
AB 8 was only to assist counties in meeting their portion of the costs, an ability
that had been severely hampered by the steep decline in the local tax base. An
incentive was also built in as encouragement for local agencies to reduce net health
costs. If a County could reduce its actual expenditures for a given budget year
below the total of its 1977-78 net cost adjusted by inflation, the state would
continue to match the unreduced costs so long as a hearing was held and the
County, from the testimony received, could demonstrate that the curtailments
would not have a deleterious effect on the health needs of the community.
The Health Services Fund was financed by redistributing property taxes
that had been flowing to public school districts to County and city governments.
The state made up the difference so that by 1984, the state contributed over 62
percent o f all public school income and, incidentally, exercised its majority interest
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in many school district decisions (Richter 75). Whereas prior to Proposition 13,
for instance, school systems received 53 percent o f all property taxes apportioned
to local governments and the counties received 31 percent, after 1979, school
districts could claim only around 38 percent o f that total. On the whole, the
mechanism seemed to provide a reasonable solution for a period of time. State
transfers to local governments grew anywhere from 0 to 200 percent depending on
the category. Transfers for public assistance, for instance, grew by more than 100
percent, while transfer for mental health services hardly increased at all (Paik 12).
But, the pool o f funds used for the state bail out slowly began to evaporate
first with the enactment of Proposition 4 in 1979 that tied state income tax revenue
to the CPI and changes in population, and then with the California recession in
1982 that choked off much o f the state budget surplus. In 1983, for example, the
bail out dwindled by 7.1 percent in inflation-adjusted dollars from a high o f $5.85
billion (Richter 72). The program ultimately ended during the 1991 realignment of
state and local government funding arrangements. Prompted by the passage o f a
1988 referendum initiative (Proposition 98) amending the state Constitution and
mandating minimum funding levels for public school systems, the state withdrew
its support for local school systems, restored the pre-1978 property tax revenue
allocation pattern to schools while confiscating a significant portion of tax revenue
going to County governments to pay for the new education requirements (Paik 6).
In 1993, for example, schools commanded 51 percent of local government’s share
of property tax revenues compared to a paltry 21 percent for counties. School
revenues had been nearly completely restored whereas the proportion going to
counties had dropped by 10 percentage points since 1976 (Paik 7). Health services
were hit hard. Although a special sales tax of one half o f one percent was
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established to fund health and welfare programs statewide, state transfers to
counties for health programs dropped precipitously in 1992 by almost 100 percent.
Other than centralizing fiscal power at the state level, Proposition 13
resulted in another equally injurious outcome: the decreased spending power of
local governments. To surmount the growing deficit faced as a result of property
tax revenue cut backs, County and city governments increased user fees for
various public services such as licenses, permits and court charges to cover the full
cost of providing those services. User fees and enterprise revenues, that income
derived from County operated enterprises like airports and hospitals, dramatically
increased from a skimpy 3 percent in the 1975-76 fiscal year to 19 percent in
1992-93, and between 1978 and 1981, fee revenues increased by 86 percent in Los
Angeles County alone (Paik 14; Richter 111). Yet, there is a difference between a
price and a tax and that difference determines whether or not charging full price
for a public service is appropriate; the former is a fee imposed for a non-essential
service like renting a municipal tennis court whereas the latter is imposed for
essential services such as hospital care (Donahue 9). Perhaps the principle of
justice demands that essential services be subsidized for those who cannot afford
to pay the full amount.
Despite the sharp increase in user fees and moderate state assistance, local
governments experienced a downward spiral in spending power. With the legally
instituted restriction against raising taxes of any kind without a two-thirds approval
rate by the voters in special elections, counties were no longer able to issue general
obligation bonds, hampering their ability to finance needed improvements to the
community’s infrastructure. As economists Cliff Atherton and Duane Windsor
argue, cities and counties are the primary “housekeeping units” o f the government
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system, responsible for maintaining a sure foundation o f essential services (83).
Yet, they are also at the bottom o f the government food chain, relying on whatever
crumbs federal and state governments throw down to them. As a result of these
conflicting tensions, roads and bridges went unrepaired throughout the state,
police and fire services were pared down and other services such as flood control,
water, sewer, parking and sanitation often went unimproved. To make matters
worse, counties were having to set aside more and more o f their budgets to pay for
debt incurred in the past.
Furthermore, numerous programs were required by law and could not be
trimmed back. Fearing a public backlash and apprehensive about making
politically unpopular choices, the state legislature made it a condition o f their aid
to local governments, for instance, that police and fire departments would not be
curtailed (Richter 112). Unfunded mandates, for which the County is legally
required to provide certain services— typically health and welfare services— but for
which the state refuses to compensate it, also prevented counties from cutting back
some programs (Richter 113). In addition, local governments found themselves
squeezed between a fiscal rebellion by its citizens, on the one hand, and ironically
contradictory demands by those same citizens for more services (Kent 3). Thus,
local governments were caught between an urgent need to downsize public
services and political, social and economic pressures that eventually “helped shape
a system that today favors public safety at the expense o f public works, health,
welfare and social programs” (Richter 112). Indeed, health expenditures as a
percentage o f total County appropriations for all California counties remained
virtually constant, increasing only marginally from 13 to 15 percent in the
seventeen year period between 1975 and 1992. In contrast, money spent on
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services for public protection grew from 18 to 28 percent of total County
expenditures in that same period (Paik 19).
If police and fire departments and other public safety agencies championed
the budget battles, public health and hospital systems, along with public works,
parks, libraries and community colleges, suffered serious losses in the skirmish.
While demand for health services by poor and uninsured residents continued to
grow during the first five years after the enactment o f Proposition 13, cuts in
Medi-Cal, the state’s Medicaid insurance program for the medically indigent, put
more pressure on already distressed and overtaxed systems. For instance, in the
summer o f 1983, the state legislature redefined the eligibility requirements for
Medi-Cal, limiting payments to physicians, clinics and hospitals to only those
services “necessary to protect life or prevent significant disability” (Richter 156).
In the course o f doing so, many patients who were covered suddenly found
themselves bumped from the program. Around the same time, the Medi-Cal
program eliminated an entire class o f patients called “medically indigent adults,”
those able-bodied adults who, for whatever reason, lived in poverty. It was
supplanted with the Medically Indigent Services Program (MISP) that provided
block grants to counties for medical services rendered to these patients but at a
reimbursement rate at only 70 percent of the previous Medi-Cal rate (Richter 156).
As more and more patients were terminated from the program, they flocked to
County health systems for care, aggravating the fiscal crises experienced by many
counties. For instance, in the twenty years prior to 1984, the 64 public hospitals in
the state underwent a one hundred percent reduction and nine public hospitals
were closed in the period between 1979 and 1984 alone (Richter 155). Cut backs
and layoffs became commonplace and access to medical care was more restricted.
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Thus, the tax revolt incurred a somewhat disconcerting mix o f results for
Californians. There is no doubt that the long-term economic, political, social and
cultural effects of Proposition 13 have endured for at least a generation and may
leave an austere legacy for future generations to come. “At stake is the future
shape o f state and local government, and whether it can provide a fair and rational
system of taxation and a distribution of political power that gives a voice to all
Californians,” suggests one journalist (Richter 98). Much of the responsibility for
igniting the revolution can be attributed to the ascendancy of Ronald Reagan as
governor of California. His ballot initiative, Proposition 1, designed to reduce
government spending, failed, but the seeds o f a grass roots insurrection had been
sown which would come to fruition only six years later (Richter 187). Although
Reagan may have planted the poisonous germ in the minds of frustrated voters, it
was the toxic seeds o f Proposition 13 that have sprouted into full-fledged weeds
choking the life out of health and welfare services, including those at County
General Hospital and other public hospitals and clinics. The political landscape
had been permanently marred, signaling a paradigm shift toward a conservative
mentality antagonistic to big government and hostile to publicly funded social
welfare programs. Through the collective vision of the Los Angeles medical
community, the complex terrain of this new public personality will be charted in
the following section.
The P ublic's Got an Attitude:
On the whole, physicians and other health care experts in Southern
California are appalled by what they perceive to be a fundamental shift in public
attitude characterized by hostility toward social programs, in general, and health
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services for the poor, in particular. They share a common conviction that positive
virtues such as nobility, mercy and compassion have, at least for the foreseeable
future, been erased from the public’s moral slate and from a once widespread fund
o f social and ethical ideals. Part o f their revulsion may be influenced by the
standard training they receive in medical school and as residents often caring for
poor patients, or explained by that self-selection which hopefully still drives the
altruistic into the practice o f medicine while encouraging the less benevolent to
pursue other professions. As a group, they detect a kind o f cultural revolution,
one characterized by tax revolts and a shift away from communal solidarity and
neighborliness, one that embraces individualism and self-interestedness and one
that engenders disgust for people who look, act or think differently from
themselves. It is a bad meal, serving up heaping portions o f “cruelty” and
“mean-spiritedness.” Remarks one pathologist:
I think the political climate has changed in California as well as in
the country. We are shifting to a more conservative— crisply
conservative— form o f government that seems to believe that it is no
longer the responsibility of government to provide care for [the
poor]. . . .
Disdained by the vast majority of the medical community, it is a shift that, “raises
the hairs on the back o f your neck,” avows one health advocate, “because you
realize people hate so deeply that there is not a rationality to it.”
It is a “restorationist mentality” marked by a pronounced emphasis on
socio-economic, racial and cultural differences, a divisive mode of thought that
polarizes ethnic and geographic communities into separate camps, entrenched in
isolating suburban as well as inner-city ghettos. The most striking cleavage is
between those with enough possessions and the wholly dispossessed, between the
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middle-class and the poor. One physician described the political environment as
the “me generation” o f the 1980s spilling over into the 90s. “People are so
self-centered,” she protests, speaking of the middle-class. “They don’t look past
their own little world. And it’s becoming worse. They create a bubble for
themselves.” Their attitudes disconnect those who, for instance, are covered by
health insurance from those who are not. “‘I’ve got mine so I don’t care about you
and just don’t threaten mine,”’ is the confrontational stance assumed by
mainstream society against the less fortunate.
What these dedicated health professionals are sensing— a “reactionary angry
tone”— may stem from several different origins. First, the antagonism may result
from a failure to discern the subtle interconnections people have between
themselves and others, barely visible strings often indetectably tying communities
together anthropologically, psychologically, economically— and epidemiologically.
The affluent feel “untouched” by the adversity of the poor, they argue. One doctor
asserts:
If you grew up in Westwood and your parents were white and
working and you had your own insurance and a private doctor and
you are in school and you had no sort of financial difficulties at all,
[then] you might say, ‘we don’t need those hundreds of millions of
dollars to keep this [hospital] running and I don’t care about this
part of town. They can close the medical center. I don’t want to
pay more taxes. . . . I want to pay my own way.’
Only when they discover that people close to them— at work, in restaurants or even
in their own homes— are uninsured, only when they figure out that the restricted
access to medical care those individuals experience could affect their own health,
suggests another physician, will the sentiments o f the voting public be restored to a
more humane disposition.
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Alternatively, economic instability and an inveterate recession in California
also strongly contributed to the paroxysmal public outrage against welfare and big
government. As one physician points out, the less confident middle-class
Americans feel about their own financial security, the less likely they are to donate
to charity or cheerfully pay taxes to a government they perceive to be feeding a
welfare-hungry coalition of single mothers gluttonously gobbling up precious
resources in an unbridled mendicant orgy. One physician speaks of the overstated
concern associated with rising unemployment and the erroneous culpability
attached to people on welfare:
I think there has been a level o f hysteria whipped up politically over
issues related to welfare. People feel as if half their paycheck is
going to people on welfare, when, in fact, it’s a very small amount.
. . . There is this vision of vast hordes of illegal aliens and teenage,
pregnant black women who are destroying the country. . . . ”
Indeed, when urban myths suggest that cunning illegal aliens are able to steal their
way onto medicaid rolls while poor, hard-working American citizens remain
uninsured, an exaggerated sense of justice may inflame passions, aggravating the
already frenzied anti-welfare fury.
Others assign responsibility for the backlash to a brand of false religiosity
associated with the Christian Right, an ultra-conservative political movement
“vociferously” promoting “traditional” Christian values in social, political and legal
contexts. They champion a constitutional amendment to protect school prayer,
legislation to prohibit abortidfc on demand and political strategies to sharply reduce
social welfare programs. Although they justify their claims by appealing to specific
biblical passages, physicians criticize the approach of the religious right as
hypocritical. “You can be so religious that you are not right,” asserts one doctor.
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Very few physicians ascribed their moral faculties to religious principles, yet
central to their ethical view is compassion, charity and a commitment to saving
lives. So, what confuses them is what they perceive to be the movement’s
elements of bigotry and narrow-mindedness. “The thing about the Christian Right
for me right now that is absolutely frightening is this intolerance, this philosophy of
intolerance,” explains one hospital administrator. Likening it to Nazi Germany or
the massacres in Cambodia, she says, “the principles are always the same: there
has to be a ruling class and everybody else is expendable.” Despite its minority
status, the coalition’s intensity, “zealous manner” and “evangelical approach to the
restructuring of society” adds to their potential political viability, making them a
dangerous adversary or a coveted ally. Either way, however, they constitute an
undeniably powerful political and social force contributing to the thought and
ideology of much o f mainstream society.
Even more heartless but nevertheless ubiquitous, however, is the way
society shuns the poor because they are hard to look at. Vile and ugly to the
conventional sensibility, they are avoided on the streets, overlooked and passed by
without notice. It is probably an ingrained biological need to look past the weak
and herd together with the hearty and Herculean, but, in a society whose poverty
rate continues to climb, it becomes more and more difficult to do so. “. .. If there
is anything that is unattractive,” says the executive of one medical foundation, “it’s
the poor and those who are in need. They are really unattractive folks and we
would just as soon not pay any attention to them.” Satirizing society’s illiberal
views, he adds: “It’s embarassing that they actually make demands on us.” One
physician even argues that County hospitals make convenient asylums for those
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unwelcome in private hospitals and those rejected by mainstream social
institutions. Speaking of society’s collective mind-set, she opines:
They want them taken care o f but they don’t want them taken care
o f in their [own back] yard. They don’t want to see people of color
who are sick, people like we have at the County, in their hospital. .
. . They want them taken care of— out of the way.
Thus, a great divide has developed in Los Angeles, according to these
health professionals. Polarized, it seems, are the archetypal communities of East
Los Angeles and Beverly Hills, the former struggling to survive in an increasingly
hostile political and economic environment, the latter apathetic and impassive.
One doctor illustrates the dull indifference more affluent sections of the County
seem to have for the plight of the medically indigent. During the time o f the crisis,
her routine appointments at a beauty salon in Beverly Hills became opportunities
for other clientele to chatter about the predicament County General found itself in.
Safe and secure in their prosperous comer o f Los Angeles, the customers were
confident that the knotty problem of providing health care to the poor and
uninsured was one to be grappled with by “those people” down there, meaning the
poor population of the County. They felt assured that their community would not
be impacted by the crisis. But, “who is washing their hair at the beauty salon?” she
asks rhetorically, trying to point out the obvious connection. “Who do they think?
Do they look at these people? I don’t think they really look and see that the lady
washing their hair comes to this hospital.”
A profound lack of understanding, then, erects barriers between the two
paradigmatic communities, one symbolizing wealth and affluence, the other
indigence and misfortune. One physician expresses his frustration with many of his
acquaintances:
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When I talk to my neighbors for example, they are just more
ignorant of what's going on than anything else. They don't have
strong feelings about this; it’s just that they don't know what's
happening. Despite all of the publicity and the coverage,. . . they
are remarkably uninformed about what's going on because they
don't feel that it’s a particularly important problem for them.
Again, I think it goes back to this attitude, ‘well, that’s a place that
takes care of the poor, the homeless and the illegal immigrant.’
To their minds, the public just does not understand the significance of the Medical
Center and the dire need it fulfills in the community. In repeated rhetorical
appeals, physicians practically plead with the community to come to the hospital,
look at what they do, put their fingers in the wounds o f trauma patients clinging to
life and see for themselves how their stereotypes are misinformed. “It’s too easy .
. . , ” says one physician, “to create bogeymen and to hear and accept unbelievable
stories” from afar.
Unfamiliar with the type of patients the hospital serves or the staff and
physicians who devote their careers to the institution, a type of fictional legendry
fills the informational vacuum, according to County physicians. One o f these
hackneyed images portrays the poor and uninsured as half-witted gangsters and
drug users, evoking harsh proposals to cut off welfare benefits and erect additional
prison space. ‘There is just sort of an attitude that poor folks really deserve to be
poor,” explains one physician in private practice. “It’s kind of a social
Darwinism.” As a result o f the type of mechanistic thinking typical o f late
twentieth century thought, it is the sheer circumstance of poverty itself that
triggers the instinctive conclusion that the poor must have made bad choices or
have chosen to live in squalor. “I think the community many times equates poverty
with stupidity . . . , ” argues one academic. Another doctor recalls watching
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Ronald Reagan in a television interview insisting that homeless people voluntarily
sleep in the streets.
Laziness is another characteristic attributed to the poor. They are
irresponsible, critics of welfare argue, quickly becoming addicted to both drugs
and government checks. On the dole and dependent on handouts, they are “a drag
on the mighty engine of free enterprise,” says one doctor summarizing the
anti-welfare banter. Another physician describes the Republican argument against
welfare as paternalistic, viewing social programs as a destructive malignancy
killing the individual’s moral character and a dangerous disincentive stunting
personal growth and development. ‘There still is this pervasive immigrant bashing,
poor people bashing,” explains the administrator of a large, private health system,
“that if only they worked harder and committed and did the things I did or my
neighbors have done, they wouldn’t have these needs.”
There is also widespread anger against freeloaders who clearly abuse the
system and skillfully siphon off the hard-earned income of the middle-class. The
malice is palpable. One doctor in private practice told the story of how he lost his
innocence. In the wake of 1994 Los Angeles earthquake, he hurried over to the
community hospital to assist in treating the enormous number of injured people
who came to the emergency room. He spent hours bandaging and stitching, taking
x-rays and reading lab results. But, on his way home, after a long day of volunteer
service, he passed shops being looted, stores selling water at triple the original
price and food lines being revisited over and over again by greedy people. “I was
very angry,” he recalls. “I had given o f myself because I owed society and there
were others taking advantage.” Admitting the generalization is unfair, he still
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expressed his bitterness: ‘1 think there are those of us who are the angry majority
who feel that we are being taken advantage of.”
Even illness or injury, two o f the most relatively uncontrollable and
unpredictable misfortunes to beset humankind, are not exempt from libertarian
austerity. Rich people do get sick, but they have often purchased first rate health
insurance or dedicated a portion of their income to tax-exempt medical savings
accounts. As such, it is hard for them to understand why the poor cannot do the
same, as if a twenty thousand dollar hernia operation is within the means o f a
migrant farm worker and merely represents a trade-off between having the
operation or buying a six pack of Corona beer and a taco. The Republican
perspective, according to the medical director of one private hospital “is that
health care for the poor is just like welfare .... It’s another entitlement that
encourages idleness and needs to be curtailed because it just fosters dependence.”
Another physician, one of the few who actually share this anti-welfare sentiment,
provides an illustrative, if graphic, diatribe by which to understand the deep
resentment pervasive in the restorationist backlash:
We must impart to our society the idea that shit happens and that
you must prepare yourself for some of that shit. So, when you are
going to have a child, you cannot just assume that everything is
going to go fine. . . . That’s what you have an insurance policy
for. So, I’m suggesting that indeed, you have the two hundred
dollars every three months or six months, whatever your policy
costs, to take care o f the shit when it happens. But, when you sit
down to copulate and you have a child, that is a responsibility that
you have to assume. I shouldn’t have to put your two hundred
dollars down to take care of that insurance policy for you. Nor do I
need to take care o f your son’s sore throat because you should be
able to afford to buy Tylenol. And you shouldn’t be coming into an
emergency room charging society an E/R visit, a doctor’s visit
because you won’t go to the store and spend three dollars on
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Tylenol. Your child is wearing Nike shoes. You just ate at
McDonald’s. But you don’t want to go buy Tylenol because we
have basically allowed you to come into the E/R. You show your
Medi-Cal card, you get your Tylenol. You even want me to give
you something to go home with. You don’t want to stop at the
store. No! That is entirely wrong.
But, most physicians, both in public and private sector practices, adamantly
oppose this view. Universal health coverage, they argue, is cheaper on a
macroeconomic scale than the current system which marginalizes over 42 million
Americans from health insurance coverage. But doing so, as one oncologist
pointed out,
doesn’t fit with the punish the poor, punish the hispanics schtick
that is going on now. It’s an issue of equity and justice which are
not words that are very popular these days in American culture.
Justice is really vengeance— the death penalty. That’s not what
justice is. Justice is really social equity. How do we respect the
differences between people and have economic opportunities and
reward initiative and so forth but, at the same time, have the kind of
society that provides a certain amount of care for everybody?
In addition, most physicians staunchly defend the virtue of the poor. They
become indignant at irreverent insinuations made by right-wing critics, especially
concerning the hardships endured by undocumented workers. To them, the poor
belong to their special domain marked by medical idealism, a domain that must be
protected from marauding outsiders. Even doctors in private practice, hospital
administrators and other health care executives have this keen sense o f trusteeship
over the welfare o f the poor, a sheltering, custodial relationship that seeks to
insulate their indigent patients from the ravages of an obdurate world. For
example, they often seek to convey with accuracy the afflictions associated with
poverty and the difficulty with which it is vanquished and the problems needed to
overcome it in order to enter mainstream society and play an active, useful role in
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the life of the community. Referring to hard-line conservatives, one County neo-
natologist illustrates the point:
I think these good, but unsensitive, unempathetic people don’t
understand how hard it is for those that are disenfranchised to get
[into] part o f the loop. I think they don’t understand the
hopelessness that individuals go through, say in a hard-core inner
city ghetto. I don’t think they can fathom being bom into that and
trying to emerge from that, how hard that is to get out of that loop
and how it can self-perpetuate. I’ve seen it first hand. I have
witnessed family after family that just perpetuate that. . . kind of
syndrome.
Resolute in their condemnation of a backlash against helping the poor, the
majority of these health professionals also denounce a kind of institutionalized
racism they see playing out in the crisis. Anti-welfarism, they say, is merely a code
word for racism as it is easier to dehumanize people, easier to withdraw support
and suspend benefits from a group who is identifiably different. Although people
of color make up a much smaller percentage of those on welfare or those receiving
government-sponsored health services than the majority, a disproportionately
higher percentage of racial minorities are on welfare which makes it easier to
assign blame. O f course, the easy mark is the swarm o f “brown people from the
south”~the Latino population which constitutes almost 70 percent of the patient
count at public hospitals and clinics in Los Angeles. In fact, media coverage tends
to single out people of Spanish-speaking origins and the focus on illegal
immigration also centers almost exclusively on Hispanics, Latinos and Chicanos. .
“. . . The only people who are talked about in the media [are] . . . Latinos. We are
not hearing . .. about the Russian immigrants or about the Armenian immigrants. .
.. They are not even talking about the Asian immigrants,” says the CEO o f a
private, downtown hospital pointing out the apparent hypocrisy in the
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politico-media coverage o f illegal immigration. Indeed, it is a rare phenomenon to
hear disparagingly remarks about a “poor Canadian” sneaking over the border to
get free health care, mentions another observer. Part of that response may be
explained by the accumulation of a critical mass of immigrants from a common
ethnic descent. Whereas a slow trickle from various racial backgrounds may be
tolerable to an increasingly guarded society, large waves of immigrants from what
at least appear to be similar ethnicities tend to bring out the worst bigotry and
racist proclivities in the majority population.
The result is the shaping of an indifferent disposition toward the economic
problems of poor minorities or even the articulation of outright hatred. “There are
many elements in Caucasian society,” comments one observer, “that don’t relate
well or have the same degree of empathy for the poor black person as they would
have for a poor white person and maybe some that don’t have any empathy for
either one.” Lack o f empathy may in fact motivate what many physicians see as a
disturbing racial storm brewing in the political waters of Los Angeles County. One
physician in private practice is enraged, parroting what he perceives to be the
prevailing sentiment o f the community:
Load them on the boat and send them home. Why should we spend
our tax dollars [on them]? This incredible attitude which is
manipulated and exploited by our dismal politicians. There is not a
high-minded person in the whole bunch. Pete Wilson even used to
be kind of a liberal, but now he is a xenophobe like all the rest of
them.
It was this noxious political concoction, as many argue, that galvanized support for
Proposition 187, that “horrifying example” of social disintegration, that ballot
initiative passed in 1994 but still held up in the courts that bans illegal immigrants
from admission to public schools and limits their access to public health services to
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the treatment of life-threatening conditions only. It’s attractiveness grew,
indoctrinating the public with a racist creed and, as one trauma surgeon at County
General argues, ultimately fomenting the development o f the health crisis. A
dangerous interference into what should be the autonomous domain o f medical
care, it is a “big mistake,” he says, “to mix political well-being with peoples’ lives.”
On the other hand, several commentators debate the mainstream argument,
saying that what may be perceived as racist behavior are merely symptoms o f
deeper structural problems at a social level. Despite the undeniable burden
disproportionately felt by the Hispanic and African American communities when
the public health system was curtailed, they argue, the shortage of funds
constituted a fiscal crisis threatening the welfare of all poor people who relied on
the system for their medical care. The fact that the patient population was mostly
made up of minority races and ethnicities is merely incidental. They question the
validity of ad hominem snipes directed at politicians and harsh excoriations of the
general public and insist that whereas the crisis may have had racist results, a racist
intent did not exist. It was economic not racial prejudice, they contend.
But it is this argument that barely scratches the surface, argue other
observers. The crisis may indeed have been one of fiscal realities, but to disclaim
any racial motivation in how and where the budget cuts were made discredits the
“intimate relationship” that exists between racial, ethnic and cultural factors, on the
one hand, and socioeconomic status, on the other. Political decisions may be
covered in a thin veneer of racial impartiality and cultural neutrality, but in reality,
these critics say, there were other choices that could have been made. Money
could have been appropriated from other County departments or the state
legislature could have levied special taxes, both of which may have impacted the
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racial majority more keenly. The choice was made, however, to allow the fiscal ax
to fall discriminately on those services that a higher percentage of poor minorities
tend to use, and that, say critics, substantiates their claims o f racial discrimination.
When it is possible to conveniently associate social problems with a highly visible
subculture or minority group, those people become “expendable,” as one chaplain
called it. The services are more easily devalued and the conclusion is more
comfortably reached that this particular group is not worthy of the social
investment.
This is the type of indirect, institutionalized racism these commentators
claim lurks below the surface, rarely emerging in full view, but subtely motivating
social and political decisions. It pervades most social institutions including health
care organizations. One physician even bitterly intimates that medical training is
affected as well, infecting future generations of doctors: ‘There is a funny streak
in our medical students, many who [sic] are anti-vivisectionists and who find moral
problems in using animals in labs .... [They] would prefer, I guess, to learn on
Mexicans.” Another observer likens the prevailing sentiment to that which
gradually unfolded in Nazi Germany or took hold in fascist Italy. Economic
problems— recession, stagnated personal income, unemployment— are not blamed
on politicians, workers or even business leaders; instead, fingers are pointed at
“that other group that’s coming in and sucking away the life blood from our
society.” “What they’ve done,” he says, referring to the politico-media culture in
Los Angeles County and other communities similarly affected by alarming
immigration trends, “is the age-old thing which is to focus on some group and you
and I are just lucky that it’s not balding old men or fair-haired young men with
beards.”
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The consequences, these social critics say, could be devastating. The CEO
o f one large, not-for-profit private hospital recalls her own personal experience
with racism:
I grew up in the South; I grew up in Georgia. . . . I grew up when
there was a White water fountain and when there was a Negro
water fountain. I grew up when whites sat in the front of the bus
and blacks sat in the back o f the bus. And what that has done to
this country, from a social, humanitarian standpoint, I’m not sure
we’ll ever recover from. . . . I don’t think that the politicians who
are making, what I consider, unenlightened decisions .. . realize
what the consequences are going to be ten years from now when
the Latino population is the majority population, when they are the
people making the rules. Because I know what I would do if I
were in that situation. . . . all of a sudden maybe I would withdraw
support for the Anglos. Because what we are doing is creating a
situation where we are not all in it together.
She hesitates for a moment, and then teaches a simple lesson learned from a brutish
history experienced first-hand: ‘Tf we are all going to be here, we had better all be
in it together.”
Thus, the historical consciousness of a community is colored by issues of
race, class and ethnicity. Socio-economic differences are compounded by racial
differences, by differences in appearance and cultural idiosyncrasies. In the minds
of some, economic distress is magnified into an exaggerated sense of justice that
becomes a harsh plumb line against which the poor and vulnerable classes--
disproportionately racial minorities— are judged. Stereotypes become reified and
myths are passed down through generations, hammering on the foibles, real or
imagined, of those less fortunate. These are the opinions o f many in the Los
Angeles medical community. They are angry about what they see as an
acrimonious restorationism of the general community, a public backlash against
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illegal immigrants and welfare recipients, including those who seek medical care in
the County’s public health care system. One physician in a lucrative suburban
practice and delegate to the American Medical Association, articulates best the
consternation most of the medical community seems to feel on behalf of the poor
and uninsured patients traumatized by a callous political climate:
. . . Instead o f rethinking our priorities and being a kinder, gentler,
generous, loving society, we are into draconian, punitive, greedy,
grasping stuff. The millennium is forthcoming and my nomination
for the theme for the next thousand years is for the human race to
forgive one another which I think is at the core of all other positive
social interactions. It’s enough already. We killed people— 250
million o f them in the twentieth century. We are wallowing in
collective madness. Let’s think of another idea .... The madness
needs to stop.
The broader implication o f this “collective madness” is manifested in the
nation’s short-sighted public policy, many say. A more wholistic approach to
solving social problems is noticeably absent as authority and responsibility are
widely dispersed across government bureaucracies. The much needed ability to
discern a broader social vision spanning across the full spectrum of communal
needs, compounding disconnected budget concerns and integrating the separate
affairs o f multiple departments and agencies is often thwarted by the frequent
provincialism stifling political progress, according to one pediatrician in private
practice. The problem is that the effects of long range planning are often
overlooked because o f the decentralized structure of government organizations.
Investing more money into health care to ensure the well-being of children by
improving their nutrition, for instance, may, over the long term, reap savings in the
education budget with less learning disablities, but the health care budget will
certainly appear bloated to many critics. “I think we are lazy in our public policy,”
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asserts one academic. Policy makers are essentially “satisficers,” settling for the
first easy solution that becomes immediately apparent. Illustrating the crassness of
this mentality, she provides a hypothetical example: “It’s like public policy that
says, ‘you don’t give dentures to people on welfare. You pull all their teeth and
then they don’t eat properly. So, you give them food supplements.’”
Health care is one area that, in these critics’ minds, is unquestionably
plagued by myopic public policy. With more than 42 million Americans uninsured,
with a disproportionate amount o f medical resources squandered on futile and
extraordinary care, with large health corporations and insurance companies
garnering record profits and cash reserves, American health care suffers from an
anemic value to price quota and a sickly productivity ratio. “If we were struggling
in this country to find enough money to provide for basic health services as in third
world countries,” says one health policy expert, “I might see this a little bit
differently, but we are not. We are spending almost twice as much per capita [as
other countries] . . ., and yet we are ignoring the enormous portions . . . who
don’t have access to health care.” Because “health care is a critical measurement
of how you take care of society,” as the chief medical officer of a large HMO
points out, it is not surprising that physicians and other health policy experts
wonder why American society cannot muster its courage, by making the hard
choice to divert resources from other less socially useful activities, and gird its
people with an efficient and reliable system o f health care delivery.
The underlying problem is easily visible to this medical community: the
maldistribution of wealth and income among the rich and poor of the country. As
more and more social goods are concentrated in the hands of a few elite, some
observers note, the less likely society will be inclined to fund health and welfare
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services for the underclass to detriment of the common good. “Whenever you
have an economic downturn,” says one physician, the president o f a large southern
California health system, describing a kind of morose blood-thirstiness, “the
wealthy people who control the power will go first after the allocation of money to
the people who don’t have those sort of resources.” Another physician, an
immigrant, finds it “embarassing” to be a citizen of the most wealthy nation in the
world and still find people living on the streets in makeshift homes of cardboard
boxes. Indeed, one indication of a nation’s health, says one administrator at DHS,
is what political economists call a genie coefficient. The smaller the coefficient,
the smaller the gap between the incomes and net worth of the richest and poorest
populations is, the more homogenous the income levels are, and the healthier the
nation is. If history is any guide, there will be a breaking point, he says. If the gulf
between the rich and the poor becomes intolerably wide, he argues, “. . . the
peasants revolt and overthrow the government.” According to another physician,
the medical director o f another large HMO, when the level of crime and disease
become unbearable and the percent of the gross domestic product allocated to law
enforcement and treating chronic medical conditions becomes insufferable, only
then will the privileged few holding the purse strings be willing to invest in
society’s health and welfare infrastructure. Warns one County physician in a
twisted sort of wishful thinking: “twenty to thirty years from now, when we look
back on this, we just can’t believe how foolish we’ve been and how short-sighted
we must have been and nobody will understand it.”
But the toll is already being paid to some extent, even though the fine is as
o f yet undistinguishable to mainstream society. As more and more middle class
families are disenfranchised from the roster of the insured population, they are
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increasingly seeking care at public hospitals and clinics. One physician has
observed this change in the demographic composition o f patients at County
General. Over time, it has shifted from a poor and unemployed to a middle class
population. With the seemingly irreducible problem of liberal legislation (ERISA)
that exempts large, self-insured employers from the jurisdictional authority of state
insurance commissions, even families with premium policies can be at risk o f losing
their insurance or o f not being covered for pre-existing conditions, and with the
general decline in the level o f loyalty paid to policyholders by insurance companies,
a protracted illness or serious injury could be catastrophic. “A lot of those patients
who initially started off insured,” recounts one emergency room physician, “have
eventually ended up in the County system. . . . When . . . [HMOs] identify very
high cost patients . . . that are going to have multiple, repeated, expensive diseases
to treat, they do whatever they can to eliminate those patients from their rolls.”
Ultimately, says another doctor, they realize the profound importance of public
hospitals.
Unemployment and work force reductions also contribute to the increasing
middle class status of County patients. With the decline of the aerospace industry
in California and the frequency of mergers, downsizing and corporate
restructuring, says another physician, the executive of a medical services
organization, the new welfare patient may increasingly be an exile from the ranks
of the middle class. “Quit talking about the working poor,” counsels one hospital
administrator, “and recognize that what we are really talking about now is the new,
blue collar worker who is working in a service job at a very low rate of pay.”
Indeed, the transformation of the global economy from a manufactoring to a
service and information base is deeply impacting the configuration and level of
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employee benefits including health insurance. The future is foreboding in the eyes
of some members o f the medical community. One County doctor cautions the
public: “. . . If they look in the mirror, they are not as different as that person who
doesn’t have insurance as they think. They are one defense contract layoff away.”
Yet, the general public nevertheless turns a blind eye to the needs of
politically and economically vulnerable groups, say these physicians. Health care
for the poor is a low political priority and those who lack a strong voice, “those
who are poor, who are ignorant,” will be the first targets to have entitlements cut.
Political mobilization and community organization may achieve positive results for
marginalized groups, but, as one County doctor points out, the hispanic
community in Los Angeles is typically disorganized and spread out along ethnic
lines. Although Spanish may be a common language the diversity of cultural
backgrounds— Mexican, Central American, South American— impedes the
stimulation o f an empowered community. In fact, the chief executive officer of
one of the most profitable southern California HMOs remarks that the
disempowerment, the political peripheralization of vulnerable and alienated
minority groups is the far-reaching cause of the health crisis in Los Angeles
County. Indeed, indigent health care is subject to the whims of political fads.
On the other hand, many commentators argue that it is not only some
monolithic public that collectively determines the fate o f the poor and uninsured.
They are opposed to the conventional idea that “the people who vote, who pay the
taxes [are those] who the politicians pay attention to . . . .” Rather, they say, it is
the other way around. They denounce mercurial politicians who mislead the
public, prey on their fears and weaknesses, and intentionally distort or magnify
issues which are sure to rally the collective ire and distract the public’s attention
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from the wizard behind the curtain. “So, the politicians courageously vote for the
death penalty for the bad guys and let’s get rid of the illegals,” one physician
sardonically sneers. ‘I t ’s typical o f the tired rhetoric of American political life: the
unwillingness to give honest answers to difficult questions.” “They show what
they want to show,” says another doctor, noting a sort of smoke and mirrors
political style. Another argues that focusing malevolent feelings against fringe
groups cowering and immobilized on the edges of society is just good politics. It’s
good form. For example, the recent retraction of prenatal care to poor women on
Medi-Cal on December 1, 1997 by California governor Pete Wilson is
self-defeating, remark several physicians. Implemented in 1988 by Republican
governor Deuke Majian in response to an overwhelming number of studies
demonstrating the indisputable cost effectiveness of prenatal care and the
enormous level of future savings to be gained by the state, critics read clear
political undertones in Wilson’s move. ‘There is no logic as to why Wilson is
cutting off prenatal care now. There is not an economic crisis. .. . [or] an
emergency situation. . . . He [just] wants to show that he doesn’t want to give
care to the undocumented.” One doctor recalls Wilson touring her community
clinic and being very impressed with his dedication to preventive medical care. His
change, she is certain, is political.
The fundamental problem, they say, is the death of big vision, the kind of
eagle’s eyesight that surveys the vista from afar and develops workable strategies
for the long-term. Yet, being farsighted, it seems, is not a politically salient or
saleable asset, as one County physician argues:
It is a lot easier to get elected as a figure pointing to some
group— be it gays or Mexicans or blacks or some other group. It’s
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a lot easier to coalesce support for your candidacy in the short-term
than to turn and say, ‘Look, I have a twenty year plan for
California. . .. But, by the way, I’m term limited to two or four
years. So, here’s the beginning o f the plan but for the next eighteen
years, you’re on your own.’ That’s not going to get you elected.
Another impetus also shapes public opinion. Gatekeepers to crucial
information, the media controls the community’s access to knowledge. Their
interpretations often determine whether outrage or support will be the reaction to
some given issue. Yet, as the medium o f the media itself undergoes significant
changes, so does the quality of the message. With the increasing reliance on
fleeting images or transitory sound bytes mere nanoseconds long on less interactive
broadcast media such as television and radio, audiences are becoming more
passive, impressionable and receptive, and less proactive, skeptical or demanding.
The result, critics say, is a dulling o f the public’s political senses, a desensitization
to weighty social issues. Furthermore, the intense competition with other media
for a dwindling amount of time devoted by the public to digesting the important
news stories of the day requires a type of sensationalism to grab the audience’s
attention. As a result, says one health care executive, “public opinion is only as
good as the last scare.”
One example of the sort of thespian melodrama that seems imperative in
the current world of news media is the Los Angeles Times ’ series of articles
published at the height of the crisis entitled “Code Blue.” In the first article of the
series— “How Public Health Care Got So Sick”— the introductory sentence reads:
“Los Angeles County’s vast public health system— which came within a heartbeat
of collapse this fall— is an entrenched and inefficient bureaucracy whose hopes for
survival are tangled in its troubled past” (Rabin, Meyer & Cheevers Al).
Continuing, it registers a list of shortcomings, many of which, say physicians, are
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unfair and misleading. It depicts the County system as one that is stalled, resistant
to change and “virtually ignoring the national trends that are dramatically reshaping
health care” (Al). It chastizes management for its decentralized and incomplete
data management system and highlights a number of insufficiently verified internal
scandals. In truth, the subsequent articles in the series are less scathing, more
accurate in their reportage and more willing to detail the number of external
factors that aided in bringing about the crisis. Nevertheless, the tone and tenor of
the articles run sharply counter to that of the articles printed in the Los Angeles
Examiner or Herald in the thirties, forties, fifties and sixties as noted in an earlier
section. At that time, the County General was heralded as the best public hospital
in the nation, a bastion o f hope for the poor, the cultural heart o f the County’s
medical community, a loving mother and tutor to future generations of doctors and
an enduring symbol o f civic pride in the community’s renowned public institutions.
Had the institution changed so much in the course of the twelve year period
between 1960 and 1972 when a “County-appointed blue ribbon panel of experts
criticized health care efforts as fragmented, uncoordinated, wasteful, impersonal
and overspecialized” (Rabin, Meyer & Cheevers A24)? Or had there been a sea
change in public attitude, a chill in the political climate that persists event today?
Most physicians argue the latter, and some maintain that it is the local
media’s drawn out attempt to discredit the institution in an effort to appeal to
readers that is, in part, to blame for the public’s about-face. Several even suggest
that the Los Angeles Times’ inherently conservative political philosophy goaded it
into a protracted conspiracy to malign the system and the physicians working in it.
One physician explains his reasoning:
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The L. A. Times has been partisan since the beginning o f time . . .
[and] not particularly well disposed towards the general poor and
people o f Los Angeles. The family has always been pretty
right-wing. . . . We had some interviews by L. A. Times reporters
here who, when they got the stories from us here said, ‘Oh, gee
that’s not what we were led to believe, but you have given us the
facts and so forth and so that’s what we’ll print.’ They go back and
they print the [opposite]. We call them up and they say, ‘Well, my
editor told me to change it, that this is a good time to get doctors.
We’ve never nailed those sons o f bitches.’
A particular example brought up in three interviews concerns a particular incident
in the operating room of County General. According to these physicians, the
paper reported that the attending physician supervising an operation left the
resident performing the surgery alone for some time and, as a result, the patient
died. “So the perception then in the press is,” according to a senior doctor at the
County, “the faculty don’t do their job. They don’t surpervise. Those residents are
running wild and patients are dying.” The truth, according to the physician who
was actually designated as the negligent faculty member in the article, sharply
diverges from the paper’s account. He did leave to check on some patients in the
cancer clinic across the street and returned later. The patient did expire, but not as
a result of his absence, because, in reality, he says, he was merely assisting another
board-certified, fully credentialed faculty member who continuously monitored the
work o f the resident performing the operation. Knowing that the story would
break the following day and he would be named, he called the journalist to dispute
the facts and defend his reputation. In response, the reporter
just said that he had been told by his superiors on the story to write
[it] and he really didn’t have an interest in putting out my side of
the story. . .. I’m pretty certain that the political agenda that the
L. A. Times has . . . is made probably far higher than the reporters
writing the story about what they want to portray.
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Another physician objects to the hyper-political orientation o f the newspaper “We
are an ongoing target for the media having to do with things about fraud, abuse,
malpractice, misbehaviors of all sorts that are usually taken out of context, have
some support on [their] face and usually are not accurate representations.”
Overall, then, political overtures and media depictions substantially
contribute to the direction public opinion follows. How the problem is articulated,
or even if it is broached at all, determines, in part, how the community will react
and by what measure it will evaluate it. Because they don’t have the opportunity
to see for themselves first-hand, they rely on images conjured up by government
officials and elected representatives and on portrayals produced by the press. One
former health correspondent for the Los Angeles Times, exemplifies this thinking.
If the public could be made to stand at the bed-side o f an undocumented worker,
an illegal alien bleeding to death, not a single person, she argues, would order the
treatment to be withheld because “that would be x amount o f dollars for the
tourniquet, y for the salaried hours of the person who applies it and x amount of
money for the electricity. Nobody would say, ‘Let that person die. Thus, she
doesn’t indict the public, she says, and never will. Instead, she accuses the
community’s opinion leaders for distorting reality to a degree where society is no
longer capable o f supporting publicly provided services like health care.
For the most part, that support is waning, say commentators, not from the
heartless indifference or venomous disposition toward the trials of other human
beings. Rather it stems from a general deadening of political instinct, a passivity
and inertia partially brought about by the theatricalism o f the politico-media
culture. The chief executive officer of one large health system, on the basis of
focus groups his company has conducted, believes that universal health coverage is
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a political issue “low on the radar screen” of the average American, not because of
an arrogant or smug conceit toward the poor and uninsured, but rather due to the
natural inability of people to foster a broad-minded approach concerning social
problems while, at the same time, struggling just to survive, to feed their families
or to get by themselves. It is a lack of awareness, says one physician, as opposed
to outright hostility by the majority of the public, a loss of social memeory for the
impotance of critical public institutions that sit quietly in the background, barely
detectable on the horizon o f social progress and durability. But, another observer
takes a harder line when describing the erosion of civic virtue. For him, it is
intellectual indolence pure and simple:
. . . The American electorate has become pathologically ignorant
and would rather be pandered to than spend an extra second in the
analysis of the themes of our time. The problems o f our time are so
obvious that it would take a politician not to recognize them.
Yet, what all o f these explanations have in common is a tangible rent in the
moral fabric o f American society. Whether attributable to mere social listlessness
or out-and-out contempt for government services and indigent welfare
beneficiaries, the vast majority of observers point to the palpable loss of social
integration and cohesiveness as the root cause of the health crisis. Underlying the
prevailing anti-welfare, anti-immigrant mood, elemental to the shortsightedness of
public policy and the maldistribution of social goods and services, they say, is the
fundamental loss of shared values. People feel isolated and disconnected from
each other, they say. Fear of crime has become so prevalent in society’s
consciousness that passers by are afraid to make eye contact and cell phones for
personal protection are almost standard issue in large cities, according to one
hospital administrator. Social cleavages and a sense of detachment from others are
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aggravated by corporate behemoths unresponsive to the needs o f their employees
who feel “cut off, alone and frightened,” according to one physician. “We haven’t
been doing things as a society,” he argues, “to strengthen a sense of an individual’s
power in collaboration with others to make a bettter world at a grass roots level.”
A culture o f individualism has washed over the public shores, flooding the
topography of local communities. As one doctor mentions, the prevailing attitude
is one o f self-interestedness and self-protection without regard for the common
good. Success is measured on a personal meter; prosperity calibrated on a more
collective dial is often overlooked. “America is really the country of the rugged
individualist,” recounts one doctor who works in a private, community clinic.
People really value that here. We don’t think in terms of societal
good. We think in terms of our own good and maybe our family
and maybe, if we are really generous, our extended family. . . .
There is not a real sense of community.
Far from a virtue, however, begrudging the community certain “base line services
and resources” because individual members are selfish with what they have been
able to reap from living in that community is the mark o f a greedy, grasping
society, says one physician. It denies progress and threatens the future viability of
all people. Again, many pinpoint the time of the shift in American ethical
consciousness to the Reagan Revolution when acquisitiveness was hailed as a
positive moral value and “the lack of responsibility for others was celebrated,”
and, before that, to the robber baron ethics of the nineteenth and early twentieth
centuries. Opines one observer: “. . . The forces that are pushing this crisis are
not different than those a hundred years ago, basically everything from greed to
entrepreneurialism, which are words to describe something actually very similar.”
As opposed to the idealism of earlier generations which “was what motivated a
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generation that endured the Depression and fought World War II and brought into
[existence] the social welfare state that we are now insanely dismantling without
due thought,” the new philosophy of self-worship replacing those aspirations has
been imported from the profound distrust o f social institutions and disrespect for
authority learned during the tumultuous era o f the sixties, say some analysts.
Thus, for most of these commentators, the crisis is not a financial one; it is
one o f social values. It is a “community deficit,” as one policy expert argues and
not a deficit reserved only for the unfortunate, for the unfortunate, in this case, is
the whole of society. The emotional and moral decay, the tearing of the social
fabric woven together by the vision of previous generations is brazenly signaled by
the abandonment of poor and indigent people who have no where else to turn. It
is a loss of social nobility and grace, a “withdrawal from our better selves.” Even
the neglect of County General, now delapidated, a shadow of her former self, is a
sign that she no longer stands as a symbol of civic pride, but as a derelict on the
city’s horizon, forgotten by a remiss community. Undergirding the transformation
is a loss o f faith in government, a shattered confidence in public institutions and a
weakened trust in politics itself. The discussion turns now to an examination of
the more caustic political factors that have seeped into the dynamics of the crisis.
The following chapter presents an overview of the numerous corrosive influences
present in the political machinery at the local, state and federal levels as well as an
analysis of the complex set o f intergovernmental relationships that will ultimately
determine the outcome of the crisis for Los Angeles County.
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Chapter Four
The Politics of Institutional Destruction
Public will is not a blunt instrument but it has become more dull. While the
imagination of a community may be retarded by a sensationalistic media and a
manipulative political class bent on exploiting public sentiment, as critics suggest,
elected officials know all too well the danger o f underestimating a community’s
resolve. It is a combustible liquid and meddling too much with it can lead to a
political conflagration. Consequently, politicians play close attention to opinion
polls and carefully watch the community thermometer. But, much is accomplished
behind the scenes, away from public scrutiny. Local politics, for instance, is often
a hotbed of infighting, posturing and blameshifting. The stakes are high because
they are close to home and the results are personal. State and federal politics, on
the other hand, may be more distant, but the course they take can profoundly
impact the width and rigidity of the parameters within which local governments are
confined. And the amicability o f the relationship between local, state and federal
officials goes a long way toward determining how flexible and how wide those
constraints will be and how loosely or narrowly legal requirements will be
interpreted. If relations are chilly, state lawmakers or federal bureaucrats may be
impassive and unresponsive to the needs of local communities, blocking particular
funding streams or legislating unfunded mandates. If dealings between state
governments, on the one hand, and federal bureaucracies, Congress or the
President, on the other, are testy, local governments may find themselves caught in
the middle of a political feud replete with personality clashes, vendettas and a
fiscal squeeze. National electoral politics also plays a part in determining the
survival of publicly provided services like health care. If, for instance, both the
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governor of a state government and the President of the United States are vying
for the highest executive office in the land, the flow of money to local services in
that state could ebb or flow, depending on the dynamics o f the race and whose
oxen are being gored. Thus, public sentiment may ultimately denote what the
general temperament will be toward social issues like health care for the poor and
uninsured, but it is the much more nuanced and complex relationships between
politicians and officials on every level o f government that frequently setties the
fate of locally sponsored public services.
The Sky is F alling: The Stratagem o f L o ca l P olitics
On the local level, charges o f impropriety and wrongdoing are abundant.
One of the most common refrains heard is the failure of Los Angeles County’s
Board of Supervisors (BOS) to act in a timely manner or to redirect the massive
public health care system toward the prevailing trends o f the day in health policy
and management. Health care delivery patterns and protocols, say these critics,
have undergone widesweeping transformation over the last ten years. Always
playing “catch up,” the County was unable to keep up with the changes. It
perpetuated an antiquated patient care model by relying primarily on inpatient
revenues from hospital admissions to keep the entire system afloat, and, instead of
true restructuring which should have been completed at least a decade ago, County
officials made superficial changes, cutting around the edges but never altering the
system’s fundamental composition or operating patterns, say these observers. A
dinosaur, the prehistoric constitution o f the system is patently obvious to some.
“It’s an old government, an old system, an old way of doing things,” says the
medical director of a private HMO.
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[It is] built around hospitals, built around employees that stay there
for twenty-five years with expectations that it will always be this
way, based on [outmoded] utilization patterns o f patient care, based
on traditional ways. Why change? . . . Everything has just gotten
old. I don’t mean just old in buildings, but also old in thinking,
embracing a system that is basically disappearing— fee for service.
As a result o f its obsolescence, recurring threats to shut-down sections of
the health system would emerge each year at budget time. One executive in a
practice management organization recounts this history of false alarms which,
apparently, was obvious to the private sector health care industry, saying the
Supervisors would start “pulling their hair” and making “draconian threats that
never came true.” But, fortunately for everyone involved, as one physician in
private practice sarcastically points out, “Every year, at the last minute, something
comes through that will bravely keep it [the system] open.” Indeed, the thunder
cloud would pass with a swift clap and, somehow, miraculously, enough funding
would be found.
Increasing damage, however, was done to the integrity and authenticity of
the system. Sounding the alarm soon began to seem like clockwork to the medical
community and the annual threats were no longer taken as seriously. In fact, most
observers believe that the Board of Supervisors knew with intense clarity the 1995
fiscal crisis was looming on the horizon and, instead of developing long-term,
innovative programs and solutions, chose to procrastinate in a futile denial o f the
impending outcome. ‘I t didn’t occur at the strike o f midnight on a certain day,” as
one County physician suggests. One surgeon whose preferred solution to the crisis
is the public hanging of all government officials involved for the unmistakable
malfeasance they committed while in office, compares the diligence with which he
performs his job to the carelessness of the Supervisors:
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If I had a patient who comes in with a GSW [gun shot wound] to
the abdomen and I just sit on him and he dies, is that a crisis or is
that bad judgment? . . . If you know that you are going to run out
of money, is it a crisis or bad judgement? I can’t believe that it just
snuck up on them and they put their hand in their pocket and went,
‘oops! I forgot my wallet this year.
A few commentators even suggest that the crisis was fabricated, an invention
designed to look like an unpredictable crisis in an effort to transfer the blame,
accusing the system of inefficiency and corruption and vilifying patients, doctors
and employees, or to summon help from inveterate state and federal governments,
a charge that will be examined in further detail later.
The hesitation to act, however, is most often attributed to a strong aversion
by elected officials toward making what are perceived to be politically unpopular
choices such as shutting down public hospitals and clinics. The primary goal of a
politician, the theory goes, is to be re-elected and that is not accomplished by
demonstrating long-range vision or fiscal austerity. Nor is it achieved by
withdrawing vital services from a needy population, especially when advocates are
able to sculpt a human face for poor and defenseless people. “Nobody wants to be
the bad guy that shuts down a hospital or clinic in their district.. .,” says one
physician. Indeed, the public could be charged with being two-faced. On one
face, the temperament of the community seems to be evolving away from support
for government operated welfare services and social programs. The other face,
however, frowns on unpredictable fluctuations in public policy, especially those
that can be visualized as injuring people of real flesh and bone. Such disingenuity
may send mixed signals to politicians, but the latter objection registers more
strongly on the Richter scale. As one County administrator points out:
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As long as the health department can go out and get state and
federal dollars to replace the dollars that are going to be taken out
o f the health department, it’s okay because . . . people like
constancy. When you are a politician, when things start getting
volatile, that’s when you start getting into trouble.
The indecisiveness by leaders was marked by an unwillingness to make hard
choices and motivated by a lack o f courage. According to one high-ranking
physician in the County, everyone knew the crisis was coming, but the utter
magnitude o f its expected path o f destruction was so enormous, politicians and
County officials alike could not muster the emotional and political fortitude to deal
with it effectively.
Displacing waning political valor was a prolonged reliance on onetime
funding sources, speculative revenue and debt to fill the inevitable gaps in the
annual budget. Supervisors “mortgaged everything,” says one insider, including
the Hall of Administration building and County officials were placed under
increasing pressure to keep the system intact through imaginative stopgap
solutions and creative financing. “This County, with all its good will,” remarks a
private, health care industry trade group representative, “avoided dealing with the
crisis by being extremely creative. . . . They ran out o f tricks last year. . . . Their
sins came home to ro o st. . . .” One senior executive of DHS suggests that it was
the administrative agency itself that promised the Supervisors results and, basically,
told them what they needed to hear:
. . . You have a very, very visible and powerful governing board
with vast constituencies that like any other governing board doesn’t
want to make reductions in services. The message from the
department was, ‘we’ll find revenue’ to forego those decisions. . . .
[But] the revenue band just kept getting turned tighter and tighter
and tighter, and, eventually, [it] snapped.
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On the other hand, one former key official at the health services department insists
that much o f the incentive to find makeshift, temporary solutions can be traced to a
kind of perverse enticement by federal and state legislation that encourages local
governments to use speculative revenue in balancing their budget forecasts. The
hypothetical income is conditioned on the successful completion of sometimes
obscure, imprecise and vaguely articulated federal or state standards that are
subject to a variety o f interpretations. Unlike private sector organizations whose
budgeting methodology is a relatively straight-forward extrapolation from
historically derived financial data, public institutions must accomodate their
procedures to the inevitable vagaries of the legislative process. He explains:
. . . The County is entirely dependent on a different way of
receiving money, some o f which isn't decided until a fter the budget
even begins, so that you have a system in which in November
sometimes, October sometimes, federal and state governments are
passing laws that impact the budget that was set back in July. So
you are not working off last year’s money. . . . So you have a
government system that is spending money not knowing if the
money is going to be coming in based on [budget] projections. And
if there is a little bit o f difference you can lose hundreds of millions
o f dollars and be in trouble. And if two or three of those things
happen at the same time, you can be in big trouble. So,
fundamentally, that structure and the way the government does its
budgeting is flawed.
Thus, using speculative revenue in the budgets of government enterprises may be a
necessary, if unreliable, accounting procedure. Local governments may be
compelled to gamble on incoming funding streams, but it is risky. As explained in
a later section, a profound miscalculation stemming from a speculative revenue
game gone awry is one of the material causes o f the health crisis.
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Consequently, the health services department suffered an ongoing loss of
credibility with the Board o f Supervisors, the medical community and the general
public. It would “cry wolf’ so frequently and yet stubbornly continue to book
speculative revenue in its yearly budget. The Los Angeles Times, in its “Code
Blue” series on the embroiled health system articulated that loss of faith, albeit
somewhat prejudicially:
Since its creation in 1972, the department has lurched from crisis to
crisis with little vision for the future and few incentives to become
more efficient. . . . When funding started to dry up in the 1990s
due to the deep recession and ensuing loss of local, state and
federal dollars . . . the long era of neglect came to an abrupt end.
(Rabin, Meyer & Cheevers A24)
Much of the blame is assigned to the department itself. Speaking of the
predecessor to the current director, one upper level administrator criticized the
former leader’s inability to “talk straight” to the Supervisors about the likely
adverse effects of their decisions, and argues that, as a result, the department
gradually lost the Board’s confidence in the years preceeding the crisis. “I have
had on a couple of occasions thrown back in my face the fact that Los Angeles
County first made application for a Distressed Hospital Grant back in 1971 to the
federal government, promising then to reform its system,” he says. “So, there is an
institutional lack of credibility that meant that people didn’t automatically rush to
our rescue when we were rea lly on the verge of collapse.”
On the other hand, the Supervisors may have had trouble gathering enough
resolve to make crucial changes in the system early on because o f a similar inability
to reach consensus on a variety of other issues. As critics point out, the Board is
characteristically frayed by divisive bickering and bitter infighting. They take a
“divide by five” mentality, these observers say of the five supervisorial districts that
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make up the Board. They forge their own “Board of Supervisor-doms,”
quasi-dictatorial autocracies over geographic districts some o f which are larger
than many countries. The fractionated nature o f the Supervisorial structure, then,
encourages elected officials to focus almost exclusively on the welfare of their own
districts, often ignoring what may be an altogether contradictory good for the
entire Los Angeles community. Often referred to as the “rule by fives” or the “five
fiefdoms,” the Board frequently makes political decisions to the detriment of the
health care system as a whole, say these critics. In addition, the structure
engenders “an inherent, untenable and impossible conflict of interest. . . .”
Supervisors serve as administrative officials, law makers and arbitrators or judges
for their own districts. In the minds of some analysts, permitting elected officials
to act simultaneously on behalf of the executive, legislative and judicial branches of
government violates the constitutional doctrine of the separation of powers. But
the net effect is not nestled in some abstruse point of constitutional law; rather, the
outcome of the Board’s political decisions have more practical import. Colored by
an inequitable inclination on the part of each Supervisor to give more to his or her
own district and less to the others, or trade votes in order to pass some measure
chiefly benefitting that particular district, political decisions may on occasion
distort political actions and retard advancement toward the common good, a point
not lost on proponents o f establishing an office of County mayor.
The negative effects of the Board’s territorialism are apparent to critics.
One physician, a former public health officer for the County, argues that the
inimical effects of the Board’s narrow focus, ethically troublesome in times of
prosperity, is aggravated in times of economic distress when curtailments in service
are unavoidable and “everybody is fighting over diminishing resources.” Another
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doctor, the medical director of a free and community clinic, criticizes the
irrationality of the quinquapportionment o f layoffs in the health system. The
number of County clinics slated to be eliminated in the October 1995 round of
service reductions, she explains, had to be a multiple of five and evenly divied up
between the districts. Similarly, an emergency room physician at a private,
non-profit hospital relates hearsay that Supervisors had granted pay raises to key
health officials on the condition that the services in each district remained
substantially in tact. “They have focused on preserving their own little area,”
explains a chief executive of one public hospital. The task of executing the layoff
notices for his staff, daunting enough, became exasperating when Supervisors
“entered into politics,” fiddled with the number of cuts already assigned to each
health program and strove to restore employees and services for their own
districts. “It ended up being four supervisors against one supervisor,” he claims,
the others ganging up on the one representing most of the poor who use the
County system in order to secure advantages for their own communities. “I think
the politics stinks,” he says vehemently.
The madness of parceling out resources in multiples of five or the
irresponsibility of politically motivated tinkering with a rational system to
implement service reductions is astounding to these commentators. To them,
politics is an unwelcome intruder trespassing beyond the gates demarcating
rational medical planning and reasonable health resources allocation algorithms.
The outcome is “unfair,” they say, because it distributes a uniform number of
resources to districts that vary dramatically in their needs. In the case of the
medical services, then, it seems that equality is inequitable and that a needs driven
system of rationing is more sensible. ‘Tf one supervisor thinks they need an HIV
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unit, then they ail have to have one,” notes a policy expert at one health
foundation. And an article in C alifornia M edicine magazine recounts the health
czar’s own criticism o f the Board:
By Margolin’s own account, the way in which the supervisors
conducted their business in the past looked more like jungle warfare
than effective County government. Which is to say that each clinic,
hospital, and comprehensive health center was treated as an artillery
piece by the County’s elected officials, its loyalties determined by
its location in and among the five supervisorial districts. Pieces in
one district were pitted against pieces in the other four. (Shinkman
20)
The outcome is also politically self-defeating in the long run when inability to reach
an agreement about a vision for restructuring and operating the public health
system jeopardizes funding from the state and federal governments. Because
supervisors could not agree on a single plan, says one surgeon, they looked foolish
to state officials, each touting a different version of a plan to save the system. Yet,
it may not be too difficult to understand the motivations of the supervisors.
Although it is much easier to brand them as irrational buffoons or cretins too
ignorant of health policy to understand the crucial nature of their decisions, the real
reason for their behavior is rooted in a far more banal, a far more ordinary
explanation. Their seemingly erratic behavior stems from a desire to please their
constituencies by wielding billions of dollars of resources and deploying them for
the benefit of their own communities.
Whereas that kind of financial leverage is used to gamer an increasing fund
of resources to be used for other public services, it is directed internally as well.
Supervisors use their political power to generate accountability from the health
department much to the chagrin of officials who regard such unwanted intrusions
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as an unnecessary and exasperating encroachment on their authority as well as an
irrational drag on the system’s efficiency. In fact, the long relationship between
the Department and the Board has been peppered with disturbing instances of
supervisorial micromanagement, according to observers. The magnifying glass,
critics say, is held far closer to the actions of officials than is needed. “Having a
County board of supervisors vote on whether to keep open or establish a wing in
one hospital for fourteen patients,” says one critical care specialist for the County,
“is inappropriate.” In fact, during weekly Board meetings, supervisors will
routinely vote on measures that account for less than one tenth of one percent of
the annual budget o f the department. Although one commentator argues that the
Board’s actions are in response to the usual kind of hemming and hawing by
department officials who provide inaccurate, misleading or contradictory
information, most agree that intrusions of this nature reduce the efficiency of the
department. One physician nearing his retirement insists that the supervisors must
delegate a far greater amount of decision making authority than they have in the
past:
I have always felt ever since I have been here as a staff physician
that the Department of Health Services was beholden to five
independent. . . supervisors. .. . We were always at their mercy
and therefore we couldn’t do things as efficiently as we could have
had we been left alone to [do] them the right way rather than the
Board of Supervisors’ way.
For example, a well-meaning but vexatious constituent inquiry system at
times clogs the inner workings of the department, stealing valuable time and
attention away from other pressing and more urgent problems, say critics. One
former administrator spells out the tedium o f the system:
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The way the system runs, that inquiry takes precedence over all
other work that’s being done in the system. . . . [It] then floats
through the system and involves everybody through the system
responding to it, all the way down to where the actual question
occurs, wherever that may be. And then, those individuals have to
prepare a response [which] . . . as a result of the [question’s]
sensitivity, is reviewed by multiple other people and sent back and
forth and all the way back up to the supervisor who didn’t even
know the call came in ..., taking precedence over all the other
work that needs to be done.
Even private clinics contracting with the County have been pestered by
what they see as random and haphazard inquests at the behest of supervisors or
their staff. One clinic director tells a tale of a typical type of badgering instigated
by the health department and goaded on by politicians. Having agreed to take over
one o f the County’s six clinics scheduled to be privatized early in the crisis but not
having received any funds or even signed a contract until more than six months
later, County officials telephoned notifying the director o f an impending audit to be
performed on the clinic. “What changed was the tone,” the director says. “. . . It
was a directive.” Frustrated but not about to be intimidated, the director started
working the phones, calling the various supervisors’ offices and trying to track
down the origination of the order. A senior executive from the health department
phoned her to insist that the order be carried out, but the director is not dissuaded.
She told the executive.
‘I am having a problem with two things: that there is no
notification [and] that people think they can just come in willy-nilly
and that you think I have an administrative staff to do this. I am
running the health clinic with no money from you. I don’t [even]
have a signed contract. . . .’ He basically threatened to take back
the buildings. I said, ‘you can have them’ [and] he backed off....
From then on, she was hounded no more, but the story still sticks in her craw.
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The day to day interference places unreasonable demands on the system,
these commentators say, and distracts staff from the normal course o f their duties.
And the profoundly hierarchical structure o f the department aggravates the
inefficiency as officials at each level must dutifully review the request or take time
to arrange for the petition to be carried out. Remarks one frustrated
administrator:
Gloria Molina [a supervisor] says ‘I want this,’ [and] it goes all the
way down the line and then this underling that calls you up in a
nasty voice because she has been told in a nasty voice from
everybody [else on] down, [that] you have to do this.
Thus, the County Board of Supervisors itself suffers from a noted lack of
credibility and trust within the medical community. Public and private physicians
alike denounce the political infighting and posturing, the machinations used to
secure an equal share o f available medical resources for each supervisorial district
regardless o f the actual need in those communities and the heavy-handed displays
o f power supervisors make in operating the health department. It moves beyond
politics, they say, into a kind of quasi-despotism.
For its part, the Department of Health Services (DHS), which runs the
massive system of public hospitals and clinics, also contributes to the local political
quagmire in a significant way. Laden with personality conflicts, big, clumsy and
awkward in some ways, driven by its imperialistic appetite, the department is the
epitome of all the usual images dredged up about public bureaucracies. Yet, to
understand its “megolithic mentality,” the analysis must start upstream with the
department’s unsteady relationship with the board of supervisors. Historically
volatile, it fluctuates between amicable cooperation and irascible acrimony. Part of
the reason for it stems from the need to testify candidly before the board, as one
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senior departmental official suggests. Health Services should be more like an
advocate on behalf of the poor, says one outsider, and the relationship with the
Board is, by nature, almost adversarial. A system built on the principles of charity
and care for the indigent, it may frequently collide with the Board on other issues
threatening to reduce funding for health care. Officials plead their case to the
supervisors on behalf of their vulnerable clients which, at times, has created tense
relations and a chilly reception. On the opposite end of the spectrum, the
department has also shrinked from relating stark reality to the Board. The two
most recent directors of the Department— Mark Finucane and Bob Gates— illustrate
those two polarities. Whereas “Mark who just gets up there and just blasts and
says stuff” exemplifies the more intrepid style, Gates, the recently ousted director,
was more political, less confrontational, more submissive. A student of that
bureaucratic etiquette discouraging open competition with other department heads
for limited County funds, he walked a more gregarious line, perhaps to the
detriment of the health system.
The more agreeable approach, however, crystallized the
“hyper-politicization” of the department’s leadership, says one executive, imbuing
the organization with an objectionable brand of “survival politics” that is more
concerned with ensuring the bureaucracy’s future viability as opposed to gallantly
defending the needs of the health system and its patients without concern for its
own safety. Without exception, says one top insider, policy was addressed with a
political yardstick used to measure the breadth of the Board’s resolve and its mood
on any given question. “The Department viewed everything through a political
prism,” he says. “Everything.”
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.. . How big should the med center be? Well, how big do you
think they want it? You look at some o f the capital expansion plans
and there are five political subdivisions and they are all getting
something they wanted. . . . It’s not supposed to start like that.
Conversely, good politics can actually enhance the effectiveness of the
organization. “Policy politics,” as he calls it, is a thick administrative soup,
chock-full o f policy expertise but sparingly spiced with enough political dexterity
to achieve important health objectives. Recognizing the deep fissure between
“spindoctoring” and policymaking, good health politics says to elected officials,
“you go work on the other side of the curtain and decide amongst yourselves
what’s going to happen. I’ll advocate, but I’m not working the other side of the
curtain.” The reason is simple. “Once you step over there,” says this bureaucrat
with a pregnant pause, “you never step back.” Ultimately, then, successful health
systems will want to recruit an artful diplomat as well as a brilliant policy maker to
stand as its bellwether, a “. . . Big ‘H’, little ‘p’ [type]. The type that you avoid
like the plague,” he continues, “is the Big ‘P ’, little ‘h’. The ‘P’ is politics, the ‘H’
is health. You want someone who understands health policy, health programs,
health management and also is a politic~not a politician, a politic.”
Over the years, then, the department has become increasingly proficient at
staying the wrath of supervisors, warding off evil spells cast by politicians
unsympathetic to the health system’s needs and preserving its own interests. But
that talent has also fashioned a bloated institution now sick and cloyed from its
own crapulent lifestyle. It is an enormous bureaucracy, so big that it inspired one
physician to compare it to the disintegration of Russia. Both, she says, are grossly
obese systems ready to implode and to collapse under their own weight.
Indifferent to the needs of community physicians, distant and aloof toward grass
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roots concerns and the needs of the rank and file, it promotes inertia and inaction,
a kind of institutional paralysis serving to maintain the sta tu s quo, critics say. In
the thoroughly excoriating words o f one physician practicing in a managed care
setting, the County health system is “one of the ugliest bureaucracies I’ve ever
seen,. . . [it’s] just a big, rusty God-awful bureaucracy.”
One newcomer to the top brass found a diseased culture infected with an
offensive imprint of moral indifference. He says: “. . . the organization appeared
to lose the capacity to tell right from wrong,” and tells a particularly disturbing
story to corroborate his radical conclusion.
Out at the med center, there was a surgical technician who
performed a tubal ligation. He asked the chief resident of obstetrics
and gynecology if he could do it. The chief resident said ‘yes’ and
then left. So, the tubal ligation was performed. The only doctor in
the operating suite was the anaesthesiologist who never left. The
resident and the surgical tech were given a twenty-eight day
suspension . . . I asked [about the incident] . . . [after it] eventually
surfaced and the City Attorney for the City of Los Angeles, Jim
Hahn, filed criminal charges against LAC-USC [County General] . .
. [for] practicing medicine without a license. I said to the two
people most responsible, in my opinion— the CEO and Chief
Medical Officer o f the institution— I said, ‘how did you come to this
conclusion?’ The CEO said, ‘number one, the patient was not
harmed. The tubal ligation was performed successfully. Number
two, this was a very good surgical tech. Three, it was an
aberration. This had never happened before. Four, all involved
swore it would never happen again. Lastly, all were remorseful.’
That gave me the opportunity to say, ‘this is why I was hired. You
guys can’t tell right from wrong anymore.’ I said, ‘it’s a criminal
act. Practicing medicine without a license is a disqualifying act.
The surgical tech should have been fired. The chief resident should
have been fired. I would have suspended the anaesthesiologist. I
mean everybody.’ I said this. There are some things that you are
supposed to get outraged about and practicing medicine without a
license is one of them. They said, ‘well, we ran this by everybody
downtown.’ I said, ‘shame on them, shame on you. I don’t care
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who you ran it by.’ This is my point to you: it was consistent with
the ethics and values o f the organization because what they were
trying to do was to keep it quiet. They didn’t want to harm the
career of the chief resident and I guess the surgical technician
etcetera, I suppose, naively thinking they were going to keep
something like this quiet. I mean this an outfit that has the L. A.
Times on speed dial. . . . (T said] ‘if your wife had been in Cedars
[Sinai Hospital] and somebody comes out and says, ‘hey, you know
what. Don’t worry about it. Your wife’s okay, but we let a
surgical tech do the tubal,’ I said, ‘what would you do?’ I said,
‘come on.’ I said, ‘plus this is a low income, uninsured, poor
population. There are elements o f experimentation here. It’s okay
to ask to do that on a Latino?’ Public Trust. We have lost sight of
it.
The sickness took other forms as well. Internally, the department was
driven by bitter politics and personality conflicts; it was rife with egomaniacs
whose sole function is to aggrandize their own power within the bureaucracy. In
order to advance innovative ideas and imaginative solutions, underlings would
need political support from others in the department, a contagious game of
sycophantism intended to secure needed resources from otherwise begrudging
officials bent on withholding them unless certain favors were exchanged. Recalls
one former public health officer:
The idea that as a program manager you could put together an idea
of a program approach and send it up the line and have it approved
on its merits was about zero. . . . You needed someone that had
clout. Everybody knew that is the way it went.
Certainly, as the executive director of one private clinic who has worked closely
with the County says, there are competent individuals within the health department
who are concerned with patients and delivering high quality health care. But, she
says, they are few and far between. Mere projections of their own vainglory, most
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are unresponsive, refusing to liberate resources until the right person asks in the
right way.
These are the administrators, as one former County physician illustrates,
who are working at their shadow jobs. Modeling her theory on the now famous
“Peter Principle,” she theorizes that bureaucrats within the County system practice
two jobs; one is their real job, the other a shadow job. The shadow job is the
hidden apparition, a thin emanation of self-regard that lurks behind ignoble
employees, furtively following each legitimate action with an equally illegitimate
one:
You are the head radiology clerk and your job is to make sure that
x-rays are in the proper order so that people can find them in a
timely fashion and get the reports out. That’s your job description.
. . . The shadow job is to protect your butt, [to] make sure that you
are perceived as doing a good job and that everybody likes you and
that you don’t get fired and that you get more power and maybe
rise in the hierarchy. And those can conflict. Somebody in the
information systems department may come up with a way to
manage those files by some piece of software that would really
improve things. But, if you are doing your shadow job, you don’t
want that guy to get credit for improving your department so you
are going to reject it. . . . I found that about ninety percent of the
people at County were just protecting their turf. And it was some
times almost impossible to get the most simple thing done ....
An illicit patronage system also exists in the bureaucracy, a complex
network of traded favors and simony, agreements forged by a slap on the back and
careers decimated by a wink and a nod, according to some critics. Crucial to
staying alive is knowing the jousting rules by rote. One administrator in the private
sector, after the eye-opening experience of deal-making with County bureaucrats is
willing to share some hard-won lessons, learned first-hand from swimming in these
swampy waters: . . When you meet people [you must determine if] their jobs
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are real jobs or if it is because they had a friend somewhere.” If the latter, “the
best thing . . . is to make sure that they like you, that you never ask them directly
for anything. But, when they offer something, you . . . look at what they are
offering and make sure it is not an IOU . . . .” Indeed, as one health foundation
executive suggests, an estimated twenty-five thousand contracts in the health
department alone is enough muscle to construct a confusing maze of mutual
benefaction.
Dismantling the system is a daunting task. The Civil Service System, say
critics, has made it vritually impossible to terminate bad employees. One common,
albeit expensive, alternative is to shunt problem workers to non-productive jobs, a
procedure called “warehousing.” “They don’t get rid o f them,” explains one legal
advocate. “They just move them and put them on a track where they don’t
supervise anybody. They are just dead-ended someplace . . . [which is better] than
having them in positions o f authority where they keep things from happening.”
But, that is as ineffective and corrosive to department morale as a prolonged hiring
freeze. Faced with a cadre o f unproductive employees, managers perform a
perverse sort of calculus, computing whether an employee providing service at,
say, thirty percent o f total ability is a benefit or burden when compared to the
alternative of terminating that employee without the possibility of hiring a
replacement. Thus, says one former department official, “. . . the deadwood was
locked in by the hiring freeze. O f course, the good people realize that it is an
ossified system and they leave. So, the good people hemorrhage; the bad people
stay; you can’t replace anybody; you’re in trouble.”
Further impacting the system are the painful spasms of racism. Bigotry
infects the department like an abscess, says one observer. “A lot o f the leadership,
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some o f whom are not particularly competent, are black,” he explains. “But
nobody wanted to dislodge them because nobody wanted to say, ‘I’m a racist
because I’m firing a black person.’” Although he can point to numerous instances
of discrimination against racial minorities by white supervisors, he claims that there
is a boomerang effect and the race card is played often and not tepidly. “We’re not
going to allow ourselves to be dislodged,” he says recounting the banner slogan of
what he perceives to be a kind of minority militancy. “We will use charges of
racism to defend ourselves against criticisms that we are incompetent.”
The unions, particularly Service Employees International, are blamed for
gumming up the system and making sure that mediocre employees are paved into
their posts with an intractable cement. Alleged to breed inferiority, obstruct
communication and thwart courage and valor on the part of individuals to take a
stand, to speak out prophetically against a corrupt department, unions are derided
as counterproductive and outmoded organizations by quite a few commentators in
the private sector. They are obsolete because the seniority system, in particular, is
incompatible with the complicated demands o f modem and highly specialized
health care delivery. “A nurse is not a nurse is not a nurse,” says one County
physician chiding the unions for insisting that layoffs be made through a generic
system that releases the most junior employees and merely reassigns workers with
more seniority to other positions for which they may not be qualified in a mindless
cascade that ripples indiscriminately throughout the system. In fact, many critics
reduce the County health system to one gigantic, public works program:
I think the County hospital exists because they had to have a big
work project back in the 30s. They built Hoover Dam and they did
a lot o f things to get people back to work. And that [County
General] was their local project. There are millions and millions of
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tons o f cement in that place. If there had been a river here, it would
have been a dam. If the Los Angeles River had a year-round flow,
we’d have a giant reservoir here and we wouldn’t have a County
hospital. . . . They were so concerned about cement, in fact, that
they poured [concrete around] the piping in the wall. . . . When it
comes to the people— and this is where I think the whole thing
breaks down— there is a vast portion o f taxpayers that get to work
there. If they don’t have their jobs, they vote in new decision
makers. It’s inevitable that they are going to have their jobs. So,
it’s inevitable that one way or another, there is going to be a
County hospital.
All of these impairments— bureaucratic listlessness, moral indifference,
pandering and favoritism, corrupt patterns o f patronage and fossilized personnel
policies— hinder the smooth functioning o f the department. There is considerable
difficulty in getting things done, say critics, especially when the task requires
coordination between departments. For example, one physician vents her
frustration over spending five years in internal negotiations and various
organizational meetings trying to rework the x-ray distribution system. The way it
had worked, after an x-ray was developed, it was returned to the patient’s chart,
not to the doctor. So, if a patient missed an appointment or if there was an
extended waiting period between physician visits, as there often were, a potentially
serious condition could go undiagnosed for quite some time. Because charts, in
typical fashion, float around the medical center and locating a particular medical
record is a Herculean feat in and of itself, a more sensible method would be to
return x-rays to physicians instead of to medical charts. But, revamping that
system would require interdepartmental cooperation, long-range planning and an
unprecedented display of initiative, all of which are lacking in the health
bureaucracy according to this doctor. After going through the usual channels,
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. . . I brought this to the attention o f somebody in administration
one final time and she set up a meeting for me with some woman in
radiology. And the woman told me all the reasons why it was
impossible to do it. And I got mad and I made an enemy for life
because I said, ‘Actually, I’m not interested in hearing about why
you can’t do it. . . . If your system cannot return x-rays to the
doctors, then it’s a dysfunctional system. That’s the purpose of it is
to get the information to the doctors. You should just junk the
whole system and start all over again if you can’t do it. And that’s
your job! That’s not my job!’ [She] hates my guts.
Much of the trouble may not be the result of obstinancy on the part of any
individual employee, but o f the exceptionally hierarchical nature of the power
structure. The span of control that each manager has is limited and the number of
administrative layers between line supervisors or department heads and higher
ranking officials is many. For instance, nine layers of management fill the expanse
between the administrator of one particular health clinic and the director of the
health department, one department chief relates, astounded by such an outlandish
number of middle managers. “. . . In a typical hospital, the administrator in charge
of internal medicine would report to the ultimate boss,” he explains.
Here, there are two or three layers o f individuals plus the support
services are all broken off so that the individual [manager] has no
control. . . . So, they are nominally in charge o f a service, but they
don’t control who cleans the floors, who supplies the materials, the
budget— the most fundamental aspects— even the personnel. So,
they are [in command] in name only; they don’t get to make any
decisions, but they have a title on the door.
An internal culture of democratic decision making also congests the
system, making it sluggish and unresponsive at times. The elaborate,
interdisciplinary committee structure, some say, is an insidious friction stalling the
health system to a mere idle. For instance, several years before the crisis began,
the health department had been working to equip its system to meet the
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expectations of the managed care era in health care by swerving away from
expensive hospital admissions and gearing its services toward more outpatient and
preventive treatment modalities. In doing so, a vast committee was formed, a
multifarious task force called the Managed Care Working Implementation Team
(MCWIT). “This committee was full o f the most high up people in administration
and they appeared really committed to doing it,” recalls one physician. Sure that
the team’s recommendations would ultimately be implemented, members slaved
away, meeting every week for many hours over an extended period of time.
Eventually a workable plan emerged, the implementation team had reached
consensus and “. . . everybody signed off on i t . . . .” Slithering its way through
the bureaucratic muck, it was finally quashed by a “hide-bound” nursing
department which was threatened because the plan called for substantially
increasing the number of nurse practitioners used. Perhaps, the mocking
permutations of the group’s acronym— “half wit, nit wit, etc, etc”— widely
circulated throughout the department were more a reflection on the kind of
low-grade sense o f resignation or the sort of perverse yet somehow comforting
self-derision and jadedness pervasive in the culture o f the department than the
skills of the individual team members themselves.
Roadblocks, it seems, are erected at every organizational turn. Legal
mandates, budget caps, narrow job descriptions and multiple layers of approvals
dampen organizational efficiency, harden institutional agility and stiffen an already
arthritic system. The monotonous administrative chant, says one physician, is “we
can’t do it; we can’t do it.” There is always something obstructing innovation,
something thwarting change and progress. It is a dull drone broadcasted through
the system, critics say, crushing initiative and imagination. The executive director
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o f one private clinic which took over a former County health center told o f her
experience when she first saw the shabby facility: “. . . it was a horrible pit. The
floor was so dirty you couldn’t even see what the tiles looked like. It was
run-down and dirty. . . . They had to disinfect the phones; there was dirt encrusted
on them.” Flabbergasted at the neglect, she was surprised by how quickly and
how easily her maintenance staff was able to clean, paint and improve the building
on a shoe-string budget. One former employee, upon returning to the clinic, burst
into tears, she says. “It came back to the bureaucracy,” she says, assigning blame.
‘There is this whole system and it just takes months. And people feel so beaten
down by it, there is a point where they just give up.”
One doctor at Women’s and Children’s Hospital also bemoans the tedium
o f trying to get something done quickly in the ponderous system. Several of the
doctors, realizing that the County would never accomplish it, had pooled their
money and even taken it upon themselves to buy television sets and a satellite dish.
Over a year later, neither had been installed. “I had a sink removed from my
secretary’s office,” says one physician.
Not only did I have to fill out all these forms to request it, but they
had to have one guy there to shut the water off and another guy to
remove [and replace] the sink, and then a plumber to come back
and then the guy to spackle and about ten people came up. Finally,
they were arguing over who was to remove the towel dispenser on
the wall because that wasn’t in any of the [job descriptions of the]
four work groups .... It wasn’t in the painter’s; it wasn’t in the
plasterer’s; it wasn’t in the plumber’s. That’s a handyman’s job for
one day and it took a process of three months to accomplish.
Perhaps, the notion of downsizing the institution or at least stopping its
growth would have dawned on public officials and bureaucrats. But, as many
critics point out, the Department of Health Services is a monstrous monopoly
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ravenous for more and more power. Its one desire is to protect itself, ensure its
own survival and preserve the economic rents its employees receive. ‘I t ’s
evolutionary,” declares one private hospital executive.
The public sector grows and grows and grows. It’s income sources
are tax based rather than sales based. Very little competition to
keep the institution focused on the provision of its core product
line. So, over time, the institution splinters, takes on more
responsibility, [makes] wider and wider definitions, brings in more
people.
Economists agree. Calvin Kent, for instance, argues that the lack o f competitive
forces in the public sector encourage government officials to expand their budgets
and their departments. ‘In the public sector, prestige and power are both related
to the size of the agency’s budget and the number of employees, not to how well
the consumer has been satisfied or to how low costs have been driven” (11).
Indeed, a well-defined and much touted theory in the economic literature— Public
Choice Theory— posits that the public official is not exclusively civil minded but
often “strives to some extent to achieve such personal goals as status, income, and
promotion” (Lovik 29). And bureaucrats in government agencies ally with
politicians seeking to please their constituencies by providing an ever increasing
array of government services (Lovik 27). They are rational utility-maximizers
pursuing a self-interested course o f bureaucratic entrepreneurship.
Thus, the health department, like most other large-scale public
organizations, is like a leviathan ever enlarging its realm o f influence, critics say.
Yet, its sheer size and proportion to the other creatures in its habitat makes it
unable to discern subtle but critical changes in its own ecosystem. One incredulous
physician, for instance, recalls that efforts to move the County’s obstetric patients
to mainstream, private sector institutions were met with resistance and
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despondence. Another doctor illustrates what he thinks is the County’s insurgency
against progress or improvement by point out that when the state mandated a
portion o f its Medicaid patients to be enrolled in HMOs, the County insisted on
creating its own rather than contracting with private managed care entities already
in existence.
Thus, alongside its ultra-political nature and the typical entrapments of a
public bureaucracy, the health department suffers from an ungainly size, critics say,
slowing its advancement to a mere crawl. Despite its cumbersome gait, it craves
an increasing share o f the health care market goaded on by an aggravated case o f
megalomania. The director of one community clinic, for instance, is uneasy with
the County’s power, distrusts its motives and refuses to mince words:
It is my fervent view that right now the leadership in the L.A.
County Department of Health Services would like to control not
just the public sector in health care in this town, but the private
sector [too]. It is my belief that the County would like to be totally
and completely in control and dictate all health care in L.A. County.
That’s what I believe . .. . Mark Finucane views that as the
ultimate goal for himself as Director of the Department o f Health
Services. I think he took this job seeing that it was a great
opportunity to implement a major public policy exercise in how to
control health care in a huge metropolitan area where the County
has to be a major player [and] where you have half the population
uninsured or on Medi-Cal— 2 million on Medi-Cal and 2.4 [million]
uninsured in L.A. County. So, why not control everything . . . ?
Another commentator echoes that sentiment:
I can remember standing pounding on the back o f the trunk of my
car talking to a high-up official at DHS [Department of Health
Services] out here and saying, ‘who the fuck do you think you are?’
. . . You are a servant [of the people]. Where do you come off with
this bullshit? You think it’s okay for you to talk this way?
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In the wake o f its megalithic mentality, impacted constituency and
patronage system, internal factionalism, political obsession and organizational
inertia, the health department is also branded as inefficient and mismanaged by its
detractors. They deride what they perceive to be a lack of competent leadership
and condemn the “tremendous inefficiency” of the system. The Los Angeles
TimesT for instance, has been a strident critic. One article outlines the failure o f
County health administrators to smoothly update their hospital systems, reporting
that the process was riddled with bad decisions and “plagued by confusion, delays
and huge cost overruns” (Meyer, March 17, 1996 A28). But the paper is not
alone is its disdain. Overall, both the public and private sectors of the medical
community are incensed about what they think is a heinous crime: the
politicization and bureaucratization o f medicine. “It makes me pretty angry,”
storms one furious physician manager in the private sector. “. . . I think we can do
it for less money than we are doing it and we can do a better job. And it just
makes me real angry.” And a County doctor is even more irate. “If you want to
talk about somebody being irresponsible to patients,” she says fuming, “way
beyond the pack, leading everyone is the County. . . . I’ve never been convinced
that the County knows shit about patient care. They [DHS] don’t provide patient
care. We do!”
E t tu, Brute!: The Sedition o f Intergovernmental Politics
Public opinion having turned ugly, the County should have been able to
rely on the support o f higher governments. Instead, they were met with a
distressing dose of indifference, handed a whole series of unfunded mandates,
caught in the middle between a state government at war with its political foreman,
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the federal bureaucracy, and swept into a debilitating game of electoral posturing.
No Pollyanna, County officials understood the political barriers set before them.
In reponse, they followed their own campaign trail, politicking all the way to the
White House. It was a political stratagem, a ruse designed to force the hands of
the state and federal governments who, for their part, seemed to be perfectly
content allowing the County’s health care system to drown in its own red ink. One
strain of argument fostered by some observers denies that mismanagement or
institutional incompetence are to blame for the County’s problems; instead the
system is imperiled by a pervasive neglect and inattention at all political levels. In
effect, then, the treacherous and relentless policies as well as the marked apathy of
the state and federal governments shackled County officials, rendering them
immobile and paralyzed in the face of a mounting crisis in public health.
The result, says, one physician is a wide chasm between the medical needs
of the people in the community and the focus and attention of political leadership.
For instance, some observers question the Board of Supervisor’s commitment to
providing health care to the poor and uninsured in the County. “When they built
this hospital, the inscription on the front door implies that the County sees it as
their responsibility to take care of its indigent,” remarks one physician. “I don’t
think they do anymore. I think that if the County Board of Supervisors had their
way, they would get out of health care altogether.” As one insider of the Health
Crisis Task Force points out, the job of Burt Margolin— the Board’s appointed
Health Czar— was narrowly defined:
The Board made it very clear from the first time that the Health
Crisis Task Force met that they were not there to debate or
determine health policy; they were there to tell the Board how they
could save $600 million in the least harmful way possible ....
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That tight rein, some say, is a strong indication of the Board’s disregard, once
again, for the bigger picture and for long range planning, and signals their lack of
interest in running a health care system at the outset.
The federal government, too, was unresponsive, at times, refusing to waive
or repeal enforced policies that fettered the County’s ability to respond to the
crisis. Unfunded mandates, for instance, place significant pressure on state and
local coffers and compromise the autonomy of lower forms of governments and
individuals that work within those systems. One physician details how they impact
medical care:
. . . Doctors are caught in an absolute conflict between the patient
and the government. . . . The government says that on an individual
basis everybody should get everything, but when they are sent the
bill, they refuse to pay it. . . . So, the government is putting the
physician in an untenable situation and basically saying, “Yes you
must give this little 400 gram baby full care. You must give him
everything, but we are only going to pay your hospital X number of
dollars a year. Now figure it out and don’t come to us to ask
where to allocate those resources. You do that.” So, there is a
basic irresolvable conflict, if you will, [between] what the
government says and what the government wants, and it puts the
doctor in the middle. I as a physician . . . am bound legally by the
government’s own policies to provide XYZ level of care. The
government, on the other hand, is not bound to pay for that. Its
sort of the unfunded mandates equivalent in medicine.
Indeed, many physicians and hospitals point to the 1986 “COBRA” law that
requires emergency rooms and physicians to stabilize patients suffering from
life-threatening illnesses or injuries before transferring them to public facilities on
pain o f excommunication from the Medicare program.
For public hospitals, however, it is the uncompensated cost of treating
illegal immigrants that some say constitutes a fundamentally unfair mandate. At
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present, the federal government denies Medicaid and Medicare to illegal
immigrants and supplemental payments through those programs excludes the
treatment o f non-citizens. Likewise, in the negotiations with federal officials
surrounding the Medicaid Demonstration Waiver, the Health Care Financing
Administration (HCFA) excluded illegal immigrants in a special program that
would match fifty percent of the County’s costs for treating patients who were
both indigent and uninsured, a classification that certainly would include many
undocumented residents. Although the federal government does not legally
require public facilities to care for undocumented residents, many local
communities see it as a de fa cto mandate because withholding treatment would be
politically, economically and socially impossible. As one County official argues, it
is all too easy to confuse legal with illegal immigrants. In many areas, the law is
unclear and enforcement even murkier. Elected officials run the risk of alienating
minority ethnic groups if local agencies were to bungle the task of sifting through
streams o f patients trying to pluck out purported illegal immigrants. In addition,
physicians are often able to identify public health hazards while caring for patients.
Prohibiting treatment could let loose a host of public health risks. ‘There is a real
conundrum,” he says, “between enforcing immigration laws and trying to uphold
what is a legal charge to the County to protect not just the indigents but the entire
community . . . [from] the transmission of communicable disease.”
Other counties like Orange and San Diego Counties aggravate the problem.
By shunting uncompensated care to the private sector, they avoid operating public
hospitals. When illegal aliens do seek care for a non-life-threatening condition,
then, they are shuttled on to Los Angeles County, the last stop for many of the
least desirable patients. One neonatologist illustrates the point:
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I remember I was at a symposium and some doctor in San Diego
put his statistics up about what their newborns did and how good
the results were and so forth. And then I asked, ‘what’s your
socioeconomic population that you have there?’ It was very much
a private, working, blue collar crowd. And I said, ‘well, how could
you have that? You’re so close to Mexico.’ . . . He said, ‘oh, we
don’t let them [illegal aliens] stop here unless the baby is just falling
right out. We just send them up to L.A. County.’
Thus, County officials deny that they should be solely responsible for
funding the care given to undocumented residents. Los Angeles is a major port of
entry and the duty to protect national borders falls on the federal government’s
shoulders. In addition, the taxes illegal immigrants do pay, such as sales tax and
income tax, are collected by federal and state governments whereas the
consumption of welfare benefits such as publicly provided health care often is a
burden borne exclusively by local governments. Most physicians, public and
private, agree. “I think the financial responsibility for that care has to rest with the
federal government,” says one physician, the CEO of a medical management firm.
‘The problem is falling disproportionately on southern California . . . .” And one
County physician remarks that the federal government should pay their “fair
share.”
Yet, federal agencies also wrongly saddle the County with the financial
burden in a second, equally disturbing, area: health services for Native Americans.
A long recognized obligation o f the federal government, the “trust relationship”
between the United States government and Indian tribes bestows a right to health
care on the Native American population, the only legal entitlement of its kind.
‘The Indian people,” says one advocate, “have the right [to health care]. . . . They
paid for it with their lives, the history, the land and all the broken promises.” But
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now, the responsibilty for providing medical care to indigent and uninsured Native
Americans is being inappropriately shifted to counties, he says. With cutbacks in
financing from Indian Health Services, the federal agency housed in the
Department of Health and Human Services, more and more Indian clinics and
other health facilities are losing federal funding and patients are being re-routed to
County hospitals and clinics. “So, now you have an indigent— a grossly
indigent— population, a very large population,” says one displeased Native
American spokesperson, “that is either the working poor and not insured or
[unemployed and] uninsured. And you have a shift in responsibility to a County
where there is already a major health care crisis.” Furthermore, block grants to
states, they say, could add insult to injury if health benefits for Indians are bundled
in the funds because states would be under no obligation to recognize Native
Americans as a separate government. Whereas the Native American population is
currently represented by organizational vehicles at the federal level, the
relationship at the state level would not be government to government. Rather,
Indian groups would be unilaterally demoted and classified as a Community Based
Organization, the same as any non-profit grass roots agency in the state. In effect,
then, the federal government’s treaty-bound duty to arrange and fund health care
for Native Americans has been gradually disintegrating. As the provider o f last
resort for all residents in its border, County health facilities have been reeling in the
slack without funding from the U.S. government. “Really inappropriate,” says one
jaded advocate. “Welcome to Indian Country!” says another.
The State, for its part, had also enacted a series of unfunded mandates that
transferred the burden of caring for the poor onto counties without a series of
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corresponding budget appropriations. The classic example is section 17000 o f the
State’s Welfare and Institutions Code which requires cities and counties to:
relieve and support all incompetent, poor, indigent persons, and
those incapacitated by age, disease, or accident, lawfully resident
therein, when such persons are not supported and relieved by their
relatives or friends, by their own means, or by state hospitals or
other state or private institutions.
The impact of Section 17000 was further augmented by the Beilenson Act of 1974
which was designed to guarantee that counties would not abnegate its statutorily
mandated responsibility to provide medical care to the poor. It enjoined any
curtailments in health services until public hearings were held and the County
could determine, based on evidence presented at the hearings, that the quality and
scope of as well as the access to health services would not be deleteriously affected
(Duke 33). The purpose o f the act, as embodied in section 1442.5(c) o f the
California Health & Safety Code was to ensure that “people who cannot afford to
pay for their health care should receive the same availability o f services and quality
of treatment as non-indigent people receiving health care services in private
facilities within that County” (Duke 35). Although vast changes were made to the
Beilenson provisions in the 1991 to close a $14.3 billion gap in the State’s budget,
the legislation had, until that point, held counties to a costly, yet uncompensated,
“community standard” o f care. Even now, legal advocates still press in the courts
to force counties to return to that standard.
Even more unresponsive than federal agencies, the State of California also
eschewed the County’s problems, merrily going about its own business while local
officials were in a state o f panic over the zero hour fast approaching. Cordial and
good-natured about the whole thing, administrators at state agencies were
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nonetheless nonchalant, treating the crisis rather casually, remarks one insider. He
assigned the following caption to their comportment: “Hey. We’re here to help as
long as it does not cost us one thin dime.” Although one commentator suggested
that the County had been treated fairly, the feeling among most observers is that
California government had deserted them. “The State did not do what it was
supposed to do in the fiscal crisis that developed,” says one County physician. ‘I t
didn’t respond to what was a very clear and urgent cry for help when we were just
weeks away from disaster.” But stolidity can also incite a full offensive press. “By
virtue of being able to distance themselves from that [section] 17000 responsibility
to provide the funding and to provide the care,” contends one poverty lawyer,
“they have been able to blame Los Angeles and say, ‘L.A. County doesn’t have its
act together; they don’t know what they are doing. . . . They are just not
managing; they are just not running the system [efficiently].”’
Thus, not only was the State listless and keenly unsympathetic, but an
underlying political ideology widely shared by State officials and legislators also
made them antagonistic, to the County’s distress. “It’s been a royal pain in the
ass,” comments one doctor referring to the State. “I think what we are seeing a lot
is a very rightist philosophy that Governor Wilson embodies and I think it’s very
mean-spirited. . . . It’s been willing to let Los Angeles County just go adrift . . . ”
That conservatism is evident, critics say, in the historical underfunding of the
Medicaid program in California. “While New York was driving a truck through
this federal provision, we are out here with our heads in the sand, doing nothing in
California,” remarks one high ranking County official. For years, the State has
ranked as one of the lowest in the union for the amount it reimburses providers for
medical services to the program’s recipients. Over the last fifteen years, for
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instance, Medicaid providers in California have not received an across the board
cost of living adjustment for care rendered on an outpatient basis and the State has
taken every opportunity to force counties to contribute to various federal and state
matching programs out of their dwindling property tax revenues, says one County
executive. The right of center politics is also evident in the resistance by state
legislators to various tax proposals such as additional “sin taxes” on cigarettes and
alcohol to fund health care for the poor, or to fiscal diversions. One chaplain at
County General, on a day trip to Sacramento with four other pastors--“five naive
little pastors that went up to make their stands against Goliath”— endeavored in
vain to convince lawmakers of the urgency to divert funds earmarked for other
purposes to the public health care system. “We were trying to come up with
concrete ways to encourage the Assembly and the Senate to help,” says the
clergyman. But the response to that perceived imposition was always the same, he
recalls: “You should be able to take care of yourself. Why do you keep coming
up to Sacramento to get money from us.”
That opposition may, in part, stem from political vendettas against major
political players in Los Angeles. Political backlash can be swift and sharply honed.
As one commentator points out: “. . . Politics is indeed lots of compromise, and
coalitions are built on fragile strings on any issue . .. .” They break up when the
issue is resolved or when another one cleaves the participants along different lines.
But in a process that demands constant loyalty, a dear price may be paid for
betrayal. ‘W e’re going to drag this slowly so you don’t get what you need
because this other stuff was dragged slowly,” another observer says, articulating
the harsh political sentiment. Revenge can be severe and feuds entrenched.
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One nil persistently plagues political relationships in Sacramento. It is a
geographical one between northern and southern California. Sacramento and Los
Angeles, observers say, are polar opposites of each other, differing in outlook,
mentality and political ideology. “Do you understand how Los Angeles County is
hated in Sacramento?” asks the executive director o f one community clinic. “. . . If
L.A. County says black, Sacramento says white; if I say it’s day, they say it’s
night.” Part of the lack of concern for the tribulations of Los Angeles County,
then, may have its origin in the fact, as one health foundation executive put it, that
“they wish to God the whole southern half of California would fall off into the
ocean.” Reasons for the animosity vary, running the gamut from an alleged
jealousy over the amount o f defense contracting the County attracted in the
eighties to the vacuity of the Hollywood foofaraw. Yet, much of the ill will most
likely stems from the personality clash between some of the County Supervisors
and legislators, instigated, in part, by an institutional jeolousy. “As some people
say, to be head o f the County Supervisors in Los Angeles is the second most
powerful position in the state and probably the tenth most powerful position in the
country,” says one commentator. Such power, especially when coupled with an
arrogant display, brings bitter enemies. The relationship between the Board and
some o f the law makers is “deep hatred,” he says. “You bring up anything that’s
by one particular County supervisor and you just condemned yourself.” In
addition, the fractious nature of the Los Angeles delegation rankles some state
assembly members and senators who say that until the delegation can unite and
agree on a common plan for their County, pleas for funding will fall on deaf ears.
Yet, it is this sort of peevishness in the state legislature itself that draws criticism
from health policy experts and politicos alike irked by the unproductive hostilities
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and the divisions. It is, as one professor o f public health says, a “rather
incompetent or at least disorganized legislature, who do not seem to even have the
political will... to respond to these issues, but are incapable of doing it even if
they wanted to because of organizational incompetence.”
Devolution, of course, could make matters worse. The notion of folding
categorical programs like Medicaid into a single block grant to the states frightens
health advocates for the poor. Stemming from a fundamental distrust of
state-level politics, they fear indiscriminate cuts in benefits, wholesale
disenrollment as a result of narrowing eligibility requirements and decreased
reimbursements to providers that would lock out Medicaid beneficiaries from
mainstream medicine. In addition, they claim that variability in benefits between
states would create an uneven standard o f care, inducing some indigent people to
migrate to more generous states. The alluvium of poor moving to those states
would, in turn, spark an interstate “race to the bottom,” a competition to reduce
benefits as a way o f encouraging the poor to emigrate and discouraging them from
immigrating. “Health care is a human right,” opines one County physician,
not a right o f the citizen of Los Angeles. You could equate it to a
civil rights issue. . . . There were poor schools in Mississippi and
the County [state] did not want to pay for getting black students a
good education; it required federal legislation or a judicial ruling to
get a minimal standard of education. [Likewise] there should be a
minimum standard for health care ....
Ensuring State compliance with federal mandates has indeed been a recent
priority of the federal government concerning California’s historic underfunding of
the Medicaid program. That effort, however, has trapped the County in an armed
political struggle between federal agencies and the White House, on the one hand,
and the State bureaucracy and the Governor, on the other. Intended to be a joint
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federal and state matching program, California has been extremely creative at
contorting the mechanisms to finance Medicaid in such a way as to avoid paying its
fifty percent share and to pervert the original cooperative spirit of the legislation,
according to critics. In the early seventies, for instance, the State required
Counties to contribute a certain amount to the State’s portion of the federal match.
But, as recently as 1991, when a special federal program to partially underwrite
inner city hospitals that care for a disproportionate number of indigent, uninsured
and Medicaid patients was finally enacted by the California legislature— the
Disproportionate Share Hospital Program (DSH-pronounced “Dish”)— the State’s
arm-twisting became excruciating. Although the details of the program will be
clarified in a later section, the State not only enjoined County public hospital
districts and, to a much lesser extent, state hospitals, to contribute the entire State
portion o f the federal match, but also skimmed off at least $229 million from the
amount flowing back to public and private hospitals as an administrative fee.
For this, the federal Health Care Financing Administration (HCFA) began
to exert economic pressure on the State in an effort to force it to contribute its
legally mandated portion of the federal match. Because the State’s actions were in
compliance with the law on a narrow, technical basis, the federal government had
few options. The most promising one, however, would prove to be the most
detrimental to the County. Demanding that the State fulfill its financial quota for
the DSH program meant implementing a set of hospital-specific caps, called
OBRA 93 caps, on the number of federal dollars public and inner city private
hospitals could collect under the program. The manner in which the caps were
implemented, however, sent County hospitals into a budgetary tailspin and brought
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the entire system to the brink o f disaster. “HCFA is angry with the state,” explains
one County health department executive.
It is very clear. HCFA is very concerned that the state
underfinances its own Medicaid program and doesn’t opt into
solutions, options and opportunities that the federal government has
available to bring in new federal dollars into the California Medicaid
program and also help indigent care services.
The program was originally intended to be a fiscal partnership between
state and federal governments. Whatever the state would contribute would be
matched at the federal level. But, California found a loophole in the law, one that
the “feds abhor,” and were able to solicit County property tax funds for the
purpose of funding the state’s portion of the match, called an Intergovernmental
Transfer (IGT). In effect, the DSH program became an entirely federally funded
program because, as will be discussed in more detail later, County money was
returned to their general funds and only the federal dollars were used to make
supplemental payments to public hospitals and severely impacted private hospitals.
The Democratic administration at the federal level is extremely
upset at California [which] not only does not give any money or
provide any money to the DSH program of the State, but they rake
off $229 million a year to fund their own budget. Almost every
meeting I have ever been in with the people in Washington on this,
that issue comes up. . . . But, as long as Wilson is governor . . . he
basically thumbs his nose and says, ‘hey, you can’t touch me. ’
In response, Washington politicos pressured County hospitals, instead,
capping the amount o f federal money that they could receive through the DSH
program by rigging a byzantine funding formula designed, critics contend, to
nearly capsize the entire public health system itself. It was a nefarious type of
extortion, a risky game of chance charged with high stakes and the potential for
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horrendous loss. “The feds are actually helping and hurting the County at the
same time,” explains one health policy expert.
It’s obvious how the caps hurt the County only for the sake of
pressuring the State to contribute to the IGT match. But, the feds
actually help the County by putting so much pressure on the DSH
program itself, so that the entire law will have to be re-written.
Thus, although the OBRA 93 caps make sense from an abstract policy perspective,
the legislative intent is far more cunning, say medical experts. “It’s two sentences
in the Federal Registry what this thing [OBRA 93 caps] says and it’s the two most
damaging sentences,” explains one administrative official at the health department.
HCFA is aware o f it; Congress is aware o f it. They know exactly
what it’s meant to do and it’s doing exactly what they intended it to
do. This is not an accident what is happening right now [the crisis].
They want this to occur ....
Even during the negotiations concerning the Medicaid Demonstration Waiver after
the White House had promised $364 million in federal assistance, HCFA initially
refused to exempt the County from the OBRA 93 caps because it might set a fiscal
precedent for other states and counties to follow, a slippery slope that exposes the
federal treasury to unrestrained growth in Medicaid, but also because federal
officials wanted to continue to exert pressure on the State. Only after County
officials “presented them with evidence about what they did in Tennessee and
Hawaii where they, in effect, waived the caps,” did HCFA agreed to a partial
waiver worth about $88 million to the County. “This is the most they were willing
to move,” recalls one County officer. “And that took breaking o f arms. That was
the hardest thing to get. And it’s not worth much to us.” The secrecy was so
salient that even the nomenclature of the exemption was concealed: called an
“interagency agreement” instead of an OBRA 93 waiver. In addition, most players
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in the health care industry, except County insiders, could never have dreamed of
such convoluted political machinations profoundly influencing health care financing
through all levels o f government. One nonplussed commentator, choking back his
perplexity, stammered after hearing the theory:
Oh, God. In my dreams. That HCFA would help out like that? I
don’t think so. I wish it were true. . . . God, that would be great.
I would hope that is true . . . because that would get us out o f the
DSH death spiral. That’s interesting. That’s interesting. . . . I
didn’t know this. That’s interesting.
Further bringing the County to the verge of catastrophe was the SB910
fiasco, again, to be discussed in further detail later. In general terms, County
officials had unearthed a potential revenue stream from an obscure state law
crafted to draw down additional Medicaid funds from the federal government. The
HCFA office in Washington, however, had not explicitly approved nor anticipated
how extensively the County would exploit the bill which appropriated funds for
Medi-Cal administrative claims. The total claim over three years amounted to
more than $650 million. “HCFA balked,” recalls one County manager.
Washington officials denied the claim outright, even though its Region 9 office had
approved the County’s methodology, to which the County subsequently and
swiftly filed an appeal accompanied by aggressive crusading in Congress. “The
issue of the County booking revenues that it didn’t have a chance o f getting,” says
one upper level health department administrator, “. . . spending it and then
demanding it and then putting on a fixll-court lobbying press to get i t . . . pissed off
the White House. It goes that high.” In the end, the County received $23 million
on the disputed claims and the Director as well as the Assistant Director of
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HCFA’s Region 9 office were promptly dismissed, according to another County
executive.
By this time, the County had whipped itself up into a frenzy. Faced with a
health care system sinking in a sea of debt and budget shortfalls, confronted by an
outraged medical community but impassive public, and entangled in an ongoing,
politically motivated, partisan feud between Washington and Sacramento, Los
Angeles assembled a clever cabal, the Health Crisis Task Force, and concocted an
artful scheme meant to intensify and capitalize on the confrontation between the
State and federal governments and use it to force one or both to come to the
County’s rescue. In short, County officials pitted one against the other and did so
by beating a rather insulated budget deficit, one that could have been handled
internally between governments, to a full-fledged froth and a public emergency. It
was intentional, some observers say. “.. . I think a lot of governmental bodies like
to manage by crisis,” comments one County physician.
The only way they know how to manage things is by precipitating a
crisis. . . . I think it makes good TV, good media. It’s much more
exciting .... The public never responds . . . to media attention or
accolades for people doing good things. You only see it when it is
a crisis or a catastrophe. That’s the nature o f the beast.
The crisis, then, was allowed to escalate in response to a treacherous political
contest designed to extort federal aid from Washington or Sacramento, say
insiders.
Whereas the Board of Supervisors intimated that it had run out o f options,
some critics contend that alternatives other than closing down County General or
the vast majority of public health clinics and medical centers were available to
Supervisors. “They could have made other decisions,” remarks one administrator
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of a private medical clinic. “But they wanted to point the finger at the State and
see if they could get something .... It was a big game o f ‘chicken’, everyone
pointing a finger at each other to see who is going to blink first.” Sally Reed may
have first started the game of nerves when she put health care under the blade of
the budgetary guillotine and forced the Supervisors to reflect on the long-term
consequences of their continued economic wizardry. But the Board continued it
by refusing to reallocate funds from other departments that may have at least
partially ameliorated the crisis. Their obstinance was designed to aggravate the
circumstances and send a message to the public that the health system’s fate had
been predestined by the policies of the State and federal governments. “The gloom
and doom in the press was such, ‘they have no choice; they have to take the
system down.’ [But] that really wasn’t the case,” recalls one Task Force insider.
My own assessment in talking with some people at Health Services
[is that] they felt like they had to show, too, that this was
devastating. . . . They also had to make it clear because, if it’s not
clear, it’s not on the radar screen. If people aren’t going to die,
nobody pays attention.
Thus, a kind of dulling of political vitality seemed to desensitize officials to
the hazards of their brinksmanship and to preclude the renunciation of personal
conflicts and political posturing in favor of rational planning and reasonable
discourse between the three levels of government. Instead, local officials felt
compelled to devise calculating maneuvers that would bring the political cauldron
to a roaring boil. Who would be scalded first was an outcome the Board of
Supervisors, the State and the White House were all, for a time, willing to risk
their own skins to see.
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Closing County General (Option A) or the vast majority of public health
centers and County medical clinics and curtailing outpatient hospital visits by over
one million per year (Option C), however, is akin to dropping a small H-bomb over
Los Angeles, says one observer. Just the mere threat o f detonating such a
political warhead seemed to be an effective way o f jarring state and federal officials
from what County workers saw as a soporific senility, a potent deterrant to their
seeming apathy and indifference and a quick end to the political skirmish. But a
small miscalculation could have been enough to send the nuclear missile veering
off course. During the time County officials were in the grips of their local crisis,
Washington was grappling with its own budget emergency. The year of the
Republican revolution and the infamous “Contract with America” was the same
year Congressional members found themselves at loggerheads and locked into an
intractable, partisan stalemate over the national budget. Already late August, the
federal government was on the verge of a temporary shut-down. In accordance
with law, non-critical services would have been temporarily frozen and federal
employees would have been forced on hiatus if representatives had been unable to
agree on the budget by the end o f October. For Los Angeles, this turbulent
political climate meant a dramatic increase in the risks of the gamble. Federal
officials could have easily called the Board’s bluff, causing a backfire in the
County’s weaponry with catastrophic effects for the local region.
Nevertheless, aiming the atomic bomb at itself in a kind of metropolitan
hara-kiri seemed to be the only viable choice open to local officials despite the
ability to divert a small amount o f money from other departmental budgets. Early
on, the Health Crisis Task Force had come to the realization that the potential
self-immolation resulting from closing down specialty outpatient and primary care
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clinics would be far less damaging than the holocaust that would have ensued if
County General’s doors were padlocked and state and federal officials had called
the bluff and dared the Board to pull the trigger. In that vein, they recommended
that the supervisors only use the ruse to wager the clinics but not the hospital.
Closing County General would have been essentially irreversible and unacceptably
final, but taking a gamble and closing the public health centers and medical clinics
would have been both reversible and amendable. So, without risking the crown
jewel of the system and limiting the potential fall-out of a machination gone afoul,
“. . . they said put some cuts in motion that will also create pressure back in
Washington and so forth,” explains one health department executive.
The Task Force’s recommendations were released to the Board in late July.
The accounting firm of Arthur Andersen had concluded that, whatever the plan,
the County had two months in which to shut down enough health services to
prevent a complete financial collapse. The D-day was set for early October.
Forestalling an immediate crash of the system, ‘I t bought the time to make the
political deal,” says one person close to the deliberations. During that period,
County officials and Task Force members scrambled to put together a feasible plan
to present to state and federal health agencies while Supervisors mobilized and put
into play all the political resources they could marshal. For example, one
consultant to the health czar was able to wheedle a veiled threat into the Task
Force report, one that would resonate with middle class political constituencies.
He argued that shutting down the public health centers and medical clinics would
signal a full-scale “public health emergency,” capsizing private hospital emergency
rooms and the entire trauma system.
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In addition, the Board and Task Force members both relied to some extent
on a hidden alliance with health and public interest lawyers ready to litigate against
the County. A surreptitious relationship, it nevertheless is also “symbiotic.”
Although the health department is an ardent promoter of health services for the
poor, it is often constrained from more ostreperous or stentorian advocacy before
the Board. “. . . There’s this politics,” one health attorney for the poor says.
You don’t start saying, ‘rob from the SherifF because then the
Sheriff says, ‘rob from you.’ So, there are all these little things that
are not done between department heads about how they approach
this budget crisis. But [outside] advocates are not subject to those.
So, we go in and say, ‘it’s outrageous that you are taking money
away from health to fund the Sheriff’ And everybody just looks at
us like we’re nuts. But, in reality, all of those people are going
‘yea.’ Sometimes it [the threat o f a lawsuit] gives the Board cover.
There are things they want to do but they don’t have the political
muster. But, if [there is a threat of a lawsuit], they say, ‘they’re
going to sue us. They have a good claim. We have to do this.
Hold your nose and vote for it because otherwise it’s going to cost
us money. ’
In this way, the alliance stokes the political kindling by creating a forbidding
external threat which is secretly applauded by Supervisors and health officials
while, at the same time, constructing a political safety net. An effective
instrument, it permits politicians to ride both sides of the issue: partially feigning a
hawkish disposition toward the budget while simultaneously protecting essential
public services.
For instance, in August immediately following the dissemination of Sally
Reed’s budget proposal and the Task Force’s proposal to slash ambulatory care
centers, a lawsuit was filed in U.S. District Court by public interest lawyers against
the Board of Supervisors and the Director of the Department of Health Services to
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obtain injunctive and declaratory relief for the cuts then slated to take effect
October 1, 1995. Thirteen plaintiffs were included in the suit which was a class
action filed on behalf o f “all residents of Los Angeles County with insufficient
resources to pay for their medical needs who depend and will depend on the
County of Los Angeles Department of Health Services for the provision of
necessary medical care,” a population estimated between 800,000 and 900,000
people (Vinery v Board o f Supervisors 4). In essence, the suit alleges that the
County’s planned cutbacks will violate the Americans with Disabilities Act,
hospital discharge planning duties under federal law, state law, specifically section
17000 of the Welfare and Institutions Code, and due process of the U.S.
Constitution.
All of the plaintiffs were individuals who suffered from debilitating, chronic
medical conditions, had made reasonable but unsuccessful efforts to obtain
treatment from other health providers, whose health would be substantially and
negatively impacted by the service cuts proposed by the Task Force’s
recommendations. Even though four thousand pages of testimony from doctors
and patients accompanied the suit, one plaintiff’s predicament is representative:
Plaintiff Diana Molina worked for thirty five years until she was
forced to resign because of health problems. She has no income
other than GR [General Relief cash assistance] and is totally
dependent on the County for her health care. She suffers from
severe hypertension and heart problems. She has blocked arteries,
prolapsing mitral valve and wall motion abnormality. She must be
seen every four to six weeks to monitor her condition. . . . When
she spoke to the staff at the hospital they told her the service she
uses, ward 5P51, was closing October 1. They also said they had
no idea where she could go for follow up care. The medical clerk
told her that the patient records were going to be boxed up and sent
to storage (Villery 9).
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In the end, the bluff backfired. Federal assistance came too late, cuts were
already in motion, and patients and staff had already been displaced. One insider
explains how the failed subterfuge forced County health services to self-destruct
and detonate the hydrogen bomb aimed at the heart of its health care system:
. . . [Because] we think that the federal government won’t let us
close down all o f these clinics, let’s threaten that we are going to.
And with that threat, came the only solution .... It would have
worked perfectly. Perfectly, really. Except for four weeks. What
happened was the August 1 st or something proposal was approved
by the Board. . . . We had sixty days from August 1 st. If you
didn’t close the clinics and decrease the hospital, everyday you
would lose more money. You [would] lose a million a minute, or
whatever it was. You would go bankrupt. So, you only had a very
short period of time to be able to get the clinics back open. It takes
about 4 weeks to shut down a clinic, put notices out, to stop seeing
patients. It’s a complicated business. .. . So, we had a deadline of
September 1st o f having a signed Medicaid Waiver to say, ‘yes, you
can keep your clinic open. You can pull your card back. You
bluffed. We let you bluff us. Don’t close your clinics.’ And the
whole thing would have been fine. No clinics would have been
closed. They would have been downsized a little [but] patients
wouldn’t have been turned away. [But] we didn’t get the Waiver
until September 23 rd. September 1st we had to announce whose
being closed, whose being laid off; we had to get rid of people. We
had to start closing everything down. . . . The 23 rd, we hear that
they can be open; we hear the offer. [But] the Board has to
officially vote on it. That didn’t come until the 28th or 29th and
now you can say, ‘okay, go back and reopen.’ Well, it takes a
month or two to reopen. So, that’s why it’s four weeks. If we
could have had it on August 23 rd, we could have been able to never
announce that we were closing. The whole thing would have been
smooth.
Thus, confronting indifferent and even unhelpful federal and state
governmental machinery, local leaders contrived a political device to force
Washington and Sacramento to take notice o f Los Angeles’ plight even though
they hedged their bets by putting clinics and smaller health centers on the chopping
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block instead of County General. The federal government wanted to pressure the
state government to contribute to the Disproportionate Share Program (DSH), a
request that had previously gone unheeded. To do that, HCFA successfully
lobbied Congress to include hospital specific caps in OBRA 93 and, denied the
SB910 Medi-Cal administrative claims for over $650 million that the County had
expected to receive both of which, either knowingly or unknowingly, sent the
County health system into a desperate fight for survival. The County responded
with more than idle threats to close seventy-five percent of its ambulatory clinics
and curtail its hospital-based specialty outpatient services by seventy-five percent.
Paroxysmal outcries by private medical providers frightened by the prospect of
having to accomodate a horde of indigent and uninsured patients in their
emergency rooms, doctors’ offices and hospital were heard. Yet, the State refused
to buckle under the federal pressure.
A dogged standoff developed at the highest levels between the State and
federal governments and between Republicans and Democrats which partially
explains the four week delay in receiving federal assistance. One physician said he
detected a hidden agenda in the overblown reports of the crisis. Not having nearly
the import it was portrayed as having, he says, political leaders engineered it to
“stampede” the American public into a version of the Clinton health plan or
universal health insurance. The truth is not quite so grandiose, yet is an interesting
enough conspiracy theory. The impasse ensued between California Governor Pete
Wilson and President Bill Clinton, insiders say, both of whom were well into their
presidential campaigns at the start of the crisis. Wilson’s platform and credentials
for his presidential run were largely based on reducing governmental spending
without reducing services visible to key constituencies, observers say. Abridging
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services important to affluent voters would obviously substantially reduce much
needed political capital; far more prudent is reducing services vital to the
politically disenfranchised. . . Pete Wilson was running largely on a ticket of
cutting cost by cutting services to undocumented aliens,” says one County
physician. . . He was going to use [that] as his banner, that he could cut taxes
and trim governments and that in order to accomplish that, he was going to make
an example of the County system.” As a result of his determination to give middle
class Californians a tax break and balance the budget, Wilson began to slash social
programs, some analysts suggest. “. . . One of his campaign commercials was to
say that he was the one governor who was tough enough to have lowered state
spending below the level of when he came into office,” says one observer.
Meanwhile, Clinton was in the heat of the democratic electoral battle.
Although Wilson’s barnstorm posed little threat to the President, he still needed to
win California. Therefore, as one commentator opines:
. . . Clinton wasn’t going to come to bail him out and then let
Wilson [or the Republicans] live on that glory and say, ‘you see, I
cut taxes and I did it by cutting the support to undocumented aliens
and that’s why I should be President.’ Clinton wasn’t about to give
him that ammunition.
But, pressure was mounting from the Board of Supervisors as well. They had
close connections with White House politicos in Los Angeles. One of them,
Gloria Molina, was the national campaign co-chair for Clinton, and another,
Yvonne Burke, had ties to Donna Shalala, according to one staff member.
Although the Los Angeles County health care crisis may have seemed somewhat
insignificant compared with other more national issues on the political register,
“there was some construction o f a series o f political clocks that made the White
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House realize that it was important for them to do something,” recalls one key
health department official privy to the discussions held behind closed doors.
Suddenly apprehensive, he insists the tape recorder be turned off. During that
time, he recounted how the Supervisors, now desperate for resolution, trekked to
Washington and threatened and vowed to finagle the collapse o f the health care
system in time to impact the election if Clinton and his staff declined to take the
steps necessary to ameliorate the public health crisis.
In retrospect, most crisis participants hand the victory to Clinton.
Although he flinched and conceded the contest, he “played his cards well, riding in
on a white horse” to save the system. As for Wilson, the Republican bid may have
slipped through his fingers, partly, as a result of bungling health care. “Quite
frankly,” one physician says:
I assume that one o f the reasons Wilson dropped out of the
presidential race is that there is no way that he could continue with
this egg on his face. It would be a travesty to think somebody
could run for President in a state where a crisis like this is going
completely unaddressed by him and the legislature.
Whatever the reason, Clinton triumphed and there is no doubt that the crisis in Los
Angeles, though small, played some role in that outcome.
But, the larger story is both gripping as well as somewhat depraved. In a
time when most medical experts would demand that political gamesmanship recuse
itself and stay as far away from policy deliberations as possible, political factors
not only were at the forefront, but were the driving force. Contending with the
indifferent stolidity of state legislators and bureaucrats— motivated in part by
geographic hostilities, in part by ideological differences, in part by a refusal to bend
to federal pressure-ensnared by a series of unfunded mandates and trapped amidst
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the small arms fire exchanged by federal and state officials, County leaders set up
an ingenious booby trap. In guerilla-like fashion, they magnified the crisis and
filtered it through a political prism by threatening to annihilate vast portions of the
health system if federal or state assistance failed to come through. In doing so,
they pitted the state against the federal government and waited to see who would
cave in first. They banked on their guess that both Clinton and Wilson would
appraise the ensuing political fallout to be too costly for either the Governor or the
President, for either the Republicans or the Democrats. So, the County health care
system, a mere blip on the national radar screen, managed to puff itself up and put
up a scrappy fight for survival and recognition. To health policy analysts for
whom politics is antithetical to rational health policy, it was depraved; to political
artisans, it was a brilliant coup.
Funding Follies: A Revue
Political machinations have real-life effects. Perhaps childish games, they
nevertheless can create grown-up problems. One o f those is funding for publicly
provided services. A common weapon in the political arsenal, power over budget
appropriations is often used as bait to lure adversaries into legislative compromise
or as leverage to jack up the salience o f an unfavored public policy issue. But for
local governments, the political and bureaucratic swamp can wreak havoc on
regional services like public hospitals and clinics. The following discussion briefly
summarizes the various financial pitfalls that have befallen the County health
department, some of which were intentionally or unintentionally set by the state
and federal governments as a result o f their political infighting.
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Public hospitals have been historically underfunded. Their visibility is high
when they are used as bargaining chips in political gambiting but their overall value
and worth to the community must be quite low given how consistently they are
compelled to forage for financing. “They have almost never been supported by
public funds at levels needed to provide ‘state of the art’ care— that is, including the
amenities available in the better private hospitals . . . argues William Shonick in
his study Public Hospitals Under Private Management (4). But, medical experts in
Los Angeles do not even speak in terms of “state o f the art.” Rather, they are
concerned with just scraping enough money together to provide “appropriate”
care. “. . . We never have enough resources to take care of the people in the way
we think they ought to be,” says one County physician and administrator. “So, we
perceive that we are compromising our care for economic reasons.” The essential
problem stems from the rising cost of medical care coupled with the insistence that
County hospitals be health facilities of last resort. They are the last medical
institutions that permit universal access, and it is the sheer number of patients, the
swarm of sick and injured individuals that seek care at public hospitals that devour
limited resources and force the kind of temporal rationing that plagues the County
system. As one health department official puts it, the Consumer Price Index (CPI)
of medical care is rising by well over ten percent each year, whereas govermental
resources, those that reimburse public facilities for the care provided, are
increasing by less than five percent annually.
One explanation for the paucity of funds is the increasing centralization of
control over funding to the state and federal governments. After the passage of
Proposition 13 in 1978, counties and cities lost much of their fiscal autonomy
along with their ability to raise property taxes or enact new taxes to finance the
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growing cost o f public services. As noted in an earlier section, the State filled the
gap left in the health services budget by Proposition 13 with the AB 8 and MISP
programs, and, later, with tobacco tax, sales tax and vehicle licensing fee revenues.
The dramatic growth in the DSH program on the federal level also acted to shift
control to Washington and away from Los Angeles so that by 1995, out of a $15
billion total County budget, only $2 billion is under the direct control o f the Board
of Supervisors, according to one local official. As a result, health services suffered
a staggering loss o f County funding concomitant to the rise in state and federal
financing. One senior staff member explains the phenomenon:
. . . In 1981 to 1983, the Sheriffs department and the Health
department had the same amount of the County general fund;
about 16 percent of the general fund went to each department. Flip
forward to today. Only about 4 percent o f the County general fund
goes to the Health department, whereas, if you look at the Sheriffs
department, they are upwards of 23-24 percent o f the general fund.
You can look at it [in] two ways. One is that the County doesn’t
invest much in its own health department. Proportionately, [it] puts
in less of its general fund dollars, its discretionary dollars into the
problems that it has responsibility for. That is one way to look at it.
The other way . . . is that the County has been unbelievably
successful in getting state and federal governments to pay for things
that they have always paid for.
Indeed, the change in the pattern of intergovernmental contribution to the
health services budget is remarkable. In FY 1980-81, for instance, the federal,
State and County governments provided funds in almost equal amounts, furnishing
26 percent, 35 percent and 28 percent of the health budget, respectively. But, in
FY 1994-95, the pattern had become decidedly asymmetrical. State funding
remained nearly constant at 30 percent, but the amount from federal programs
(DSH) leaped to 56 percent, whereas the County’s outlay plunged to a measly 6
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percent. In essence, health officials leveraged the County’s inconsiderable financial
obligation in exchange for enormous health care purchasing power. “We get to
run a $2.2 billion program for $159 million of County funding,” proudly states one
senior financial executive.
Yet, some commentators decry the trend toward creative financing as a
loss of local autonomy and an erosion in society’s commitment to providing vital
public services for the poor. A fundamental transfer of authority and responsibility
away from the local community, one critic contends, has shifted the County’s role
from owners to administrators. “We have gone from being the people primarily
responsible,” he exclaims, “to being people who administer a federal program
[and] manage a state program . . . . ” The diffusion of accountability, in turn,
makes public services more susceptible to fiscal crises and less likely to be rescued
by the general public, explains the medical director of one private hospital. “The
ownership of this problem has shifted to Sacramento and Washington and away
from Los Angeles,” he says, “and that’s why you see people sort of throwing up
their hands and saying, ‘Gee what are we going to do?”’ If the public health
system were controlled more tightly at the local level, he contends, it would be
better managed, more accountable and less inefficient.
As local commitment wavers and the implied social covenant begins to give
way to federal initiatives, the poor and uninsured, from a distance, appear less
concrete and more incorporeal; they are classified into legal categories, sorted and
compartmentalized into particularized sections. No longer real individuals found in
the midst of a living community confronting it and demanding assistance, they are
abstract entities now, mere whisps categorized into a series of colorless and drab
statutory typologies. But it is the revenue attached to these categories that local
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officials chase with such vehemence. As federal and state funding streams are
augmented with new categorical programs, elephantine social programs become
more and more involuted as does the fiscal policy o f local agencies. Bureaucracies
expand in response to ever increasing revenue streams, eventually crossing over a
philosophical threshold where drawing down money from federal and state
governments becomes the justification for the construction of new programs, and
not vice versa. As one health department insider explains, “the County became an
expert at finding money. It would then develop a program to justify the money.”
Needless to say, some o f the programs would be incongruent with the needs of the
local community. For instance, one physician recalls a hospital commission
meeting in which members were discussing whether or not to construct a new
public facility to replace a hospital lost in the 1994 earthquake:
The Supervisors and the powers that be in politics and
administration in the County said, ‘yes, we should build another
hospital in its place even if it’s out in Sylmar and everybody has to
take three buses to get there because we have matching funds from
the federal government and we can’t afford not to get that money.’
Not, ‘yes, we have a system now of local clinics convenient to the
neighborhood and let’s keep on that level and use the facilities that
already exist and which cost less.’ But, ‘we have matching funds
from the federal government and we should use that money.’ Isn’t
that pork barrel politics? I opposed it. But, I was a voice in the
wilderness.
This inverted budget process, inspired by categorical funding programs
unilaterally crystallized by remotely situated state and federal governments,
ultimately created a convoluted and jumbled patchwork of fragmented and isolated
funding streams. ‘T o me, it’s like band-aids,” says one physician who monitors
quality assurance for a non-profit system of free and community clinics.
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[If] we come up with a special, interesting or different problem, we
just bring up another program to fix it. I think that is where our
problem is. We need to stop doing that. We need to look at some
of the deep-seated reasons why we have these problems and resolve
them there.
As a result, the pattern of health care financing, especially for public hospitals and
clinics, is positively occult. It is a labyrinth o f immense complexity, according to
one frustrated administrator who tried in vain to procure County funds for her
non-profit clinic, that nobody fully understands. And one health department
administrator compares such futile efforts to “trying to get into J. Edgar Hoover’s
vault. . . . County financing has gotten very complex over the last dozen years.
You will get spinned in twenty different directions and come out not knowing
which way is north.”
With that in mind, the discussion turns now to a brief history of the specific
programs that have made up the dizzying array of federal and state health care
financing schemes. A pattern will emerge demonstrating a subtle but evolutionary
shift of primary responsibility for the funding of health care from local communities
to state and federal governments, a shift that opened the door to a series of
complex intergovernmental relationships rife with political and personal conflict.
In 1965, Congress forged the Medicare and Medicaid programs to help reimburse
health care providers for the costs of treating disabled, elderly and poor patients as
well as other beneficiaries that fall within a number o f narrowly defined categories
of eligibility. The relatively liberal compensation afforded to doctors and hospitals
as well as the emergence of new technological advances accelerated by the
research funds distributed through these programs drove up the cost of medical
care rather rapidly. When the State legislature enacted the Medi-Cal law— the state
component o f the federal and state matching program— it required individual
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counties to contribute a portion o f the state’s financial responsibility. The
assessment was based on a composite index tied to property tax valuations,
according to one long standing County official. Both the steep inflation in the cost
of rendering health care services as well as the somewhat farcical requirement that
counties at least partially fund their own revenue received through the Medicaid
program encumbered them with new and onerous financial burdens.
To assist them in meeting the exponential costs associated with the 1965
legislation, counties were allowed to choose between a “County option” plan,
usually elected by larger counties, or a “standard County” plan. Under the former
plan, the State would reimburse counties the net increase in health care costs
attributable to the Medi-Cal program; under the latter, the County’s assessment of
the state’s share of the Medicaid program would be capped at 90 percent o f FY
1964-65 levels. But in 1971, the Reagan administration repealed the County
option plan, forcing counties to bear the brunt of the steeply rising health care
costs for non-Medicaid eligible patients, costs that were, at least in part, pumped
up by the Medicaid program itself. In exchange, state legislation added a new
class of patients to the Medicaid rolls, called Medically Indigent Adults, which
included indigent children as well as adults under age sixty-five (Duke 25).
Although Proposition 13 enacted in 1978 nearly drowned local services
like public hospitals and clinics in a pool of red ink, one-time and speculative
revenues as well as state and federal assistance were able to keep the County
health system on an even keel until 1995 when OBRA 93 took full effect. In
1979, to offset the loss of property tax revenues as a result of Proposition 13, the
state legislature enacted AB 8 funding that provided a per capita grant in addition
to matching funds to share up to a maximum of sixty percent of the net cost to
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counties of operating their hospitals and clinics adjusted annually for inflation. But
in 1982, state lawmakers cropped about $600 million from the Medi-Cal budget.
“. . . The cuts have eliminated a wide variety of non-emergency medical
procedures, surgeries, drugs and other items, required prior authorization for
others, and removed about 50,000 people from the program (18,000 in Los
Angeles County alone),” reports the Los Angeles Times in their composite book
on a five year assessment of Proposition 13 (Richter 155-6). In addition, the 1971
expansion of Medi-Cal eligibility to Medically Indigent Adults was repealed.
According to one health policy expert, the reversal dumped about 400,000
Medi-Cal beneficiaries state-wide onto County health systems, and the number in
Los Angeles County reached as high as 200,000. In its stead, the state created the
Medically Indigent Services Program (MISP) which provided block grants to
counties in order to compensate them for the care and treatment o f this
disenfranchised class worth about 70 percent of the funding previously afforded
them under the Medi-Cal program. Over time, according to the health policy
expert, “that 70 percent dropped down to 20 percent.” Eventually, the funding
stream was eliminated during the 1991 State budget realignment. As Kathryn
Duke suggests, the revocation of the MIA class engendered some long-term,
negative consequences for medically indigent patients: “. . . [It] saved the state
about $110 million for that year, but also resulted in fragmentation of medical
benefits, eligibility criteria, and access to medical care as many counties developed
their own programs for the medically indigent” (26).
In 1986, the Immigration Reform and Control Act was enacting, providing
amnesty and permanent green cards to certain illegal immigrants residing in the
U.S. Part of the Act appropriated funding to states for the purpose c f offsetting
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the cost of local health care services provided to this class of individuals. State
Legalization Impact Grants (SLIAG) lasted for about five years and helped to
mask the long-term negative impact of Proposition 13 on County health services
budgets. Then, in 1988, California voters passed Proposition 99 which imposed a
twenty-five cent increase on the cigarette tax, two-thirds of which was eventually
funneled to hospitals and physicians for the care o f indigent and uninsured patients
who cannot otherwise afford medical services (Duke 25-6). A set of requirements
known as Maintenance of Effort (MOE) stipulated that only those counties that
maintained their net costs at a level at least equal to the pre-Proposition 99 levels
would be eligible for those funds.
But, in FY 1991-92 came the most sweeping changes in health care
financing since the implementation of Proposition 13 in 1978. Faced with a
staggering State budget deficit o f more than $14 billion, Governor Wilson outlined
an agenda called realignment that fundamentally altered the configuration of state
and local programs and the relationship between them. For health care, the
proposed budget slated the elimination of approximately $900 million in annual
transfers to counties out of the State’s general fund, including the AB 8 and MISP
funds, in exchange for a similar amount to be financed from increased taxes on
alcohol and vehicle licensing fees (Duke 28). One high ranking health department
executive explains the thinking and problems behind realignment:
What the state did is that they said to the counties, ‘you can have
more autonomy over these programs and we are going to finance
those out of revenues that are not tied to the State general fund.
We are essentially not going to pay for them out of income taxes
anymore. We are going to pay for them out of what are known as
VLF (Vehicle Licensing Fees) . . . [and Sales Tax].’ The problem is
the counties accepted that. They actually had no choice but to
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accept it because they were part of a political dynamic between
Sacramento and the counties and the counties didn’t have much
voice. . . . The State won in the short-term and it will probably win
in the long-term. The problem is that at the time that the counties
were engaged in the new autonomy that they had to define
programs and to spend their dollars the way they wanted to, the
dollars that they traded grew [General Fund] and the dollar streams
that they got— the VLF and the Sales Tax revenue— started to drop
state-wide. So, the counties got more autonomy— relief from
MOE— but they got less cash to do it, primarily because those
revenues are highly elastic relative to the economy.
The result was a precipitous drop in the amount of money transferred from
the State to the various counties. Between FY 1990-91 and FY 1991-92, for
instance, State transfers to counties for health programs plummetted by 100
percent from about $1 billion to $500 million, most o f which is attributable to the
repeal o f AB 8 and MISP (Paik 12). To atone for the loss of these two cash cows,
a 1992 law revoked the Beilenson Act outlined in section 1442.5(c) of the
California Health & Safety Code which cancelled the onerous mandate that County
health services at least meet a “community standard” o f care. At the same time,
lawmakers rescinded three o f the four MOE requirements of Proposition 99 (Duke
60). As with any political action, compromise governed the final outcome.
Although state officials implemented a repeal of the MOE requirements of
Proposition 99 to partially compensate for the dissolution of AB 8 and MISP
funds, health advocates pressed for something in exchange. “We fought with the
County every year on this maintenance of effort,” recalls one poverty lawyer.
“They . . . wanted relief from MOE. . . . But we could negotiate for a certain
amount o f flexibility in that in exchange for certain things like reporting
requirements and monitoring of access to health services and backlogs and wait
times.”
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Lawmakers did try to ease the burden on counties by passing legislation
that permitted those in “significant financial distress” to make general assistance
payments only to indigents whose income fell at or below 40 percent of the federal
poverty level (Duke 28), and added a provision that any future State action that
would eliminate a class o f Medi-Cal recipients would not become a County
responsibility. In addition, another law— the Friedman bill— gave counties in
distress further relief from the fourth and last maintenance of effort requirement.
One health department official explains:
.. . We actually had less dollars to make MOE and we dropped
below MOE. We got a special bill passed that allowed us to get all
the money anway. It is a perverted situation. What are you going
to do to a County health system that fails to meet its MOE? Are
you going to take away more money from the system?
O f course, much of that legislative assistance was merely formal, reducing the
County’s legal, but not its moral, responsibility to the people o f the community.
Irrespective of whether or not State officials would require a “community
standard” of care, it is the County that must deal with the consequences of not
providing one, and despite the fact that the State had rescinded the County’s
obligation for the care and treatment of patients who would not be eligible for
Medi-Cal in the future, it is local officials who must nevertheless contend with
public health consequences. Either patients “die in the street” or they will receive
treatment at public hospitals and clinics, despite State legislation that eases the
County’s legal burden.
The State’s formalistic attempts to redress the revocation of AB 8 and
MISP notwithstanding, further tinkering with the financial relationship between
counties and the State in 1993 was also partly responsible for the huge gap in Los
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Angeles County’s health budget. In 1988, California voters passed Proposition 98
which established in the State’s Constitution predefined minimum spending levels
for public schools systems (Paik 6). In order to meet this challenge, Governor
Wilson in FY 1992-93 and 1993-94 proposed and executed a property tax shift
that reduced the proportion and amount of local property taxes collected that
would ordinarily go to Counties and diverted it to public schools instead. The year
after Proposition 13 was passed, AB 8 established a Health Services Fund to assist
counties in meeting its health care costs in the face o f dwindling property tax
income. To accomplish that, the State then shifted property taxes from schools to
counties, cities and special districts and funded schools directly from its general
fund. Prior to the enactment of the Proposition requiring the State to enforce
minimum spending levels for public schools, the County share of locally assessed
property taxes was 31 percent. But, in FY 1993-94, it fell to 21 percent (Paik 7).
Consequently, in 1993, the State “hijacked” $2.6 billion in property tax
income that should rightfully have gone to counties, further expanding State
control over local finances. For Los Angeles County, the bill totalled around $1
billion, a striking similarity to the amount of the County’s budget gap which is not
lost on many observers. Instead o f using other state-wide taxes or an increase in
income taxes, which would have been far more visible and politically
disadvantageous, lawmakers chose to shroud its fiscal problems in what some see
as an intricate maze of money transfers tantamount to a kind of financial
humbuggery. O f course, the argument could be made that counties are merely
political subdivisions of a state and, therefore, any money taken from local coffers
is well within the legal rights of the state, and that the centralization of funds and
administrative control creates both state-wide efficiency as well as equity across
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counties. But those ideas run counter to the notion o f “subsidiarity,” a philosophy
of local autonomy cherished by many in the medical community. Health care, they
contend, ought to be decided, for the most part, at the local level and state and
federal governments should be involved only to ensure the implementation o f
consistent standards across regions. Certainly, higher forms of government should
not busy themselves with absconding with locally derived tax revenues.
Then, sometime between 1994 and 1995, the SB910 caper was foiled.
Recall that County officials had counted speculative revenue of over $650 million
in the FY 1995-96 budget from an obscure provision in the Medicaid program that
permitted counties to be remunerated for costs associated with an administrative
activity called targeted case management. Under this statute, counties were
authorized to provide services to several classes of Medi-Cal beneficiaries in which
case managers would “assist clients to gain access to needed medical, social,
educational, and other services” (Senate Bill No. 910, Chapter 1179 3). In theory,
counties would advance funds to the State Department of Health Services
(SDHS), the “Certified Public Expenditures” would be matched by federal monies
through the Medicaid program, and the State, according to one official, would of
course loot about a third of the money before returning the remainder to the
counties. In fact, though, the law was so nebulous, officials had to surmise for
themselves the most appropriate way to compute the amount expended on
targeted case management services. Because these services are decentralized,
possibly extending across several County departments and because the services of
case managers extend beyond the classes of beneficiaries under the Social Security
Act enumerated in the statute, it was necessary for County officials to extrapolate
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from the activities of a representative sample of case workers in order to calculate
how much time case managers were devoting to Medi-Cal recipients.
According to one health department administrator, the trick was to
accurately figure the total time spent by case managers each month on Medi-Cal
beneficiaries who fit into the categories defined by the statute. To do this, three
factors needed to be known: the average amount o f time spent by case workers on
each client, the total number o f clients served and the percentage of the total
clientele who were Medi-Cal recipients and who fell into one o f the categories
named in the statute. Although the other two measures could be easily calculated
from the sampling data, the most difficult index was the percentage of Medi-Cal
clientele served by case managers. Whereas most counties estimated this quantity
by applying census figures to their time samples, Los Angeles County calculated it
in two ways and then filed the claims using the higher value. The first method
used the proportion of patients hospitalized at County facilities who were covered
under the Medi-Cal program. This percentage varied between 50 and 60 percent.
The second method used a regression analysis that correlated the Medi-Cal
population in any given zip code in the County to the number o f patients from
those zip codes that used public hospitals and clinics. That formula pushed the
percentage of Medi-Cal recipients seen by case managers to an astonishing 92
percent, and the difference between the two methods amounted to about $200
million. According to one County official, the accountants in the Department of
Health Services’ Revenue Management section were ‘leery,” but the Chief
Administrative Officer’s staff instructed them to use the 92 percent assumption
when submitting claims to the Health Care Financing Administration (HCFA), the
federal agency charged with administering the Medicaid program. Worried about
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a fiscal landslide touched off by the County’s precedent, HCFA denied the claims
outright and fired the director and assistant director of its Region 9 office who had
previously approved the methodology. “The federal government saw that as
another way of getting more money and they looked at it very carefully,” recalls
one observer.
They didn’t want to set a standard since California was trying it for
the first time, and they didn’t want to go through what would be
another loophole where all these hospitals could get more Medi-Cal
funds. So, they really clamped down on it.
Local officials mounted an appeal and lobbied strenuously in the Congress and at
the White House but to no avail. Ultimately, they were forced to reverse almost
$650 million in speculative revenue had previously been recorded in the health
services budget, opening up an enormous deficit and, in part, touching off the
immediate budget crisis.
But the Medi-Cal program has had more far-reaching effects on County
financing of health services than just SB 910. In general, federal rules on
reimbursement to doctors and hospitals for services rendered to Medicaid
recipients are not only meager, but perverse, according to several critics. They
reward inpatient care with high payments and punish outpatient care with
payments far less than the cost of treatment. A clear example can be seen as far
back as 1979 when the net cost to the County for acute inpatient services, after
being reimbursed by Medicaid and other payment sources, accounted for only 17
percent o f the total amount expended from the County’s general fund for health
care even though these expenditures were more than 53 percent of all health care
costs. Conversely, outpatient services directly cost the County a full 39 percent of
the total expended from the general fund even though they are only 28 percent of
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total health expenditures (County Health Services Report 33). “. . . Nobody ought
to be surprised,” says one former medical director for the health department, “that
the inpatient part of the system expanded as much as it could in order to attract the
funds to take care o f the people that the private sector wouldn’t take care of
because the fees were inadequate.”
One pediatric clinic administrator gives an example. Pretend, she says, that
a child presents to the clinic with a brain tumor “that is causing an acute visual loss
and has to be treated immediately with radiation.” If the child is admitted to the
hospital through the emergency room, the patient qualifies for “presumptive
eligibility” or emergency Medi-Cal coverage that will pay providers retroactively.
In that case, an MRI, a type o f imaging device that uses magnetic waves to create
a detailed picture of the brain helping doctors to locate the tumor, would be
performed immediately. If, however, the child is an outpatient and does not
require hospitalization, she is not eligible for Medi-Cal and cannot get the MRI.
One County surgeon relates how the inherent irrationality thwarts efficiency.
Because the operating rooms are always filled to capacity, patients have to
unnecessarily wait extra days in hospital beds until a surgical suite becomes
available. “You could hire two extra nurses and a scrub tech to do surgery all the
time at night,” he says. Yet, the County has no incentive to do so because if their
hospital patients go home earlier, their reimbursement from Medi-Cal is reduced.
And the trend has persisted, stunting any progress toward the
developments occuring in the health care industry. “. . . Over the last decade,”
says one health policy expert, “the County has not focused any restructuring of the
health care delivery system to follow what is naturally evolving. They have circled
up the wagons around inpatient care.” Because they have been a ward of the
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Medi-Cal program for so long and have been so dependent on that stream of
revenue, which accounts for about 70 percent of total hospital revenue, they have
been unable to follow the general trend taking shape in the private sector toward
less expensive community-based, outpatient-oriented systems. In fact, one insider
testifies that “perverted federal financial rules” became the singular nemesis of the
Health Crisis Task Force which was wrestling with ways to close the budget gap
and keep the system from capsizing completely during the summer of 1995.
Maddened by the backward logic o f the regulations, they saw all too clearly how
unyielding Medicaid reimbursement vehicles had locked the County system into an
antiquated and retrospective health delivery structure. The rigor m ortis paralyzing
the County health system impeded change and constrained efforts to act
progressively. In short, it imprisoned an entire health system pent up with a need
to expand and change. Years later, the stultification erupted into a fiill-fledged
crisis.
In addition, the efforts by the State to enroll all o f the Medi-Cal recipients
who also receive federal welfare payments under the TANF program (formerly
AFDC) into HMOs has accelerated the loss of County patients to the private
sector and reduced the amount of Disproportionate Share Hospital (DSH) revenue
available to both public and private hospitals. When patients enroll in managed
care organizations, those commercial plans often contract with private, not public,
health facilities. Although the County has its own HMO, Community Health Plan
(CHP), many Medi-Cal recipients, now more attractive to private providers than
before because they are enrolled in commercial HMOs, typically choose to sign up
with those private plans. And, as more and more patients choose HMOs, income
from the DSH program continues to dwindle because providers are only eligible
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for those payments under a fee-for-service system where they are reimbursed for
actual services provided to Medicaid beneficiaries. Under a capitated system
where providers are paid in advance a fixed fee for each person covered by
Medicaid regardless o f how many medical services they consume, DSH payments
do not apply.
But, some of the problems associated with Medi-Cal Managed Care
program (MCMC) could exacerbate the County’s predicament further. Originally
intended to protect public facilities and other traditional safety net providers from
being excluded from managed care networks, the “two plan model” enacted by the
legislature has created a duplicative and inefficient bureaucracy which, if the dire
predictions made by some critics come to pass, could dump more uninsured
patients at County General’s doorstep. The chief executive officer of one HMO
explains the thinking behind the legislation:
. . . The County health care system said, with significant political
force, ‘we are really concerned about this. We think it is really
important that we not be disenfranchised, that we not lose our
patient volume and lose our revenue source.’ Their argument is, ‘I
have to take care o f a third of this population that no one is paying
for [the poor and uninsured], Medi-Cal is my primary source of
revenue to do this. If you move Medi-Cal beneficiaries into
managed care and if I am not able to compete for that patient
population, I have lost a piece of the core funding that I use to
support the other dimensions of my mission: care for the entirely
uncompensated. I think that that argument has some merit. I think
the political response was developed to do that. They said, ‘let’s
set up what we call a two plan model. Let’s set up this model
whereby we will have a main stream plan whereby we will pick one
health plan— in this case Foundation Health Plan— and the [create
the] other plan to be a local initiative, which really constituted a
mechanism to guarantee that the County health care system and
other urban providers have the ability to participate in the program.
. . . The County was advancing the argument to the State that,
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‘well, these private health plans won’t contract with me. So, you
have to guarantee me a piece of this market within Medi-Cal
managed care.’ .. . So, the local initiative is guaranteed a quota
of enrollees ....
The truth, however, is that commercial plans would, in fact, want to
contract with public providers because they have developed unique systems to
accomodate a critical mass of indigent and uninsured patients, at least according to
this CEO. And it is this disparity that constitutes much o f the driving force behind
the vehement criticism of the two plan model. The president o f one non-profit
hospital calls it “the most ridiculous thing that could have possibly ever happened.
Why would you set up a bureaucracy to manage other bureaucracies. Give me a
break.” The problem is that the plan is said to be too cumbersome and unworkable
because both the mainstream plan and the local initiative, called L. A. Care, act as
supervisorial governing boards, contracting out patients to a second tier of HMOs
who, in turn, subcontract with doctors, clinics and hospitals. L. A. Care, on the
other hand, was originally envisioned as an all encompassing HMO, not as a
supervening bureaucracy, but State officials insisted that it secure a type of license
that all HMOs operating in the State must be certified under--a Knox-Keene
license issued by the State Department of Corporations— a process that takes
several months and millions of dollars to complete. To circumvent that procedure,
L. A. Care instead partnered with eight to ten HMOs already in existence and, in
effect, set itself up as a duplicative bureaucracy. But, critics foretell a foreboding
future, saying that the elaborate organizational contraption could come “crashing
down in a political heap” in an “extraordinary crisis.” If it does, more patients will
be foisted on County health facilities for which the reimbursement mechanism
would be precarious.
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Already there are implementation problems that are adversely affecting the
County’s patient population, partly arising out o f the State’s zeal for rapid
enrollment. In order to hurry the process along, says one observer, they are aiming
at a goal o f registering one twelfth o f the TANF (formerly AFDC) welfare
population into Medi-Cal managed care each month. Yet, significant problems
were brewing. Although beneficiaries, at that time, were ostensibly given the
option to remain in the fee for service side of Medi-Cal, they were placed by
default into one of the commercial HMO plans if they failed to indicate their
preference on the enrollment form. “What’s happening is the notices aren’t going
to people,” explains one lawyer whose clients have allegedly been mistreated by
the process.
The packets are . .. [very] thick. People have gotten them
sometimes on the same day that they got their notice of default into
a [managed care] plan. So, they don’t have the choice to go back
to their doctor. They can’t actually get the [phone] number
[because] they’ve changed the contractor at the State. It’s just a
total disaster!
For example, the grandmother of six, she explains, received a notice that her
grandchildren had been unilaterally assigned to at least four different primary care
physicians whose offices were located as far apart as several hundred miles. One
was in San Pedro, the other in Sacramento, one in Laguna Niguel (Orange County)
and the other at Pasadena (a suburb north of Los Angeles). Worse yet, her clients
are having difficulty withdrawing from these plans. “. . . The disenrollment
procedure is not accessible to people,” she protests. “They are not returning
people’s calls. They have been told to leave messages on a machine. Three weeks
go by. These are urgent people that were in the middle of treatment
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The result is that many of the bewildered Medi-Cal recipients simply return
to County facilities for treatment. But, now, since they are enrolled under another
managed care plan, public hospitals will not be reimbursed for the care of those
patients and HMOs are even denying payment for emergency room visits to
County hospitals if they deem that care to be o f an elective or chronic nature.
Despite HCFA’s authority to audit the process, what is called a “readiness
review,” it would not step in beyond its capacity as an advisor until the fee for
service option had been formally revoked.
The whole notion of enrolling poor patients into managed care is senseless,
according to some critics. Managed care works best with a stable patient
population who are healthy enough to take advantage of the true strengths of
HMOs: prevention and wellness through an emphasis on primary care. Yet,
Medi-Cal recipients tend to suffer from a higher acuity index and typically
transition in and out o f Medicaid eligibility depending on their monthly income,
making stability and continuity o f care difficult. But those obstacles go
unaddressed by State officials, say critics, because the entire Medi-Cal managed
care project is merely a subterfuge for hidden service reductions, a device to
“derive cost savings by ratcheting down . . . funding,” or what John Donahue calls
“tactical privatization” (136). “It’s just cheap, crappy health care for poor people
through managed care which means, basically, it’s a rationing scheme,” contends
one doctor in private practice.
Get the problem out of our hair. Get it out there in the private
sector and let somebody else take the fall for the egregious
inadequacies that would be necessary to have any profit whatsoever
in caring for those patients at the level of funding that is going to be
offered.
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But, the worst case scenario vividly portrayed by some critics is the type of
skimming practices that will be employed by certain HMOs trying to scoop off the
best patients from the top o f the population stew, leaving the sickest patients for
County hospitals. “I don’t think they are too keen on enrolling HIV positive,
heroine addicts and so forth into their HMOs,” argues one doctor in private
practice. “They are going to look for the best cross-section of those patients to
capture and leave the rest for the County system which means, again, the
economics are going to get worse . . . .” Another physician, the chief of staff at
one private hospital provides a few illustrative examples of such behavior:
Go back and look at PCCM (Primary Care Case Manager) who got
money for taking care of outpatient services for Medi-Cal patients.
They were showing 30 percent profits. The only way they would
be able to do that would be to sign up people promising them all
kinds of benefits and then making it impossible for them to get the
benefits. Keep the capitation [pre-paid premiums]. Treat a healthy
population. There are a lot of ways to do that. . . . For one thing,
if you are in the [housing] projects, put your office on the third
floor Anybody who can get up there is healthy. So that is where
you do your recruiting. . . .Y ou can offer people all these benefits.
You send out all these marketeers who do door-to-door marketing
[enlisting Medi-Cal patients]. These people walk up and just flat
lie. ‘We provide all the drugs. You can go to any doctor you
want. Everything will be free. You can come to our clinic and see
the specialist. You can see your doctor. We will give you free
transporation and appliances (hearing aids, crutches). We provide
it. No problem. Just sign right here. ’ People sign and get their
Medi-Cal card. Then, they go to use these services. They dial a
1-800 number that no one ever answers. They have to call on a
Tuesday between 9 and 9:15. . . . I am deeply suspicious of that
kind o f arrangement. I look at the HMOs and how they performed
in Sacramento where they signed up all kinds of people in the
Medi-Cal program with geographic managed care and they gave
them a list with a 15-20 percent error rate, so you got the premium
for people who weren’t [even] there. .. . And since the patient
didn’t know who the doctor was, they had no place to go. . . .
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There are opportunities for unscrupulous providers that are almost
limitless. These guys will make a lot of money and leave town and
we will be left with the problem. We will be left with all of the
uninsured. I am deeply suspicious of that. I have much greater faith
in the local practitioners in this community . . . who have been
taking care of Medi-Cal patients for years, who have been taking
care o f people for nothing for years and [are] about to be driven out
by these HMOs.
Of course, door-to-door marketing pitches are not allowed under the
Medi-Cal managed care program. Yet, the common thread stitching together the
difficulties associated with Medi-Cal managed care is the long-term, detrimental
effects the County would experience if these patients were unloaded at the front
doors of public hospitals as many critics predict. If enrollment procedures are so
puzzling or are so bungled that confused patients resort to County emergency
rooms, if a monstrous contractual bureaucracy with multiple tiers collapses on
itself sending patients running for cover at public facilities, if State funding is so
stringent that entire health plans fail diverting patients to County hospitals, or if
shady, fly by night HMOs cherry-pick the healthiest patients leaving the sickest
patients for the County, an already strained public health care system will find itself
strapped with a new load of patients for whom their care will not be compensated.
In essence, it would be an unmistakable violation of the State’s promise to never
again jettison a class of patients from Medi-Cal and palm them off on County
facilities.
Aside from a set of entrenched federal reimbursement patterns
handicapping public and private health care systems that rely disproportionately on
income from Medi-Cal and an array of pitfalls ready to ambush the move toward
managed care and seriously exacerbate the County’s fiscal problems, a curious
irony emerges from a fundamental contradiction in the Medicaid program itself.
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Although it is a “heartless, stingy system,” disavowing millions of the working
class poor and middle class uninsured, it has also experienced exponential growth
in the last ten years. On the one hand, it is so penurious that many patients only
qualify for Medi-Cal “if you can prove they are dying.” And the variability in
reimbursement levels between states is significant. California, for instance,
according to some experts, ranks 52nd out of the 54 governmental districts that
make up the U.S. On the other hand, Medicaid grew by 300 percent in the six year
period between 1989 and 1996, much o f that attributable to greater enrollment and
the increasing price and volume of medical services provided (Litman 181). In the
Omnibus Reconciliation Act of 1989 (OBRA), for instance, federal lawmakers
mandated that states cover all pregnant women and their children age six and
under whose monthly income was at or below 133 percent of the federal poverty
level (Litman 180). But, the growth o f Medicaid is often chiefly blamed on the
immense growth of the Disproportionate Share Hospital program (DSH) that
distributes supplemental payments to hospitals treating a very high percentage of
Medicaid and low income patients. In the four year period between the program’s
start in 1989 and 1993, total DSH payments spiraled upwards from $400 million to
$14.4 billion annually— a 3600 percent increase— so that DSH accounted for almost
15 percent of the total Medicaid program in 1993 (141 Cong. Rec. S16807-01).
Between 1991 and 1992, the Urban Institute estimated that the increase in DSH
payments explained the majority (51 percent) of the growth in Medicaid
(S16807-02). The expansion was so significant that in 1991, and again in 1993,
the Bush administration introduced legislation that was rigorous enough not only
to clamp down on the program’s seemingly unstoppable growth but also to hurl
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the second largest health system in the country headlong into a potential disaster of
unfathomable proportions.
Enacted by Congress in 1988, the DSH legislation is a highly complex
statute that spells out a convoluted funding formula. Essentially, it appropriates
supplemental payments to both public and private hospitals who meet minimum
requirements, payments which exceed the customary payments made to hospitals
for the hospital care of patients covered by the Medicaid program . To be eligible
for “Disproportionate Share Hospital” status, a hospital must either have a
Medicaid inpatient utilitization rate-defined as the percentage o f the aggregate
number o f hospital days attributable to Medicaid patients out of the total number
of hospital days for all patient types— that is at least one standard deviation above
the mean for all hospitals treating Medicaid patients in the state, or it must have a
“low-income utilization rate” that exceeds 25 percent. The low-income number is
calculated by adding together two percentages. The first is the percentage of total
annual revenue received by the hospital for care of Medicaid patients plus other
cash subsidies from state and local governments out of total revenue; the second is
the percentage of total charges arising from unsubsidized charity care out of total
hospital charges for the year. Those two percenages, when summed, must exceed
25 percent in order for a hospital to qualify as a DSH or the hospital’s Medicaid
inpatient utilization rate must exceed the mean for all DSHs in the state by one
standard deviation. In addition, apart from a few exceptions, a DSH must have at
least two obstetricians on its medical staff and it must have a Medicaid inpatient
utilization rate of at least one percent. Disproportionate share hospitals are paid
the supplemental payment in one of three ways. Either it is equal to or greater
than a predefined percentage o f the total amount paid to the hospital under the
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Medicaid program, proportional to how far above one standard deviation o f the
state-wide mean the hospital’s own Medicaid inpatient utilization rate falls, or
equal to the reasonable incremental and additional charges related to caring for
Medicaid patients.
Although the legislative intent behind the DSH program, to compensate
hospitals caring for a high proportion of low-income patients for which they
receive little or no payment, seems noble enough, it has nevertheless generated a
crippling addiction to it. Hooked are private hospitals, the County health system
and even the State who are now fighting each other, in gangland style, for more of
the smack. In fact, the funding and distribution of payments under the DSH
program has engendered a rancor so shrill and so strident that it has sharply
divided the medical community and pitted each faction against the others in an
acerbic and cutthroat race for more money. The reaction to that acrimony by the
federal government, when it imposed the OBRA 93 caps and other austere
measures in an attempt to force the State to contribute its fair share to the
program, is, in truth, the most proximal and immediate cause of the health care
crisis.
The malice between public and private hospitals receiving DSH payments is
intense, much of it incited by the virulent competition for ftinding under the
program. Full steam lobbying efforts to tweak the law in favor of one or the other
leave harsh feelings and indignant posturing in their wake. But the stakes are high.
The chief executive of a health system that owns one inner-city disproportionate
share hospital describes how utterly dependent it is on the program:
. . . [The hospital administrators] put a dollar of revenue on the
books and then immediately write off forty percent of that. We are
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really operating a hospital that is almost half the size of the services
it is providing, if you think of it that way. Fortunately, there is a
program. It’s called Disproportionate Share. . . . We receive about
$16 million. . . . If it weren’t for that, we would have a real
problem on our hands. I think it [the hospital] is going to make $4
or $5 million this year, but that is with that $16 million. So, if you
pull that out, there is a loss there of $12 million. . . . That program
is a year to year program. If it goes away tomorrow, we would be
in the red, big time, losing about $1 million a month.
That dependency also extends to County hospitals who are incurable
junkies hooked on the federal dope. “It’s like you get hooked on heroine,” says
one health department official. “We need the money.” He recalls how the County
was slipped a Mickey and gradually become more and more servile to the drug:
The first year you use it to pay for extras: one-time kinds of things.
But, sooner or later, it gets into your operating, yearly [budget] and
then you need the money. And you get hooked on i t . . . and now
they are giving us morphine to get us off and it’s not working. And
that’s what you see in the 1115 [Medicaid Demonstration] Waiver.
Basically, we’re hooked on drugs and we don’t quite know how to
get off o f it. We are hoping the 1115 will be our cure.
Because public hospitals typically have an unfavorable payor mix with
Medicaid patients accounting for the vast majority of payment types, County
hospitals, as well as a select few private hospitals, rely almost entirely on DSH
funds to cross subsidize the operation o f other unfunded programs, the
construction of new facilities and the purchase of expensive equipment. Indeed, in
the Senate debates over imposing OBRA 93 caps on DSH hospitals, Senator
Moseley-Braun pleaded with her colleagues to preserve disproportionate share
payments that exceed the proposed caps. She asserted that disproportionate share
hospitals, especially those supporting an extremely high ratio of Medicaid and
uninsured patients, are indispensable for the health of their surrounding
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communities, and that when commericial insurance or Medicaid coverage run out,
private hospitals often transfer indigent patients to public facilities.
A situation o f this type occurred at La Rabida [Children’s Hospital
and Research Center in Chicago] recently. A very sick child was
receiving acute care in a private hospital, the child’s benefits ran out
and the child became Medicaid eligible. The private hospital no
longer would care for the child, in effect dumping him, and
transferred him to La Rabida. (139 Cong. Rec. S7374-01)
Arguing that disproportionate share hospitals which are grossly dependent on
Medicaid are unable to shift their uncompensated costs to better paying
commercial plans as most other hospitals do, they are less able to cope with the
costly capital improvements or new facility construction. “Without the extra relief
provided through the inflated disproportionate share payments these valuable
institutions will suffer significant, and perhaps, fatal shortfalls in their budgets”
(S7374-01).
Even though the State has refused to contribute its legally mandated share
of the federal and state matching program compelling County hospitals to do so
out of their own budget, it has also become addicted to the extra money coming in.
In what is called a “rip off” by officials in the County health department, the State
siphons off about $229 million of the DSH dollars that are fimneled from the
federal treasury through the State’s war chest and eventually out to public and
private hospitals. “They call it an administrative fee,” says one official. ‘W hat’s
wrong with that? It’s contrary to the purpose o f the DSH program.” Indeed it is.
The State actually uses those pilfered funds to finance other components of the
Medicaid program. The upshot is that County hospitals wind up paying not only
for the State’s portion of the DSH program but for other parts o f the Medicaid
program as well, both o f which are the State’s responsibility to fund.
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Furthermore, according to one health policy analyst, the thieving of those dollars
by the State government has, in part, fomented the bitter rivalry between public
and private disproportionate share hospitals. “If the State didn’t take the $229
million, you wouldn’t be having the stress that is currently seen between the
County and the privates because there would be enough to keep everybody whole .
. . for now.”
So much dependency on and so much desperation for DSH dollars
ultimately made the temptation to swindle and defraud the federal government
virtually irresistable. State governments around the country had learned fairly
quickly how to exploit the program for their illicit gain. ‘T he Washington Post
and New York Times were putting articles in daily about DSH funds and how they
were being used as a funding gap for the states,” says one health department
official. Instead of using the money exclusively for health, quite a few states
would draw down the matching funds from HCFA, return their portion of the
match to state coffers and then use the profit to build roads, libraries and other
non-health related projects. Frequently, states would conspire with DSH hospitals.
“They would say, ‘okay, you give us $50 million. We’ll get it matched. We give
you 70 back and there’s 30 left [for us]. You’ve made 20 and we’ve made 30,”
recalls one commentator. A 1994 study by the Prospective Payment Assessment
Commission quoted in a senatorial debate outlined the trickery. For instance,
although state governments reported disbursing $20 billion more in total Medicaid
payments to acute care hospitals in 1992 than in 1990, the actual amount received
by those providers was “substantially less” (141 Cong. Rec. S16807-01). The
General Accounting Office also released a report in 1995, finding that States
frequently
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churned or even laundered Federal Medicaid dollars through State
hospitals. The GAO report said: State hospitals received $4.8
billion in DSH payments. However, hospital officials indicated that
only a small share of the gains were actually retained and available
to pay for health care services, such as uncompensated care.
Instead, most of the gains were transferred back to state general
revenue accounts. (S 16807-01)
It is no wonder, then, why DSH payments soon represented the fastest growing
component of the Medicaid program and were responsible for a significant portion
of the program’s three hundred percent growth rate over a seven year period. “It
was an incredible Ponzi game,” remarks one health department executive.
The sky was the limit. There was no cap, either hospital-specific or
state-wide, in the DSH program. So, it was basically, who is the
boldest person on the block today? You can get an unlimited
amount of DSH funds by just putting up a state match and, if you
can derive that in a way where everybody makes a profit, then it’s
just really how much money do you have in your bank account or
how much can you go out and borrow for a couple of weeks to
leverage [the] federal bucks?
The reaction by Washington was swift and fierce. In 1991, Congress
passed HR 3595 which enacted sweeping tax reform measures. One of those
prohibited private organizations from making tax deductible contributions to state
governments that would trigger higher spending by the federal government,
according to one insider. That legislation applied directly to the DSH Ponzi
scheme. “The federal government thought it was a sham,” contends one observer,
“that private hospitals could donate money to the State of California and then get
it back through DSH payments, and they did everything possible to stop it.” So,
the statute bars donations by private hospitals or provider taxes as a way of
funding the State’s portion of the disproportionate share hospital match. In
addition, the DSH statute was amended in 1991 to put state national and
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state-wide caps on the entire size of the program’s payment pool. Both caps were
set at 12 percent o f the total Medicaid program, but the State cap could be
exceeded if all the payments were the minimum amount needed to reimburse DSH
hospitals for legitimate expenses allowed under the program. In no case, could the
State DSH program exceed its size in 1992 (or $1 million, if greater) except for
increases associated with the state growth factor and a special supplemental pool
o f residual funds remaining in the national fund after all DSH payments had been
made available only to states which did not exceed their 12 percent cap. “The key
to the [prior] arrangement is the ability to give the profit back to the same entity
that gives you the money that draws the federal match,” explains one official. ‘T o
the extent that you are stopped from doing that, the game ends.”
Yet, the legislation was not without its critics. In November 1991 Senate
proceedings indicate many of the members of the Subcommittee on Health for
Families and the Uninsured, which monitors the Medicaid program, opposed the
new rules promulgated by HCFA. Referring to the original 1988 DSH legislation
grandfathering state laws that already permitted provider taxes and donations to
fund the state’s share of Medicaid appropriations, Senator Riegle contended, first,
that HCFA’s interim regulations “violated congressional intent regarding the use o f
provider taxes under Medicaid” (137 Cong. Rec S I8324-02). Even worse, a rift
seemed to have occurred between HCFA officials and the National Governors
Association (NGA) over a compromise agreement. “It is not clear at all,” he says,
“whether the Administration would negotiate in good faith . . . citing his second
argument (S I8324-02). Finally, he insists that disproportionate share hospitals all
over the country, but particularly in his home state— Michigan— will be seriously
injured by the imposition of the legislation.
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. . . Because of recent budget cuts by Governor Engler in Michigan,
our hospitals will be burdened with even more uninsured people
and consequently, more uncompensated care costs. Close to
1,000,000 Michigan citizens now have no insurance coverage,
including 300,000 children. . . . Michigan hospitals lost over $360
million in uncompensated care costs last year alone. The current
NGA-Administration proposal locks Michigan’s total level of
payments under disproportionate share to 12 percent at a time
when they need the flexibility to give more money to
disproportionate share hospitals. (S I8324-02)
O f course, the statute was eventually enacted.
But crafty officials and legislators in Sacramento quickly colluded in
creating an effective ploy to avoid putting up State money for the DSH match.
“When Congress was rushing HR 3595 through to put a state by state cap on this
DSH program,” explains one observer, “they couldn’t figure out how to deal with
intergovernmental transfers [IGTs], . . . So, [the] states figured out, ‘well, okay,
we can’t do donations; we can’t do taxes anymore; we can still do IGTs.’” Out of
that artifice, then, emerged SB 855, a tortuously complex state law that outlines, in
excruciating detail, how public hospital districts that include County, and to a
lesser extent State and University of California hospitals, are required to transfer
funds from their own budgets to a State repository where they would be matched
by federal funds and returned to the original political subdivision that issued the
funds. “They don’t distribute the combination of the match and what they draw
down,” explains one health lawyer. ‘T he problem is that in California, counties
make up the State share of costs,” explains one insider. “They put up what the
State otherwise would put up. . . . Those costs, which are hundreds of millions o f
dollars, are laid on as costs to the hospitals.” And hospitals are not permitted to
keep those funds. “[The other half] they just put back into the general fund to go
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to other departments wherever it comes from. It’s not considered health dollars.”
Thus, HR 3595 was defenseless against the stratagem. The State, it seemed, had
successfully eluded contributing to the DSH program without violating the 1991
tax reform statute and was enjoying a hefty administrative fee leeched from County
funds to boot.
Federal officials were understandably livid. In 1993, they went on the
offensive, again altering the federal DSH statute. This time, instead of capping
the national and state DSH programs and proscribing donations by private
providers to fund the State’s portion o f the federal match, Congress enacted
hospital-specific limits that terminated the ability of public or private hospitals from
drawing down DSH dollars in excess o f the cost associated with treating Medicaid
or low-income and uninsured patients, other than those whose care is partially
compensated by special State and local health programs (The Public Health and
Welfare Code. Title 42, Section 1396r-4 (g)(1)(A)). For public hospitals in
particular, the caps were phased in. Prior to 1995, DSH payments could still
surpass costs by no more than 200 percent. After 1995— the year of the crisis
incidentally— DSH revenues may not exceed the cost of treatment.
On its face, the amendment made perfect sense, say health department
officials. “. . . [It] was meant to do exactly what you think it’s meant to do: stop
questionable financing. And California was one of the major abusers o f it.” Yet, it
was the jolt that unhooked the linchpin holding together the entire County health
system. In short, the OBRA 93 caps, say insiders, caused the crisis. “OBRA 93 is
the death of us at the moment,” laments one official. Health department
executives were able to stave off the crisis for one or two years by convincing
State lawmakers to enact a statute permitting the department to shift its costs from
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FY 94-95, when the OBRA caps took effect, to FY 93-94, when DSH payments
were still allowed to exceed actual costs up to 200 percent of the cap. Yet, when
the full brunt of the federal retaliation was felt in FY 95-96, the Titanic health
system began to sink faster than officials could bail water.
But why would County hospitals need more than what OBRA 93 is willing
to afford? After all, it is fiscally prudent to constrain the growth of the DSH and
Medicaid programs by limiting payments to the actual cost of providing services.
Indeed, County officials campaigned vigorously in the Medicaid Demonstration
Waiver for an increase in the caps to 175 or 200 percent of cost. The reason,
County financial gurus say, lies in the difference between the gross and net
amounts received from the federal match and the way in which HCFA requires the
County to compute its costs and revenues for Medicaid and uncompensated care.
Not only does the State bleed funds from the federal match, private hospitals are
also compensated before County hospitals receive the return on their investment.
Although the funds the County uses to draw down the federal match are eventually
returned in their entirety, the federal match dwindles as other players cause the
fund to hemorrhage. What is left over is a mere pittance, insiders say. If, for
instance, the County puts up $670 million in an IGT, if no other private hospitals
were to receive DSH payments and the State were to not siphon off an
administrative fee, County hospitals would reap a $670 million return. But, as one
senior executive explains using FY 94-95 as an example:
. .. We sent up about $670 million in an intergovernmental transfer
(IGT). We got back [only] $940 million. So, our net profit was
$270 million. If we were just playing by ourselves on a 50/50
match, we should have sent up only $270 to get $270.
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So, County funds are expended to receive the match, but private hospitals and the
State are able to rake off their share before the County receives its proper return,
and the health department, in essence, funds the DSH program for private hospitals
and the State.
To make matters worse, private hospitals are increasingly qualifying for,
and receiving, disproportionate share hospital status. “That’s what’s killing us,”
groans one administrator. “The program started with 50 hospitals in 91-92 and it’s
now up to 130. .. . Somebody has to pay for that.” At the program’s inception,
for instance, County hospitals across the state reaped a more than 65 percent
return on their intergovernmental transfer, according to one health department
source. In addition, they were able to secure 76 percent o f the total DSH dollars
in California resulting from the federal match, whereas private hospitals
collectively received only 12.9 percent. But in FY 1995-96, just five years later,
the County’s return was a trifling 25 percent. Out o f an $845 million IGT, it’s net
return was a mere $212 million. Both the State and private hospitals escaped with
DSH dollars on the order of $200 million each. Likewise, private hospitals took
about 41 percent of the total DSH dollars available in the State, even though they
provided only 34 percent o f the “maximum target days,” an index that measures
the quantity o f DSH services furnished by various providers. On the other hand,
County hospitals managed to eke out 47 percent, having provided over 49 percent
o f the “maximum target days” under the DSH program in California. Furthermore,
with the OBRA 93 caps in full force by FY 1995-96, the total number of DSH
dollars from the federal match for all providers in the State had dwindled to a
paltry $453 million from a high of $858 million in 1991, even though the maximum
target days increased by 13 percent.
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Critics o f public hospitals, o f course, could argue that such arcane financial
intricacies are theoretically benign, that if the State, private hospitals and public
facilities, for instance, could contribute their own funds to the IGT, the net federal
match would have been the same for all three as under the current system, and
that, as it stands now, the County having to make the IGT for all three entities is
merely an inconvenience and not a significant impairment. Constituents of
PEACH— the lobbying group composed of private disproportionate share
hospitals— for instance, argues that the growth in private hospitals catering to
Medicaid and uninsured patients is a positive development, one not to be eschewed
by a public system merely trying to preserve itself in the face of increasing
privatization.
Yet, a far more pernicious activity sounded the County’s requiem.
Because federal officials were determined to force the State to contribute to the
DSH program, they strong-armed the County instead, bringing the system to its
knees. Since OBRA 93 amended the federal DSH statute, individual hospitals may
not receive DSH payments in excess of their net cost for treating Medicaid,
indigent and uninsured patients after being reimbursed by the Medicaid program.
For instance, if a hospital incurs $10 million in costs related to the treatment of
low-income patients, both those covered by Medicaid and those who are
uninsured, but has already received $8 million in revenue from Medicaid, the
maximum amount of reimbursement from the DSH program would be capped at
$2 million. For public hospitals, however, the Health Care Financing
Administration (HCFA) requires that the entire intergovernmental transfer made to
the State in order to trigger federal matching funds be counted as revenue, thereby
effectuating a substantial reduction both in the gap between expense and revenues
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and in the funds public hospitals are able to recover under the DSH program. One
health department administrator explains:
If we send in $700 million to the State, the State goes through and
gets it matched [by the federal government] and they give us back
$950 million [after the State and private hospitals take their share].
We pay back the loan [of $700 million]. So, we have a net usable
of $250 million. However, when we do the OBRA calculation,
since we got $950 million in revenue, they make us recognize it all.
So, that limits the amount of Medi-Cal revenue we can bring in
because we are now capped. The problem is they are capping us on
money we don’t even use.
Thus, County hospitals have four fiscal strikes against them, handicapping
their ability to compete with private hospitals. First, they are mandated by State
legislation to bankroll the entire portion of what should rightfully be the State’s
share of the DSH program originally intended to be a cooperative financial
undertaking between the State and federal governments. Second, from the federal
funds allotted to match that intergovernmental transfer, the State helps itself to a
sizable administrative fee, and private hospitals filch almost half of the remainder
though they are able to contribute nothing to the purse. Third, hospital-specific
caps restrain County hospitals from filing for badly needed additional funds from
the DSH program beyond their immediate costs for low-income patients. Yet, the
fourth strike was the deadliest. It was the final blow that hurled the public health
system headlong into an unmitigated disaster when federal officials forced the
County to recognize its entire intergovernmental transfer as revenue, artificially
closing the gap between income and costs and plugging the pipeline to federal
funds.
The coup de grace, however, strikes when the yield for public hospitals
drops so low that it becomes negative. As the State continues to usurp
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administrative fees from the yield and more and more private hospitals become
disproportionate share facilities garnering more o f the harvest for themselves, the
30 percent return on the intergovernmental transfer now left for public health
systems will dwindle even further creating a disincentive for subsequent
investment. When that happens, more and more counties will turn to privatization
as a way to save their ailing medical systems and the DSH program will ultimately
implode. “. . . Sooner or later all the counties are going to go belly-up,” predicts
one County official.
When they go private, they are no longer responsible for the IGT. .
. . Give you an example. Fresno gets about $50 million gross 855
[DSH funds] a year. They have to pay an IGT of $40 million.
They make net $10 million. [If] they turn the hospital private, they
are no longer responsible for an IGT because they are now a private
hospital. So, all $50 million coming to them is usable money. . . .
The problem with that theory is that somebody has to pay the IGT
for Fresno. The other counties have to pick up the cost.
As counties privatize their hospitals to avoid the intergovernmental transfer, they
become free riders ultimately cannibalizing the system. Eventually, the pace of
privatization will accelerate and few, if any, counties will remain to fund the IGT.
As one health department executive imagines it, the resulting collapse of the DSH
program will be similar to a stock market crash after investors rush to sell their
stocks.
In an ironic twist o f fate, then, private disproportionate share hospitals,
ordinarily craving nothing more than the complete privatization of the County
health system, are befuddled by the sudden realization that they are absolutely
dependent on the existence of public hospitals and their exclusive ability to glean
federal funds under the DSH program. “What is interesting is that the private
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sector DSH hospitals are scared that the counties aren’t going to have enough to
make the IGT and they are not going to get their money,” explains one customarily
zealous critic of the County, chuckling over the absurd antilogy. “Yeah, maybe we
should work together on this. It has a strange way of turning around. I love
health care financing. It’s great!” The shared amusement was palpable, according
to one health department official, at a high level government meeting, in some
bizarre way stuffing the mood between publics and privates from one of idealistic
militancy to a pragmatic jocularity:
It’s really funny. We were in a meeting . . . up in Sacramento with
lobbyists. I was bringing up that we were thinking about
privatizing Rancho. Private hospitals were telling me maybe this
isn’t a good idea. Maybe we should look at public-private
partnerships [PPPs], Basically, we all sat there looking at each
other because they all came to the realization that they can’t afford
for us to go out o f business because their DSH funds disappear and
it will hit them financially. So, all of a sudden, the financial
incentive is now, maybe we need the County of Los Angeles. So,
we all sat there going, “wow, I wish we had a tape-recorder to play
this back.” Because this was the PEACH organization which is
made up of St. Francis, RFK, Queen of Angels, all o f them. And
they were saying maybe selling Rancho wouldn’t be a good idea. . .
. And it all came down to the IGT. And they know that in the long
run the IGT has to come from the County.
Despite the efforts o f the Health Care Financing Administration (HCFA) to
limit the growth of the disproportionate share program and to crack down on
fraudulent practices with an austerity that ultimately inflicted serious damage to the
County’s health system, congressional members in Washington used the DSH
program as a powerful political bargaining chip. In the late o f fall of 1995, the
Washington Post detailed the dilatory tactics of some Republicans in Congress
who held up the passage of a comprehensive budget package for the coming fiscal
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year. “In the scramble to pass their budget,” the article reports, “Republican
leaders in the Senate found they had to pass around billions of extra dollars in
Medicaid payments to states to buy the votes of— pardon us, we mean secure the
support o f Republican senators” (November 6, 1995, A24). Democratic Senator
Bob Graham during Senate proceedings condemned what he called “scams,
illusory tactics, and raids on the Federal treasury” that Congress and HCFA had
put to a grinding halt with HR3595 and the OBRA 93 caps, but was lugubrious
when reporting that such fiscal prestidigitation had returned in the midnight hours
of budget negotiations. Addressing the President of the Senate, he said:
Halloween came early this year. In the dark of night, immediately
prior to the passage of the Budget Reconciliation Act on the Friday
before Halloween, the Medicaid formula was written by the
architects on the reconciliation package. Amazingly, the rewritten,
revised Senate bill handed out treats-treats in the form of $10.2
billion mainly to States that were the prime abusers of Medicaid
disproportionate share hospital funds in recent years. The Senate is
preparing to reward States that have manipulated the Medicaid
system by making permanent their past misdeeds. (141 Cong. Rec.
SI 6807-01)
In the course of the rejiggering, states with two Republican senators would
receive over $11 billion in supplementary Medicaid funds whereas those states
with two Democratic senators lost a total of $3.6 billion (SI6808). In addition,
Republicans engineered exemptions for what are called “high-DSH” states, those
states that already exceeded the 12 percent state-wide cap on the DSH program.
Two states widely reputed to have bilked the federal treasury for DSH payments
far in excess o f their health care costs— Louisiana and New Hampshire— received
special prerogatives in the arrangement, and nine other “high-DSH” states would
have been rewarded with $14.8 billion in additional Medicaid payments over a
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seven year period (SI6808). “This is a perverse Washington logic,” exclaimed
Graham, “where spending is savings— where bad is good— and locking in the past is
heralded as reform” (S16808). To accomplish this, Graham demonstrated that
Republican bosses had plundered the Social Security trust fund by erroneously
recording $12 billion in savings from the one percentage point variance between
the budgeted and actual cost-of-living adjustment. A smaller adjustment, they
assumed, meant more modest outlays in Social Security payments. But the
reasoning was specious, contended Graham, because it ignored inflation, interest
rates, the number of new Social Security recipients and other important economic
indicators which, if taken into consideration, would have nullified the purported
savings. Adamant that the Republican error was a deliberate and intentional
scheme, he says:
. . . The only conclusion is that the Senate has taken $12 billion
from the Social Security trust fund to pay for more Medicaid
allocations to a selected few States— States which in large numbers
had been those that had abused the Medicaid system in the past.
(S I6809)
Meanwhile, County officials back in Los Angeles were on an erratic
political rampage to elicit support and assistance for their foundering health system
only to be met with apathy and indifference from state and even federal officials on
some accounts. All the fuss made by Republicans over stopping the ineluctable
growth of the Medicaid program had firmed the resolve o f officials. HCFA
initially refused to waive the OBRA 93 caps or the federally imposed method of
performing the revenue and expense calculations. “.. . The Congressional Budget
Office [had] scored savings in the federal budget to come from the OBRA 93
caps,” explains one health department executive.
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Their primary concern is, ‘we put a lid on this thing. We stopped
the 20 percent per year growth in federal Medicaid expenditures
with this law. . . . If we let the horse out o f the bam again, all we
are going to do is make this problem more difficult than it already
is.’
The Republican hypocrisy, however, is staggering, according to Graham:
It is ironic that the House Republicans would be so concerned
about the Social Security trust fund that they would tie Secretary of
the Treasury Rubin’s hands to preclude him from even borrowing
from the trust fund, but at the same time the Senate Republicans
seem quite willing to raid the Social Security trust fund to finance
additional Medicaid allocations. (SI6809)
It is similarly incompatible with the theoretically hawkish disposition of Republican
representatives toward the Medicaid program and government largess in general to
dole out the sweet confectionary of cash in what was a strikingly clear example of
political manipulation and pork barreling. Nevertheless, in the same fiscal year as
the second busiest health system in the United States operating the largest hospital
in the nation was on the verge of absolute pandemonium and the brink of complete
failure as an immediate result of Congressionally ordered restrictions on
disproportionate share funding, obtuse Republican dullards meted out copious
helpings of Medicaid currency to their cronies while Democratic states, including
California, were rationed and Los Angeles County virtually starved.
Many o f the negative features of the disproportionate share hospital
program can be traced back to one discernible, underlying problem: the
camoflauge and subsequent exploitation of a politically unpopular program.
Because of its complex, cumbersome and ever changing statutory regulations, the
DSH program is an easy mark for corrupt, fraudulent and counterproductive
behavior committed by States, members of Congress and, as will be explained
more fully later, even the private hospitals to whom the funds are disbursed.
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Federal regulators have tried to keep pace with the unceasing creativity these
players have exhibited in rooting out various loopholes and legal subtleties but
have only contributed to the serpentine nature o f the program. Yet, its sinuousity
provides the needed cover for contenders to skulk about in secret, hatching their
sinister plans. As privatization expert John Donahue points out:
It is a reliable rule of thumb that the less comprehensible is a
spending program, the more questionable is its overall worth. In
part, this could result from a sort of perverse fiscal natural
selection: the more obscure and confusing a program is, the more
likely it is to escape the attention of reformers, while
comprehensibly wasteful programs will be weeded out. (32-3)
Ultimately, politicos are worried that the level of funds expended to treat
additional uninsured and Iow-income patients under the disproportionate share
program in excess of those Medicaid recipients that are now only tenuously
tolerated would spook an already wary public. At the moment, Medicaid covers
only a few narrowly defined categories of individuals— usually young children and
pregnant women— and the diversion of more funds to care for the behemoth that is
the uninsured population would raze the entire funding system, critics say. But
other analysts insist that the time has come to sanitize the DSH program in the full
light of public scrutiny. “We are avoiding the real issue of an adequate policy for
payment o f services rendered to indigents and to Medi-Cal beneficiaries in severely
impacted communities,” contends one health policy expert, calling the DSH
program gerry-rigged.
We shouldn’t be going through these contorted formulas and
reshuffling of money. That’s bullshit! It’s lunacy. It’s absolute
lunacy for a County or university to have to send money off to the
State for them to take a piece off the top, to leverage a dollar back
from the federal government which will then be shared with
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everybody. Come on now. That just doesn’t make sense to me at
all.
Instead, he is adamant that the federal and state governments should fund care for
the indigent and uninsured openly and forthrightly.
Whether or not that vision is possible, the County health care system still
confronts numerous financial hindrances. As has been shown, an often sordid
history plagues the intergovernmental relationships between the federal, State and
County governments when it comes to funding and regulating the provision of
public health care. From the County’s perspective, ephemeral programs within a
tortuous matrix of categorical funding streams have been enacted and then
repealed at the whim of politicians, property tax funds rightfully belonging to the
County have been absconded, State appropriations for indigent medical care have
been overturned and unilaterally exchanged for lower allocations, federal monies
triggered by County expenditures have been churned by State officials yielding
windfall profits to their treasure chests, circuitous political agendas and squabbles
have motivated statutory amendments that have hamstringed already meager
federal and state programs to fund health care for low-income patients, perverse
reimbursement regulations have locked the public system into a reified
organizational configuration starkly contradictory to the trend set by a more
enlightened health care industry, and authority over health care financing has been
gradually ripped from the local community.
The political dimensions impose a myriad of financial obstacles that impede
the public system from prospering: the imposition of rigid OBRA 93 caps, the
rejection of SB 910 claims, the usurpation of property taxes by the State, the
fruitless competition with the private sector for Medicaid patients further
exacerbated by efforts to enroll Medicaid patients in managed care organizations,
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the unwillingness o f the federal government to at least partially offset the costs of
treating American Indians and undocumented workers, the rescission of prenatal
care from the Medicaid program, the reversal in public attitude toward government
services, welfare and immigrants, the enactment o f Proposition 13 imposing
austere limits on the growth of locally provided services and an exceptionally
unfavorable payor mix creating an almost singular reliance on the Medicaid
program. From the County’s point of view, the State charged it with the ultimate
responsibility to care for the sick and injured who have no other way to get health
services, but then, by commission or omission, did everything possible to cripple it
and thwart it from carrying out that responsibility. State officials dumped a whole
class of recipients off of Medi-Cal and enacted legislation to complement the
federal disproportionate share hospital program that fundamentally pits private
sector health care organizations against the public sector and allows private
hospitals to feed off of or cannibalize funds with little accountability expected in
return. And when the County saw its darkest hour, the State turned its back and
disavowed the agonal health system, blaming its backward, unprogressive and,
ultimately, moribund condition on incompetent management and bureaucratic
inefficiency. For its part, federal officials used the County as a pawn in its spat
with the State over its approach to financing the Medicaid program and burdened
the County with insufferable and artificially restrictive fiscal regulations meant to
incapacitate it long enough to force the State into submission. Moreover, electoral
posturing by Republicans and Democrats in view of the impending presidential
elections engendered an impassivity among officials during a political stalemate
which only ended when the White House finally blinked after the County had
armed itself with every piece o f political artillery it could muster and Governor
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Pete Wilson called the federal government’s bluff. In view of the events arising
out of the health crisis, then, health policy in Los Angeles County was assuredly
not the sole result of rational deliberation and civil discourse; rather, the future of
the public health care system would be determined by the outcome of a fierce
political battle and the struggle to retaliate against what may rightly be called the
sedition of intergovernmental treason.
Chapter Five
The Politics of Estrangement: Public and Private Health Care
While support among the people of Los Angeles for its dilapidated public
health care system and civic institutions in general may be gradually dissolving in
the backdrop and the struggle between governmental entities stubbornly remains
an enduring feature of the jurisdictional pluralism and federalism that marks
American political life, yet another embittered battle unfolds on center stage. At
least governments, on some level, purportedly cooperate with each other in the
best interests of the community, albeit sometimes through devious and even
treacherous means. At least the public’s anti-government, Pujadist Angst, except
for sporadic flare-ups, pulsates weakly out of the limelight. But the enmity
between public and private health care providers in the County rages on
unfailingly. A long-standing disaffection, the animosity between the Department of
Health Services (DHS) and private community clinics, hospitals and, to some
extent, physicians has been fermenting for some time, breeding bitterness and strife
and ultimately defacing the vision of an integrated, coordinated and wholistic
health care system. Yet, now they find themselves strange bedfellows, tossed
together in a crisis for which the only workable solution may come from
communication, understanding, cooperation and a mutual commitment to care for
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the poor and uninsured together. The third in a series focusing on the political
swirl that has plagued the County and its health system, this chapter will examine
the sources and repercussions of the antagonism as well as discuss the specific
gripes each side makes against the other in the unending contest for patients,
funding and respect.
The ill will between the County system and its private counterparts has
evolved over a long period of time. For decades, public and private hospitals have
sputtered and seethed in fits of anger, making the ravings something of a historical
tradition in the County. The hard feelings have ballooned, in part, because they are
pent-up in separate and independent health systems. “. . . Up to three and a half
years ago,” says an executive for a private hospital in the San Gabriel Valley, “it
was unheard of for a hospital administrator to walk into a DHS clinic or
comprehensive health center because DHS built its own. The walls are very thick
and very high.” The County had erected its own comprehensive delivery system,
uniquely tailored to the needs of poor and uninsured patients and went about its
own business essentially ignoring the collateral infrastructure rapidly developing in
the private sector, according to experts. It became a medical citadel, virtually
impenetrable by outside health care providers in the community. ‘There was no
way to get in to the system except walking into the emergency room,” says one
legal advocate, recalling the fortification the County had built around its hospitals
and clinics until the crisis forced open the drawbridge.
There are all these [private] safety net providers out there. The
[only] way they got people into the system was through the back
door, was by calling this doctor that they know, saying, ‘you need
to see this person’ and making . . . arrangements for people to stay
late.
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Even if they manage to slip past the sentinels protecting the hospital from
marauding patients sent by private clinics, they will be treated as a clean slate
despite the fact they have already undergone testing and diagnosis by a physician
on the outside. “One o f our constant and ongoing complaints,” says the executive
director o f one community clinic is figuring out “a way to refer to you [DHS] so
that our patients can get seen . . . rather than show up, take a number and sit for
twenty-four hours.” The fragmentation was so acute, she says, that at the peak of
the crisis when public clinics were being closed, patients were referred to phantom
clinics in the private sector because the County had unwittingly handed out
erroneous phone numbers and addresses that it had on file.
The bulwarks, now widely assailed by would-be invaders, were originally
erected out of necessity, according to some observers. They were necessary to
dike the grossly underfunded hospital from a flood o f patients. “Nobody wanted
the poor and the indigent and the Medi-Cal population for many years,” says one
hospital administrator, “including us righteous, non-profit community hospitals . . .
.” Given the County’s statutory responsibility to care for the poor, it was essential
that a public system be constructed. Over time, however, critics say that necessity
changed to arrogance and a callous indifference to other safety net providers. “. . .
The system started out of the fear that no one was taking care o f the patients,”
says one private clinic operator. ‘Then, there became a feeling of ‘we own these
patients; these are our own patients.’” The County became collectively paranoid,
she remarks, retreating further within its walls, and the conviction spread internally
that private providers intentionally shunned County, the black sheep o f the medical
community.
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The developments, however, have come full circle. At its inception, the
County system was constructed to execute its statutory obligation to the poor and
create a consistent haven for the uninsured who fell through the cracks in the
private sector. Now, however, instead o f being a consequence of that unfulfilled
demand, the County system is a cause o f it, according to one health policy expert.
A well-funded, highly evolved publicly operated analogue to the private sector
health care system impedes cooperation and fosters the advancement of structually
disconnected and dual systems. “If you do have these sort o f statutory and funding
separations about which part of the system takes care o f which kinds of people,”
she says,
then you give the people who share the moral force within that
profession an out. They can say, ‘it’s not in my job description; it’s
not my responsibility.’ And a private hospital can say, ‘that’s not in
my job description to take care o f someone who is dying right
outside the door.’ . . . It puts the health care providers who are on
the front line into an almost untenable ethical [position].
Over time, however, the tacit symbiosis began to unravel. As various
economic pressures on the health care industry came to a head, Medi-Cal patients
became increasingly attractive to private sector organizations. Medi-Cal, in an
effort to diffuse obstetrical services across private hospitals increased payments
just as fixed managed care payments were replacing the old indemnity insurance
cost basis reimbursement. Hospitals soon began to wheedle patients away from
the County, hampering its ability to cross-subsidize the care o f indigent and
uninsured patients and touching off a savage rivalry. The competition mounted,
but it was the level of mistrust and cynicism between the two systems that
acclerated most rapidly. County doctors and administrators characteristically
regarded some of the organizations in the private sector as inconstant parasites
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only willing to care for Medi-Cal patients when it becomes financially rewarding.
By the same token, executives in private medical institutions regarded the County
as an avaricious bureaucracy seeking only to aggrandize its own power at the
expense o f the best possible care for low-income patients.
The malice only grew. Nowhere is that more palpable than in the
somewhat discouraging attempts to form enduring public-private partnerships.
The exigencies of the crisis had put County officials under pressure to forge
working alliances with a variety of private clinics in the neighboring communities
to treat poor patients in ambulatory, population-based settings. In light of the
stipulations made by federal officials as a condition for financial assistance that the
system reduce the number of its inpatient beds by half and concomitantly expand
the number o f primary care visits it provides, the County fashioned a plan to
increase its outpatient services by over 110 percent in the span of a few months
through contracts with privately operated health clinics with an ultimate goal of
nearly doubling the number of outpatient visits by the year 2000 (Rabin,
September 8, 1996 Al). As such, mission-driven free and community clinics with
a proven track record for treating indigent patients found themselves abruptly
immersed in an unwilling partnership with the County. As one insider remarked,
the conditions of the Medicaid Demonstration Waiver could only be met through a
partnership with the private sector, one that required officials to “encourage, force,
cajole [and] incentivize” private sector organizations to embark on a journey to
uncharted territory and a new frontier. “We can talk about it, we can pontificate
about it, we can philosophize about it until the cows come home,” says the captain
of one multiple hospital system. “But until we sit down and say this is important
enough to us to figure out and do something together and walk down that road,
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we’ll never know. We’ll never be able to engage in better dialogue.” Their task,
however, was formidable: to create an enduring relationship with the County
marked by ongoing collaboration and teamwork.
The first step in the process was the geographic organization of the myriad
private sector entities. The executive director of one community clinic recalls the
swell of panic among health care providers that spread out over the local area:
It was like a tidal wave of patients was going to hit here, and we
didn’t have space, staffing and finances to increase our capacity
here at this site. We are at capacity. So, we rounded up our
traditional partners: the hospitals that have helped the . . . [clinic].
They have all traditionally been our partners in that they give . . . a
certain amount of free diagnostic work or they give in-kind
[donations]. They give various things charitably. We also got
together the other small, not-for-profit agencies in this part of
town. . . . [We] sat everybody down at the table and said, ‘What
are we going to do?’ No one single agency felt like they had the
money or the strength to just take on all these patients who were
going to have no care. But, yet, as a coalition, we felt we could
and had very little choice, each for its own different motivation. . .
. That Coalition then applied to the County to take over the
operation of the [clinics].
Right from the start, then, it was the dread o f being inundated with a throng of
indigent and uninsured patients that was the stimulus shocking the private sector
into coalitions and organized associations in order to bargain with the County and
strive towards a more systematic approach in addressing what was now rapidly
becoming a serious threat to both the public and private sectors, forcing them to
work in tandem.
Yet, some alliances between private health care providers, much less
between the public and private sector, have proven to be elusive. Flustered by the
crisis, private hospitals and clinics hurriedly strung together makeshift consortiums
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that were fragile and “tenuous,” as one insider puts it. Although non-profit clinics
took the leadership role because o f the greater familiarity with caring for
low-income patients, hospitals, endowed with more economic power, were the
financial glue linking together the coalitions. But their participation was
unpredictable, strongly dependent on whether or not they could achieve a
competitive advantage or prevent a fiscal hemmorhage in their emergency rooms,
according to one professor o f health policy. Small clinics, for example, have
sometimes been ignored or even ostracized by large private hospitals. A clinic
manager recounts how, after more than a decade, she finally had the opportunity
during the crisis to meet the president of one Catholic hospital located just a few
miles away who has since retreated once again to his ivory tower. Another tells of
her experience with the leadership of a neighboring hospital who seemed more
interested in competition than collaboration:
I have had some difficult times in trying to get them to come to the
table and work with us. . . . They started their own primary care
out-patient clinics. They came to me when they started those and I
helped them and gave them information on how to get them
licensed under Title 22 and this and that. I tried to work [it] out
with them at the time . . . [but] they did not want to join our
consortium and went off and did their own thing. . . . They didn’t
want to be in a partnership where anybody would potentially be
competing for Medi-Cal patients. . . . They have a very vertically
organized health care system as far as I can tell. They provide their
own HMOs, their own out-patient primary care clinics. . . . It’s all
their corporate system. It’s not really a partnership in the way that
the consortium we’ve developed is . . . . It’s a shell game quite
frankly. We’ve had several meetings with them and we’ve agreed to
just disagree and let them do their own thing and we’ll do ours.
Coalitions, she says reflecting on her experience, “don’t happen overnight”
and cannot be forced. Rather, they evolve naturally over time and arise out of a
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common history and a feeling of mutual trust. Because of the ubiquity of
self-interest and a predominant concern with self-preversation, says another critic,
many consortiums lack coherence and a real sense of unity. But negotiations in
true partnerships require players to bracket their cynicism about the others and to
overlook wounds inflicted by injustices in the past. It is rather much like a
marriage or a family, says the chief executive officer of one health system
reflecting on the organization’s experience with private sector affiliations. From
the outset, partners must take the time to become familiar with and understand
each other’s values.
It is amazing to me, as we look around the community, the number
of groups who come together only to fall apart. We believe that
most often the reason it occurs is that they didn’t take the time to
say: ‘What do we value?’ . . . [or] believe things together and have
a common view of how the world should be or could be.
Thus, a peculiar paradox exists in private sector health care. At the same time as
most leaders acclaim free market competition and berate monopolies, excessive
governmental intrusion into the every day workings of health care delivery and
anything that smacks of socialism, they also aspire to cooperation between rivals
and teamwork between contenders in the health care marketplace. On the one
hand, most recognize the efficiency of a medical economy based on competition;
on the other, nearly all disparage what they see as a fragmented industry
distinguished by the vehemence of its partisan bickering and many blame for-profit
health organizations for many of the industry’s problems, indicting them as
destructive warriors of Wall Street. In short, then, private sector health care is
strangely inconsistent, vacillating between a rigorous free market philosophy and
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one attuned to extolling the virtues o f an industry that is more affable, more
corporate in nature.
Far worse than the sibling rivalry among private organizations is the
malevolence between the private sector and its public complement. To many, the
County is the self-appointed, domineering yet enigmatic patriarch of the local
heath care system. “We don’t know each other,” responds a senior executive for
one local area health system. ‘Tf you don’t know anybody, you can’t create
relationships; you can’t create trust and you are not willing to go to the next step.”
The estrangement is deeply rooted, planted in a soil of cynicism and saturated with
suspicion. “ . . We have created systems that are fraught with distrust and anxiety
and fear,” remarks one incensed observer. Doubt and skepticism abounds.
Although both systems share a common mission to health and healing and many
providers on the opposing teams are dedicated to caring for the least advantaged,
most vulnerable patients, each side reproves the other for perpetrating what it
perceives to be a series of flagrant injustices and egregious transgressions.
For its part, the public sector is dubious of the private sector’s commitment
to embrace the poor and uninsured. In particular, many observers predict that
private health care organizations will skim the cream off the top of the County’s
patient population or cherry-pick, plucking the most desirable and least sick or
disabled patients for themselves and leaving the rest for the public system, and if
those preferred patients also have some payment mechanism connected with them,
so much the better. One perplexed County physician, seeking answers from his
administration only to become more quizzical, explains his skepticism:
I have even asked the crisis management representative as late as
last night how privatization that has to have something to skim off
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the top . . . is going to be able to manage a bunch of clinics better
than the County when the County is already getting some o f the
maximum reimbursement it can from Medi-Cal. . . . It’s just
obvious that somebody’s going to make a profit. . .. So, I think
that this public-private partnership is motivated by profit-taking and
skimming. I don’t think the altruism is there.
Much o f the concern over cherry-picking focusses on what method the County
would use to reimburse private providers. If the agreements, for instance, were
modeled after managed care contracts in which doctors, clinics and hospitals are
capitated or given a fixed amount of monthly income for each person assigned to
them whether or not they are sick or need medical attention, the potential for
profiteering and skimming would increase dramatically. Under a capitated fee
system where providers are paid regardless o f how much or how little care is
meted out to patients, medical practitioners are saddled with an instrinic incentive,
a temptation even, to both withhold care and exclude the sickest patients from
their rolls. Although, currently, clinics are compensated for providing outpatient
care to indigent patients on a fee-for-service (FFS) basis, an internal memo o f the
Community Clinic Association (CCA), an advocacy group representing individual
community clinics and assisting them in their contract negotiations with the
County, alluded to private conversations with DHS staff indicating that the FFS
model would shift to a capitated model after the third year of the partnerships. It
is precisely this development that would realize the worst fears of public health
care advocates. “I worry about public-private partnerships,” says one observer.
I worry that they are a cover for the County to get out from under
its responsibilities. My worry is that they will take some of the
patient populations and give them to the private sector and that
they won’t do very well with them. They will skim and get the
healthiest people and then the County will just bail out o f the rest. I
don’t trust it.
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But supporters o f public health care systems adamantly complain about
what they see as the social irresponsibility of private sector health care
organizations, especially for-profit hospitals and insurance companies. Private
hospitals, they say, routinely dump patients on the public system. A widely known
law, fervently repudiated by the private sector as a particularly oppressive type of
unfunded mandate, requires hospital emergency rooms to screen and stablize all
patients suffering from an imminently life threatening injury or illness, regardless of
their financial status or whether they have insurance, and obtain consent from
public hospitals prior to shipping them out. However, that law, enacted under the
auspices of the 1986 Omnibus Budget Reconciliation Act, only guards against the
immediate loss of life. By contrast, private hospitals are given free rein to unload
patients with chronic or non-life threatening acute conditions onto the County
system. Managed care organizations and insurance companies also selectively
filter the healthiest patients and best risks through their enrollment sieves. The
president of one medical management company illustrates the procedure through
an analogy:
It’s like if you have ten apples and you want to make sure you get
five good ones. They are sitting on a wall and there is an ant’s nest
to the extreme left down the wall. And suppose that you can’t see
any ants on any of the apples. Well, if you pick the five apples on
the right, the likelihood is, if you do this enough times, you are
going to have less ants on the apples if you pick the five on the
right as opposed to the five on the left because you know those ants
are down the wall further. By using that analogy, you can game the
system.
But, what that executive calls the “intelligent gaming of actuarial situations” is
thoroughly castigated by allies of public hospitals as wanton disregard for the
integrity of the health care system as a whole. Says one infuriated County doctor:
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I think it’s unconscionable that we’ve allowed the insurance
industry to operate as a business and exclude people it doesn’t want
to cover. . . . The Economist had a wonderful piece about the value
to insurance companies about knowing everything about
somebody’s health history and, even further, the prospects for their
becoming ill because then they can limit their losses .... But, it
seems to me that the point of insurance is to share burdens so that if
you happen to have a predisposition to something and if you
happen to get ill, everyone was willing to shoulder that in concert.
Aside from skimming practices and cherry-picking, private sector
organizations will abuse the County, exploiting it for as long as the arrangement is
lucrative and the returns profitable, say critics. When earnings turn sour, they will
breach the contract and skip out of town. “. . . What usually happens with a lot of
these public-private partnerships,” explains one public sector physician,
is that they don’t really capitalize the endeavor. They actually look
to government to retain the capitalization on the risk .... They
want to buy a County facility for $ 1 so they have no investment. . .
[and] are assuming very little or no risk because they can close up
shop and say, ‘Oh, it’s not profitable anymore’ and disappear into
the night in six months with whatever funds they may have
generated.
Thus, much of the private sector health care industry is judged untrustworthy by
backers of public hospitals when it comes to consistently caring for poor and
vulnerable patients. They are said to lack a permanent commitment to the
community and, in fact, contribute very little in social utility. HMOs are
bloodsuckers, ransacking medical resources, looting the health care dollar and
squeezing down payments to physicians and hospitals to a dangerously low level.
They rebuff social commitment and spum any contribution to unprofitable but
essential activities like medical training, research and care for indigent and
uninsured patients. Likewise, private hospitals avoid treating financially
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undesirable patients while simultaneously feigning a counterfeit concern for the
community. They construct what one critic calls ‘Teel Good” programs: health
screenings designed to draw in well-insured patients by detecting latent diseases.
They welcome paying customers while the poor and uninsured who are spotted
with abnormalities are deflected to a County system where they may have to wait
six months for a follow-up appointment. . . These little [health] fairs get a lot of
public relations,” says one community clinic manager.
If you look at who funds them, they are not funded out of the
community medicine department [of private hospitals]. They are
funded out o f the public relations budget. . . . I am not opposed to
outreach programs but the outreach has to be linked into regular
sources of care.
Even the University o f Southern California (USC) University Hospital, a private
facility constructed across the street from County General, is assailed. In this
hospital practice the same physicians who attend indigent patients, the same faculty
members of the USC Medical School who train interns and residents at the
adjacent public hospital. In this hospital, however, they treat more affluent
patients. It is not the individual doctors who are criticized, but the Medical
School’s leadership. “. . . They got into bed with Earner,” says one County
physician referring to the past president of Tenet, a for-profit hospital chain, “and
built a white elephant up there.” Another doctor continues the argument: “. . .
USC’s major emphasis has been on finding ways o f harnessing what remains o f a
richly reimbursed, highly insured people and getting them into the University
Hospital. . . . I haven’t seen much interest at all in serving the poor
Thus, what characterizes the private sector, critics say, is a system that
fosters an uneven development of society’s health care infrastructure, a
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maldistribution of resources and a disproportionate investment in highly
specialized, extravagently technical services catering to insured and well-off
patients while virtually abandoning the more conventional, relatively unheroic
aspects of public health and sound medical practice. That sort o f insouciant
disregard is typical, say critics who, they think, are witnessing a failure of nerve on
the part o f leaders in private sector health care to exercise their moral voice and to
articulate, on behalf of the entire medical community, the fundamental importance
o f universal access to a basic system health care in society. Instead, they are
involuting, seemingly paralyzed in a state of cataleptic shock, says one
commentator. “I think we all suffer from a lack o f vision,” he says.
We all tend to look at our own navels and be somewhat
condescending to others. It’s part of the balkanization of medicine.
. . . So, by and large, physicians, as they go through their careers,
become dinosaurs who are suffering from severe grief reactions
over ‘whatever happened to the wonderful world that I thought I
was going into.’ . . . You go down to the doctors’ dining room and
it’s all, ‘wah, wah, wah. Why me.’ It’s pathetic age regression
stuff because there is no vision.
One health journalist tells a particularly apt story to illustrate the loss of foresight
and forward-thinking among the medical community and the self-imposed exile of
physicians from the efforts to forge coherent health policy. She was speaking to a
large group of doctors practicing in the private sector:
I was talking about the breakdown of the health care system in Los
Angeles and the failure of a collective, wholistic approach to
designing and running a health care system that served the basic
needs of the community as opposed to fragments of different
populations. I used as a contrast the fact that three hospitals in
L. A. were competing with expenditures of tens o f millions of
dollars to become the world-class, organ transplantation center and
their marketing plan was to attract patients from all over the world.
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Now, the number o f transplants within Los Angeles . . . was far less
than the capacity of these three centers and their ambitions as
institutions, a lot o f [which] was driven by the prestige of being an
organ transplant center. There wasn’t enough donated organs in
the country to support those ambitions. . . . So, it was one of these
real crazy competitions for market niche in health care that was
squandering resources that the community really needed. I
contrasted that with the fact that something like thirty children have
died from measles in an uncontrollable four year epidemic that ran
from 88 to 92 in L.A. for lack of a $15 shot. . . . At the end of this
talk, one physician was very angry by what I said and stood up and
said, ‘this just shows how little you understand about health care
because immunizations are a public health function. They are not a
physician responsibility.’ My retort to that was: ‘that’s how little
you understand about the way the public sees its health care
professionals. If you were a doctor and a child in your town dies of
measles, you share a responsibility in the eyes o f the public and of
the community. Nobody is looking to see whether you are ‘M.D.
Private Practice’ versus ‘M.D. Public Health County Employee.’ It
is an indictment of the health care system [as a whole]. You can’t
escape it by hair splitting about what your particular label is within
that system. You have a much larger responsibility as a leader and
someone who has the privilege of having a certain education in that
system .... A transplant surgeon may not have any kind of direct
role in whether kids in East L.A. get their shots on time, but the
point is that the trasnplant surgeon has a voice and an obligation to
the larger system that he or she serves.
Sadly, that schismatic attitude is an enduring feature in the medical
community, dividing public from private providers, insured from uninsured
patients, rich from poor clients, poor children from affluent elderly and public
health from personal medical services. In a similar story, one observer had listened
to a debate between the medical director of a for-profit, publicly traded HMO and
a County physician contending that public hospitals and universities were
inequitably strapped with almost the exclusive responsibility to train future doctors
and produce research for the future progress of medical science. In contrast, the
medical director claimed that research and training were society’s responsibility.
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I sat there and thought: ‘excuse me, are you a member of society?
Are your tens and thousands of employees members o f society? Is
the social and governmental structure within which you do business
. . . part of that society as a corporation?’ It goes back to this
fragmented way of thinking: ‘it’s not my problem; it’s society’s
problem.’ Who the hell are you?” In the words of one critic, then,
it seems that private sector health care has a simple yet potentially
lethal axiom: “you pay, I do it; you don’t pay me, I don’t do it.”
For these reasons, champions of public health systems admonish political
leaders to tread slowly and cautiously as they are entering a virtually unexplored
bayou, one teeming with reptilian creatures of all kinds. The process of defining
and securing public-private partnerships must advance with sober deliberation
“carefully, quietly and dispassionately,” in the words of one County doctor.
Otherwise, errors will be blamed on government mismanagement. When fraud and
corruption is inevitably committed by private sector shysters, says one professor of
health policy, elected officials will bear the brunt of public outrage. “I think any
change should be made slowly,” he says. “One of the things that we are going to
discover is that there are rascals out there. Nobody ever realized that before, that
there are, in fact, dishonest people out there and they are going to rip off the
County.” Even among private sector providers a healthy skepticism wards off
opportunistic organizations. Many of the small, community clinics are vigilant of
larger private hospitals and HMOs which have traditionally not been safety net
providers treating the poor and uninsured now elbowing their way into contracts
with the County. Collectively, they have the gnawing feeling that these are
“bottom feeders” unfairly capitalizing on the new relationship paradigm with the
County. One clinic operator recalls:
. . . There was a lot of concern that there were people jumping into
the process who saw this as another Medi-Cal, to hop on board to
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take care o f the indigent but they didn’t have a track record for
having taken care o f the indigent. It’s like, ‘oh, good. Now there’s
money. Let’s be a part of this.’
Their misgivings inspired by the protective, almost custodial, stance they take
towards their patients, she explains how safety net providers often act as advocates
on behalf o f their patients, shielding them from the harm of an unjust health care
delivery system. “Most of us who have been doing this feel very strongly about
making sure they get what they need .... There always are people who are going
to seize the opportunity but maybe not for the right reasons.”
Yet, for all o f their own suspicion of each other, private hospitals and
clinics urge the County to shed their own qualms about their evolving union with
the private sector. Faith in the reliability and honor of each partner, they say, are
essential prenuptial ingredients to ensure a long-term, successful relationship. “I
think that people should come in with a fresh mind-set,” says one
physician-entrepreneur.
[The] public sector should not come in with as much cynicism of
the private sector as they do. . . . The public sector has questions
on the private sector’s motivations and those types of things. There
would be less cynicism if there were open discussions. Discussions
don’t hurt anybody. You don’t have to make decisions. Hopefully,
you set up a process that people trust to make decisions. That is
the first step: trust.
But, for its part, the private sector suffers from more than the occasional
twinge o f uneasiness when pondering their newfound affiliation. In fact, their
demeanor has, self-admittedly, been downright antagonistic. They are terrified of
being taken advantage of in vaguely construed contracts, becoming dependent on
County money, and being pushed around by bureaucratic bullies and legal ruffians.
Right from the start, the negotiations took on an adversarial tenor as tiny clinics
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and even large hospitals seemed dwarfed by the County’s imposing bureaucratic
edifice. In response, they tried to align themselves and present a united front when
haggling over contract specifics. “ . . We are trying to make sure that clinics
across the board have a unified voice,” says the director of one clinic, “rather than
each of us negotiating with the County one on one and some getting something
and others getting something else.” In fact, one unsuccessful organization created
unilaterally by private providers in overlapping consortiums— the Multi-regional
Coordinating Alliance— was large enough to present a threat to the County, its
countervailing strength becoming its undoing, according to one observer.
Their disapprobation was expressed with exceeding clarity in the rancor
stirred up over the specifics of some of the contract stipulations. Several key
issues which in any ordinary contract discussion would have triggered mediation
and compromise, given the nervous apprehension of all parties, became major
conflagrations over the viability of the public-private partnership program (PPP)
itself. First, a conflict erupted over payment rates. The County offered to pay the
clinic for indigent care visits at 90 percent of the rate ordinarily paid by Medi-Cal
for the program’s beneficiaries to encourage the clinics to assist indigent patients
who are eligible for Medi-Cal but not yet enrolled to register in the program so
that the County would no longer be responsible for payment. Whereas the County
originally wanted to use the Medi-Cal rate normally paid to individual doctors,
clinic managers insisted on the Medi-Cal clinic rate, an incremental payment of
roughly 20 percent. In addition, confrontations broke out over whether or not
laboratory services, radiology exams, radiologist fees and pharmaceuticals would
be paid under an all-inclusive rate or in supplemental reimbursements. Second,
clinics were vexed by how officials proposed to determine which indigent patients
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would ultimately be eligible for remuneration from the County. In an attempt to
avoid subsidizing providers for a level o f effort they had already achieved, each
clinic would only be compensated for the care and treatment of indigent patients
which surpassed a predetermined baseline number of visits. Although some
flexibility existed, most baselines were set at the number of indigent visits provided
by the clinic and reported in 1994 to the Office of Statewide Health Planning and
Development (OSHPD). Clinics winced. They regarded the baseline provision as
unfair discrimination because newcomers or those providers who delivered only a
niggling amount of indigent care would have substantially more visits reimbursed
by the County than clinics who had acted on their mission and provided
comprehensive health services to the poor. “One of the reasons why this doesn’t
feel fair to me,” says one clinic director,
is that there is a County facility over here . . . [that] had narrowed
their services to only funded services. . . . They were referring all
of their uncompensated, adult ambulatory care to us. . . . So, I
said, T’ve been taking care of your uncompensated patients for the
last ten years and now you are telling me that you are not going to
pay for them because I have been taking care of them?
Even more foreboding was the potential loss of funding by private foundations.
Primarily designed to kick start pilot projects like community health programs and
develop a solid foundation for them, most foundations will discontinue funding
once a more steady source o f income becomes available. “The minute I sign a
contract with you, it’s going to go away,” says one troubled clinic director
referring to her foundation grants. “I can’t write to a private grantor and say, ‘the
County is only going to fund the second half of my uncompensated care, so would
you please help me support the first half. . . ?’ That’s not going to fly . . . .”
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In addition, the baseline provision and eligibility requirements initially
excluded patients who were “eligible” for third party insurance coverage, including
Medi-Cal. Clinics recoiled, demanding that the contracts be changed to exclude
only those actually covered by other payors. “Many people qualify but are not
covered,” wrote the executive director o f the Community Clinic Association in an
internal memo to members (November 11, 1996). “Also, almost every one
qualifies for insurance however, affordability is the issue [sic].” The distinction is
significant. If the contract were to stand as originally written, thousands of visits
would not be compensated by the County. Patients eligible for Medi-Cal but not
yet enrolled who appear at a clinic’s doorstep must be cared for and appropriately
treated. By virtue of the clinic’s contract with the County, no one may be turned
away. But once treated, if they subsequently enroll in the Medi-Cal program, that
initial clinic visit will go unpaid as retroactive reimbursements are prohibited. For
instance, every child under the age o f six whose household income falls below 133
percent of the Federal Poverty Level (FPL) is eligible for Medicaid. “. . . The
parent should have been taking them over to the Medi-Cal office and getting
Medi-Cal before they ever walked into the door,” says one clinic manager
explaining the County’s reasoning. But since many do not, clinics could have seen
tremendous losses under the contract’s original wording. Moreover, under an
even stricter reading, the language could have forced clinics to count only those
visits provided to patients who were never eligible for Medi-Cal toward the
baseline, making it even more difficult to meet that threshold. Much o f it is open
to interpretation. As one rankled clinic manager puts it, “it depends on which
yahoo at the County counsel’s office gets his hands on this.”
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When officials tried to impose collective contracts on the consortiums that
would be coordinated by one lead agency, a third area of dissension ulcerated.
The director of one clinic remarks:
One issue that hit immediately in our consortium was the idea that
we, as a lead agency, would be the main contractor with the County
and all the other participants would sub-contract with us. Now,
that was never said in the beginning. In the beginning, we were
told that we would in fact contract individually with individual
billing and the lead agency’s job would be strictly coordination and
leadership.
The coalitions strenuously objected. One clinic director’s resistance was
altogether obstreperous:
Given that the County agreed to pay us fully 90 percent o f the
maximum Medi-Cal rates in the allowance schedule, there is no way
in hell that I was going to take another 10 to 15 percent off the top
in an administrative fee from everybody else.
And another expresses her discontent:
If the County is not really vested in allowing those consortiums to
develop by putting money on the table to make that happen, why
would I take on that headache. Let them keep it. I don’t want to
go monitor eight clinics on how they are doing. That should be
their job.
Finally, one clinic director is solicitous over what he sees as the ongoing
encroachment of the private sector by an aggressive and acquisitive bureaucracy.
Convinced that the County would gobble up every last clinic and hospital under its
dictatorial umbrella if it had its druthers, he is uneasy about what onerous
provisions the leadership might insert in future contracts. “What I would be
worried about further down the road in this contracting process,” he says, “is that
they decide . . . [that] a ll. . . Medi-Cal patients have to be hospitalized at County
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facilities. . . . Why would I want to suddenly send my patients to Big County— it’s
a cess pool— when we have a very large hospital across the street?” Once in their
clutches, dependent on them for food and support and hooked into their monetary
lifeline, he contends, they could become increasingly enterprising in a bold
Wal-mart-esq type o f bidding war. Once hooked into the County’s monetary
lifeline, it may be virtually impossible for clinics to extricate themselves financially,
and one day, they might discover that their dependency is analogous to the funding
addiction suffered by disproportionate share hospitals.
Worse yet, the County could rescind its public-private partnership program
completely at some point in the future, leaving community clinics in a lurch. One
demonstration o f the bureaucracy’s lascivious desire to devour more and more of
the private marketplace, says one observer, is the slower pace of and “backsliding”
in the privatization efforts made after the federal bail out was received. Although
the Health Crisis Task Force had originally called for an almost complete
elimination of the County’s 39 health centers and clinics, at the time of this writing,
only six have been privatized. Because the health system’s future survival is
contingent on its ability to transform itself into a viable partner with managed care
organizations, it has a real need to retain most o f its clinics. Yet, some see this as
one more example of the imperialistic threat the County poses to the private
sector. At present, officials are compelled by the Demonstration Waiver to
rapidly augment its own primary care system by contracting with freestanding
clinics already in place. But if bureaucrats repeal the program, they could thrust
themselves right back into the business of competing with private clinics through
an accelerated expansion program. The anticipation that officials will reneg on the
contracts is tangible, one based on a history of broken promises.
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Indeed, the County’s record of promise-keeping is below par, say critics,
and has been a curse for the private sector. One story that is told and re-told
describes a series o f actions taken by the County when its own hospitals and clinics
were overflowing and bursting at the seams, one that to this day chafes many in
private hospitals and clinics. As a result of overcrowded conditions at Women’s
and Children’s Hospital in the mid 1980s, the Department of Health Services
(DHS) executed a number of contracts with various private sector organizations to
deliver prenatal and obstetrical care to those pregnant women on Medi-Cal for
whom the public system was unable to render services. Providers would bill and
be reimbursed by the County. “The problem is that the County started re-neging,
at least that’s the perception of the problem from the private sector,” says one
former health reporter for the Los Angeles Times.
The payments started getting held up. The old, bureaucratic mess
with the paperwork re-emerged after a few months . . . into it. It
started to collapse because, once again, it was evidence of baid faith
by the County and the private sector felt that it had been a [victim]
of poor leadership [and] disorganization, perhaps not intentional. .
. . But, the perception o f what happened was: there goes the
County again re-neging on a promise. They are not to be trusted.
That failure of the obstetrical overload program subsequently is
something a lot o f people bring up when I used to talk to them
about the theoretical [notion] of public-private partnerships.
Similar reports are plentiful, some concerning what many believe highlight
the undependable and irresponsible nature o f the Department. During the most
intense period of the crisis, for instance, the Health Crisis Task Force
recommended and the Board of Supervisors approved the privatization of six
County health facilities, an act some observers characterize more like a desertion
or displacement of patients to the private sector. It was more akin to a “rescue”
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than a true partnership, says one clinic medical director, because clinics were
expected to take up the County’s slack with no anticipation of remuneration in
return, at least for foreseeable future. “They haven’t privatized anything,” she
exclaims. “They just basically walked out o f the buildings . . . .” And in the midst
o f fervent negotiations to privatize Rancho Los Amigos, at one time the leading
hospital for rehabilitation services in the nation, officials eventually withdrew.
Chalking it up to a lack of cultural readiness, one hospital administrator says the
project was too enormous to make the debut for what was hoped to be a new
trend in privatizing County facilities. The waters were still too cold and too deep.
“You know, Rancho has been around a long, long time,” she says. “[It was] the
County’s first facility. It has very strong roots. . . . There was a lot of opposition
from the union . . . [and] from the County. . . . I don’t think they thought the
financial savings would justify the pain and hardship
Normally, the level o f anger directed at the County simmers, stewing just
below the boiling point. But, on occasion, it erupts into waves of emotion.
Speaking of a particularly disturbing encounter, one clinic director tells how she
was seething after the County had informed her it would be relocating public
health officers from the facility the private clinic was slated to take over to other
areas that would be inaccessible to its patient population. To her, it was a breach
o f good faith. Gesticulating passionately, she describes a confrontation with one
public health official:
. . . I was standing like this close to this person’s face, screaming at
him. . . . We were screaming at each other. [Mike] Cousineau
looked at me . . . He could see my frustration .... They said,
‘we’ll send you a report.’ I was like, who cares about fifty pages of
paper telling me what you plan to do or telling what you learned?
You have hundreds of thousands o f people who aren’t getting
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served because you consolidated your public health centers. . . . I
said, ‘there is no interest here in what has happened to this
population/
Some time after that meeting, the County promised her some funds for
tuberculosis testing at her clinic. Wary of all the broken promises, she says she
will not believe it until she sees it.
Thus, what should have been the inauguration of a strong bond between
the County and the private sector pledging mutual trust and interdependence
quickly degenerated into a legal showdown and a contentious brawl between
lawyers, according to observers. The deep animosity between the parties gurgled
through the amicable facade when suspicion and mistrust gripped the process.
Negotiations turned into opportunities for self-interested legal maneuvering to see
who could seize the greatest share o f the contractual bounty. One observer
explains:
What I was hearing and still hear to this day is, ‘oh, the County is a
slippery character and what you want to do is get what you can in
the contract because they are going to reneg and you [must] have
your lawyers there working, trying to block the loop holes that you
know the County is going to slip through.’ So, there is such a basic
level o f mistrust existing there that you never get beyond that.. . .
They are [constantly] at each others’ throats.
The bilious and pugnacious disposition o f the private sector has been
evoked by the County’s own misdeeds, say critics, especially its past record of
marginalizing private sector organizations. Protective o f their patients, the County
exuded a sense o f ownership, tagging them as property and demarcating the
boundaries o f its exclusive territoiy. “The County historically was not just
indifferent to the other part of the health care community,” remarks one top official
at the health department, “it was actually hostile towards it.”
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To this day, I get lobbied by people in my own department saying,
‘don’t you realize you are giving away our patients to them?’ That
part of our [internal] culture got thoroughly understood and
absorbed by the external culture and led to this skepticism about
our motives, our capability, our ability to follow through on some
of these things.
The entrenchment, although rapidly abating in the Department, is an anathema to
most private operators. “That was insane,” says one insider. “You don’t own
anybody. These are not your patients or our patients. These are people who need
health care.” Nevertheless, the private sector is still dubious o f the Department’s
new claim of openness and sincerity. Some suspect Mark Finucane himself, the
newly installed director and successor to Bob Gates. “I don’t know him well
enough to trust him,” says one hospital administrator. “Whatever his agenda
is— and I don’t know what that agenda [even] is— it seems to inhibit him from truly
trusting us and us being able to truly trust him.” Yet, others who have confidence
in Finucane are still cautious, fearing the resistance and retribution of his powerful
underlings and internal constituency groups who are charged with interpreting and
implementing his orders. One observer sees a similarity between the chain of
command at DHS and the old “telephone line game” in which a story is told and
retold in a series of one on one conversations. By the time it reaches the last
person, the story has usually mutated into an unrecognizable distortion. The same,
she says, holds true for commands that percolate through the County’s hierarchy.
The sheer size of the Department’s bureaucracy makes it nearly impossible, critics
say, for one leader, even with the best of intentions, to change the course of the
enormous vessel in a short period of time. Thus, while Finucane may be working
toward mutual understanding, collaboration and reciprocity between the two
traditional and ancient foes, conservative branches o f the Department may be
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successful in surreptitiously throttling down the full force o f change, at least for a
time.
It is not just the doctrinal fanaticism o f the Old Guard that spooks the
private sector, but also the unadulterated power that government agencies typically
exercise over their dominion. A conviction that, if given the chance, the
Department will exert its sovereignty in authoritarian and even despotic ways
thwarts a spirited enthusiasm about working with the County. “I don’t trust
government entities running things,” says one convinced administrator referring to
County supervisors. “I think it’s bad policy if you allow the ultimate dictator to
run everything. . . . [It] scares the crap out o f me. Those five little kingpins
control too much.” In the eyes of some in the private sector, their jurisdiction is
unlimited, their command unchecked. “Hey, they’re the County,” exclaims one
commentator. “Government can do anything!” Indeed, it is not so much the goals
and objectives of the Department that unsettle the private sector, but the means of
achieving them, an instrumentality which, they believe, at times can border on
intimidation and coercion. One clinic director recounts a particularly
representative experience:
. . . You don’t want to get me angry and there are a few people at
the County who know they don’t want to get me angry because
they have seen me angry. When I am angry, there is a price to pay.
. . . I go bananas. I’ll give you an example. About five years ago
we got into a County contract for prenatal care. The County was
so overloaded with prenatals that they needed us to the work. We
said, ‘great, we’d love it.’ We had a site visit. Along with the site
visit came one of the County counsel, one of their idiotic lawyers. .
. . In the course of the visit, something was said about one o f my
physicians. The next thing I know, I’ve got a cease and desist
order telling me that I can’t be a County contractor anymore. I
have to stop. I said, ‘what the hell is going on here?’ So, I made a
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couple o f calls and I couldn’t get a straight answer. So, I called up
somebody at the County . . . at 5:30 on a Friday afternoon. I said,
‘look, you are not going to do this to us.’ You are not going to
pull one of my main sources of revenue out of here based on some
yahoo lawyer who didn’t even belong here hearing something that
one o f my physicians said and misinterpreting it.’ I said, ‘if you
want to see our place, if you want to see what is going on, get
down here right now. I will meet you right now. I will wait here.
It’s 5:30 now. I’ll wait here until 8 o’clock, 9 o’clock, 10 o’clock.
You inspect this site and you clear us or you clear me over the
phone.’ They couldn’t believe it. I was just livid. They said,‘back
off, back off. We’ll find out what’s going on. Nobody is pulling
your contract. ’
The County’s autocratic disposition also extended to the bid process,
insiders say, when officials solicited proposals from the lead agencies of various
private sector consortiums to form a partnership with the Department to provide
medical care for indigent patients. Many of the grievances stemmed from what
were perceived to be the onerous requirements of the County’s Request For
Proposals (RFP). “We just looked at the application,” said one physician-manager,
“and just to fill out the application was going to be an enormous task that was
going to cost us probably $10,000 just for the legal fees . . . .” He says his
organization would have had to make fundamental changes in their staffing
patterns and reporting mechanisms and institute some kind of an affirmative action
program. The much contested “right of first refusal” stipulation was also a
stumbling block for many private hospitals and clinics. Although giving priority to
laid off County workers in making employment decisions may have seemed
altruistic and sensible enough, administrators cringed foreseeing an unstoppable
wave of unionizing efforts sweeping their organizations and driving up their
personnel expenses all at the instigation of former public hospital employees. On
top o f that, accountants for the Department were unable to calculate or release
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critical cost indexes to guide aspiring partners in developing financial projections
or a complete picture of the magnitude and parameters of their economic liability.
‘T he way the County runs something [is that] they have no unit cost per claim,”
says one observer. “They can’t tell you how much the electricity bill is, the heating
bill or the fixing bill because all those go downtown. They have no idea how many
patients they see or how many ones they bill for.”
Others protested the cloud of mystery that hung over the entire operation.
A two phase process, County officials first requested on December 14, 1995 a
Letter of Intent from private providers identifying the members of their coalition,
the history o f their relationship with each other and each provider’s foregoing
commitment to a mission of serving the poor and uninsured. A few months later,
the Department sought submissions from the private sector, a “Scope of Work,”
detailing specific plans to create an integrated network or delivery system to fulfill
the primary care needs of the indigent and uninsured patients in the County. But
because Washington would wind up not giving its imprimatur to the Medicaid
Demonstration Waiver until mid-June 1996, yet nevertheless goaded the County to
proceed with expanding access to outpatient clinics, local officials were
constrained to petition the private sector for proposals before many of the details
concerning funding or payment mechanisms had been ironed out. Those who
wrote proposals were required to “address multiple scenarios, including
privatization without County funding, privatization with [an unspecified amount
of] potential County funding, and partnerships with the County and others to
jointly plan and operate a delivery system for identified geographic areas of Los
Angeles County,” wrote Mark Finucane in an official letter to the Board of
Supervisors on September 12, 1996 outlining the public-private partnership
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program. Nothing could have been foggier for private consortiums wrestling with
the most prudent way to respond. “Nobody knew whai you were bidding on,”
says one clinic manager. ‘I t was absurd. It was really ridiculous.” Most odious
was the alarming fear that the County could recant in the future or significantly
change the game rules in midplay and hurl respondents
into a sort o f contractual purgatory. It was enough to discourage at least one
alliance of private hospitals and clinics:
. . . We, as an organization, passed the first cut but then with the
restrictions and really the difficult requirements related to dealing
with the County, most of the participants . . . backed out and chose
not to go forward in dealing with the County on the presum ed
public-private partnership. It wasn’t viewed as having any touch
with reality .... So, we just gave up. . . . It was not just [the]
imposition of rules; it was a complete lack of understanding of
where you were going to be in the future. How can you come in
with a proposal now and have the County come back and say, well,
we may just take this all back. . . . It was a question of not
knowing where you stood as a partner with the County. Are you
going to no longer be a partner at some point in time? . . . Are you
talking about being a partner for primary care only? Are you
talking about being a partner in a complete health care delivery
system that includes everything from primary care, preventive
services all the way up through hospitalization? You had no idea
where you stood. We had no idea what the County’s interest or
motivations were in maintaining their infrastructure .... It didn’t
feel like there was any opportunity to even discuss those options.
In other words, we came at it from a position of understanding and
wanting to develop a good system o f health care delivery that
would provide health care both to the Medi-Cal and indigent or
uninsured populations and it didn’t seem like it was getting there.
The increasing consternation the private sector experiences working with
County officials, though, wells up from a much deeper source: an irreversible and
fundamental dichotomy between the mind-sets o f the public and private sector.
Where governments consider formalism in the exercise of due process and
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strict adherence to inviolable rules of procedure virtues, the private sector
frequently regards them as superfluous artifices and unnecessary hindrances to
efficient and effective health care delivery. As such, the definition of true
partnership diverges between the political and economic institutions of society.
Business leaders and entrepreneurs, especially in health care, cling to a discursive
imagery that is at once flexible and adaptable. For them, the mediation table is a
central symbol animating for them a paradigm o f collaboration and partnership.
“Sitting down together” is the metaphorical repast reminiscent of religious icons
denoting communion and fellowship around the eucharistic table. It is a respite
from the usual causticity o f the competitive marketplace. “. . . It would have been
nice if all o f us had been in the same room with the County people when they did
their nuts and bolts planning,” says one observer.
All these issues [that] are being raised by the Clinic Association, . . .
we put them in writing and then the County goes back and they talk
to each other and they come back and they agree or they disagree.
Why not just do this all in one room? Sit down and say, ‘look guys,
let’s put the issues on the table.’ Talk it out right then.
Similarly, they distinguish between true programming, where public and private
sectors come together in a true covenantal relationship built on trust and a
common mission, on the one hand, and, on the other, the mere purchase of visits
from the private sector through a legal device that is both cold and aloof as well as
reserved. Contracts rarely permit what Phillip Selznick calls “core participation.”
Instead, they segment motives and interests of an organization, restraining it from
full communion with others.
Thus, members o f the private medical community criticize County officials
for cutting off dialogue and reducing their role to that of a child or an apprentice.
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I think as long as the County continues to believe that they are the
parent, the leader . . . [cooperation] won’t happen. Until they shift
their paradigm o f who they are and what we can bring to the table,
I don’t think it will happen .... I really don’t see that vision at the
top necessarily. I hear some things spoken but it is still spoken in
terms that the County will decide how this happens.
The views and opinions of industry leaders were relegated to the sidelines, they
say, by a nonresponsive, overly formal bureaucracy punctiliously observant of its
own legal rituals to the detriment of its relationship with the private sector.
Describing the bid process, one hospital administrator tried to portray the kind of
colloquium that should have taken place:
. . . It wasn’t anybody sitting down, all looking at, here is what
we’ve got. Here is what we have to provide. Gosh, I can do this
and I can do it for [this amount]. What can you do? Oh, I can do
this. None of that happened. No dialogue. No communication. It
has been done to the private sector, not with the private sector.
Still another executive expresses his incredulity at how deviant the County’s
methods are from his own:
You know, if I were sitting in the County somewhere,. . . I would
want to sit down and talk. . . . If I had people in my community
who were experts in health care deliveiy systems, I would try to
involve them, people at the Rand Corporation or people like myself
who have been involved in Medicare Reform who drafted a lot of
the Medicare Reforms and the legislation on that. I would want to
just sit down and talk and have a debate and try to figure out the
best way to figure out public policy. Doesn’t happen. I think they
have no interest. That’s my impression. They have no interest.
That is the most troublesome thing to me. . . . I practice medicine,
I run a health care delivery system, I have been the chairman of the
largest community clinic in the San Fernando Valley and grew that
ten times. So, I am used to that population. I have been involved
in the federal government in health care reform. I can put together
this partnership and I can’t get people to pay attention to things.
So, you sort of say, ‘okay, I quit.’
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In response, the County might argue that a legal albatross encumbers it,
diminishing its dexterity. Administrative rules impose rigorous requirements on
purchasing procedures, forcing officials to engage in a formal bid process rather
than more friendly table talk, and an intergovernmental harness bridles the County,
restraining its ability to freely and openly discuss its actual agenda. The fiery
relationship between the public and private sectors, then, is scorched by a culture
war. On the one hand, private business is more agile and nimble because it enjoys
virtually free rein over its domain, whereas government agencies are obstructed by
sometimes convoluted purchasing formulas, due process requirements and union
roadblocks. The County, then, may be more indentured than authoritarian, more
bureaucratically laden than purposefully tyrannical. As for the private sector,
however, these extenuating circumstances do little to whiten their crimson color.
The Balkanization o f Health Care: Competition fo r Patients and Funds
If private hospitals and clinics find good reason for the acrimony over how
they perceive the County treats them, their vengeance is hard won earned through
a brutal competition for patients and funds. Although public and private hospitals
and clinics may share a common mission in spirit, their form belies their altruism,
transmogrifying it into the structures and motives of capitalism. Economics, then,
bisects the medical community, splintering relationships built on fragile political
strings and a moral idealism quick to surrender to the undeniable realities of the
marketplace. Patients are like commodities, collateral held hostage by health care
providers as leverage for compensation from third party commercial and
governmental insurance plans. The more of them one captures from
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competitors, the greater the financial victory and the more likely one’s existence is
secured for another day’s battle. But the relative scarcity of these essential
commodities defaces the visionary aspirations o f the medical community to work
in concert for the overall health o f society. If physicians and administrators alike
conjure up harmonious and utopic images of a corporatist solidarity and unity
between providers both public and private in the industry, they are quickly
shattered by more materialist exigencies and self-interested strategies.
As such, private providers surround themselves with an immense filter
selectively permitting access chiefly by relatively lucrative patients, primarily those
commodities with a viable payment mechanism. Just a hallmark of good business,
they say, a necessity to succeed in the competitive marketplace. But in the minds
of public officials and even private entrepreneurs, it is an anathema to a
well-functioning health care system. This section will examine the rivalry for
patients and funding mechanisms between the public and private sectors. Where
officials and County supporters excoriate the private sector for unfairly stacking
the economic cards in its favor further exacerbating the County’s fiscal anguish,
private hospitals, doctors and clinics call for a monetary inquest, citing a pervasive
bias in the way federal and state funds are distributed to the County. In the end, it
is an unequivocably political rather than a solely financial contest and, bar none,
the most bitter antagonism o f all.
The private sector is attacking public hospitals and clinics, critics say.
They are cannibalizing its patients, drawing off the most profitable and leaving the
least financially desirable to an already pecuniarily challenged system. “ . . They
want to . . . skim off all the paying patients in Medi-Cal that make money and they
want us to continue to take the gun . . . shots, the bleeding alcoholics, the
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homeless, the mentally ill, the sickest of the sickest. . . , ” says one County
physician. “They want the ability to stabilize all those people [in their emergency
rooms] and ship them over here and not have them be a financial risk to them.”
The most profitable are those single mothers and their children on the federal
welfare program TANF (formerly known as AFDC) which gives them automatic
eligibility for Medi-Cal. This population, experts say, very seldom present with
overly complex and puzzling medical problems. Rather, it is the indigent and
uninsured patients who frequently have a disproportionately higher level of acuity.
But the more obscure and complicated the condition, the more resources providers
must funnel to that patient, a level of commitment that is often not reflected in the
payments made by public or private insurance plans, aggravating the economic and
productivity drain on hospitals that admit these types of patients.
Conversely, others argue, both on principaled and practical grounds, that
the County should not even be in the business of competing with the private
sector. Ideologically, critics of the County flout the notion that poor patients
belong to the public system, and champions o f the free market insist that
government ownership and operation of vital services should be narrowly limited
to only those the private sector is incapable o f providing, a topic that will be taken
up more comprehensively in the next chapter. More pragmatically, though, critics
o f the County system contend that sparring for patients and funds with the private
sector is a contest public hospitals and clinics will inevitably lose. Once given the
opportunity, they say, Medi-Cal patients will seek health care through the private
sector in droves. It is this spontaneous, instinctive shift, one hospital administrator
says, that ultimately demonstrates the lack o f fidelity and allegiance that
proponents of the public system are convinced their patients exhibit, a revelation
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that gainsays the beliefs of most County doctors. “If you took the number of
dollars spent in the County hospitals and gave that amount of money to everybody
who didn’t have insurance and let them go where they wanted to,” declares one
resolute critic, “the County hospital would be a ghost town in ten minutes.
Nobody would go there.”
County officials, however, challenge that logic, saying that the public
system is needlessly crippled by funding mechanisms designed to ignite
competition with the private sector. Primarily, only two sources finance the
treatment and care of indigent and uninsured patients, the bulk of which
disproportionately flock to County facilities: realignment funds, consisting of sales
taxes and vehicle licensing fees totalling $400 million annually, and
disproportionate share hospital (DSH) funding, a pool of dollars intended to be
shared between the two sectors but which is instead plundered by private hospitals.
Realignment funds, officials say, are inadequate to cover the entire throng of poor
and uninsured patients arriving at the County’s doorstep each year, and DSH
dollars are principally tied to the number of Medi-Cal visits a hospital provides
each year. As the private sector persists in filching them, the number of Medi-Cal
patients the County treats drops, initiating a precipitous, collateral drop in DSH
money coming in as revenue. Thus, because County facilities are hospitals of last
resort and statutorily mandated to take in all patients regardless of their financial
status or medical complexity but, with the exception of realignment funds
representing only about 10 percent of the County’s budget, are forced to compete
on the same playing field as private hospitals, they are unfairly handicapped and
put at a competitive disadvantage with the private sector, observers say. “. . . It
becomes desirable to bring in as many paying patients as you can, if you are
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competing against the private sector,” says one observer, a former medical director
for the County.
. . . [But] in order to survive, the County health system must have
an assigned population or a population that is not accepted in the
private sector. . . . Unless you do something to change the ability
of the County system to compete— which means fund it— the private
sector will take all the patients.
Officials also rebut their detractors by pointing to the opportunism of
private hospitals and clinics that take advantage of defects in health care financing
legislation and the weakened state o f the County system. They impugn the private
sector’s mercurial tactics which constantly fluctuate in response to changes in the
financing structure of the health care industry as injurious to what they see should
be the universal and altruistic aspects of health care delivery. For instance, up until
just five years ago, Medi-Cal patients, seen as inferior payment sources, were
eschewed by private hospitals and essentially relegated to the public sector. As
payments from other financial springs began to dry up, however, Medi-Cal become
increasingly attractive as one private sector executive points out:
. . . When we hit the financial crunch of the health care reform
mandates, the economic reality [and] the world-wide economic
crisis which hit health care in the United States and especially in the
west pretty profoundly . . . [occurred after] we entered into the
managed care arena, all of a sudden, [a] Medi-Cal [patient]
becomes one of your best paying clients. They paid better than
most o f your HMOs in terms of their per-diem rates. Now, they
are a desired commodity. Now, all o f a sudden, everybody is
competing with DHS [County], We want that business.
Once the private sector had finally discovered the advantage o f Medi-Cal patients
to their bottom line, they were quick to respond. “. . . There was enormous
competition,” says one clinic director. “Bus benches would have in Spanish:
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‘come to prenatal care at La Clinica, blah, blah, blah.’” Indeed, when the County
was at its lowest point in the crisis, observers say, private hospitals and clinics
began an exceptionally aggressive, self-serving marketing campaign to entice
Medi-Cal patients to their facilities. Highly visible billboard advertisements were
posted in a strategic locations where many of the poor and uninsured would be
sure to see them (Jacobs A l). “I never thought I would live to see the day,” says
one professor o f health policy, “when docs would fight for a Medi-Cal patient.”
But that is precisely what has happened. As most private hospitals in the County
are vastly overbedded, they are desperate for patients. Not only are they
embroiled in a bitter competition with the County, but they fight vehemently
amongst themselves for market share and that holy grail revered by public and
private providers alike: the paying patient. Yet, such fanaticism only divides
health care delivery in a pointedly unhealthy way, say critics. “. . . All of those
[competitive] forces undermine a true spirit of collaboration about appropriate and
timely care for that huge population out there that has no insurance at all,” says
one analyst. “I don’t hear anybody talking about the uninsured which makes up
one-third [of the] population.”
That silence, however, is what both hampers the County’s ability to
compete with the private sector and fans the flames of its fiscal inferno. Luring
Medi-Cal patients away from the public system also permits private hospitals to
game the disproportionate share hospital (DSH) program, a funding structure
designed to award supplemental payments to hospitals treating a high number of
low-income patients. As explained more fully in chapter four, establishing a
hospital as DSH eligible is accessible in two ways: either by demonstrating that its
measure o f uncompensated, charity care exceeds 25 percent o f its total costs or
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showing that the number o f Medi-Cal patients (using inpatient bed-days as a
measure) it treats is significantly higher than other hospitals in the State. There is
little incentive, then, to achieve DSH status by treating indigent patients not
enrolled in Medi-Cal or the uninsured. Rather, it is most financially prudent for a
hospital seeking supplemental DSH payments to liberally admit Medi-Cal patients
while screening out the uninsured and non-Medicaid indigent. “We actually have
some data that shows that as private DSH hospitals in Los Angeles County have
gotten DSH payments, they have taken on more Medicaid patients and they have
transferred out more indigent patients to County hospitals,” explains one health
department official. In fact, reports from the Office o f Statewide Health Planning
and Development (OSHPD) shows that for the five year period between 1991 and
1995, private and other non-County hospitals increased their Medi-Cal bed days by
22 percent, while County hospitals lost Medi-Cal bed days by 11 percent.
Conversely, bad debt, charity and indigent expenses for private hospitals decreased
by 13 percent but increased by 26 percent for County hospitals.
In sorting out the moral ramifications, participants in the debate look to the
original objective o f the DSH program. But that is in dispute, County officials
arguing that the intent of legislators was to bolster hospitals treating a
disproportionate share of low-income patients, including indigent and uninsured
patients, and private sector gurus contending it was to relieve financially impacted
inner-city hospitals treated a high ratio of Medicaid patients. One commentator
suggests that the DSH program allowed Medi-Cal rates to be selectively raised for
certain worthy hospitals while protecting the treasury door from being pried wide
open. But “you can’t have your cake and eat it too,” asserts one observer. To his
mind, private hospitals should be prohibited from both selectively filtering out
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indigent and uninsured patients while receiving federal and state assistance to treat
the low-income population because, by definition, the “low-income” category
includes both Medi-Cal and indigent patients.
The ethical condemnation of that dichotomy notwithstanding, private
hospitals have been successful in orchestrating their subterfuge of the DSH
program, at least in the eyes of their critics. “The public sector provides ten
indigent days for every one indigent day in the private sector,” bemoans one health
policy expert.
Yet the reimbursement to the private sector is equal in total dollars.
So, in relative dollars, they get paid ten times as much for every
indigent day as the County gets paid .... [Therefore], all of the
responsibility is left with the County and all of the revenues or
resources are with the private sector. So, the sequences then goes:
the private sector continues to compete for more and more
Medi-Cal patients which are revenue producing and the County
gets left with less and less revenue sources and more and more
uninsured.
The shrill sounds of disapproval are also emitted from non-DSH hospitals
in the private sector who provide a substantial portion of the care delivered to
low-income Medi-Cal, uninsured and indigent patients but not enough on an
individual basis to warrant certification under the DSH program. “Duh, there is
something wrong here,” says one private, non-DSH hospital executive referring to
the massive payments some hospitals receive for ostensibly caring for the poor.
. . That certainly doesn’t always correspond with the fact that because you are
receiving disproportionate share money for Medi-Cal that you are taking a
proportionate increase in indigent care. Uh, uh. Ain’t happening.” The inequity,
they say, lies in the eligibility formula outlined in the federal statute. “It’s like all
or nothing,” says one hospital administrator. “You cross that line, you get your
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DSH dollars. . . . [But] there are the DSH wannabees who have every right to
some of those dollars.” He estimates that roughly one-third of all indigent care in
the County is provided by non-DSH hospitals who receive no supplemental
payment for those services because individual hospitals, usually by virtue of their
geographic placement, are unable to amass enough low-income patient bed-days to
be authorized as DSH eligible. Regrettably, he says, there is a very bright line
demarcating the “winner’s circle” and the generous financial bonanza that is the
DSH program. The formidable threshold, however, institutionalizes a form of
fiscal discrimination between equally deserving hospitals. Often, private DSH
hospitals will be less unstinting than their non-DSH counterparts in embracing
indigent patients needing medical care. “Queen of Angels Presbyterian is a DSH
hospital,” says one insider.
They are just as stringent on who gets to use their services, in my
opinion, as are non-DSH hospitals. Though they promote a mission
o f providing care to the indigent, when push comes to shove, they
are very interested in people that can afford to pay or have
Medi-Cal. They love Medi-Cal. . . . My experience is that they are
not any more accepting to see indigents than is Cedars-Sinai
Hospital. Quite frankly, in this particular case, we get much more
access to health care through Cedars and Children’s [Hospital] than
we do through [them] ....
So, it is hard to justify rewriting the DSH program in favor of private
hospitals, one health advocate says, because of their history of gaming the financial
formula, especially when they use the money for what some regard as illicit or
reprobate purposes. Many use their newfound wealth to bankroll capital
improvements or renovations to their buildings, say insiders, diverting the money
from the most pressing needs such as indigent care and programs for the poor to
more ignoble projects like refurbishing administrative space or building new
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outpatient clinics founded almost exclusively to siphon off more revenue producing
patients from the community pool of Medi-Cal recipients. One health department
officials tells o f his eye-opening disillusionment with the DSH program:
I used to have conversations with private hospitals. I was very
naive three or four years ago. I was saying we really need this DSH
money to provide uncompensated care to the indigent. They all
went: ‘ssshhh. That’s not what we are using the money for. We
are using the money to improve our facilities and raise our salaries.’
If you go over to White Memorial, if you could take a picture of
White Memorial [before the DSH program] compared to what it
looks like today, [there are] new buildings, [a] new infrastructure.
The place is a palace. In fact, one of the asian gals that works for
me and has a lot of friends in the asian community over there says
that they call that the Disney Land of East L.A. What happened
there? Everybody was sitting around scratching their heads one day
and somebody goes out to get the mail and all of sudden, my God,
here is $40 million in disproportionate share revenue. Didn’t work
on the legislation; didn’t have anything to do with it passing in
Congress; didn’t do anything. And all o f sudden this manna falls
from heaven and, ‘God, happy days are here again. Our financial
troubles are over. Let’s get together and figure out what to spend
this on.’ You can look at example after example. If you look at the
capital projects at private DSH hospitals throughout California, I
don’t see how you can escape the conclusion that most o f that has
been financed out of DSH dollars that they didn’t put up one red
cent for.
All o f these schemes may just be part of a strategy o f prudent fiscal
management and shrewd business practice, but the effects have been deleterious
for the County health care system. As outlined in more detail in chapter four, the
growth of private sector DSH hospitals has meant a sharp decrease in the percent
of the overall dollars in the DSH pool going to the public sector. In 1991, at the
inception of the program, for instance, County hospitals received almost 500
percent more in DSH dollars than their private adversaries. Today, the
disbursements have almost reached parity; both public and private hospitals receive
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a similar proportion o f the DSH purse. Yet, the efforts to treat all low-income
patients, Medicaid and indigent alike, are unevenly divided, critics say. As private
DSH hospitals winnow patients, meticulously searching for those with a preferred
payor status, not only are they able to gamer a share of DSH funds commensurate
with public hospitals, but their discriminating exclusivity displaces swarms of
indigent and uninsured patients who have nowhere else to go except County
hospitals. Sicker and more impoverished, they are a drag on an already exhausted
system.
It is a war o f presuppositions, the public sector arguing that private
hospitals should put aside their avarice and market orientation in favor of altruism
and universal access. When the rivalry undermines patient care and threatens to
destroy the capstone of the safety net system, they say, it is time for the private
sector to forfeit the match and cede victory to the County. In rebuttal, private
hospitals turn the argument’s assumption on its head, alleging that public hospitals
engage in unfair competitive practices against them and asserting in principle the
now famous Circular A-76 clause of the federal administration that discourages
government agency competition with the private sector on ideological and
economic grounds. “I look at it almost the other way,” says one hospital
administrator suspicious of the government’s motives. “I think the County is
trying to compete with us for the DSH dollars. . . . They want to take all of it.
They’d take it in a heartbeat if they could.”
Private hospitals take umbrage at what they see as a presumptuous and
supercilious County system holding them in disdain while failing to fully
understand their problems. For one thing, the private sector is saturated with
providers scratching and clawing for market share. ‘The problem that the private
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hospitals have is that they are overcapacitied and underfilled,” says one observer.
‘This community has far too many beds than it needs. . . . They can’t earn enough
to pay for the big debt service on their new wings. So, they are always scrambling
for patients.” For another, non-profit hospitals are also squeezed between the IRS
hulking over them to make sure they are fulfilling the charitable trust provisions of
their by-laws and prestigious boards of trustees demanding fiscal solvency. In the
case of for-profit hospitals, they are sandwiched between a general desire to act as
good corporate neighbors to the community and Wall Street shareholders
threatening class action law suits if satisfactory earnings are obstructed by an
overly munificent philanthropic program.
In spite of these pressures, free market advocates say, private hospitals
treat their fair share of indigent patients. “If we can transfer, we do that,” admits
the chief executive officer of one non-profit health system.
But, I also know there are times when people roll in and they are
fresh off the boat and they get admitted to the hospitals because
they just have to be. I know we have the right to transfer but there
are times we don’t transfer everybody because of the severity of
their illness.
The numbers are edifying. One hospital administrator contends that County
hospitals care for only about one-third of the indigent population, whereas the
private sector treats the rest fairly evenly divided between DSH and non-DSH
hospitals. His estimation is somewhat accurate. Figures from the Office of
Statewide Health Planning and Development (OSHPD) attribute 40 percent of the
County’s indigent care to the County system and 60 percent to private providers.
“We have taken a bad rap,” swears one DSH hospital administrator alluding to
OSHPD numbers. The agency unfairly counts only those hospital stays for which
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the patient was never billed as indigent care. If any attempts are made to collect
the hospital fee and the amount is eventually written-off as a bad debt, it cannot be
considered a genuine indigent care visit. The difference, she says, is significant.
Her non-profit hospital, for instance, can only report a 5 percent indigent care rate;
had they been able to include the portion of their bad debt expense incurred by
indigent patients, the tally would be closer to 12 percent. Non-DSH hospitals also
boast o f their community service. “We actually take above and beyond charity
care .. . and the unpaid costs of Medi-Cal and Medicare . . . a minimum of 10
percent of our profitability and put that into outreach programs,” avows one
hospital administrator proud of his 8 percent indigent care rate.
The numbers, however, are still low, the bed-days attributable to indigent
care distributed over hundreds of private hospitals, whereas the County’s 40
percent rate for uncompensated care is spread out over just five hospitals and 10
percent of the total hospital beds in the County. But that care is compensated, in
part, by the State government, say famished private hospitals yearning for a piece
o f the fiscal pie. Ever since 1982, they contend, when the Medically Indigent
Adult (MIA) component was jettisoned from the Medi-Cal program, public
hospitals have enjoyed an exclusive contract with the State for the provision of
care to indigent and uninsured patients. So predatory o f those funds, private
sector analysts construct elaborate formulas, sometimes using unsubstantiated
assumptions, to calculate the revenue per bed-day public hospitals receive from
sales taxes and vehicle licensing fees. For instance, one lobbyist on behalf of
private hospitals concluded that the County receives $1700 per bed-day for each
indigent patient it serves, an amount at least double to that which is reimbursed by
Medi-Cal for many hospitals. But to arrive at that figure, he may have used an
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erronous utilization rate. He speculated that indigent patients at County hospitals
consume hospital services at the same rate as patients covered by commercial plans
whereas the actual rate is more than double that, according to one high ranking
health department official. Plugging in the appropriate utilization rate makes a
more accurate estimate closer to $730 per day, a rate substantially less than
Medi-Cal. But industry loyalists are not dissuaded. Instead, they oppugn the
County’s data, insinuating that officials are less than forthcoming. The paper trail
is gone, one critic suggests, after the 1992 realignment deal with the State revoked
the County’s statutory responsibility to track and report certain statistics. Private
hospitals, another detractor says, gradually drew the conclusion that they were not
“getting straight, honest information out of the County .... They have so many
funds and so many ways o f allocating, you are always left feeling like, ‘well, are
you getting the straight story here?”’
It has been the surge of these kinds of antipathies that has fueled the
fusillade between the two health care sectors and spawned the creation of a
splinter lobbyist organization from the industry group that represents all local
hospitals. The new alliance, called Private Essential Access Community Hospitals
(PEACH), is a particularly contentious coalition determined to safeguard the DSH
program and tweak it to its advantage, insiders say. Because the old hospital trade
group, the Health Care Association of Southern California, advocated on behalf of
all health care providers, including public facilities, DSH hospitals perceived a
disconcerting conflict of interest and subsequently seceded. “They felt that we
were compromised in our ability to represent them as aggressively as they felt they
needed because County hospitals are part of this organization,” explains a
spokesperson for the Association. The impetus for the creation of PEACH is
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reported to have arisen out of the fear that the County’s political muscle exceeded
that of individual DSH hospitals and a countervailing political force was needed to
defend the group’s special interests. One PEACH member explains the birth of the
organization:
The concern is that the private systems like ours that take care of a
significant number of the uninsured and underinsured will lose out
because the County systems have the strength and the notoriety to
stand up and say, ‘give us a ll that money. . . . There are, frankly,
some hospitals out there who want to fight.
But both public and private facilities will need to marshal their resources
collectively and mobilize them for the good o f the indigent and uninsured
population as a whole, peacemakers argue. To fashion a seamlessly integrated
health care system for the most vulnerable patients in the County, it will take
cooperation between public and private safety net providers in a model of
collaborative teamwork. “I think the PEACH hospitals can be their own worst
enemy,” remarks one health advocate.
They are out there saying they provide all this indigent care and this
and that. The truth is always somewhere in between. The County
doesn’t do all that it says it does and the PEACH hospitals don’t do
all that they say they do. But everybody does have a role and a part
in the safety net and the County can’t do it without the other safety
net providers.
The fighting is odious, these political doves say, an opprobrium that is a step down
from the kind of higher moral ground upon which they think health care
organizations should be treading. It is also an oxymoron, one hospital
administrator argues idealistically:
If you are going to have public dollars that are really, truly being
used, we should not be in a competitive mode with each other for
it. We should be saying, ‘hey, what’s best for the patient? How
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can we best utilize those dollars for the good of everybody? . . .
Nobody is willing to give in and say, ‘well, okay. You can have my
DSH dollars.’
Instead, the conversation is truncated by a series of tempestuous legislative frays in
Washington and Sacramento, a dizzying cacophony o f strident lobbying efforts,
and a kind of cold war at home in Los Angeles. That is reality. But ideally, one
health system CEO criticizing both public and private DSH hospitals longs for a
more cooperative, less militantly self-interested health care system. The
confrontation over funding divides the medical community, she argues. It is a
scourge on the health care system enfeebling it and the health of the patients it
serves. For her and many other critics of the current state of affairs, a
collaborative mind-set would usher in a new era o f innovative options improving
the physical and moral health o f patients, their medical providers and the entire
community. “I think this is one of the saddest things I have seen since I have been
here,” she says.
We are adversaries about that payment mechanism. I’m not sure if
I could cite or if my staff could cite one example of where we have
been able to collaborate . . . to make sure that patients do have
access. That saddens me. I mean, we are so busy fighting about
the money that we haven’t had a chance to say, ‘what are we doing
here?’ . . . From a philosophical standpoint, I find it diminishing for
all of us not to be able to get to a higher place in the conversation.
We have our group that dukes it out for PEACH and you have your
group that dukes it out for County. At the end of the day, I’m not
sure we have done a whole lot for anybody.
The Crucible o f Health Care: Efficiency and Quality—Who does it better?
One o f the more polemical sides o f the controversy between the public and
private sectors of health care in the local Los Angeles community is the assertion
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loudly promulgated by private providers that they are more efficient and deliver
better quality medical services than their bureaucratic opponents. A pretext for
privatizing health care services, the efficiency and quality issue has plagued public
hospitals for as long as the PEACH organization has existed. As alleged reasons
for the current woes of the public health care system, inefficiency and mediocre
care have been widely touted as justifications for shutting down public hospitals
and handing the keys over to private entrepreneurs. But County hospitals contest
such grossly offensive claims, citing a number of legitimate excuses for their
somewhat less than salubrious condition. They argue that even with the many
sources of friction dragging on the system’s momentum, in actuality, they are more
efficient and deliver care at least as proficiently and compassionately as the leading
private sector hospitals in the surrounding community.
Private hospitals contend that they are more efficient for several reasons.
First, they are usually smaller in size and more tightly controlled, circumstances
that discourage organizational laxity. Their leadership is more visible and less
abstract as opposed to the cybernetic automatism of large governmental agencies,
a paradoxical condition in which the more supervisors a public institution uses to
monitor its operations, each with a relatively narrow span of control, the less
accountability is achieved. ‘T don’t think you will ever get it to a level of
efficiency,” says the dubious administrator of one private hospital, speaking o f the
public system, “that you would get from a much smaller entity like a private
hospital that has 150 beds, that is very controlled, where the quality o f care and the
utilization [of services] . . . are very carefully monitored.” They are also less
bureaucratic and, as such, avoid the cumbersome reporting requirements and other
extraordinary overhead costs that yoke public hospitals.
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In addition, private hospitals are less likely to be unionized enabling them
to be more flexible in changing staffing patterns and increasingly heavy-handed in
demanding more and more productivity from their workers. But County hospitals
are, at least partially, muzzled by the unions and are unable to escape their
suffocating chokehold, critics say. Heavily influenced by the unions and “grossly
overstaffed,” detractors denounce the County health care system as an expensive
disguise for a bloated public works program. “They argue that the union influence
on the Board [of Supervisors] has led to the County being fat in its health care
delivery system in an era where eveyrbody else is cutting or trimming,” explains
one health policy expert. Rather than viewing unioniziation as a social and
institutional good, most private sector executives condemn them as
counterproductive and valueless intrusions on the free development and progress
o f the industry. For one thing, it is impossible to terminate inferior, even
dangerous, employees, they say. C T point to the problems at MLK [Martin Luther
King Hospital] where they keep docs on the payroll who never work,” says the
medical director of one private hospital. “[Conversely], I run a medical group. If
someone doesn’t show up tomorrow, I’m going to know about it and he is going
to be off the payroll the next day.” One private sector physician tells a particularly
disturbing story:
I trained at Harbor General. There was a guy. He was a sweet
guy, but in the twenty years that I had contact with him, I never
saw him sober. Not once. At this hospital, if you show up and you
have alcohol on your breath, you are gone. Period. There is no
question about that. County system: if I show up everyday 20
years drunk, [nothing happens]. He is out there in his truck. He is
out there drinking. Everybody knows about it. That is what he did
on his breaks. Nice guy. Sweet guy. One of the nicest guys for
patients. You can always count on him to help patients. He was
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always kind to people. But he was drunk. Always drunk. I never
saw him when he didn't have alcohol on his breath.
Civil servants, critics of the public system suggest, lack the hustle
inculcated by an incentive system more aligned with the organization’s
productivity goals as in many private hospitals and clinics where employees tend to
work harder. Public workers, by contrast, walk more slowly down the halls, clock
out exactly at five o’clock in the afternoon and rarely put in the extra effort or bum
the midnight oil to ensure a project’s success, they say, all because they are not
incentivized. Other than franchising the torpid work ethic of individual employees,
unions also impede the evolutionary flow of innovations to reform and improve the
delivery of health care, critics contend, and the County system is an excellent
illustration of that. Mired in a bureaucratic slush partly precipitated by the unions,
the County has been unable to make the needed changes in their operations to
progress alongside the private sector, free market advocates say.
Overall, then, public sector hospitals are less effective, less productive than
private hospitals, the latter contend. Unable to acquire many of the “process
efficiencies” available to organizations in a free market environment, according to
one executive, the County is saddled with a mediocre work force, internal
dissension excited by an aggressive union and a grossly obese health system that is
difficult to govern and regulate. Since they have historically lacked the incentives
and the discipline of the free market to rein in their unrestrained growth and prod
them towards the spartan frugality o f the private sector, it is no wonder why public
hospitals are incapable of keeping up with private health care providers, critics say.
Private hospitals also claim to provide better quality medical care to their
patients than the County system. It is more personal, more sympathetic, more
caring care, they say. Their nurses and doctors are more kindhearted and humane,
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and patients are not treated like cogs in the wheel of a massive bureaucratic gear
assembly. “We can do it cheaper. We can do it better,” declares one private
hospital executive. “Our people aren’t going to leave thinking they are treated like
shit. That’s the kind of reputation you’ve got at DHS [Department of Health
Services]. You’re treated like shit [there] and, you know what? It’s okay.”
Furthermore, private hospitals are equipped with newer, state-of-the-art machines
for more reliable diagnosis and treatment of a patient’s condition, proponents say.
The rooms are cleaner with softer beds and warmer food replete with gourmet
entrees. On the other hand, County facilities are drab, barren and overcrowded,
they say. They are undercapitalized and their physical plants are obsolete and
antiquated, the structural equivalent of a flintlock rifle. As a result, patients have
voted with their feet. “Why doesn’t somebody with Blue Cross health insurance,
[for instance], go to a County hospital,” inquires one physician-executive in what
is assuredly meant to be a rhetorical question. “By and large,” he quickly answers,
“they go to the local, not-for-profit, charitable, 501(c)3, public benefit corporation
oriented hospital because that is where people have learned they get the best care.
They don’t go to the County hospital. So, in terms of competition,” he proudly
clucks, “County hospitals have lost and not-for-profit hospitals have won.”
Patients, especially low-income Medi-Cal recipients, are increasingly discovering
that they have a choice, critics o f the County say, and are flocking to the private
sector instead because that is where real quality care is delivered.
In reply, supporters o f the public system argue that the perceptions among
patients about what constitutes high quality medical care is skewed, perhaps
abetted by the seductive facades and vacuous self-promotion of private hospitals.
By all accounts from inside the County system, care for relatively minor illnesses
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or injuries is episodic, delayed and inconvenient, and the ambience of the physical
environment is somewhat less than appealing. But when it comes to serious
medical conditions, the County is unassailable in the quality of care it provides
both because of the professional calibre o f its physicians and staff and its universal
access and staunch refusal to compromise on the level of treatment it provides,
supporters say. One County doctor explains:
You know, the irony will be that most of those people that are
eligible for HMOs will routinely have their care denied and have
care rationed to them, whereas the patients not eligible for those
HMOs will probably get better medical care in this system. And it’s
always been an irony to me that if you’re in an ICU [Intensive Care
Unit] here, you can have four or five physicians [and] intensivists
looking after you; if you’re in an ICU at a private hospital, you will
have no physicians there physically present looking after you. It’s
all run by nurses. There are no physicians there. They do it all by
telephone. You get much better care in this system, and the guy
that comes from under the bridge and gets brought in here gets
excellent medical care, and the person in Beverly Hills . . . who gets
taken into a private hospital may not get the best medical care
because they [sic] can’t have someone physically present there all
the time.
Apart from the strictly technical competence and skill of the care rendered in
County facilities, insiders from doctors to nursing assistants to ward clerks
repeatedly insist that staff members foster personal relationships with patients that
are cherished far beyond the immediate medical intervention and serve them with
respect, sympathy and a single-minded devotion to their well-being and clinical
improvement. They contrast the treatment patients receive at County facilities
with what they consider to be health care “mills” in the private sector, where
physicians are frequently absent from the bed-side, patients are rushed through
doctor visits, diagnostic procedures and therapies on an exacting schedule.
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Furthermore, private sector organizations may, indeed, be more
expeditious, County advocates concede, but they are not inexorably more efficient
overall, especially when controlling for the many innate legal, political and
structural impediments that confront government agencies in their daily operations.
In particular, County hospitals typically treat a sicker, more medically complex
patient population, observers say. Although to a few curmudgeons, this may be a
“vacuous excuse” given that all large hospitals, including private hospitals, must
compete with smaller facilities offering a more constricted, more elementary set of
services, most nevertheless acknowledge the County’s competitive disadvantage
here. “. . . They are seeing exotic diseases . . . which I’ve never seen,” confesses
one physician in private practice.
They are seeing people who have a lot of alcohol and drug abuse,
the ‘Gun and Knife Club.’ They are seeing motor vehicle accidents
and head trauma. They are seeing people who have let their cancer
on their legs fimgate for months before they even present [to the
hospital] so [that] they end up with an amputation and
chemotherapy which they know is not going to work because the
person waited too long. They are [also] seeing a lot of end-stage
disease.
Indigent patients are, in fact, “high utilizers” of medical services, according to one
high ranking health department official. He estimates a utilization rate close to 460
hospital days for every thousand people in the indigent population which compares
less favorably to the more average 156 hospital days for the general population.
As such, the County is expected to care for patients who drain limited medical
resources at an accelerated pace relative to the general population. The reason,
explains one health policy expert, may be rooted in the relationship between
socio-economic status and health status. Although the indigent population may
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not have a higher frequency of morbidity, “when poor people do get sick,” he says,
“the evidence will suggest that they are oftentimes more sick than someone of a
middle class or upper-middle class background with the same condition because of
other deteriorating health conditions or [because] their overall health status is in
worse shape.” Specifically, living conditions and quality o f life significantly impact
health outcomes. Diet, housing, insurance, and employment status as well as other
material circumstances play determinative roles in an individual’s state of health.
Thus, County patients, the large proportion o f which are indigent or uninsured
low-income workers, exhibit a notably higher level o f acuity such as chronic,
end-stage diseases or massive trauma. “They do see sicker patients,” admits one
expert. Their “backgrounds, culture [and] education level,” he says, tend to
undermine a patient’s ability “to comply with instructions on how to take care of
themselves .... They oftentimes are a much more difficult patient to manage than
is the case in the private sector.”
Unlike the majority of private hospitals, County facilities also support a
fertile teaching environment which can lead to longer hospital stays for patients
and more testing. “Residents are notoriously inefficient,” says one physician in
private practice. “I am much more efficient today than I was when I was a
resident. It’s just experience. You can’t get experience except by doing things.
So, it’s costly.” Procedures, for instance, may be duplicated for the benefit of an
uninitiated resident’s instruction. An intern’s responsibilities are sometimes
prodigious, overwhelming in their scope. Decisions made under conditions of
persistent uncertainty by oftentimes relatively inexperienced medical trainees tend
to be more conservative, more risk adverse, thus extending hospital stays and
putting pressure on residents to order liberal panels of diagnostic tests and copious
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cocktails o f drugs. Frequently, the overtesting and overmedication is to impress
faculty members with a new physician’s breadth o f knowledge as one physician,
now a plastic surgeon in private practice, recalls:
. . . When you would go on rounds, the guy who could think up the
most esoteric test that this person might have, the resident would be
considered the smartest if they do the test. It might be negative,
but it’s just another thing to find out. . . . You just don’t know that
it’s needed. But, how do you know [if] it’s needed until you try
and find out its negative. That’s partly [a result of] teaching
inefficiencies.
Finally, residents are just slower and more ungainly in their diagnoses and
treatments. The old adage of medical training— “watch one, do one, teach
one”— may swiftly move a callow intern from student to professor in a matter of a
few months, but it also hinders the smooth flow o f patients in and out of the
hospital, increases health care costs and fetters the efficient provision of
appropriate medical care. Whereas private hospitals are often able to raise capital
and gamer voluntary contributions through celebrated fundraising activities and
various philanthropic endeavors, public facilities are not.
Finally, as consistently noted before, County hospitals treat a
disproportionate share of low-income, indigent and uninsured patients, a ratio that
approaches 100 percent, according to one health department official. They are the
terminal point for financially destitute patients and are the hospital of last resort for
the sickest, most impoverished and least advantaged members of the local
community. As mandated by law, the County possesses the sole burden for
relieving the suffering of those who have nowhere else to go. As a result, public
hospitals are inundated with the poor and those unable to pay for the vast majority
of their treatments. Whereas most private hospitals, even DSH hospitals with a
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disproportionately high share of low-income or Medi-Cal patients, are able to
cross subsidize the uncompensated care they render by more lucrative payments
from commercial or governmental insurance plans on behalf of other patients the
hospital treats, County hospitals generally do not have enough insured patients to
do so. They may treat a high number of Medi-Cal patients, but even that revenue
source is rapidly dwindling as the private sector increasingly gorges itself on that
formerly exclusive public hospital feeding trough.
On the other hand, the private sector braggards are not altogether as
efficient as they boast, County supporters argue. Their system is overbuilt with
too much capacity. In fact, most private hospitals in Los Angeles County are
beleaguered by empty beds, idle wards and insufficient patient counts. With an
average census o f barely fifty percent, profits and operational surpluses are at an
all time low. “Nobody wants to shut down their hospital,” remarks the chief
executive officer for one mammoth southern California health system. ‘I t might
get to a point where twenty percent of the hospitals won’t make it financially in
L.A. County .... Today, everybody is talking to everybody about mergers,
acquisitions, who should we partner with because it is not easy today.” In 1993,
the aggregate net earnings for all private hospitals in the County reached
approximately $400 million, he says, a number that tumbled to $180 million only
one year later. As policy wonks have argued well before the ill-fated Clinton
health plan, the national health care economy is grossly inefficient. One public
health professor explains:
We are spending almost twice as much per capita around the world,
and yet we are ignoring the enormous portions of many people in
the U.S. who don’t have access to health care. . . . There is enough
money in the health care setting to finance everything that needs to
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be done in the U.S. It’s [just] a matter of redistributing the money
One of the main culprits, the administration of the private system is top heavy.
The myriad of endless insurance claim forms alone is estimated to account for as
much as ten percent o f the waste. “We send three forms to get one referral for an
eye check,” explains one physician consternated by the managed care rigamarole.
“We have to make two forms, fax at least one of them, mail the other, make two
phone calls [and] confirm with [the] insurance [company] just to get a [routine]
mammogram . . . .”
All of this is to suggest that health care delivery is a suboptimal enterprise
and medical providers, both public and private, are characteristically inefficient.
“Having now worked in both public and private sectors and with many other
institutions, none o f us really run very well,” suggests one physician working in a
nationally distinguished private hospital. “I am not yet convinced,” he says, “that
one is necessarily inherently superior to the other . . . .” At the level of individual
hospitals, that similarity is even more noticeable. Because state law and
credentialing programs such as the Joint Commission on the Accreditation of
Hospitals (JCAHO) set minimum staffing ratios and other structural and
organizational provisions, public and private hospitals tend to be isomorphic and
therefore similarly inefficient, says the chief executive of one large physician group.
The difference, however, is that the public sector’s shortcomings are more glaring
and publicized on a regular basis by a hostile media “on speed dial.”
Public hospitals even have the upper hand in some instances. For example,
“the dirty little secret” of teaching hospitals is “that a 120 [hour] work week makes
up for an awful lot o f other inefficiencies in the system,” according to one veteran
alumnus of the system. It is cheap, slave labor forced upon a captive work force
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of residents and interns caught in the venerable and time-honored medical tradition
of sleep deprivation and indefatigable pressure to continue working through utter
exhaustion. For the hospital, however, it saves money. In addition, County
facilities receive higher than average Medi-Cal payments because of factors such as
higher acuity, teaching status and amount of indigent care provided. An “apples to
oranges comparison,” the County’s Medi-Cal rate is also adjusted upward to
account for the physician component. The salaries of residents, interns and
attending faculty members are included whereas most private physicians bill their
patients separately from the hospital. The exact reimbursement made to public
hospitals for each inpatient bed-day is unknown, however, because the California
Medi-Cal Assistance Commission (CMAC), the political body handpicked by the
state governor, assembly and senate to negotiate Medi-Cal rates with every
hospital in California, has veiled the process with a cloak of secrecy so stringent
that no matter how hard one health department official was provoked, he would
not reveal the County’s reimbursement rates. The Commission, however, has
sought fit to elevate those rates beyond that of many hospitals, essentially
acknowledging the additional financial and productivity burdens County hospitals
face.
Thus, the issue is not so straightforward. The numbers, in fact, betray all
the trumpeting by the private sector, revealing that County hospitals may indeed be
less costly than private hospitals similar in size and scope of services. ‘Tf you look
at our cost to deliver a day’s service,” remarks the Chief of Staff of one County
hospital, “we are a bargain. And we are tremendously cheaper than the
comparative California hospitals and markedly cheaper than the University of
California system. So, if efficiency is measured in terms of cost in providing the
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product, we are extremely efficient.” One internal cost comparison prepared by
the Department of Health Ser vices (DHS) reveals that the overall cost per day for
County facilities has been significantly less than the average for comparable private
hospitals every year since 1981. For instance, in FY 1995-96, County General’s
adjusted cost per day totalled $1,499 while Huntington Memorial Hospital in
Pasadena, California Hospital Medical Center in downtown Los Angeles and
Cedars-Sinai Medical Center in Beverly Hills all analogous private hospitals,
reported a cost per day o f $1,394, $1,541 and $2,211, respectively. Of course,
County hospital costs also include the physician component whereas private
hospitals do not, making them seem even more efficient. Granted, the efficiencies
are inadvertently accomplished through pervasive understaffing and below market
salaries and wages, and the comparisons are crude as County officials readily
admit.
Nevertheless, research both in health care and in other industries
consistently demonstrate that publicly provided services are often no more
inefficient or costly than contracting out those services to the private sector. For
instance, William Shonick’s landmark 1983 study evaluating the management of
public hospitals in California by private health care management firms decisively
concluded that no real benefit or cost savings to County government was derived
by private ownership or contracting (79-80).
The report from our consultant accounting firm and our own
review of the California Health Facilities Commission data both
concluded that overall operating costs per unit of service . . . were
not reduced. The essential strategy o f the private management
firms, therefore, was to save the County money by passing costs
onto the state and federal governments, or to other third-party
payors, such as Blue Cross. (50)
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And one of Theodor Litman’s fifty lessons learned from his experience with
government’s involvement in the provision of health care, outlined in his widely
used textbook Health Politics and Policy, is that there is no evidence to suggest
that private sector health care is more efficient than the public sector (37ff).
And the human saga is equally as compelling in both sectors, transcending
that distinction. One health policy expert relates her recent experience:
You hear horror stories in both systems. Let me tell you, I gave a
community forum last night in a private hospital. . . . At the end,
one o f the questions came from a fairly young man whose 85 year
old father is dying very slowly and in a lot of pain. He is in the
Kaiser system which I think is the very best managed care. He
described abandonment by doctors, by hospice [services and] by
nurses because the guy is sick and he is cranky and he is dying.
This man was literally in tears because o f his frustration with the
system. I hear that from a woman whose husband has a brain
tumor at UCLA. I hear it at Kaiser. I hear it in the private sector.
Those are human tragedies that are happening in all of those
sectors.
Thus, the medical community in Los Angeles is rife with animosity, keenly
split between public and private providers. Although both sectors agree on basic
values, as will be illustrated in the following chapter, they nevertheless compete
viciously for patients, funds and, above all, survival. They are adversaries at the
legislative table, a rancor that inevitably spills over at home in the extraordinary
endeavor to bring them together in a broad and enduring public-private
partnership. The conflict is, at times, untamed, wild with uncivilized hostility.
Fully anticipating corruption and self-interested profiteering to emanate from the
partnership, public officials are often dubious because of what they perceive to be
the private sector’s ulterior motives. It will skim off the healthiest patients and
dump the rest on County facilities, detractors insist, poised to indict their
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antagonists on charges of fraud and racketeering. Private hospitals and clinics, on
the other hand, distrust the County’s hidden agenda, fearful it will reneg on
contracts on which they will inevitably become dependent. They feel defenseless
and impotent against the sweeping power of an authoritarian County bureaucracy
whose attitudes and actions at times, they believe, border on dictatorial. But the
mudslinging reaches its apex over the contending theories of equity and justice
concerning the distribution o f disproportionate share hospital (DSH) funds and the
incendiary combat over Medi-Cal patients. Accusations of gross mismanagement,
poor quality of patient care and administrative inefficiency are hurled over the
walls of the County’s health care fortress only to be rebuffed in vain.
There is a tension, then, between the intense rivalry that resorts to either
the condemnation or approbation o f a marketplace, capitalistic mentality for either
side’s moral justification. As could be predicted, the private sector is more
entrepreneurial, more willing to see medicine as a business and health care as a
commodity to be distributed by the rational workings of the free market.
Conversely, the public sector is more communitarian, even quasi-socialist in its
zeal to guarantee universal access to affordable, quality care. Yet, the abyss is not
so wide, the split not so clean. Most health care providers seem conflicted in their
responses. On the one hand, nearly all in the private sector believe in the power of
competition to squelch monopolistic inertia and bureaucratic drag, but, on the
other hand, all but the most staunch free market advocates aspire after a less
competitive, more cooperative and solidarous industry, one in which public and
private sector organizations collaborate and plan together to forge a unified,
rational health care system accessible to all. They cling to a quixotic, almost
romantic corporatist vision o f an undivided, comprehensive and rational health
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care system while nevertheless fighting with each other bitterly for funding and
patients. They implicitly reject the notion that medical care is a commodity like
sugar or a quality hair cut to be traded in the marketplace while simultaneously
promulgating those principles in an effort to divert revenue producing patients
away from County hospitals. In short, they agree on fundamental values and an
underlying set o f ethical standards and, calling for system-wide consolidation and
rational re-organization, they bewail the fragmented character of the industry
today. From a bird’s-eye view, in other words, soaring over the health care
landscape, they are ennobled and more magnanimous in their views, more
benevolent in their outlook. But when bogged down in the marshland o f funding
mechanisms and reimbursement for patient care, baser instincts take over and a
more Hobbesian state of nature emerges, one that is indeed “nasty, brutish and
short.”
The political factors highlighted in the last three chapters and the financial
impact that results from them profoundly influence the structure, operations and
future of public health care systems. Public attitude governs the political mood
and the general attitude toward publicly provided health care services. It
determines, in part, the proclivities o f politicians, either urging them to react
favorably toward the system or goading them into an unfriendly, antagonistic
disposition. Whether the community’s racial and ethnic complexion is mottled or
relatively unblemished often sways the acceptance or rejection of public health care
services and other publicly provided services given the pervasive stereotypes about
the users o f government fomented by a hostile majority, and the public’s
temperament on tax supported welfare services affects to what extent public
hospitals and clinics are embraced by the community as icons of a mutual concern
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for each member’s welfare. Intergovernmental politics can either be treacherous
or supportive of local government health services provision. Depending on
whether the party affiliations are in alignment or opposition, whether aspirations
for higher political office and the means to achieve it interfere with the goals and
objectives of locally run public services, whether federal and state officials are
unresponsive and apathetic or deeply interested in and attentive toward public
health systems, intergovernmental relationships will either promote or hinder the
provision of government sponsored medical services with superior outcomes. The
response by local officials, in turn, is mediated by the saliency of the issue and
political muscle it can flex in the halls of state and federal administrative and
congressional offices. Whether the relationship is sunny or stormy, then, will
ultimately impact the bounteous or parsimonious distribution of funds from state
and federal governments and the rationality or intentional tortuousness of the
funding mechanisms themselves. Finally, the measure of amicability between the
public and private sectors o f health care providers affects the predilections of both
public opinion and federal and state policymakers toward local public health care
systems. In addition, the level of trust and competition between the two entities
often decides how forceful and destructive the inevitable political upheaval will be
when these two tectonic plates collide.
Ultimately, then, the rise or fall, success or failure of publicly provided
health care services around the country rests not on the efficiency o f the system
and its adminstrators, the quality of the medical care delivered, the proficiency of
its practitioners and providers or even the rational design and implementation of
effective health programs, but, rather, on the skill of local political players in
securing power, first regionally and then nationally. In the end, it is about
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navigating the system through waters infested with personality conflicts and power
mongers. It is the outcome o f a series of compromises and concessions made by
political contestants who sit atop bureaucratic organizations, be they public or
private, that finally determines the fate of public health care systems in particular
and government services in general. Yet, eliminating the political dimension
through efforts to privatize or depoliticize essential public services, which are
essentially political in nature, compromises the democratic process itself. This will
be the subject o f the final three chapters of the dissertation. The following chapter
will take up the ethical and practical responses of the medical community to the
health care crisis in the public system, including the twin emergent visions of
privatization and depoliticization. Chapter seven will evaluate these solutions in
the context of the theory of bureaucratic organization and administrative law, and
the conclusion will tread a middle ground, seeking to harmonize these competing
visions in a model of public cooperation that integrates the careful reconstruction
o f public services and a plan for modest privatization with the rebirth o f a vibrant
civic culture.
Chapter Six
Moral Convergence and Clashing Visions: The Conflicting Values of the
Medical Community
Despite the pronounced animosity between the public and private
components of the Los Angeles County medical community, a remarkable
consensus about rights, social values and health care for the poor and uninsured
lives beneath the annunciated malevolence. It is a moral fountainhead animated by
both utilitarian, intellectual and professional logic as well as humanitarian,
emotional and religious affect. To many doctors, medicine is similar to a vocation
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inspired by some understanding o f the divine. “. . . I feel very strongly that I was
somehow in some fashion called to be a healer,” one County physician reflects.
[My profession] had to be something that involved being a neighbor
to somebody in that philosophical context o f what a neighbor is. I
could never have been a businessman; I could never have been an
entrepreneur; I could hever have been an attorney; I could, God
forbid, never have been a politician.
Some broad-minded physicians enlarge that oceanic feeling to a more enveloping
concern for the health o f not just individual patients, but to society as a whole.
“Very much like a minister,” says a doctor in private practice, ‘1 had a calling, but
my calling isn’t to the cloth. My calling is to medicine and public health and to
bettering society.” Often the vocation is passed down between generations, an
inherited profession of faith that has, for example, imbued one physician’s family
with a firm commitment to succor the sick, injured and downtrodden for over two
hundred years.
Beyond medical culture and heritage, however, humanitarian and
philospohical traditions engender the same magninimous inclinations. Many times,
unstinting philanthropic impulses are enkindled by the environment in which
individuals were raised. For instance, in small towns where the standard of living
is modest and the means moderate, the sense of togetherness and mutual charity
that emerges is transported by more than a few physicians to their medical practice
in the hustle and bustle o f the inner city. “I was raised in a family that didn’t have
much money . . . , ” recalls one County doctor.
They were school teachers and very much involved with the church
and helped out people in the community. . . . If somebody was in
need, the small town got together and took care of it. . . . [The
idea] was, ‘somebody has fallen on hard times. Let’s all get
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together and go over and take care of them, cook them dinner . . .
and all join together.’
Outside of small communities, though, many physicians took their education from
the example of their parents and grandparents during the c 40s, ‘50s and ‘60s when
America, they say, was “liberal-minded” and inspired by the “bedrock altruism” of
the G.I. generation’s ingrained sense of civic virtue. It may, in fact, be these
subliminal, ancestral transmissions of conscience that explain what several health
professionals say is their inexplicable affinity to express compassion and
benevolence to those in need and their seemingly innate prejudice against stingy
and exclusive medicine. Muses one physician: “It’s just part o f my inner fiber that
tells me it’s .. . wrong not to provide care for people that are in need . . . just
because they don’t have money, power and influence .... It just fee ls wrong to
me.” Or perhaps, it is, as one physician puts it, the exposure to so much diversity
in people that doctors see on a daily basis that invigorates a sweeping humanitarian
concern for all. Whatever the reason, the humanist stripe is distinguished by the
deep conviction that, as humans, the welfare of individual people is, at least to
some extent, bound up with one another, and that, above all, “no man is an island.”
But for others, religion ignites the passion for charity, sublimity and
munificence. From the Jewish tradition comes the halakhic Golden Rule first
articulated by Rabbi Hillel more than two thousand years ago. Roughly
paraphrased as “do not do unto others what is hateful to you,” it is an axiom that,
evident from its tacit enunciation in the Hippocratic Oath, has taken root both in
the medical profession and in the popular consciousness of most societies. “I think
we can all think of situations,” ponders one physician, “where we might ourselves
be in difficulty and wouldn’t want to be shunned because of our economic status
or because we are not in a country with the proper credentials.” The Christian
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tradition augments this universal moral principle o f reciprocity with the more
arduous and exacting command to “love thy neighbor.” Declares one steadfast and
devoted physician: ‘1 believe very strongly that I am my brother’s keeper and I
believe very strongly that everybody is my neighbor and I believe very strongly that
I [should] treat my neighbors] like I would have them treat me.” Yet, it is a
dictate that requires Christians to not only empathize with the poor but to actively
embrace them with God’s hesed, or what is poorly translated from the Hebrew as
“loving kindness.” It inspires an agapic type of love that nurtures what disciples
say is a strenuous ministry to heal the sick, console the poor and comfort the
afflicted, a belief that is expressed by even the most powerful of health care
executives. “I am the president and CEO o f... [a Catholic] health system with
more than a billion dollars in revenue, ten hospitals [and] one thousand
physicians,” explains one devoted administrator.
Clearly, spirituality, God and Jesus Christ are a part of this whole
ministry, and [although] it’s not forced on anyone,. . . being part of
this organization you become aware of the power and presence of
God in the workplace. . . . We are here to love thy neighbor, to
care for those that are most in need and to help them through their
own transitions.
Indeed, a history of concern for social justice and what the American Catholic
bishops call a “preferential option for the poor” pervades a number of liberal
Christian traditions of which many physicians are members, motivating some to
take up social and political activism, but calling all to express mercy and
commiseration with the unfortunate and to commit their own resources in
charitable devotion to the needs of the poor.
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Social Responsibility and a R ight to Health Care:
These most basic values o f benevolence and good will are essentially
shared by most of the medical community, whether grounded in religious,
humanitarian or emotional concerns. But are they pervasive enough and
unambiguous enough to resolve some o f the more intractable moral conundrums
plaguing the profession? Among the more lofty ethical questions in medicine is
whether or not individuals possess a universal, fundamental human right to receive
health care, and society the correlative duty to render it to everyone regardless of
their ability to pay. Given the number of indigent and uninsured patients it serves
and its role as the community’s health facility of last resort, at the center of public
medicine, at the very core o f government sponsored health care is this question.
Distinct argumentative strands emerge from the dialogue on this issue. Some are
minimalist positions in favor o f limiting that social responsibility while others
justify universal access to health care through utilitarian, principled and cultural
arguments.
In the very small minority are those realists pushing for society to rein in its
health care responsibility to the poor and uninsured. Inequalities, they say, are
permissible in medicine just as they are in the distribution of any other commodity,
good or service. The insured should have more choice, more amenities than their
less deserving counterparts. “If you don’t have any dough and you don’t have any
insurance,” says one executive, . . and I have insurance and I am lucky . . .
should you get the same choice as I do? No, I feel you should not.” In essence,
those who lead reckless and destructive lifestyles or who make rash, careless or
improvident decisions and who are also uninsured or poor, should be cut off from
receiving any of the community’s resources or kindness, proponents say. “I don’t
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think society should feel obligated to care for a person who has a traumatic head
injury who rides a motorcycle without a helmet on,” says one inclement
commentator.
I think the individual has to take some responsibility. And when
they make those choices, they have to live with the consequences of
those choices. Same for people who smoke, who don’t watch their
diet, who have health risk factors that they don’t do anything about.
It is time, they say, for individuals to be accountable for their personal health. In a
similar vein, others argue that access to comprehensive health care is not and
should not be a legal or human right. Irked by what they see as a scurrilous
entitlement mentality besetting society, they draw a distinction between
supererogatory or voluntary, on the one hand, and forced or compelled generosity,
on the other. And they are seemingly unconcerned with any resulting shortfalls in
health care funding. ‘I t would be nice to provide free care for everybody,” says
one nonchalant physician.
But, somebody has got to pay for it and there is only a limited
amount of free care that you can provide. So, that means some of
these patients will get care and some will not. That’s the way it
goes. In Mexico, if we don’t have enough supplies, ‘sorry, you
don’t get any.’ If they are the last person in line, ‘sorry, you didn’t
get any. We ran out. We gave it to the last guy in front of you.
That’s kind of the way it goes. . . . Chalk it up to a fact o f life . . .
9
Even so, indigent patients demand so little, according to one health
advocate for indigent patients. The abusive entitlement mentality tenaciously
promulgated by bristled critics is fallacious, she says.
For me, working with the patients . . . they all want so little.
People have this idea that [poor] people are lined up to get free
health services and they just go in because they have a hangnail.
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The people I see are so sick and working still and so determined to
keep working at any cost that they will do whatever they can to be
able to keep functioning. It’s so compelling to me that they don’t
want Cadillac care or anything close to it. We are talking about a
level o f pain and suffering and disability that is so great.
It is for this reason that even the most ardent critics are hard pressed to bring their
pragmatic leanings to fruition. Ultimately ambivalent, they equivocate, stopping
short of outright austerity. “I don’t think they [the poor and uninsured] have a
right,” says one physician differentiating between theory and reality, “but I would
be unwilling to turn them away. . . . I don’t want to be the person to say, ‘I’m
sorry. You can’t get health care.’” Most within this group, in fact, endorse some
kind of limited, basic health care package for the most vulnerable patients,
demarcating “good, solid coverage” from the kind o f “rich person’s medicine” that
is rife with extravagant frills such as cosmetic surgery, breast augmentations, plush
furniture or gourmet menus at public hospitals and other unessential
accountrements. The poor, they say, should at least have access to routine care.
Yet, it is difficult to cleanly sever opulent medicine from basic health care. Even
the most well-insured patients are typically obliged to pay out-of-pocket for
cosmetic surgeries, private hospital room upgrades and other luxuries not covered
by their health plans. Given that elective medical care can rapidly escalate to
emergency medical care in a short period of time, then, the bright line grows
increasingly dim and even seasoned doctors become befuddled trying to draw the
distinction.
If, indeed, the line is obscure and the poor and uninsured are to be vested
with a right to comprehensive health care commensurate with conventional
medical standards prevalent in the community, many commentators formulate
arguments based on social utility and the common good. Although American
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political philosophy seems decidedly liberal and individualistic, it is inescapable that
health care, as a social institution, embraces a more communitarian bent. Indeed,
there is an ecology of health care, an interconnectedness both within the body itself
and between individuals that creates a commonality and therefore a collective
responsibility to ensure mutual health and well-being of everyone in the
“household.” The interdependency is no more explicit than in the protection of
society from epidemics and contagious diseases. As one physician describes it, the
government has a role in
making sure that when I go to a restaurant to eat, things are
sanitary and I don’t get ill,. . . or making sure that my water is
clean, or making sure the sewers don’t overflow into the streets, or
making sure people don’t defecate in my water because they’re
living out there homeless,. . . or making sure that industry is not
spewing out toxic chemicals to which I then become exposed.
In short, the County has a role in protecting the public’s health overall.
Yet, that is precisely what is compromised when personal medical services to
indigent and uninsured patients are curtailed because, in the course of caring for
individuals suffering from disease or injury, many public health hazards are first
discovered. Ecologically, there is significant overlap between the medically
underserved and the well-insured majority, a fact that is not lost on the CEO of
one managed care physician group:
One of the unique aspects of being in capitated medicine is that it
forces you to not just think about your population that you serve . .
. but how your population fits within the community and whom it
rubs elbows with and how they may impact your folks. If there is a
subset of the [general] population that doesn’t get treated out there
and develops tuberculosis,. . . they are sitting in schools next to my
population which I care for deeply.
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Yet, the integral unity in the ecology is also seen when health care is
delayed, permitting a relatively minor condition to become exacerbated, more
aggressive and considerably more expensive to treat. For instance, detecting and
treating diabetes early will usually prevent comas, blindness and amputations, and
estimates of savings in the medical economy range from three to seven dollars for
every one dollar spent on prenatal care. An emergency room doctor explains:
If a patient has hypertension and has access to a facility where he
can go and be followed and get prescriptions, his hypertension can
be controlled for a few dollars a day. If that same patient fails out
o f the system and doesn't have any place to go, his hypertension
will get out of control, he can show up in the emergency dept with
a stroke, with a heart attack, he can run up tens of thousands of
dollars in ICUs. If he has a stroke he can be debilitated for life, be a
burden on society on his family [because of] a loss o f earning
potential. It's just that it is so penny-wise and pound foolish not to
take care of things like diabetics, hypertensives, people with seizure
disorders where it is very easy to follow these people. You don't
have to be very sophisticated to control their diseases. But
uncontrolled, the price is big.
But these costs become social costs as the poor and uninsured generally
lack sufficient means to pay for all of their routine health care much less whatever
exorbitant medical intervention is necessitated by insufficient access to the health
system. “. . . What’s the consequence to society,” asks one physician?
The answer is that you and I~the taxpayer--end up paying for the
person because until we have firing squads on the comers of the
streets picking out the lame and the infirm and killing them,... we
are going to have to pick up the tab to care for these people if they
get sick.
Thus, by stemming the tide of public health hazards and checking exorbitant
medical costs associated with inadequate access, universal health care is in the best
interest of society as a whole, proponents argue. Analogous to public education,
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they say, health care provided through public institutions advances the common
good. Like education, health care promotes a robust and productive citizenry, one
able to fully participate and function in the crucial political and economic processes
o f a prosperous democratic society. Without health, without iife, one physician
contends, other social goods, including liberty and property, are meaningless.
Without health, collateral social pathology develops, according to one
physician-executive, allowed to continue on its unchecked rampage until society
becomes unwilling to pay for more courts, more police and more prisons.
Productivity on the job plummets, abseenteeism rises, disease, crime and
unemployment all balloon, corroding the social and economic fabric of society. In
essence, inadequate access to timely health care, according to these observers,
damages society as a whole. What is needed, instead, is a re-invigoration of the
vision forged by the World Health Organization to keep communities healthy
through prophylactic measures focusing on the physical, mental, social and, as
amended by one physician, spiritual well-being o f society. Social problems such as
substance abuse, malnutrition, smoking and crime are inextricably linked to
problems in health, they say. In children, for instance, many health problems are
actually psycho-social in origin which require an integrated approach to delivering
medical care. The medical director of one children’s health clinic clarifies her point
by way of an example:
Today, we had a kid that is doing poorly in school. The father is
demeaning to him. Last time I approached the Mom on that and I
talked to her, she burst into tears .... So, rather than trying to get
it from the Mom and discuss it for fifteen minutes, I just picked up
the phone. I called the school and got the school counselor. She
pulled the chart and we talked about the case. . . . This is a child
that is seven. If he starts feeling bad about himself because his Dad
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is telling him he is stupid and he is not getting treatment at school,
he is the perfect one to enter a gang and become violent because he
needs to belong somewhere. That’s where the importance of
accessing the lads early on [comes in]. That’s really a health issue
if you take a wholistic view of health.
As trusted social commentators, doctors have the opportunity, the means
and the obligation to speak out on behalf of more broadly defined public health
issues including domestic violence and gun control as well as universal access to
health care, says one such outspoken pundit. tc Medicine has been around for 2,500
years in virtually the same form,” he asserts. “So, we can step up and say, ‘this is
an unhealthy thing.’ Politically, medicine is not Republican, not Democrat, not
Liberal, not Conservative. We try to articulate the public interest.” The scholarly
tradition to search for truth and knowledge for the benefit of all, then, is more
comprehensive now, extending beyond the narrowly defined conventions of
medicine. One of the more illuminating insights garnered from the academic
pursuit is the absolute necessity of universal access to health care services as the
hallmark of an enlightened society, according to the chief executive officer of one
for-profit HMO, and “an intelligent characteristic of a commonsensical social
organization. . . . To prevent unnecessary suffering and to facilitate the prevention
o f disability and encourage productivity among a broad cross-section of the
population is a feature of a rational, ethical society . . . ” Thus, in order to protect
the public’s health and the common good of the communities in which the poor
and uninsured reside, a collective responsibility is borne upon the people to
provide the basic exigencies of life that promote the health and welfare of all.
More courageous observers move past what may be seen as self-serving
utilitarian arguments and, instead, reason from principles, equating equal access to
health care with social justice. Health care is a right, they contend, something that
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everyone deserves just by virtue of their common humanity. Certain social goods
are so imperative for human flourishing— goods which, if withheld, would have the
potential o f being as equally devastating on the lives o f the rich as well as the
poor— that they are elevated by society to the standing beyond that o f a mere
good, to the status o f a fundamental human right. A prominent health policy
expert explains:
Health care ought to be viewed not like any and all other
commodities are viewed. Health care ought to be viewed as
essential to one’s life because without adequate health status,
everything else in your life is so miserable. It’s like breathing air.
You have to have it in order to survive. In philosophy, there is a
principle called distributive justice. And with distributive justice,
what we are saying is that government ought to regulate access to
certain things because without equal access to that particular thing,
an injustice has been visited upon the people. The example I would
use is [if] you all o f sudden found out that we didn’t have enough
air for everybody, how would you distribute air? The ethicists
would say, there ought to be equal access, that no one should have
greater claim on that air than anybody else. That is the same thing
that I believe about health care, that health care ought to be treated
as something different than other goods and services because it is
solely essential to our enjoyment and everything else we do in life.
So, I think everyone should have guaranteed access to adequate
health care without regard to their socioeconomic status, race,
creed or anything else.
Similarly, others reason that access to health care being a general indicator of
socioeconomic status, it is often possible to trace it back to an accident of birth
that advantages some while excluding others. Since it is unjust to hold individuals
responsible for events which are beyond their control and since equal opportunity
is a fundamental principle in the American moral consciousness, proponents of
health care rights argue that those disenfranchised from the medical system be
granted unconditional access. ‘I t ’s a common morality,” argues one former
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medical director for the County. “T think people project upon themselves: ‘would
I feel that I ought to have access if I needed it and couldn’t pay for it?’ They all
answer ‘yes’ about themselves.” The universal incertitude of stable employment,
good health and the constancy of providence, proponents say, should disturb the
affluent enough to empathize with and advocate for universal health care access as
a matter o f right on behalf of those who live in what is fortunately only an
imaginary scenario for the, at least for now, well-insured middle class. “My own
personal feeling,” says the associate medical director of a prosperous HMO, “is
that there are three things that people have the right to in the world: enough food
to eat, a warm, dry place to sleep, and health care.”
A final approach is cultural, justifying the provision of comprehensive
health care services to the poor and uninsured existentially by way of the
conventions and moraises of the medical community itself or the legacy of the
American tradition of compassion and charity. Physicians exhibit an intense
idealism and single-mindedness to patient care, some say, a sincerity so
unwavering that most devote their lives to the well-being of their patients, often
sacrificing family life and personal objectives in the course of their dedication.
Arising from those sacred duties is the core of their ethical system, beliefs, as one
physician explains, to which even the most conservative, right-wing physician
would assent: a universal ethic to care for all in need without exception.
What is common in the culture of physicians is a zealous
commitment to the quality of what we do . . . and our autonomy as
individuals to define and delivery that. And the substrate of that is
the ethical roots o f medicine .... We are part of an institution that
has this incredible tradition in western civilization of serving
mankind. It is unambiguous. That is our job, first and foremost, is
to serve the needs of our patient, even if it somewhat
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inconveniences ourselves or even if it is in conflict with our own
economic needs.
Admitting that there are, in fact, “scoundrels” in medicine, he nevertheless refuses
to concede that the medical community, as a whole, would ever be willing to
compromise that ethical standard. According to another physician, the notion of
applying a monetary means test to patient care is repugnant to most doctors whose
benevolent personalities are the result o f self-selection even before medical school.
“I am an American physician,” says the medical director of an enormous HMO in
southern California passionately.
All physicians in western society are imbued with an oath to take
care of sick people. And I don’t see anything in it that said [only] if
they had insurance or [not] if they are an alien or whatever the hell
they are. You are supposed to take care o f people who are sick. I
pride myself in thinking that. . . I do carry that image. Most
physicians do.
A shared culture of the medical community, then, a shared teleology, world-view
or weltanshammg resonates within that silent space between patient and doctor
inspiring physicians in their supernal calling, a universal quest to care for all
patients hurt or suffering regardless of particularity of their circumstances.
More practically, the medical profession, some argue, shares not only a
common culture and value system, but also a collective responsibility as stewards
of the public fund of health care resources, a kind o f medical husbandry that
obligates them to equally distribute, and promote universal access to, the
advantages of medical care. Resources are collectively owned, they say. Research
that advances the knowledge o f the profession and the sophistication of treatments
and diagnostic procedures performed, and medical education that imparts the
knowledge and skill of the profession to future caregivers both bestow enormous
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benefits on current and prospective generations of patients. Yet, both are tax
supported, both are social investments in the sustained viability of health care. As
such, proponents say that common ownership necessitates universal participation
and access. “If you think about it for a minute,” says one physician, “the gifts of
medicine have come to us from all over the world.”
My country [Canada] contributed with insulin. Britain gave us the
principles of asepsis and cowpox vaccination. France, under
Madame Curie, gave us x-rays. . . . So, the gifts of the knowledge
of medicine have come to us from all over the world and I
[therefore] don’t think it should be restricted to any one social
economic sector or, for that reason, to any geographical sector. . .
. Whatever has been given freely has to be shared freely.
And for that reason, equal access to health care is a basic human right, a humane
entitlement that should be shared world-wide in ever widening circles of concemas
one physician suggests:
I think we are overdue in looking hard at what our obligation is to
our neighbor, whether that is another resident of the County, or
whether it is another resident o f the State, or whether that is
another resident of the United States, or whether it is another
resident of the western hemisphere, or whether it is another resident
of the globe.
What is most fascinating about the values of the medical community,
however, is not their uniformity or consistency but their intuitive or existential
roots. Physicians are often unable to articulate the precise reasons for their ethical
code except to point to the pain and suffering of their patients and their ingrained
desperate desire to apply the balm o f compassion and empathy as well as the skill
of their medical training. “. . . It’s common sense,” says one doctor. “You don’t
need . . . religion; you don’t need to read any philosophical or ethical books. It’s
common sense. It’s a human being who is there and he’s sick and he needs care.
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You must take care of him.” Because of their strong empathy for the
disenfranchised— “women, children, animals, old folks, different races, people on
the fringes”~alienation and neglect for those groups just feels vile and morally
offensive. “I don’t see the people I take care o f as being materially different, in
terms of worth,” avows one County physician, “than my neighbors who have
insurance or my colleagues who have insurance.”
So, I ask the simple question: if we are to live in a society that we
all respect and we feel respects our best, how can we pretend that
one in three people who lives in Los Angeles, who don’t have
access to health care, who don’t have insurance, are in some way
subhuman because if they are human life to us, then they deserve to
be cared for.
Physicians adamant about making the general public understand the critical
needs of poor and uninsured patients implore others to switch off their own
self-interest and concerns, tune out their preconceived notions temporarily and
turn their eyes to ponder the anguish and distress of sick and injured patients,
regarding them during their most vulnerable moments. “If you really look at
people’s suffering,” says one doctor, “if you look at the people who are really sick
and who have no money, they really suffer. They really suffer.” One County
physician issues a challenge to what he sees as a callous and apathetic public
indoctrinated, for the time being, in the philosophy of a conservative, anti-welfare
backlash, daring them to attend with him to one of his many trauma patients.
“Come on down with me,” he says.
Stand by as we look and watch him die, a [patient with] a gun shot
wound to the abdomen. We could take him to the operating room
and save him probably, but I want you to stand with me as we just
watch him [die]. Put him in the admitting area and let’s just watch
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him for the next twelve hours. If they can do that, then we have a
dilemma.
Thus, many physicians simply feel that treating indigent and uninsured
patients is an undeniable, irreducible ethical warrant. It is an affair o f the soul, an
obligation embedded at the core of medical ontology. The chief executive officer
of one physician practice management group explains:
The founder of this organization . . . [on my] first day brought me
into his office and he said, ‘y ° u probably learned a lot today and I
want you to know that you will forget some o f the things and that’s
okay with me. You can make mistakes here. But, I want you to
remember that when you make mistakes, you make . . . [them] on
behalf of the patient.’ . . . I think what he was saying is that it is
okay to make a mistake with your head but not your heart.
To these advocates, it is the pathos, the empathy and human emotion that is the
quintessential linchpin o f medical care. Indeed, prior to about 1900, health care
was almost exclusively a charitable endeavor. Historically, hospitals and medical
clinics were frequently operated by religious organizations with “substantial
charitable overtones.” That spirit is rapidly being replaced by a strictly business
paradigm, according to one health policy expert, an anathema and abomination to
him and many others. Whereas business marginalizes and excludes those without
resources in fidelity to the principles of liberty and freedom, many health care
providers view public health as a deeper commentary on humanity, that society is
not merely an awkward collage of mismatched stangers, but a plaited garment, a
fabric of interconnected people who are, at some level, concerned for the welfare
of others. “. . . We are all entitled to a basic level of health care if we are sick or
frightened or in pain,” says one observer.
If you . . . [distinguish] one population as more deserving than
others because they have health insurance or because they were
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bom in the United States, then you are really rending some o f that
fabric of the humane regard for your fellow man. . . . You want
your child to have a playmate who is as healthy and as strong and
as able to participate in the classroom and be a contributing member
of your own child’s social world as possible. And if that other child
is sick or tired or underfed or handicapped by lack o f some o f the
basic necessities for full participation in life,. . . then that entire
classroom is diminished. So, if you take that classroom and you
spread it across society and the people we interact with, everyone is
diminished.
Yet, virtues such as kindness, beneficence, mercy and good will are not just
firmly grounded in the medical community, but also deeply lodged in the American
ethos itself, some commentators say. America is the “most generous country in
the world,” declares one physician. Another espouses the “common morality” of
the country’s open-handedness. Indeed, numerous polls have demonstrated an
approval for universal access to basic health care as high as 70 percent among
members of the general public. Despite the widely held belief that America to its
detriment is steeped, even mired in a liberal, individualistic mentality, there
nevertheless is a solid tradition of charity and philanthropy especially in the custom
and culture of the historical artifact o f the small town. “It’s the American Way,”
declares one private hospital administrator.
We take care of each other. . . . I grew up in a small, rural area. . .
. The old, classic example: if somebody’s house burns down,
everybody pitches in and tries to help them build a new one or [do]
something [else]. You pitch in and you help your fellow man.
Granted, it gets to be a heck o f a lot more complex when you are
talking about . . . medically complex problems. But, really at a
basic level, a lot o f it still stays the same.
Perhaps, once society has awakened with an insufferable hangover from its revelry
in the conservative and reactionary views on welfare and immigration, critics say,
its true identity as a charitable nation will be illuminated once again.
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A Community Divided: Illegal Immigration a n d Social Cohesion
One of the more controversial issues concerning universal access to health
care is the polemic over the care and treatment of undocumented, non-citizen
residents o f the County. One of four or five states disproportionately affected by
an annual influx of illegal immigrants, Californians seem to have lost their patience.
In 1994, Proposition 187, a ballot measure prohibiting undocumented residents
from accessing the public education and health care systems except under certain
dire circumstances, was enacted by voters. Although it has yet to be implemented,
many observers argue that its passage constituted more o f a protest than an actual
desire to harm illegal immigrants. But in the area o f health care, the issue has
become something o f a Pandora’s box, a destructive political debate unleashed by
the proposition. Despite the remonstration by most in the medical community,
politicians and anti-immigration advocates alike have used the voters’ current
temperament as a springboard to impute the blame for the health care crisis on the
illegal immigrant population in the County. They are ubiquitous, critics say,
abusing the system and imposing an extraordinary millstone on what would
otherwise be a functional health care system. “Reform immigration,” wrote
Republican Representative Elton Gallegly in an editorial for the Los Angeles
Times, “and Los Angeles’ health services won’t be so overburdened” (Los Angeles
Times, October 2, 1995 B11). Although he appreciates the $364 million bailout
Clinton dropped “out of Air Force One as part of a West Coast campaign fly-by,”
he argues “a better approach would have been to bring a scalpel to the problem:
the thousands of illegal immigrants who seek treatment at County medical facilities
and leave overburdened taxpayers holding the bag” (Los Angeles Times, October
2, 1995 B 11). Society cannot afford to care for the throng o f the great unwashed
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stampeding over the U.S. border, they say. “Practically speaking,” says one
physician, “can we support the entire world? ‘Give me your tired, your hungry,
your cold and the [huddled] masses yearning to be free.’ I mean, what were they
thinking?”
Moreover, the character of illegal immigrants is assailed, charged with
infidelity and a wavering commitment, at best, to American culture and ideals.
Branded as contemptible opportunists, tainted as a population whose only
objective is to exploit the American people and abscond with whatever resources
they can, critics are outraged at a liberal and permissive health care system that
“welcomes” these lawbreakers. “We have allowed anybody and everybody to
come here,” says one indignant physician. “Among the illegal aliens are a large
number o f people who come here because they know they can get free health care
and then they don’t stay. They go back to their home country.” His denunciation
of illegal immigrants themselves is so vehement, he questions his ability to act
impartially on their behalf when in his care. “. . . I don’t even ask, I don’t even
know who is an illegal alien on those beds when I am there on that ward because .
. . if I knew, I am personally frightened that I might do less for them.” Part of the
opprobrium, however, stems from many of the urban legends circulated and the
unsubstantiated mythology attached to County facilities about the kind of gross
abuse and egregious practices sustained at the hands of illegal immigrants. For
instance, the most common target is pregnant Mexican women who allegedly
sneak over the border onto U.S. soil and deliver in County obstetrical wards in
order to guarantee their children’s citizenship. One physician now in private
practice recalls his residency at a County hospital: “When the women went into
labor in Mexico, they would jump in the car and bum rubber getting up here.”
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Others enter illegally to defraud the system by freeloading on the public system
despite their ostensible wealth, says one offended doctor.
I’ve had people come up here from El Salvador, Nicaruaga, from
Central America, from China, straight off the airplanes that have
had cancer that couldn’t get treatment in their country,. . . and
within a day or two are in our hospital. There are people abusing
the system who aren’t poor, who have more gold jewelry than I
have, who come in here to get care and services that don’t
reimburse the system.
On the other hand, “everybody has a horror story,” says one skeptical, high
ranking health department official. “Somebody flew in here from Guadalajara and
got a transplant or something like that.” Yet, he denies high utilization of health
services by undocumented residents. Once called by a staff person of a San Diego
state assemblyman to testify at a hearing on illegal immigration, he argued that
Medi-Cal is a chintzy program and actually a disincentive to exploit public health
care services in southern California. “I understand the issues of fairness,
citizenship, civic responsibility,” he says. “I understand all those arguments people
make about denying illegal immigrants services. However, I have to say that I
have never seen any study that proves the disproportionate consumption of health
care resources by the illegal immigration population.” Another skeptic, the
medical director of a nationwide medical group, argues that illegal immigrants
could not logically be the root of the health care crisis in Los Angeles given that
almost all the other urban, public hospitals, even those in low immigration areas,
are in dire fiscal straits.
Indeed, what few statistics do exist seem to confirm those assertions, say
observers. Over 3 million residents are uninsured, yet estimates suggest that
700,000 illegal immigrants reside in the County, a fraction amounting to less than
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25 percent o f the potential health services burden on public facilities. Moreover, a
study conducted by the National Health Foundation, according to the executive
director, found that the most significant “barrier to care for the citizen children of
undocumented parents, who don’t have legal status here, was cost. That is
because most of the undocumented persons in our sample pay for care. They do
not use the public services.” Utilization, she concluded, is “very low. Very, very
low.” Finally, only 17 percent o f all uncompensated medical care delivered in
California, according to one health policy expert, is rendered to illegal immigrants,
making claims that undocumented residents have precipitated the health care crisis
seem inaccurate, even specious. “It’s not the root of the crisis,” declares one
private hospital executive.
The numbers aren’t there. By denying prenatal care we are going
to save $69 million. What is that? A wheel for a B-2 [bomber]?
That’s chump change. It’s nothing. We’ve got a $600 million
deficit in one year. There are not enough illegal immigrants in all of
the United States to run up that kind of a bill.
Thus, the odium over treatment of undocumented residents is largely
motivated by anger and resentment toward the larger issues of welfare and illegal
immigration in general. It is rooted in emotion and not fact, observers say, and by
critics “exaggerating the situation and pandering to xenophobia,” illegal aliens
become opportune scapegoats and “convenient political symbols.” “Have you ever
read the preamble to [Proposition] 187,” asks one hospital executive?
Great reading. You ought to read it. Read th e ‘Whereas-es.’
Immigrants are causing problems for schools, employment, health
care. They may be responsible for a rise in dandruff. I don’t know.
But, if you look at the preamble to 187, you will see that
immigrants are blamed for a whole series of things, not just health
care.
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Despite the wholesale repudiation o f immigrant bashing or anti-immigration
sentiment by the entire medical community with the exception o f five or six
respondents, there is a range o f views concerning to what extent and for what
reasons illegal immigrants ought to be cared for at County hospitals and facilities.
In spite of that variation, however, no physician or health care professional would
ever propose the type of abrupt excommunication from the health system
suggested by the voters in Proposition 187. Indeed, even the solitary physician
who admitted to having voted for the ballot measure did so confident that it would
never be executed in a manner that would actually be injurious to real people. Yet,
several commentators feel that illegal immigrants ought to pay something when
they seek medical care. They should take some responsibility and participate in
funding a basic level of care that would cover only non-elective or life threatening
conditions. Demonstrating a pronounced disparity between theory and reality,
however, every physician agreed that once illegal immigrants penetrate border
defenses, they must be eligible to receive some type of medical care when they
become sick or injured. “I don’t think the place to solve the illegal immigrant
problem is at the hospital door or the school door,” says one doctor. “I think the
place to solve the illegal immigration problem is at the border.”
Once again, arguments are utilitarian, principled and cultural. Refusing to
provide medical services to illegal immigrants, many argue, merely endangers
public health and the common good. Withdrawing prenatal care, for instance, is
“pennywise and pound foolish,” according to one health policy specialist, because
delaying care ultimately septuples total social costs in the long term and
jeopardizes the health of a prospective U.S. citizen.
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It’s dumb fiscal policy. I don’t care what kind of message you are
sending. I don’t care how you feel about illegal immigrants. To
say I am going to spend $7 later when I could spend $1 now, I
don’t know that I have to figure that out. If that brands me as a
liberal, I guess I will be so branded.
In addition, if illegal immigrants are afraid to access essential health services
because social hostility has risen to such a level that any authority figure is
associated with the possibility of expatriation, there is tremendous opportunity for
an epidemics or a public health scares, experts say. Since undocumented workers
are able to infiltrate a variety companies whose services are contiguous with the
general population, such as restaurants, declining health in that population may
potentially spill over to the mainstream. ‘Tf somebody has tuberculosis,” inquires
one policy wonk, “do you really care what their legal status . . . is? Don’t you
really just want them to get care . . . so that you are not sitting next to them in
some public place or they are in some kitchen preparing food?” Thus, a real
conundrum springs up between the twin goals of enforcing immigration laws, a
federal responsibility, and protecting the health o f the entire community, a County
responsibility. Even if it were possible to limit health services for illegal aliens to
just those required for epidemiological control, the perceived threat of deportation
by the Immigration and Naturalization Service (INS) if they emerge would be
enough to confine undocumented residents to their hidden enclaves. One hospital
executive recounts a particularly disturbing, yet illuminating, story:
I don’t know if you know my community well, but I have large
pockets . . . of immigrant populations, both legal and illegal. . . .
They are so afraid. They go deeper into their villages. It’s not so
much that they would be deported, but. . . the people who live with
them will be reported and deported. These are people who are here
legally but they’ve got cousins and aunts and grandmothers within
their community structure, in their own homes oftentimes. They
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are not going to put them at risk. So, they are not accessing
systems. I’ll give you an example. We had a TB [tuberculosis]
screening in the same neighborhood as El Monte Comprehensive
Clinic just a few months ago. . . . INS showed up and did a raid.
Don’t you think my community knew about that? They’ll never go
back to this clinic. These are the young adults that are working in
the backs of the kitchens, under the table, in every restaurant in this
community. It’s a micro-economy. Come on. We don’t have to
have our heads up our butts on this one. There is a whole
micro-economy working out there. These are the ones not showing
up for TB screenings, the ones that are most at risk because they
are living in immigrant populations in immigrant communities. . . .
Do you think they are going to come to these things? I mean,
communicable disease is one of the public health mandates. They
are not going to come. [A couple o f months ago], three people
showed up [to another screening]: the mayor, a priest and a city
council person. Three!
For those who hold that health care is a right, even for illegal residents,
providing medical services to aliens, whether they be in the state legally or illegally,
whether they are tourists traveling through or refugees seeking asylum, is part of a
worldwide “civil contract” and the hallmark o f a civilized nation. ‘Tf I was passing
through Belgium and I got an appendicitis,” explains one physician suggesting an
instructive analogy, ‘T would expect somebody there to help me out.”
I mean, they are not going to watch you die in the street. I think
there is a kind of international trust that exists that somehow or
another your acute health problems are going to get taken care of .
. . and that there is going to be some means of providing you
medical care, whether your insurance card means anything to them.
They are not going to watch you die or watch your health
deteriorate or watch you lose a limb ....
But the treatment of illegal immigrants in the United States, says the executive of
one private hospital, is “vicious,” “hard,” and an abridgment of a fundamental
human right. Although every state has the right to use lawful violence against its
citizens to achieve communal goals and promulgate laws to curtail immigration, he
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says, the exercise of coercive force on the newly bom and unborn, as is being done
by withdrawing prenatal care to illegal immigrant women for example, is an
egregious violation o f a universal human right. Furthermore, advocates question
moral arguments that extend their magnanimity and ethical obligations toward
other human beings only as far as a predefined zone or boundary. Doing so, they
say, denies the kind of indiscriminate concern and universal action that the
infringement of human rights and compassioniate response to the sufferings of
others truly involve One physician notes an illogical distinction:
When people sit down in front of the television at night and look at
scenes of starvation in Rwanda and Somalia as it was and see
scenes of destruction and human deterioration in Bosnia
Herzogovenia . . . and we as a nation respond in some way to this
mass of inhumaneness, then everybody concedes that it is
appropriate that we respond .... It seems to me incongruent that
you respond to someone at some great distance but not feel the
same level o f sympathy [for someone] right at your doorstep,
whether it is a homeless person who was bom in this country or
whether it was an illegal immigrant who came across the border . . .
seeking help for some congenital heart condition .... I think we
make too many barriers in recognizing human needs and how we
can respond to them.
Borders are artificial, observers say, and categorical claims to ownership o f land
are ahistoric and fallacious. “Where do you draw the line,” asks one physician?
Do human rights terminate at the border, at the demarcation line of a sovereign
nation? In response, he betrays his idealism: “Personally, my choice would be to
take care of the whole world.”
The prevailing argument beyond human rights claims, however, justifies
access to health care for illegal immigrants on the principle of equal access for
equal effort. Undocumented workers, they say, contribute to the economy by
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performing menial, servile jobs that even low-income citizens would be hesitant to
accept on a consistent basis. . . Behind every successful woman, do you know
what you find,” asks one doctor? “An illegal alien, cleaning . . . [her] house.”
Indeed, it is a thriving underground, black market economy that underwrites the
standard o f living for most of the middle class in southern California. The cheap
labor undocumented workers provide minimize costs for domestic services such as
child care, food preparation, pool maintenance and gardening. “.. . In California,
the life blood . . . is being sucked away by the horde of brown immigrants that
come across the border,” says one physician bitingly.
Never mind the fact that our food in this state is cheaper, our
purchase of produce is half the cost than in any other developed
country in the world largely because there is a large immigrant
population picking the vegetables and growing the food for you at
very cheap prices. Never mind that this is one of the last places in
the world that you can still get domestic help or relatively
inexpensive bus boys and waiters and so our food prices for eating
out are substantially less. That's not to be considered.
Thus, illegal immigrants do not come to the U.S. to get sick or exclusively to use
the public health care system, commentators say deriding the absurdity of such
notions. It is not a “magnet,” they say. Rather, immigrants steal over the border
to live the American Dream and to secure a brighter future for their children.
Indeed, frequently every member of the family who is able to will work in low
paying jobs by necessity. ‘Teople don’t come to this country as illegal immigrants
and not work because, if you didn’t work, you’d starve,” argues one doctor. They
labor in dreary, tedious jobs without key benefits such as health insurance, so that
when they do become seriously sick or injured, a dreaded event by all accounts,
they are forced to seek care at public facilities.
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Yet, they pay taxes, especially non-employment related, highly regressive
taxes like sales and gasoline taxes as well as vehicle licensing fees. If they are able
to acquire counterfeit social security numbers or green cards, they will have
federal, state and local income taxes, Social Security and Medicare taxes as well as
unemployment taxes, in some instances, withdrawn from their paychecks. Also,
the ability to suppress wages by enlisting a critical mass of undocumented workers
is a windfall for employers in the form of higher profits and for federal and state
governments in the form of additional corporate tax revenues. Aside from public
education, health care and the general social infrastructure, however, they are
powerless to avail themselves of the more specific welfare benefits associated with
economic participation, and by virtue of their alien status, they are unable to derive
such benefits and protections as Social Security, worker’s compensation and health
insurance, advocates suggest. “ . . Look at those sweat shops that employ illegal
immigrants,” one physician bids, pointing out the culpability of some companies.
They’re to blame because they are not paying insurance [for their
employees], they are not paying decent wages, they are not paying
their share to society, [and] they are taking advantage of a very run
over population. . . . [So], the people that come here themselves
seeking a better life is not where the blame lies.
It is this discrepancy between the effort and social contribution made by
illegal immigrants, on the one hand, and the lack of reward and just compensation,
on the other, that provokes many indignant commentators to charge public attitude
and political grandstanding with hypocrisy and sanctimoniousness in the face o f the
obvious exploitation undocumented workers experience. Illegal aliens, they say,
are manipulated and demeaned by predatory companies hunched over, stalking
their easy game, ready to strike. “They are really the ones being cheated,” one
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physician goes so far as to say, because they enrich the middle class by increasing
their earning power, yet are exploited by their employers, vilified by the media and
scorned by the very group whose standard of living they raise. The working
conditions, for instance, can be appalling, say critics. One health care executive
recalls his impressions as a young boy growing up in southern California,
observing and remarking on the way Mexican immigrants were treated:
. . . We had these menial jobs that we didn’t want to do as a
society. So, we developed a program .... We went down to
Mexico and we built labor camps in California and we drug them up
here. . . .You wanted to work, you lined up at the border. You
got in these weird green trucks and drove down to the . . . [work]
camp and you lived in a rotten little house. And we worked you to
death and paid you little and probably took care of the minimal
amount of health we could for you and sent you back home with
some money if you worked real hard. . . . There was a lot of
inhumanity in [that] program. Again, I don’t know the program.
This is from a very young kid looking in and thinking and
wondering what it is those Mexican people did who lived in those
shitty little shacks except work incredibly hard at a really shitty job.
Thus, much o f the dizzying rhetoric condemning the federal government laxity in
patrolling its national borders is a “political sham,” according to one professor of
public administration. Americans intentionally permit the borders to be selectively
penetrated when it serves their own best interests, he says.
. . . The people that control our economy very much want them
here as a cheap source of labor .... So, we bitch, on the one hand,
and, on the other hand, go ahead and see to it that they get across
the border and work for us.
Thus, it is an incorrigible double standard and an oppressive bigotry tantamount to
the worst kind o f exploitation, critics say, to first silently usher immigrants across
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the border and then malign them as unpatriotic, welfare gluttons and unwelcome
freeloaders, persona non grata, swindling American jobs and benefits.
The final argument justifying the provision of medical care to illegal
immigrants is cultural. It appeals to both the stalwart ethical resolve of the medical
community and, what to more zealous cultures may seem to be the faint-hearted
constitution and dovish ethos of Americans. As pointed out earlier, physicians
have always thought o f their profession as a noble one. Turning patients away for
financial reasons, they say, would be foreign to their ideals, and statutorily imposed
requirements to examine visas and other immigration documents would be an
abhorrence. “W e’re life saving machines,” crows one doctor. With the exception
of a few boors, so indelible is the ethical mark on the profession the notion that
illegal immigrants should not receive medical treatment for their ailments is, as one
offended physician put it, “gross nonsense.” Even large health systems and
medical groups claim that they do not shrink from what they see as their moral
responsibility. For instance, one executive recalls, with a fleeting grimace, the
$300,000 his medical group expended on one illegal alien who was admitted in
their emergency room for severe tetanus and eventually died in their hospital. And
another chief executive officer of a large health system is less chary, refusing to
mince words about the organization’s standard operating procedures:
Illegal immigrants should be treated the same as anyone else and no
matter what policies or laws are adopted,. . . [our] health system
will care for all people regardless, no matter what happens [or
what] laws and regulations or things that Govenor Wilson or
anyone else pushes forward. . . . [Our] health system will provide
care for all those in need, regardless of their citizenship and their
status in the community. You can quote that our policy is to take
care o f people regardless of their ability to pay or their citizenship
[status]. In fact, we use radio spots and TV ads and print ads to
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get that message out to the community, that people are welcome to
come to our facilities without being fearful of being reported.
Thus, doctors seem to share a hallowed ethic and a collective conscience.
It is not morally permissible for physicians, they say, to pick and choose their
patients based on discriminatory factors such as financial or citizenship status. A
few, however, brood over the ineluctable dichotomy and internal tension they feel
between their roles as taxpayers and physicians. “I think if you have conversations
with physicians, you will meet plenty of physicians who will say to you, ‘oh, we
shouldn’t give them care,’ because it is politicized,” remarks one clinic director
experienced in the intricacies of medical volunteerism.
But, I think, most physicians, if you put them in the emergency
room and they are standing there and a small child is gasping for
air, I believe that same physician who politically votes one way is
going to intervene. I just do. I have never seen a doctor walk
away from someone in trouble. It is too ingrained in medical
practice and the whole belief system of medical practice in America
to intervene to save a life.
Yet, most are pertinacious in their convictions, sensing no such inward dissension.
To this majority, universal access to health care for even undocumented residents,
by dent of training, is an absolute moral value inextricably connected with then-
own individual value systems. In short, it is simply inconceivable, as a physician,
to rebuff any patient in need, including illegal aliens.
The general public, on the other hand, seems to be hopelessly conflicted.
On the one hand, chapter three detailed what many physicians perceive to be a
watershed in public opinion, marking a backlash against welfare and immigration
and a sea change to a more reactionary, restorationist, even mean-spirited attitude.
On the other hand, on a more sanguine note, the same physicians hum about their
self-declared naivete about the underlying good will o f American society once the
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suffocating tentacles o f political manipulation have been peeled away. They
attribute the disparity to the lack of propinquity between the public and the
inordinate suffering of the sick or injured poor. “When . . . it’s a sick child in your
face, I think people do the right thing,” reflects one physician. “The bigger the
system gets and the further away from it you are and the less touched your life [is]
by those people, the easier it is to say, ‘ah, screw ‘em all. . . . Let’s not pay for
it.’” Despite the seeming brutality o f Proposition 187 that would attest to the
unfeeling obduracy o f the American people, it was actually more of a “statement of
concern and outrage,” says one observer, than a genuine intent to cut off health
and education to illegal immigrants. It was, in truth, more akin to a bluff.
Virtually every American would be aghast at the suggestion of eliminating medical
services to actual people in need, says one former Los Angeles Times reporter,
who contends that in the course of her interviews on Proposition 187, even the
most obstreperous critic would cringe at the thought o f actually turning away
people from public hospitals and clinics. “All we would need to be shown,” she
says, “is the consequences: women having babies in buses .... Do we let that
child die? Now we are talking about a U.S. citizen who is slowly strangling
because the umbilical cord is wrapped around its neck.” Indeed, the stakes are
high as the chaplain o f one public hospital vividly portrays. One evening as he was
making rounds in the intensive care unit, he chanced upon an ethical dilemma.
Two children, one indigent the other insured, had been treated in the emergency
room but required immediate hospitalization in the ICU without delay. Yet, only
one bed remained. Both of their conditions were similarly critical. The “obvious”
question, had the full effect of Proposition 187 already come into play, he says,
would have been which child was illegal? The question, itself, is untenable, say
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critics, one that no doctor or health care provider should ever be forced to make.
It is no wonder, they say, that fear reverberates in the undocumented community.
“If you want to see fear on somebody’s face,” says one sympathetic doctor,
you talk to somebody who is undocumented who is just getting by
financially who now is sick and has to go to the hospital or has a
sick child. Sheer terror. I mean walk in their shoes for a moment.
Pretty awful. . . . It’s really awful.
Thus, advocates are flummoxed by the current political climate towards
immigration. It is difficult to fathom how a nation of immigrants bred on
charitable hospitality could so quickly degenerate into a stinting populace
involuted by a hard-hearted rejection of the most vulnerable segments o f society.
The American persona has always recoiled at ruthlessness, unkindness and cruelty
of any kind, despite its sporadic forays into churlish heartlessness, and it still
tenaciously roots for the underdog, commentators say. Indeed, the country is
filled with immigrant families dating back a few years or a few hundred years and
the diversity of ethnicities and nationalities embroiders a brilliantly checkered
tapestry o f lifestyles, folk tales and cultures. One physician ruminates on her sense
of connection with immigrants of all stripes, one that inspires her to acceptance
and service:
I am a child o f immigrants. In particular, I am a child of Holocaust
survivors. . . . I identify pretty strongly with immigrants. That’s
what I think is amazing here. . . . There is something so classic and
interesting to me about the process o f American assimilation. I can
sit in a room with a family from Central America and it’s so similar.
There’s grandma, who doesn’t speak any English, who basically
stays home and does most of the cooking, [who] cooks these dishes
that nobody else in America eats, who will probably never truly
assimilate but plays a role in the family. I had a grandma like that.
Then there are the parents, holding down three or four jobs, [who
are] really focused on their children. They come to America to
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make it for their kids, not for themselves. Then there are the kids
that are bom here. They want Nikes and they want Walkmans and
they live in this world where they go to school and then they go
home to this other culture with Grandma. It is so familiar. It is like
walking into my own house. I just am fascinated with that.
Completely different parts o f the world. . .. My parents came here
in their late teens and early twenties. They didn’t speak a word of
English, didn’t have a penny in their pockets. [Now], they are
college educated and they own a home and they have two cars and
they sent their kids through graduate school. That’s the American
dream. I am the product o f the American dream. So, it seems right
to give something back.
Yet, the darker side of immigrant relations still penetrates public discourse.
From the lofty plane of policymaking, all the arguments against cordiality towards
immigrants seem to make sense. But at the bed-side, such high falutin abstrusities
begin to pale and evaporate admidst the intense torridity of the suffering and agony
experienced by patients and their families. The American consciousness, even with
its obsession with principles of fairness, justice and equity and its preoccupation
with social utility, will come to the rescue of the brutalized, whether it be by the
force of human savagery, the force of nature or the force of misguided policy. One
former health reporter shares her particularly heart wrenching story:
I happened to be in the emergency room doing research on the
issue of how many people are coming to the emergency room for
lack of insurance .... While I’m there kind of watching the flow
of people using the emergency room, there came in one of these
drive-by shootings. It came over the radio. This kind of joking,
MASH type of comraderie that characterizes emergency rooms
absolutely ground to a halt when what came over from these EMTs
who were bringing the victim in [was heard]. They were so hyped
up with adrenaline in trying to save this person that there voices
went up an octave. It’s coming over very high pitched over the
short-wave radio that the victim is a three year old girl. Everybody
just froze in this very hardened E.R. where they see a lot of trauma.
They start immediately preparing for a pediatric surgeon. It’s a
chest wound so they are trying to bring down a cardiac specialist
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thinking the heart might be involved. Then, this child came in and,
literally, she took up one-third of the stretcher. She was just this
little, teeny thing of girl. . .. She was shot right through the heart.
They did everything they could do to try to save her. She was still
alive when she got there. There were are all these medical people
working on this tiny body. One o f the nurses is pregnant. So, she
is going through this emotionally wrenching experience totally
professional, doing her job with tears just pouring down her face.
The father is in the hall and he had brought the child. He had
carried the child until the EMTs got there. He was running with
this little girl that he had taken out for an ice cream. He was
covered with her blood. He is standing in the comer of the
emergency room and he is just crying in agony. He is just a living
nightmare. Finally, the child dies; they call the coroner. They
couldn’t save her. Everyone is completely rung out and then they
have to go and tell the father that she is dead, which was just
mind-boggling. This family was hispanic. Who knows if they were
legal or illegal. It changed everybody’s life in that emergency room
permanently. Nobody will ever forget that experience. I won’t as a
journalist and I have written about a lot of horrible things. I wrote
the story entirely from the perspective of the emergency room and
what it did to everyone who came in contact with that horror. So,
it’s not just some family that I never saw, would never run across,
[whose] kid got shot. The detail that she was walking with her
father hand in hand down the street to get an ice cream. The detail
that she was shot as they passed their parish church right at the
front door.
The tie that binds human together, the sense o f solidarity that emanates
from the shared human experience and narrative forges a universal culture,
therefore, one of compassion and sympathy, of mutual fear of pain and aversion to
suffering and of antipathy to cold indifference toward the distress of others.
Doctors and administrators alike have concocted a cornucopia o f justifications for
providing health care services to illegal immigrants. Most are valid. Yet,
undoubtedly, the most convincing is the existential one, the one that appeals to our
mutual vulnerability and sense of compassion for fellow human beings, one that
looks past particularized differences.
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Thus, the medical community, for the most part, is virtually unanimous on
its disapproval o f withholding treatment from any patient at any financial or legal
cost. But, this comity comes to an abrupt end when moral convergence collides
brusquely with economic and organizational dissension. In fact, health care leaders
were keenly divided in the recommendations they envisaged for the County, the
argument breaking down cleanly between those in favor o f privatization and those
in favor of depoliticization. The impasse is deadlocked by conflicting notions of
the burdens of government bureaucracy and the benefits of free market efficiency
on the medical industry. Health care needs to be run in a business-like fashion with
a focus on the bottom-line, proponents o f privatization argue. Yet, the altogether
hulking size of the County system impedes flexibility and innovation, say critics.
Creativity is inevitably stunted, inventiveness stilted by the seemingly innumerable
bureaucratic impediments clogging the free flow o f ideas. For instance, employees
are virtually impossible to fire, unions and civil service requirements on issues of
wages and promotions obstruct change and the democratic culture of many
governmental entites promotes policy by consensus and decision making by
committee that retards nimble responsiveness to changing market conditions.
Because they lack a mission in the narrow sense articulated by private business
organizations, they are ultimately not responsible for delivery a genuine “product”
or commodity to a community of purchasers. The result is diminished efficiency
and truncated effectiveness, critics say. A kind of pervasive institutional laxity
results from the diffusion of ownership characteristic of government enterprises
(Donahue 49-51). In a similar vein, one commentator argues fervidly that County
officials “have proven time and time and time again that they cannot work as
efficiently, they cannot work as effectively as the private sector.”
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On the other hand, supporters of the County contend that tracing the
operations o f public hospitals and clinics off of a business template is not only
unworkable but undesirable. “. . . If you run the County as a pure business,” one
doctor posits, “you’d say, ‘it’s a dead loser.’” The real question, he says, is.
Are we going to use a business model and [focus] on what’s the
most cost efficient and business-like way to do things, in which case
you get out of health care, or are . . . [we] going to run on a
government, political, societal level and say, ‘we know that this is a
loser, but we have to do it and we just have to figure out how.’
Proponents of government operated services often acknowledge their diminished
efficiency relative to the private sector, yet dispute the explanation provided by
their opponents that bureaucrats are self-interested, indolent and many times
incompetent. Instead, they contend that it is the heightened accountability to the
entire community, an unparalleled feature o f the public sector, that causes it to
teeter on the edge of fiscal ruin so frequently. “There is a large element of
nonsense in the privatization debate,” writes John Donahue.
Proponents are fond of invoking the efficiency that characterizes
well-run companies in competitive markets and then, not troubling
with any intervening logical steps, trumpeting the conclusion that
private firms will excel in public undertakings as well. To go from
the observation that private companies tend to do what they do
better than public agencies, to the assertion that companies should
take over the agencies’ duties, is rather like observing that the
clients of exercise spas are healthier, on average, than the clients of
hospitals, and concluding from this that workout coaches should
take over for doctors. Public tasks are different, and mostly harder.
(215)
Whereas private hospitals and clinics are, with few exceptions, free to cherry-pick
their clientele, public health systems are disproportionately straddled with the bulk
of indigent and uninsured patients. In short, they are the health facilities of last
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resort; their doors remain open to the legions o f the community’s beleagured
dregs.
In addition, government enterprises are charged with protecting the public
interest and preserving accountability to the community, both of which retard
simple administrative efficiency. Public hospitals and clinics are encumbered with
numerous constituencies, all of whose claims must be pondered and weighed
before action is taken. For instance, in William Shonick’s classic study of the
privatization o f California public hospitals in the early 1980s, public accountability
was a crucial issue. Stakeholders in the government system feared that private
management would discount their interests in
such matters as inner-city minority employment, the existence of
large poor and near-poor populations in the midst of an affluent
society, the employee unions and their demands, the almost
exclusive use of poor patients as ‘teaching material,’ and the
contradiction between the requirements o f a specialized teaching
program and the primary care requirements of the poor clients the
hospital serves. (73)
John Donahue argues that those expectations and demands are legitimate, at least
from a procedural point of view. Any type o f collective human endeavor, he says,
involves a complex web of relationships from which arise a spectrum of entangled
rights and duties, demands and obligations. As such, accountability becomes a
particularly salient attribute of that public cooperation. “Accountability,” he
writes, “is a central attribute of almost every definition of the ‘good society,’ and a
central desideratum of almost every moral code” (10). Yet, a special onus is
bestowed on governments because its tasks are carried out collectively, officials
are so far removed from the voters and the coercive force of government thunders
in the archaic memory of the community (10-11). Bureaucracy is a necessity,
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therefore, and the prudent sluggishness o f inert government officials an
indispensable virtue. “Bureaucratic red tape is neither an accident nor a reflection
o f bad rules or inept officials,” claims Arthur Okun.
It is the result o f the obligation o f political decision-makers to be
cautious, to avoid capriciousness, to take account of the full range
o f interests and impacts of the course they adopt. .. . Public
officials follow the Ten Commandments of their profession, which
proclaim that thou shalt not be experimental or venturesome or
flexible. (60)
As such, accountability is a costly and sometimes discombobulated process, and
exercising the twin virtues of flexibility and efficiency, rather, signals the loss of
that accountability in some cases.
Thus, a fundamental clash o f cultures is at work between the public and
private sectors in health care. “. . . Anytime you have a government agency trying
to partner up with a private company,” says one observer, “o f course, you have
those serious differences in culture.” The private sector brands the County as
authoritarian absolutists, more like feudal suzerains than allies, while the public
sector stands aloof, unsure of their shaky union and precarious, newfound
affiliation. Insofar as they differ on their organizational strategies, administrative
outlook and structural constitution, they will also have two different ideologies,
two different moral visions, two different missions, two different incentive
structures and two different modes of operation. The contrast is enough friction to
retard to decelerate aggressive visions o f a cooperative alliance. But the
importance of upholding public accountability cannot be understated. As William
Shonick suggests, the mission and objectives of the private sector “can hardly be
compared to the public accountability o f elected officials, despite periods of
apparent somnolence on the electorate’s part” (109). As such, he argues that the
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most basic issue in health care policy is the “public/private question,” as universal
access to medical services is contingent on preserving government’s accountability
and responsibility to those who have entrusted it with power (109).
A Little Privacy, Please: Visions to Privatize County Health Operations
Yet, proponents o f privatization distort this cultural tension and tip the
scales of reason in favor of their own narrative, in essence, forging a meta-ethic of
social life. They trump efficiency over justice and social utility over individual
rights. Public accountability may be indispensable to a free society, but
productivity and prudent husbandry o f collective resources are the touchstones of
advanced social organization. To buttress their claims, they appeal to a construct
of neo-classical economic theory and non-empirical assumptions, a thick gruel for
ideological gladiators and abundant fodder for speculative exercises in intuitional
abstractionism.
A distinction is first drawn between public and private goods. For
economists, private goods are those commodities efficiently exchanged in various
markets between free agents without the encroachment of government to muddy
the process. But they begrudgingly acquiesce to the provision of a few public
goods by government under four very narrowly construed circumstances. First,
so-called natural monopolies generate bona fid e public goods because the
economic circumstances are such that the product’s cost would not be improved if
competition were introduced as latecomers could never exceed the efficiency of
the first producer to the marketplace (Waters 42). Second, classic public goods
are those for which it is impractical to collect fees from individual consumers
because the cost of doing so is prohibitively high. Those who do not pay for
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public goods can hardly be excluded. Typical examples include lighthouses, flood
levees or national defense (Kent 12), but public health may also be covered. Third,
unintended side-effects of production that negatively impact unrelated parties,
called externalities, occasionally oblige public officials to to redress the economic
trespass and invasion onto the property of those who do not benefit from the good
or service. Finally, social policies to redistribute wealth from the rich to the poor
within a community require governmental intervention, a category reluctantly
affixed to the list of public goods (Kent 42).
This concession notwithstanding, economists still claim that most public
goods, even though they require governments to provide or finance the product or
service, can nevertheless be produced by the private sector. In vague and
occasionally circular assertions, economists betray their first principles and
underlying assumptions. One resolute economist writes:
The real issue in evaluating privatization transactions is not whether
a private firm can handle some activity better than government.
Instead, the question is whether the private firm is markedly inferior
to government in that activity. Whenever circumstances allow a
market to develop and persist, the philosophical presumption in
economic theory, social tradition, and political experience is in
favor of competing privately owned firms. (Atherton 91)
In other words, only as a last resort after all other private sector options have been
exhausted should goods and services be publicly provided, financed and produced.
These doctrinal convictions are ultimately justified by appeals to efficiency.
“Economic activity should be performed by private businesses unless, from an
efficiency standpoint [my emphasis], private provision is markedly inferior to
provision by a government entity” (Atherton 94). There is a heightened need for
efficiency, economists posit, especially at the local level in a post-Proposition 13
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environment. Fundamentally different in their taxation and revenue collection
structures, local governments cannot rely on income taxes yet provide many of the
essential “housekeeping” services, such as police, fire, water, sewage, roadways,
parks and utilities, that residents depend upon for daily existence (Atherton 82-3).
As such, counties and municipalities are sandwiched between decreasing grants
t
and programmatic funding from state and federal governments, on the one hand,
and escalating demands by local residents, on the other, making operational
efficiency an absolute imperative.
As both an index for and cause of efficiency, prices convey information to
the marketplace in a process that “allocates human efforts in accord with human
wants,” or establishes an equilibrium between supply and demand (Donahue 16).
“If economics teaches anything,” argues Calvin Kent, “it is that prices should be
set equal to costs. If they are not, resources are diverted from more highly valued
options to those that give lesser satisfaction” (II). But inefficiencies are spawned
by government services which frequently set prices in excess of costs in order to
effect a redistribution from taxpayers to users occurs, two groups whose functions
may be immiscible. The individual taxpayer may not value a particular public
service but is nevertheless forced to pay for it, proliferating an intolerable systemic
inefficiency (11). Therefore, price signals are crucial in that they provide
incentives for production and consumption. If noise, in the form of either
monetary inflation or governmental monopolies for example, is able to penetrate
the marketplace and compromise its purported rational integrity, signals that
communicate demand and trigger a corresponding productive response will be
hopelessly distorted, ultimately misallocating resources and eroding efficiency
gains (Copeland 30). Insofar as prices are allegedly unadulterated in private sector
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production, it is much preferable to and far superior than the government provision
of comparable goods and services.
Competition and attentive ownership, too, preserve the undistorted purity
o f the market. If government services are contracted out to private organizations,
either under a franchise model using competitive bidding, a straight privatization
effort in which a panel o f businesses compete for consumer transactions directly or
an arrangement in which the government enterprise and a private provider compete
in a given territory, the institutional “slack” that is so profound in public
bureaucracies will be expediently wrung out by competitive forces. “Production in
the private sector that results from competition,” Kent argues, “is likely to be more
efficient and thereby less costly than government provision” (10). Similarly,
oversight by vigilant owners reverses the “natural tendency o f human organizations
to depart from the unnatural state of purposeful industriousness” (Donahue 49). A
theory widely promulgated by Harvey Leibenstein, all organizations, public and
private alike, suffer from “X-ineflficiency” or what another scholar coined
institutional “slack” (as quoted in Donahue 49). But that laxity is exceptionally
pronounced in government organizations because the institution’s “owners” are so
numerous and so dispersed across the government’s jurisdiction that their interests
are diluted, their power diffuse and their supervision severely restricted (Donahue
50-1). As a result, “nonprivate enterprises tend to be capital intensive, are
hoarders of equipment and have a poor record in maintaining their assets,” claims
Alan Waters (37). The closer the tie between the principals or owners, on the one
hand, and the agents or individuals responsible for faithfully executing the policy of
the owners, on the other, the more property rights are aligned with positive
outcomes and the intent of property holders. When that link is ennervated or
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broken, as is the case in government bureaucracies, assets are undervalued,
resources misallocated and efficiency sacrificed.
Finally, private sector production avoids free riders and rent-seeking
behaviors which are purportedly common in the public sector. Rents are garnered
when the labor market is perverted by wages and benefits paid in excess o f market
value in the same way as the product market is distorted by prices of goods and
services set in excess of the long-term marginal cost of production. “The various
stakeholders in the nonprivate monopoly derive their profits in concealed form,”
argues Alan Waters. “Employees, managers, suppliers, and sometimes customers
are the beneficiaries. It is difficult at times to see behind the facade of alleged
financial losses and appeals for further subsidies” (40). Because supervision by
owners is attenuated in the public sector, self-dealing is troublesome. Bureaucrats,
the theory contends, siphon off valuable public resources and whimsically misapply
them to personal projects that may, in fact, compromise public interest in an effort
to store up status, prestige and monetary power. Yet, private sector organizations
under contract with the government are supervised by officials, preventing them
from harvesting unreasonable rents at the public’s expense.
The empirical evidence is also irrefutable, say privatization proponents.
Study after study, they contend, demonstrates that contracting with private sector
organizations to provide public services results in superior outcomes in the form of
improved efficiency, reduced costs and greater accountability to the community.
Indeed, one comprehensive investigation surveyed the literature, examined more
than fifty studies on the privatization o f local public services and reported that only
three of those studies concluded that private operations were more expensive than
governmental ones. In all others, public bureaucracies exhibited higher unit costs
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than rival private sector organizations in providing similar services (Atherton
84-5).
On the other hand, there is no conclusive evidence that privatization is
always an optimal choice for local governments. Studies which profess lower
costs by private entities over government operations often do not contrast
comparable services. For instance, a study by James T. Bennett and Manual H.
Johnson on public and private garbage collection services in Fairfax County,
Virginia reported significant savings associated with privatization while failing to
control for various factors that could skew their calculations such as “distance
from the dump, dispersal of households served, quality and frequency o f service,
and other factors aside from organizational form” (Donahue 60). In addition,
simple cost comparisons are unreliable as comparing analogous data is elusive. As
one report prepared for the Congressional Subcommittee on Human Resources
asserts, “. . . data on costs of publicly provided services are not always adequate or
available to provide a sound basis for comparing publicly and privately provided
services” (Social Service Privatization 15). In fact, the most definitive Cliff
Atherton can be in his study on the privatization of local public services is that the
evidence “yields conflicting results” and that at least there have been no findings
that public sector services are less costly than those produced by the private sector,
a conclusion that hardly sounds a ringing endorsement of privatization (88).
The arguments reproving public bureaucracies for their rent-seeking
behavior as well as circumscribed ownership and competition with the private
sector are sometimes vacuous, often supported by flimsy evidence. First, it seems
rather absurd to assume that self-interested behavior on the part of public officials
who amass budget power in order to dole out favors to third parties or who
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secretly crave lavish perks such as pleasant working conditions, job security and
collegiality is so formidable as to substantially impact the public good in significant
ways. Furthermore, as Donahue argues, far more damaging rents are bleeded from
government contracts by private sector organizations. “Profit-seekers’ rents are
far more likely than those of civil servants to come in the form of money,” he
argues. “They also tend to be highly concentrated, rather than spread throughout
the organization as civil servants’ rent normally are” (92).
Second, although supervision by the electorate is often impeded by the
complexity and sheer weight of lumbering bureaucracies, ownership in most large
private corporations is hardly vigilant. The removal of most shareholders from the
daily operations and detailed decisions of a for-profit, publicly traded business and
their broad dispersion in the stock market permits corporate executives to enjoy
relative autonomy and independence in piloting their enterprises, and confounds
the theoretical effects o f ownership on enhanced efficiency. In short, most
companies are “manager-controlled firms,” in which even the Board of Directors,
purportedly appointed by shareholders to safeguard their interests, actually pander
to senior management, rubber-stamping decisions in a mock show o f objective
analysis and loyalty to shareholders (Atherton 91).
Finally, although research strongly supports the contention that
competition disciplines the market, checks fraud and unreasonable rents, curbs unit
costs and bolsters efficiency, competition is difficult to arrange (Donahue 147). It
is true that “when a well-specified contract in a competitive context can enforce
accountability, the presumption o f superior private efficiency in delivery public
services holds true” (Donahue 78). However, studies have demonstrated, with
some consistency, that not all forms of privatization are equally beneficial. For
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instance, one study of municipal garbage collection services found that franchise
arrangements in which a monopoly is sponsored for a single private contractor
proffered no cost savings and that free market competition between private
collectors actually increased costs by a third over that o f the government operated
service (Donahue 62). “A word of caution is in order,” suggests one economist.
“Advocates of contracting with the private sector often tend to oversell. If
contracting involves nothing more than the exchange o f a private monopoly for a
governmental one, then little has been achieved” (Kent 14). Also, Paul Starr
points out that in the health care industry HMOs have consistently failed to offer
significant cost savings; instead, they are opportunistic in their pricing strategies,
using shadow pricing strategies (Starr, The Logic of Health Care Reform 40).
Finally, just as ownership theory in the private sector is inconsistent with real
practices in actual corporate settings, so is competition theory. In fact, most
markets are saturated, ruled by powerful oligopolies staunchly protective of their
turf and ruthless in their tactics to edge out smaller competitors. “Most real
markets are populated by private firms engaged in oligopolistic rather than perfect
competition,” Atherton contends (89). Thus, the tripartite argument that
privatization is invariably more efficient and less expensive than public sector
operations is based on flawed premises. Private as well as public bureaucracies
both feed off of rents they are able to harvest from government services, both stifle
direct supervision o f operations and crucial decisions by owners, and both suppress
true market competition.
In addition, it may be correct to suggest that health care, in some respects,
is a public good. Although it may perhaps not fall under the strict definitional
rubric of a “public good” as economists define it, the determinant in policymaking
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is not economic theory but rather public will. Efficiency may be apotheosized by
economists but its prominence is subject to debate in the actual political forum. As
John Donahue argues, efficiency, per se, is not the holy grail o f productive social
organization, but rather accountability of which efficiency is only one component
(10). Accountability, in turn,
means evaluating alternative arrangements for carrying out public
business by the yardstick of fidelity to the public’s values, whatever
they may be. If the citizenry cares about how goods and services
are produced, about how equitably they are distributed, about the
pay, benefits, and working conditions of those who produce them,
then any legitimate measure of efficiency must incorporate these
concerns. (12)
True, there are many problems when making choices about public spending,
including the disconnection between individual and social utility, the ethically
questionable use o f force to coerce distributive measures, the inadequacy of
judging public opinion from ballot box results, the defects of majority rule, the
“natural ignorance” of voters as well as the “engineered ignorance” of politicians,
and the ubiquity and unconquerable power of lobbyists and special interest groups
(Donahue 22-34).
Nevertheless, a case can be made for both the public provision and
production of health care services for certain segments of the population or
specific types of services rendered, given the striking medical needs of the indigent
and many of the uninsured, the inequitable externalities generated by HMOs,
insurance companies, doctors and hospitals when they marginalize poor and
uninsured patients and ignore the needs of the future medical infrastructure, and
the conspicuous market failure indicated by the accelerating failure of physician
groups, hospitals and HMOs nationwide. Even under the strict definition of a
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public good, a presumptive, unique niche for public hospitals and clinics can be
tentatively carved out. Clearly, public health systems are concerned with the
partial redistribution of medical resources to the poor and uninsured and correcting
the externalities imposed by the private sector, including the failure to
comprehensively address issues o f medical research and education as well as health
services for the poor. Finally, if true public goods are delimited by their
universality, if public goods are those for which the collection o f fees from all users
is impossible without the imposition o f inordinate and unreasonable costs, health
care would seem to qualify. Despite the public’s somewhat principled recoil
against welfare and immigration, the national consciousness historically imbued in
America’s local communities would refuse to deny those who are incapable of
purchasing health care commodities in the private marketplace any access to
urgently needed medical services. Thus, health care may indeed be a genuine
public good. As it is not likely that the poor and uninsured will be prohibited from
accessing medical services, aside from variations in timeliness and
comprehensiveness, they will be consumed in more or less equal amounts.
Also, privatization, as John Donahue argues, is a nuanced process,
requiring a perspicacious understanding of subtle factors such as the ability to
articulate specific stipulations for output-based contracts that are both flexible yet
amenable to supervision and monitoring, the capability o f replacing unsatisfactory
contractors with relative ease, the degree to which means as well as ends are
salient, and level of the ambiguity in enucleating the task to be performed.
. . . [In essence], if a task allows for clear evaluation by results, then
the bias should be toward turning that task over to profit-seekers,
instead of structuring elaborate performance incentives for civil
servants. And if a task is so delicate and so difficult to evaluate that
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the contracts that govern it must be layered with constraints and
specified procedures, it may be better to abandon outside contracts
and to set up a bureaucracy. (83)
In health care over the last thirty five years, at least, the standard has been a
combination of public financing and private provision. Government funding
programs such as Medicare and Medicaid have exclusively contracted with private
doctors and hospitals to render medical services to recipients, reimbursing them on
a fee-for-service or what Donahue calls “input-based” contracts. The more
services provided, the more funding is appropriated but without regard for results
or overall health outcomes. In the course o f the last fifteen years, though,
beginning with Medicare’s overhaul of its hospital-based reimbursement system,
providers have been increasingly compensated based on outputs or on a disease
basis. With the designs state governments have on moving Medicaid patients into
prepaid, capitated systems, Medicare may well follow suit, putting providers at risk
by making them responsible for all aspects of enrolled patients’ care in exchange
for a predetermined monthly fee per member. Yet, given that, under either
scenario, measuring quality, access and medical outcomes is sufficiently uncertain
and “the link between specified outputs and patients’ health remains complex and
controversial,” Donahue’s decisional paradigm would suggest that at least those
aspects of health care which are the most vague and ambiguous would be allowed
to inhabit a public world.
The majority of private sector physicians, however, strongly support
privatizing the Los Angeles County health system. As could be expected given the
palpable self-interest of all stakeholders, although the communities overlap to
some degree, physicians practicing in the private sector urge the County to
consider public-private partnerships, at the minimum, to restructure the system
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while County physicians press officials to revamp the existing bureaucracy in an
effort to make the health system more efficient without having to compromise its
mission by contracting out some of its services. The attitude of the private medical
community about the County system is, as William Shonick argues, germaine and
critical to its very survival. As opinion leaders, medical professionals are able to
marshal political support or estrangement, public approval or disapprobation:
The attitude of private hospitals and private medical practitioners
toward the County hospital are key factors affecting the hospital’s
position. The County hospital suffers when private hospitals and
physicians in private practice are hostile because they think it
inferior in quality, or because they would like to close it down and
obtain the licensed beds for the private hospitals. By contrast, if
medical practitioners in the community serve as staff to the county
hospital and its patients, the County hospital can operate very much
like a community hospital.
Yet, for Los Angeles County, support is winnowing in the private sector. Calls for
wholesale divestiture of public health facilities are widespread, adopted by
conservative politicians, physicians, hospital administrators and research
organizations alike as the boilerplate soteriological mold into which liquidated
public assets are to be poured. “. . . Both the privatization and outright elimination
o f public medical services are growth industries,” says one analyst for the Reason
Foundation in a report on health care privatization strategies (4). “Government is
on the way out,” says the head of one provider group with certainty, “Everywhere
I look, I see how the government is creating its exit strategy.” Indeed, the
prevailing instinct is to employ a standard utilitarian calculus to weigh the relevant
costs and benefits of public ownership in determining whether it holds any value
for the community at all. The impulse is to favor dispossession of public property.
“If a private organization can do the job better, or cheaper, with no fewer positive
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side effects and no more negative ones than the public alternative,” argues John
Donahue, “then private delivery is superior; otherwise n o t. . (221). Thus,
public health facilities are perceived to have worth only when they can do
something concrete and tangible for the community in a more efficient and
productive manner than the private sector. Besides, government is responsible
for numerous other important functions more closely aligned with its proper role in
the overall constellation of social institutions, so the argument goes, and therefore
public officials need not be “ideologically wedded” to public ownership of health
care assets, says one hospital executive. “Rather, you have to ask the question:
how can I make the limited dollars that I have for the poor go as far as possible? If
this group versus that group gives you a better deal, take that group.” For him,
the versatility of a noncommittal disposition is a matter of the pragmatic, frugal
and prudent stewardship of scarce resources. “Christ, you don’t have many dollars
for the poor,” he pleads, ‘he careful with them.” After all, argues another critic,
the current institutional structure is all “man-made” anyway. She tenders a fully
reconstructionist vision, in her mind unabashedly ripping open the mythological
veil to demystify and dethrone the presupposed value of public health care. “It’s
not like these were the Ten Commandments that came from God and we can’t
change [them],” she says. “They are all constructed from things we’ve created.
They can all be changed. There is nothing genetically superior about County
employees .... [Their services] could all be contracted out, if that is the most
efficient way to do it.”
Assorted paradigms for privatization are promulgated by various
commentators, each visionary in its outlook, each sincerely committed to
redeeming the County’s health system. Included among the proposals are the
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insurance model, the charity model, the free market model and the HMO model.
Under the insurance model, a coalition of employers and insurance companies is
coalescing under the auspices of the National Health Foundation, a nonprofit
public benefit charity devoted to improving the efficiency o f and access to health
care in Los Angeles. They share a singular goal of manufacturing a low cost
medical insurance product affordable for the poor and near-poor. At the time of
this writing, the plan was not detailed. However, it was clear that the coverage
would include only outpatient and primary care medical services with some
diagnostic testing and would retail at approximately $40 per month per adult.
Hospitalization, outpatient surgery, vision and dental would not be included,
although an auxiliary package would offer several hospital days to augment the
basic plan. The coverage would be buttressed by strong case management to
exploit other federal and state health programs for which subscribers might be
qualified. For example, pregnant mothers whose household income is 200 percent
of the federal poverty level or below or between 200 and 300 percent, are
automatically eligible for prenatal services under the Medicaid and the state
sponsored Assistance for Infants and Mothers (AIM) programs, respectively. Yet,
some in the public sector are skeptical. They are suspicious o f the insurance
companies’ vested interests lurking below the surface as well as their historical
lack of interest in committing themselves to socially responsible activities. Too
much money will be raked off from the premium, says one practice manager for a
network of physician groups.
Out of that $20 [or $40] per person per month, that insurer is going
to keep 25 to 30 percent of it and the rest of it is going to dwindle
down to providers be it the hospital or physician. That’s not a
solution.
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In addition, the plan is not comprehensive and excludes many health services vital
to the improvement of well-being and the treatment of disease or injury. It is
paltry care, critics say, “really not what it is cracked up to be.”
The charity model is more inspiring, expressing a glint of human nobility
mixed with idyllic quixotism. Prior to the enactment of the Medicare and Medicaid
government health programs, it was commonplace for physicians in the community
to volunteer several days over the course of a month at County hospitals and free
clinics in the area, observers say. “Every doctor when I was a kid said, ‘oh, today
is my County day. I donate my time to County,”’ recalls one seasoned physician in
private practice.
What was wrong with that? You made a living four and a half days
a week and half a day you are down at County. It was a good
teaching experience for yourself and a good benefit for the
community. Maybe I have my head in the sand. But, that’s the
way it has been forever ....
In some states, hospitals, in fact, require some sort of public service as a condition
to earn and retain staff privileges at prestigious private hospitals in the community,
explains one commentator. The executive director o f one non-profit community
clinic reports that physicians who volunteer at her clinic derive a great deal of
satisfaction and personal gratification from the experience. “. . . Many of our
physicians love coming here because they don’t have to . . . worry about billing or
not billing or who they can accept and who they have to reject,” she explains.
They just see who we ask them to see here. They get to focus on
practicing medicine. They enjoy that tremendously. They also feel
that the person coming here is really pleased to be getting the
services. So, it’s a win-win. The patients get what they need; the
physicians get what they need.
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Indeed, one health policy researcher surveyed over six hundred physicians on their
charitable motivation and practices. Summarizing the results of her investigations,
she says:
. . . If I have a message, it’s this: physicians feel that if the
workload is fairly distributed, they will share it. I can’t tell you
how many docs have said, ‘I’ll see [indigent] patients for free in my
office. Just don’t send me all o f them. I want to know the guy up
the street is taking some too.’
O f course, financial prudence is essential to a flourishing medical practice
or hospital and other problems such as the dearth of talented physicians and good
quality hospitals in medically underserved areas where indigent and uninsured
patients congregate question the feasibility of the charity model. One sardonic
commentator was absolutely certain, in fact, that medical care rendered voluntarily
had been “outlawed.” Yet, its proponents insist that physicians can and should
donate their skill and expertise to provide care for the poor. Some even propose a
type o f provider or premium tax, model legislation to condition state licensure of
HMOs, physicians, hospitals and clinics on their agreement to treat an allotted
portion of indigent and uninsured patients. ‘The private sector owes the public
sector some of its time, some o f its effort,” says one doctor. “Nobody is entitled
to become a doctor. You are given that privilege. Somehow doctors think they
are entitled to it. Nobody is entitled to it. Society gave you that privilege. Give
society something back!”
Champions of the free market model tender two justifications for retiring
public assets devoted to health care services and contracting with private hospitals
and physicians to provide care to the medically underserved population. Private
hospitals are immersed in their own nationwide crisis, contends one administrator,
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in which a profound glut o f health care facilities and medical providers have
inundated the market. The number o f available hospital beds in the County, for
instance, exceeds the regional demand by 50 to 100 percent. On average, more
than half of all hospital beds sit idle. Given this excess capacity, leaders in the
private sector argue that the County should outsource many o f its medical services
instead of even remotely considering the construction of a new hospital to replace
County General. . . The last thing in the world we need is more hospital beds,”
says the president of, ironically, a now defunct medical provider group.
“Absolutely not! We are talking about closing 40 percent of the hospitals in
southern California . . . over the next 5 or 6 or 7 years. . . . Close down the
County hospital, but, by all means, for God’s sake, don’t build another one.”
Contracting with private hospitals would incur only marginal, or variable, costs for
each incremental patient treated whereas replacing County General would trigger
tremendous fixed costs and impose a new tax burden on the community. Thus, the
cost per unit, measured in bed-days, of caring for County patients in private
hospitals would be substantially lower given the unavoidable debt service and other
overhead expenditures associated with the construction and operation of a new
County facility. Moreover, funds to provide care to the indigent should be
earmarked for individual patients and portable so they could seek care in their local
communities rather than being forced to make pilgrimages to distant public
hospitals, proponents aver. Moreover, the use of voucher systems to permit
access by the poor to vital social services administered by private organizations is
growing, according to the Reason Foundation (14).
Under privatization the poor may not be able to pay for the service
if it is provided by private firms that would charge the full price o f
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the service. The voucher system meets this objection. . . . If the
government feels that a service or good is so essential or desirable
that people should not be excluded from consuming it because they
lack funds, then the use o f vouchers is an excellent alternative.
(Kent 17)
Apart from benefits that would accrue to private hospitals, in the form of
augmented patient volume, supporters of privatization cite improved efficiency and
enhanced quality of care as two inevitable outcomes of curtailing public health
services and contracting with the private sector. Government, they contend, has
never operated successful, thriving entities, alluding to numerous money losing
enterprises such as health facilities, transportation systems and the mail service.
They recount the foiled privatization of public health clinics slated to be handed
over to the private sector en masse as a case in point. “They gave away six itty,
bitty clinics,” says one disgusted County physician. “This was . . . [the Health
Crisis Task Force’s] big contribution? It’s not very impressive.” Another
physician echoes that sentiment: “They have no business in the business o f health
care. They don’t know it. They don’t understand it and they can’t delivery it in an
effective means.” One reason is that incentive systems, routine in the private
sector, are foreign to civil servants. Putting doctors on salaries as is the County’s
policy, for instance, reduces their productivity by at least thirty percent, says one
analyst. Fiercely competitive, doctors, he says, guard their independence
vehemently and quickly lose their incentive to work efficiently if the type of
monetary enticements of the private sector are absent. Thus, dragging the County
system into the enlightened domain of market competition would substantially
expand quality and service as well as efficiency, proponents say. “So, I say shut
that Behemoth down and give the dollars to ten not-for-profit hospitals and just
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watch,” says one leader in the private sector. “The County health care budget will
fall, satisfaction will climb and the world will be a better place!”
At the very least, County hospitals should discontinue their ferocious
competition with the private sector for Medicaid and other insured patients, say
advocates of private sector health care, and treat only indigent patients and those
with very special needs such as trauma, bum or AIDS victims. Section 17000 of
California’s Welfare and Institutions Code assigns statutory responsibility only for
poor and indigent patients who have no other source of medical care, they say.
Thus, public hospital services should be pared down so that only the few remaining
“derelict patients” such as the illegal immigrant, the homeless and the seriously
deranged would linger as unavoidable residue. “Get rid o f all the people who have
insurance, all the people with Medicare, all the people with Medi-Cal,” advises one
physician in private practice. “Get them into the private system. Mainstream that
group and then let the County do what it is supposed to do, which is take care of
the people who don’t have insurance.”
Others are more committed to mainstreaming County patients into the
general private paying population. Instead o f isolating the dregs of society in a
colossal public medical asylum, a rather truculent throwback to the logic of
nineteenth century mental institutions, downsizing public facilities by cutting it up
into pieces and outsourcing some of its current functions to the private sector is far
better idea, many proponents of privatization argue. Most County physicians and
administrators, for instance, are amenable to subcontracting with private hospitals
and clinics to provide primary, outpatient care to indigent and uninsured patients
so long as the secondary, tertiary and quaternary inpatient care stays with the
public facilities. Farm out the primary care, they say, but retain the more complex
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cases requiring specialized attention and treatment in academic centers. For
instance, whereas the private sector is quite efficient at handling routine obstetrical
services, high risk deliveries should be entrusted to more sophisticated public
medical centers. Because they are less profitable, less standardized, private
hospitals, they say, are loathe to provide intricate, highly specialized care such as
AIDS treatments.
Maintaining specialty services at public hospitals will also preserve the
medical training infrastructure. Carving up or dismembering the inpatient system
by outsourcing some medical specialties such as surgery or internal medicine while
keeping a few disjointed and incongruent services, would erode the
interdisciplinary synergies and critical mass o f expertise that normally characterize
academic medical centers. Resident and interns must be provided with a broad
array of complicated injuries and disease processes if their training is to be
exhaustive. Anything less, would put the future of medical science at risk, they
say. And County hospitals are more cost efficient at providing highly complex
care than their private counterparts, supporters say, mostly because of the low
wages they pay to residents and general economies of scale. By retaining these
services, they could bolster their revenue flow by contracting with HMOs and
insurance plans to provide high level care to privately insured patients at cheaper
rates. Besides, diverting enough funds to the private sector for expensive,
inpatient hospital care of the uninsured would require statutory changes in law at
both the state and federal levels, an effort that would ultimately prove to be
fruitless, critics charge. Therefore, privatizing the primary care side of the public
health system is more expedient. The Chief o f Staff of one County facility argues:
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. . . It is unlikely that individual hospitals will be able to bear the
burden o f hospital care, but it is extremely likely that the
community o f physicians and hospitals working together will [be
able to] bear the office-based responsibilities for that population
because they can control access and the price o f service is cheap. .
. . The only resolution to the health problems o f Los Angeles is
some sort o f partnership where the private sector delivers the
primary and preventive care and the County is responsible for the
hospital services that are too expensive for anybody [else] to bear .
On the other hand, leaders in the private sector gravitate more toward a
County system primarily devoted to improving the health o f the general public
through expanded access to outpatient, family health services and preventive care
measures. Correspondingly, private hospitals, with their extra capacity and keen
efficiency, should be handed the responsibility to render inpatient care to County
patients. Champions o f the private sector express doubt that public facilities could
actually secure contracts with commercial health plans to provide highly
specialized care like burn, AIDS or trauma care because County hospitals are
irrevocably dilapidated and superannuated and the scheduled replacement of
County General is too far in the future to materially participate in the volcanic
upheaval predicted to occur in the regional health care geography over the next
few years. In addition, County physicians already tried that strategy when the
University of Southern California medical school faculty joined with National
Medical Enterprises to open University Hospital adjacent to County General.
Intended to be a world class health facility specializing in transplants and other
remarkably sophisticated medical treatments, it now stands empty so frantic in its
search for revenue producing patients that administrators have resorted to direct
mail solicitations to community physicians in an effort to boost admissions, critics
say. In reality, the hospital is jammed, filled beyond capacity so that administrators
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are building an additional one hundred beds. Nevertheless, the great white
elephant built in an era of optimistic exploitation of health care resources smugly
overlooks its shabby partner only one block away faithfully churning out basic
health care resources to its peripheralized clients. These efforts, says one
physician, is enough to scare the “heebie-jeebies” out of her.
Perhaps a better mission for the County is to focus on primary and
preventive care services, say commentators. “Cut the hospital down to half size,”
recommends one doctor expounding on her personal plan to restructure the
County system.
If you have to, lease part of the property. . . . If you have extra
parking lots or something, convert it to commercial use so that they
can get some money off o f that. They should put a lot of their
money into multiple, small urgency care centers. Urgi-cares. The
Doc-in-a-Box type concept. Focus on children, obstetrical care and
simple, outpatient management as much as possible.
Chop the system up into pieces, suggests the medical director of one commercial
HMO, making strategic incisions into its belly and transplanting specific organs to
the private sector corpus. He says of his Frankensteinian vision:
Let me just take one. Let’s say there are three million without
health insurance and there is a certain instance of, say, breast
cancer. Maybe those people without health insurance could be
allotted to the community to take care of. So, now we don’t have
any problem with breast cancer. We solved that one!
Besides, proponents say, the private sector is perfectly capable of handling
advanced disease processes and critical injuries. “. . . I can’t think o f any highly
specialized services, other than maybe transplantation services, that the County
offers, . . .” says one hospital administrator, “that the private hospital doesn’t
already provide. We care for a very high level of acuity in this hospital. You don’t
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have to be a faculty member in order to care for the highest level of [acuity].”
After all, one insulted physician says, doctors in private practice are not exactly
cretins. “The academics have to come down off their high horse a little bit,” he
insists. “They act like once we leave training we become morons the next day!”
The final model espoused by some advocates of privatization universally
enrolls indigent and uninsured patients by regions in HMOs or, alternatively, in
large physician-hospital organizations (PHOs). Envisioned as a kind of “gigantic
risk pool,” it is based on a rational division of labor between local health care
providers, accentuating the strengths of various hospitals, clinics and medical
groups. “Say that a high end liver patient, say it’s a woman,” suggests the CEO of
one private, non-profit hospital,
. . . needs a liver transplant. So, she goes to County for a liver
transplant. It works really, really well. So, one day she is going to
get pregnant and she is going to have a baby. So, maybe she comes
to me for that but goes back there [to County] for the complication
that is going to be related to the management o f the liver disease or
the complications during the pregnancy.
Much like a “super-HMO,” proponents envision a seamless health care system
accessible by indigent and uninsured as well as insured patients. Having already
extended the managed care revolution to part of the Medi-Cal population in
California, if implemented, the HMO model would reach uninsured people up to
some predefined cut-off point based on household income. Often called the “One
Pot Theory” after its central endorsement to consolidate the various programmatic
and categorical governmental funding streams into a single financial vehicle,
sponsors justify the concept using a series of “back of the envelope calculation[s]”
to determine the concept’s plausibility. For instance, they multiply the estimated
three million uninsured people in the County by a standard actuarial index for the
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industry that predicts what a profitable commercial premium for insured patients
would be, a figure that averages $100 per enrollee each month, to arrive at a value
that, they say, is equal to or less than the current budget for the County’s health
department. Thus, it seems obvious to them that the HMO model is both fiscally
and structurally sound. It is good public policy, according to the chief executive of
one HMO, especially given the managed care industry’s superiority in quality,
accessibility, clinical and programmatic innovation and efficiency.
A minor variation in the model would bypass HMOs and have the
government contract directly with large medical associations comprised of
physicians and hospitals, an arrangement, called a Provider Sponsored Network
(PSN) that is already in place in some parts of Wisconsin as well as nationwide for
Medicare patients. “Why on earth would anybody go to an insurance company
and have them take twenty-five percent off and have them pass the money on to . .
. us when they could just go to . . . us and do it directly,” inquires the leader of one
large medical provider group. “The only thing that stands in the way is a law that
five major employers in the country could get changed overnight.” Although
supporters of HMOs argue that managed care plans add value to the health care
market by creating and marketing the “product,” putting provider netowrks
together, many see HMOs as parasites drawing off precious health care resources
from the medical economy and not providing any services o f importance in return.
The triviality of their reason for being is evidenced by the facility of their inception,
as one critic describes in detail in a lesson on how to create a managed care plan at
home:
What is an HMO? You could start an HMO in your garage. All
you need is a computer, a doctor, a nurse, some clerks and a
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telephone. You contract out the sales. . . . When I first started on
health insurance when I went to work, I got an indemnity policy
from Aetna with a million or two million [in] coverage. In the
1950s and 1960s that was big money. You would die before you
would have those kinds o f medical expenses. The insurance
companies took the money they got from all the premiums and . . .
they covered the risk. HMOs don’t do that. HMOs just make
money. .. . For every one thousand people every month, [I collect]
$80,000 at the beginning of the month. . . . So, now I have
$80,000 to start the month in the bank. Let’s say my cost to
operate this thing is 10 percent [or] $8,000. . . . So, let’s say I am
going to give the primary care physicians $15,000. . . . So, I have
now spent $23,000 out o f the $80,000. I have the rest in the bank.
. . . The bills won’t come for three months from the specialists. . . .
So, I have money always in reserve. I am saying that between the
capital I raise in the market place and the money that you give me
up front, I can finance this puppy.
Thus, it is more efficient, detractors of managed care organizations say, to contract
directly with large provider groups and dodge the sponging tactics o f HMOs. In
any case, either scenario accomplishes roughly the same goal: privatizing County
services by consolidating fragmented funding vehicles and directing that revenue to
a streamlined system o f managed care organizations in competition for previously
uninsured patients in predetermined geographic areas.
All four of these models express a desire to privatize part or all of the
County health system either by using volunteers and charitable donations, diverting
current funding to insurance companies or managed care plans or carving up the
aggregate system of care into small, discrete units to be reassigned to the private
sector. All envisage a more interconnected and seamless system of health care for
indigent and uninsured patients, implemented by way o f a renewed commitment
between competitors and enemies to re-anneal the shards of a shattered health care
system and forge a cooperative alliance, a rational, collaborative well-oiled health
care delivery tool.
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Yet, critics abound, not in opposition to a harmonious partnership among
medical providers, but to what they see as a particularly destructive hankering to
collapse what has been the centerpiece of the regional health care economy over
the last century. Public hospitals and clinics, they say, have always been the
engines of excellence driving the shape of the medical community and catalyzing
change in clinical algorithms and organizational progress, and, as such, are
indispensable to the local landscape. Shutting down public hospitals, they say,
would create three profound threats to public cooperation and harmony, to
individual stakeholders and to the financial integrity of the health care system.
Despite the private sector’s sanguinity about privatization, supporters of
the County system predict foreboding effects of such a maneuver. Exporting a
swarm of indigent and uninsured patients to the private sector, critics contend,
would spark a culture clash of immense proportions. It is one of those
pollyannaish fantasies of a brighter future without the chains of government
bureaucracy to fetter private sector efficiency and creativity that free market
mongers like to indulge. A central myth common to revolutions of all types, it
yearns for a return to the golden era o f health care delivery. Yet, as one private
sector executive points out referring to the “One Pot Theory”:
One of the problems o f a revolution is knowing what you are going
to get on the other side of it. I don’t know if anybody could tell if
you ripped it up like that and put it into one big pot. No one group
would control the outcome. That would be the result of
tremendous, tremendous political battles ....
Those battles would further divide the medical community, critics say, rending
whatever is left of its moral fabric. Hospitals would be hard pressed to overcome
those cultural barriers given their relative inexperience in tending to the poor, and
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patients would suffer. “They will get beaten up [and] trashed,” foretells,
surprisingly, one private sector executive.
No hospital will take care o f them unless it becomes a totally poor
person’s hospital. The people are difficult to take care of, they
don’t usually speak English, [and] they don’t follow directions.
Healthcare is different for these people. . . . It comes right behind
whether the refrigerator is working or not. . . . It has to do with an
emergent situation that is in the middle of my life [while] I am
trying to dodge the INS and everything else ....
The privates do not really understand what they are getting into, observers say.
Perhaps they have the capability to deal with a slow trickle of indigent and
uninsured patients as they do now, but a torrent of low income patients would
crash over the carefully erected dikes of the private sector if County facilities
closed. A critical mass of low income patients, even with funding, would
overwhelm and quickly topple the private system. They would be relatively inept
at diagnosing complex and exotic donations, bewildered over what to do with the
“unwashed and crazy” storming their front doors and quickly discouraged at the
tortuous mechanisms of funding indigent care. On the latter point, one physician
tells a particularly frustrating story:
When I started in practice, I took Medi-Cal patients . . . [but]
stopped seeing Medi-Cal patients for a number of years, not
because I didn’t want to treat these patients, but because o f the way
I was being treated by the State. The turning point for me was the
time that we received a three thousand dollar check for services we
had not rendered and we promptly sent the check back . . . with a
small letter that said, ‘you sent us this in error. Here it is back.’ It
went back into the system and the next thing we knew, we got a
demand for the check to be sent back. We said, ‘we’ve already sent
it back.’ They said essentially, ‘oh yeah, prove it.’ We couldn’t.
So, they proceeded to deduct three thousand dollars from our
payments in increments until they got the whole three thousand
back. . . . So, we had a big hullabaloo in the office about this and .
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. . at that point I said, I can’t take this anymore. . . . We were
constantly being viewed as criminals who were out to rip off the
system. . . .
Mainstream patients with commercial insurance are repelled by low-income
patients, some observers remark, further exacerbating the disharmony and factured
unity privatization gurus seek in a blended system. Private patients start
“gravitating” to remote comers o f the waiting room shrinking like violets from the
harsh visages o f the poor. “We all recognize that Medi-Cal patients are frequently
difficult to handle . . . , ” remarks one physician.
You wonder . . . did they fall on hard times because they were
obstreperous . . . or did they fall on hard times and then become this
way? But, they definitely have a different affect when they come in
the office. They can be difficult. . . . All o f us doctors know that.
To avoid these embarassments, many physicians refuse to see Medi-Cal or indigent
patients. Others find ways to accomodate them. The chief executive o f one
statewide health system recalls his experience with one medical clinic in downtown
Los Angeles who thought it had discovered a convenient marketing gimmick to
retain its private paying patients while serving low-income Medi-Cal patients:
They had a lot of the executives that would come in for physicals
because they had a real good program with an indoor running track.
But, since it was downtown, they had a lot of indigents and
Medi-Cal. What they did was, you had the same check-in place.
But, if you were on the Medi-Cal program or were indigent, you
would go to one waiting room and if you were a private pay you
would go to another waiting room. Because what they found was
that with Medi-Cal [patients], mom may be sick, but she brings
three or four of her kids in because she can’t afford babysitting. . . .
So, they built this waiting room with toys and indestructible things
so that the kids could jump around. Over here, you had the private
pay that could read a magazine without footballs flying across their
heads. Then, the County or the State came in and said that is
discrimination. They would check-in at the same place, wait in
difference places but see the same doctors. [But] to me, that was
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just taking care o f the customer. I think the Medi-Cal mom with
five kids there didn’t have to be as concerned with them running
around, jumping around breaking things. So, probably if you
surveyed the Medi-Cal mom she would rather have been over there.
In fact, maybe they had kids who were playing with their kids so
she could sit and read with a magazine. . . When they had to go
back to one waiting room, they started losing some of their private
pay patients.
But advocates of low-income patients call that “institutional racism,” pure
and simple. To suggest that poor people on Medi-Cal are somehow dysfunctional,
crippled by a “culture of poverty” pervasive in their ghettoized communities or to
“accomodate” them in a fashion that stigmatizes them as different from other
patients is derisive and contemptuous, they say. “I come from a below the poverty
line background myself, incidentally,” says the president of one large medical
group obviously provoked by what he sees as bigoted stereotypes. “Worked in a
nickle mine. I put myself through medical school. I didn’t become dysfunctional.
. . . I grew up on an Indian reservation. . . . It’s patronizing, arrogant and totally
self-serving to use that adjective.” And the culture war is omnipresent, critics say,
inculcated even in the minds of physicians who, for example, in the private sector
are more skiddish of taking care o f ADDS patients, partly engendered by a furtively
harbored homophobia, according to one oncologist. Yet, these protectorates of
poor patients know that the stereotypes and disdainful attitudes are pervasive,
many times coupled with “illustrative” stories as evidence. One such tale is told by
a physician with no small humor:
I think about an Armenian man that I had for cataract surgery many
years ago. . . . He was put in a three bed room. He was not
indigent; he was private. The two patients on either side were
indigent. They proceeded to get into a fight and were throwing
things like bed pans and water pitchers across his bed at each other.
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He said this shrapnel, if you will, was flying around in that room. I
just thought, this is kind of the thing that you have.
Like Jesus and the two thieves on the cross, so are the comparisons made
between private paying, well-insured patients and low-income Medi-Cal and
uninsured patients. Yet, those hackneyed images only splinter the medical
community and their patients further, ultimately ennervating political and public
will to fund health care for indigent and uninsured patients. As medical services
are privatized for the premium poor, critics suggest, the residue left for County
hospitals will increasingly be the undesirable slag of the poor population. And as
the public sector shrivels to a mere shadow o f its former self, the willingness on the
part of the politicians and the general public to continue to devote taxpayer
revenues to this human sediment will wither as well. In short, the “political umpf,”
as one observer calls it, to fund indigent health services and keep existing
government facilities operational will be lost. County supporters exhibit a
profound distrust of funding based on general revenues garnered from the annual
tax cycle. When the economy plummets into a recession, resolve to fund health
care for the poor will be even further dampened. Paul Feldman, in his book on
medical economics, echoes that belief. Although he advocates for subjecting
Medicare eligibility to a financial means test, he fears that the loss of the program’s
universal coverage for the older population will disincline politicians and the
well-off to continue it, making the poorer segments of the elderly population more
vulnerable to exclusion. The experiences o f San Diego and Orange counties are
instructive o f the tendency to cut off public funding for projects deemed unworthy.
“It has just been disastrous,” says one health policy expert. “The reimbursement
rates for County patients in San Diego run three to four cents on the dollars. So,
once the County has off-loaded the patients, they don’t send the money.” The top
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executive of one health system in Orange County agrees, exploding the prevailing
myth that these two counties have resolved their indigent health care problem by
shutting down their public hospitals and funding the private sector:
People think Orange County is just Disneyland. But as I look
around I would estimate . . . [that] there is probably about a million
people that we would view as medically poor, having difficulties in
getting access to care. Fifty percent of the children in this County
do not have a regular source o f care and have not seen a dentist in
one to three years. There are over one hundred thousand children
that go hungry everyday. All of our indicators on violence and
drug abuse and those things show that they continue to go up yet
everyone is looking for a way to cut costs and get rid of
government programs and safety nets that are critical to helping
these people and it's not getting any better. . . . I think Orange
County government spends the least per capita on public health and
health care for the indigent. I don't think that that is a good model.
Thus, the health system in Los Angeles, supporters contend, requires a
creative balance between public and private institutions to ensure stability and
continuity of care for all the region’s residents. One top official of the health
department, in fact, is committed to developing a blended system by
“simultanously fostering cooperation and fostering competition” in an effort to
“send a message inside the organization” that the “coin of the realm” is now
double-sided. On one side is the public sector’s bust; on the other, is the graven
image of private sector institutions.
Yet, privatization also strikes fear in the heart of the myriad stakeholders
whose interests are invested in the County’s public health care system for the
long-term. Employees, for instance, are a predictable target of privatization. In
fact, in a study conducted by the Reason Foundation on privatizing social and
health services, over 65 percent of counties surveyed reported labor problems as
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one of the most significant barriers (13). In Los Angeles County alone, over 3,500
employees have been laid off and, if some services are privatized, that number
could grow. And labor advocates point to the historical tradition o f municipal
works programs as valuable tools for economic justice. “. . . Municipal patronage
jobs have been the gateway to the mainstream economy for several waves of
immigrants and minorities,” writes John Donahue in his book on privatization.
‘T o insist that nothing matters in public service delivery but the raw dollar cost is
to adopt a needlessly narrow view of government” (145).
In addition, medical training and research could be seriously compromised,
critics of privatization say, two functions which are crucial to the future survival of
medicine as a profession. “There is some evidence to show that training centers
have better quality care,” says one physician. “There is commitment to the
community and commitment to the profession. . . . Having students around,
having a teaching program, having medical conferences improves the quality of
care . . . ” Moreover, housing training programs in public hospitals provides
good, cheap “clinical material” for training. It is, as one physician points out, it’s
much more “cost effective” to experiment on the poor. You learn more, another
insider says, when you “ride by the seat of your pants” in public hospitals where
case loads are staggering and faculty supervision has difficulty keeping pace. “But
once you move to a private hospital,” says one County physician, “then things
change a little bit. It’s not as easy for young residents to get educated, to be
taught, to have hands on experience when they are in private hospitals.” A solid,
sweeping infrastructure comprised of a “certain corpus” or inpatient and outpatient
activity, faculty and research endeavors is required for a truly integrated learning
experience. Logistically, marshalling those kinds of resources under one roof in
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the private sector is questionable, critics say. On the other hand, Medicare is
cutting back on its funding for graduate medical education and HMOs are not
contributing. In fact, the incentives of managed care, focused on cost savings and
conservative practice styles, are actually diametrically opposed to those in teaching
aspiring physicians, focused on learning a broad range of diagnostic procedures
and therapeutic techniques. In addition, proponents of privatization argue that the
future of the medical profession will see a severe downsizing of specialists.
Doctors should be trained in physicians’ offices not in large university or County
hospitals. Nevetheless, their detractors insist that such logic is mythical. As the
population ages more complex health problems will appear even with adequate
prevention and primary care and as the indigent and uninsured are increasingly
given access to health services in a timely and comprehensive fashion, latent health
problems will emerge. Thus, training and research, even in a specialized
environment like public academic medical center will be critical functions in the
future and, for that reason, must be preserved.
In addition, just closing down County General would produce an
irrevocable shortage of emergency room visits in the County. A gap of over
300,000 visits, some data suggests, would result and studies suggest that the 30
percent deficit in the supply of trauma capacity in the County would never be
replaced in the private sector. Because trauma services are critical to the health of
the voting middle class, it “stands as a powerful argument against defimding”
County General, argues one health policy expert.
Most disturbing, however, are the negative effects that poor patients will
experience as a result o f privatization and curtailment of publicly provided health
services. The best patients will be cherrypicked and skimmed off of the top of
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available pool, especially under the HMO Model. “There is no social utility
whatsoever to managed care,” maintains one physician. “It’s just a convenience
given to Corporate America. We are going to reduce the growth of this particular
bottom-line cost [health insurance premiums] at the expense of tremendous
damage to the health economy.” Uninterested in helping to fund uncompensated
care and medical education or reserach, their sole focus is on profit-making. Many
are opportunist fly-by-night organizations going bankrupt at alarming rates and
abandoning their patients, dumping them back onto County systems. Maxicare, in
California, and Oxford, in Connecticut, are but two examples of HMOs pulling out
o f state contracts to arrange care for low-income Medicaid patients. “It bodes
very poorly for the level of commitment that both the plans and the state have for
programs,” said one poverty lawyer in an interview with the New York Times.
“The state should not allow plans to come and go as if what they were doing was
selling furniture, not health care” (Fisher, February 26, 1998 Bl).
On the other hand, managed care gurus call all the HMO criticism trumped
up “malarkey.” “I’ve gone from being called a left-wing socialist in 1969 when I
joined Kaiser Permanente,” says one high ranking official in the organization, “to a
robber baron in 1996. . . . All this stuff is mythologized. I’m just a physician
trying to take care of my patients and my responsibilities in a just, fair way . . . ”
Managed care, says another advocate, is a perfectly rational and just system in that
it merely aligns financial incentives among risk takers in a chain that extends from
the individual physician to the health economy as a whole. It refocuses attention
on preventive and primary care and away from expensive specialty care, and, in
doing so, arrests the progression or initiation of chronic disease processes and
reallocates funds in a more equitable way, away from the last few weeks of life
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towards the overall health of a defined community. Finally, proponents argue that
managed care is superior to the traditional fee-for-service system as the latter
encourages dangerous and potentially deadly overtreatment. “There are perverse
incentives anytime there is money flowing . . . remarks one HMO representative.
People have the idea that more is better .... Is more to eat than
you should eat better? No. . . . Is more money than you should
have in a family healthy? Ruins the offspring of the guy who made
it. . . . With doctors, you want more because we grew up in an era
where science and technology and more tests [was a sign o f good
medical care], . . . Everybody was making money on it. . . .But,
now that money is not available. . . . People have to apply some
discipline. . . . Honest discipline.
Critics of privatization, however, remain unconvinced. “Privatization is
bullshit,” exclaims one County doctor. For him, it is an inescapable signal that the
system is “out of control.” The incentives are just simply perverse because they
encourage undertreatment, fabricating an intolerable conflict of interest for the
physician, as one doctor points out:
It would take a saint to be able to sit across the table and say, ‘you
know, you need a gall bladder [operation] but you’re not [real] sick
and you are going to cost me eight hundred dollars if I take your
gall bladder out. But, if I don’t take your gall bladder out, it won’t
cost me anything and I would keep the eight hundred dollars. It
would take a saint to [not be influenced].
In addition, experience has shown that Medicaid patients do not do well in HMOs.
They have trouble maneuvering within the system and advocating for themselves
to ensure that they receive appropriate health care services, says the medical
director o f a non-profit clinic. One health advocate recounts an illuminating story,
shedding light on the precarious ground the “One Pot Theory” and other
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privatization schemes create for poverty health systems by jeopardizing patient
care through the inevitable use o f skimming and dumping tactics:
I've had horror stories. I had a client bring me a baby. She was
actually coming because there was a housing problem, some
habitability problem in the house. She wasn't my client; she was
seeing a housing paralegal. I walked down the hall and I heard the
baby crying. You could just tell from the cry that the baby was
really sick. So, I went into the office and I looked at the baby and
the baby looked horrible. I said, ‘you have to go to the doctor
now.’ She said, ‘oh, we just came from the doctor.’ They had gone
to their [managed care] plan in Pacoima and had been told by a
person who came out in a white coat who they thought was a
health care provider that it was Friday morning and there was no
doctor and they should bring the baby back on Monday. I said, ‘no,
this baby can't breath. This baby is really sick. Go to the hospital
immediately. Call the plan from there and tell them. Just go now.’
The baby almost died. The baby was in intensive care for like eight
days, had been to the fucking plan, and had been told to come back
in three days.
Because of the clear and pronounced threat to stakeholders such as
patients, employees and physicians in training, supporters of the County health
system press for a dual system to balance not only creativity and flexibility with
efficiency, on the one hand, but also to stabilize the system with an equilibrium of
power. . . What I see business do in the name o f the dollars is make decisions
that are not in the public good,” says one private hospital executive. “Therefore, I
do not trust business without a public option . . . .” A County physician is more
specific, outlining what he sees as the phantasmic aftermath if Medi-Cal and
indigent patients were impetuously enrolled in managed care plans with reckless
abandon, heedlessly disregarding the potential consequences.
Once we have dismantled the County public health support facilities
in favor o f these HMOs and then reduce the payment levels to those
HMOs to the point where they can’t survive and they are no longer
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going to be viable,. . . I think you can have a lot o f disenfranchised
people that don’t have any access to any care anywhere.
Thus, tipping the scales in one direction or another, in favor of private or public
health care organizations, is imprudent, analysts say. A significant loss o f public
leverage could trigger the erosion of government’s ability to keep all health care
avenues open should the private sector collapse in part or reneg in part on its
social, legal or moral responsibilities. In fact, one study found that almost 60
percent of all counties surveyed reported the loss of control as one of the most
significant barriers to the privatization of health services (Eggers 13). And William
Shonick, in his study of contracting out the management of public hospitals to
private firms, expressed similar concerns:
As long as we are dealing with autonomous public and private
hospitals, with none having overwhelming power to determine
health policy, the argument about how to organize health care can
continue. But if the private hospitals are organized into
oligopolistic blocks, and the public hospitals are destroyed, all by
the hidden workings of a poorly understood fiscal system, the
nation may be permanently prevented from making a conscious,
rational decision about the organization of its health services. (Ill)
Finally, privatization also threatens the financial integrity of the overall
health system in Los Angeles, critics suggest. One o f the first oddities of the
intergovernmental financial relationship unearthed by the Health Crisis Task Force
in the summer of 1995 is that the health department’s budget works on the
principle of financial leverage. Because County dollars spent on health care
activate funding streams from the State and federal governments, public officials
operated a $2.2 billion health system on $159 million o f County funds, a figure
representing less than 8 percent of total costs. In 1998, that figure jumped to
almost $4 billion with the County contributing a paltry $438 million or 11 percent
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o f the total. Conversely, for every dollar the health department is able to save in
curtailing services and laying off employees is matched with a $3 to $5 parallel loss
in federal and state matching funds. “We did an analysis once,” says one health
department executive. ‘W e wanted to cut $80 million out o f one o f our hospitals.
. . . [But] when you take the $80 million out, you are saving the County [only] $27
million .... The rest is going back to the State and federal treasuries.” In
addition, much o f the cost o f running hospitals and clinics is fixed overhead and
cannot be trimmed linearly with cut backs in services, which are variable costs. As
volume increases, the cost per unit decreases because the fixed costs are divided by
the number of patient visits. Service curtailments, then, may actually stimulate
losses for the County if they diminish or erase what accountants call the
contribution margin made by those services to the fixed overhead expenses. Thus,
privatizing County medical services, if not accomplished thoroughly and fully,
would actually tender negative savings for the County.
Moreover, other practical exigencies thwart wholesale attempts at
privatization. Besides being statutorily impossible, given the current legislation
stipulating the circuitry o f health care funding for the care o f indigent and
low-income patients, the utilization rate of hospital beds by indigent patients is
much higher, almost two-hundred percent more, than for the commercially insured
population, making the amount of funding received by the County from State sales
tax and vehicle licensing fees a much smaller revenue per day figure than
anticipated by vindicators of the private sector, says one high ranking health
official. Also, since low-income patients use disproportionately more hospital days
than the general population, the actuarial calculations estimating how much it costs
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to deliver health care to a typical adult covered by a managed care plan are
understated for the County’s patient population.
In sum, there is not enough money to register every indigent and uninsured
person in the County in top flight managed care health plans, insiders say. “Let’s
say that we are going to insure the uninsured,” says one senior executive o f the
health department, playing devil’s advocate against his private sector opponents.
Simple enough. Insure the uninsured. If you wanted to buy every
uninsured individual the cheapest HMO price in the L.A.
marketplace today— $100 per member per month— you need almost
$3.25 billion in annual purchasing power to cover everybody. . . .
[But], the amount o f money that is in the public system right now
to pay for health care for the uninsured, indigent population is
about a billion dollars.
Out of the County’s $2.2 billion FY 1995-96 budget, $400 million was
appropriated for strictly public health services such as restaurant inspections,
epidemiological surveillance and other non-medical health services. Around $1.2
billion was received from Medi-Cal for the treatment o f low-income patients of
which only $500 million was from the disproportionate share hospital program
earmarked for the treatment o f low-income, uninsured patients. Finally, $400
million was allocated from State coffers as the County health department’s share of
sales tax and vehicle licensing fees for the purpose o f caring for indigent patients.
In summary, out of a $2.2 billion budget, only $900 million is allotted for health
services targetted for indigent and uninsured patients. Besides, critics say, it
would be a logistical nightmare to enroll uninsured patients in managed care plans
with any consistency or continuity. “There is no way to go around town and
identify and register all indigent patients for that kind o f a program,” says one
health policy expert. The sheer number o f uninsured— 3 million— coupled with hard
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to identify and difficult to reach groups like illegal immigrants, the homeless and
the mentally ill would make such a plan unworkable.
Lastly, the soundness and integrity of the system in the interim is
threatened by sweeping and indiscriminate privatization failing to consider the
short-term effects of long-term massive changes. Some detractors of the County
even sanction indolence on the part of State and federal officials and are obdurate
in proscribing a financial rescue package, believing it better for the public system
to “crash and bum.” In short, they take a “tough love” approach, refusing to
intervene until after the system has been completely decimated. “We used to
compare it to a really large animal that was dying, like an elephant or something,”
says one observer.
It would take its trunk and slam things and kill other things in its
way and just have a wide path of destruction. . . . So, it would
wander here and kill of what was there and then wander over there.
I said, ‘because this thing is swinging so wildly, maybe in some
ways it would be easier if it would just die and then you could build
what you need to out of the ashes.
Others are horrified at such a prospect, claiming that patients would suffer
tremendously during the system’s excruciatingly slow death. “You can’t just turn
off the hospitals,” says one County defender. “You can’t just turn off Big County
.... You can’t just turn off the ventilators. You can’t just turn off the people
there.” For another physician, the destruction during the transition period would
be inconceivable:
We cannot subscribe to an idea that we have invested this kind of
resources and money in twenty to thirty years in building up the
skills o f medical delivery . . . [and then] sort of say, ‘well, let’s
forget about that and let’s start anew without figuring how we are
going to carry ourselves through.’ . . . By all means, change it, but
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don’t cut its throat and walk away and then discover that you can’t
replace the cow who you just slaughtered.
For instance, one of the dangers experts forecast is the approximately 25 percent
reduction in private hospital beds expected to result after 2008 when hospitals will
be forced to either spend millions in retrofitting their buildings to meet earthquake
standards or shut their doors. When this happens, one policy expert argues,
private hospitals . . . will be writing their own charges for managed
care companies, making good profits and no longer [be] interested
in marginal Medi-Cal rates. [The] County will be left high and dry
without its own ability to take care of patients.
Thus, given the negative social, fiscal, programmatic and systemic
consequences of privatization, opponents insist that, rather than dismembering an
effective, functioning, albeit inefficient system, reformers should instead strive to
strike a balance between public and private, between accountability and creativity,
between stability and flexibility. Instead of looting and burning the village clinic,
observers say, they should be building a series of fiscal and regulatory bridges
between them and gathering a cooperative and harmonious coterie of providers
working in tandem to solve the problems of the medically underserved.
Reason versus Revelation: Visions to Depoliticize County Health Operations
A second cadre of reformers trumpet their claims for an improved, efficient
health care system, but rather than advocating free market privatization of County
health services, they postulate that a health system liberated from bureaucratic
shackles and unhitched from governmental obstructions will be more rational,
sensible and efficacious. The County, they say, needs a structure that is both
disinterested and capable of bracketing its political and economic self-interest to
make decisions that positively impact the health system as a whole. There needs to
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be some “sober-minded management,” says one observer. In effect, what is
needed, proponents claim, is a health authority, a public benefit corporation that is
at once apolitical and competent to make medically appropriate, instead of
politically appropriate decisions. It must be suitably independent from the Board
of Supervisors, granted its own budget and bestowed with full authority to make
decisions in the best interests o f the aggregate health system subject to ratification
by the Board. During the crisis in the summer of 1995, in fact, the Board realized
its own ineptitude, recognized the advantages of the kind of political “cover” such
an entity could provide and appointed the Health Crisis Task Force, establishing a
sort of precedent for a health authority to follow later on. “They voluntarily, for
that month,” recalls one insider, “gave away some power . . . .”
Some are pessimistic about the process, calling the structure another silly,
bureaucratic “waste of time.” But most are neutral, skeptical in the sense of an
agnostic patiently awaiting the evidence of its effectiveness to be revealed and
conditioning their opinions on the empirical results. “[It] depends on what it ends
up being,” says one observer.
I think a health authority could be good if it is far enough away
from the ruling arm o f the Board of Supervisors .... If this body
could be representative enough so that it could function like a
Board o f Directors [for the health system] and truly be responsible
for this delivery system . . . so that the Board couldn’t overturn [its
policies] just based on personal ego or political whims, it could
work.
In an era of cautious experimentation, then, framers of the health authority
proposal lobbied for merely a quasi-autonomous, instead of a fully independent,
health authority both because the latter would have required an Act o f the State
legislature which would entail a “lengthy and contentious governance debate” and
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the former represents a more incremental process more amenable to the public
accountability that must be preserved in the face of the monumental changes
envisioned by the drafters (Margolin 10). Nevertheless, they are convinced that
even a quasi-autonomous health authority would succeed in detoxifying the health
system now steeped in a thick political culture. To guarantee that outcome, they
created two checks in their proposal, first, that, unlike the current cronyism of the
hospital commission, members o f the Authority would be appointed as a seven
member package by a nominating committee that itself was to be chosen by the
five Supervisors, the Director of the Department of Health Services and the Chief
Administrative Officer o f the County, and, second, that all recommendations made
by the Authority must be ratified by the Board as a package. No line-item veto
was to be permitted.
Yet, others want to go further. Expressed, surprisingly, by several leaders
in the private sector, the proposal for a Health Authority would mirror a public
utility or neo-corporatist model in which all health care policy, both that forged in
the public as well as the private sectors, would fall under the aegis of that fully
independent governing body. It would be delegated the authority to create health
care delivery monopolies accountable for ensuring universal access, setting
reasonable rates and fees, distributing medical resources and assets equitably
across providers, regulating insurers, and approving reasonable capital
improvements and construction o f new health facilities within its jurisdiction. In
return for that power, the Authority would set policy in the public’s interest and
construct a common forum to solicit rational discourse and decision making
discussions, according to one advocate. Vulnerable to charges of governmental
largess and paternalistic impulses, such a structure is an improvement over the kind
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of de fa cto monopolies that have infiltrated the so-called free market of health
care. One supporter explains:
What has happened now is what are called monopsonies; in lieu of
being collusion o f the sellers, it is collusion of the buyers. But, it
has the same consequences. A hundred years ago, the railroad
monopolies and the banking cartels and so forth were obviously
evil. Well, HMOs that are consolidating their power and giving
non-negotiable, take-it-or-leave-it, squeeze-you-until-you-bleed-
type contracts . . . [is] the same kind of abuse. The collateral
consequences to the public are the exacerbation of health access,
the threat to the viability of essential institutions, the threat to the
viability of academic institutions. It’s abusive. It’s just slightly
different so people, politicians particularly, haven’t perceived it as
having substantial similarities to the monopolies of a hundred years
ago. At some point they will wake up. The economic arguments
about utilities are arguments we already visited about the virtues of
the marketplace. I think the virtues of the marketplace should be
kept out of health care because health care should be universal and
that is not what the market says.
Others pressure for an overhaul of the County Charter to permit the election o f a
County Mayor or Chief o f Executive in an effort to transcend the shortsighted
vision and petty squabbles of a divided Supervisorial Board and refract a new
vision, bending it towards a wholistic vision for the entire community. In short,
what is needed in the uneven, maldistribution of the current health care market, say
advocates, is a more sagacious allocation o f resources and an emancipation from
the slavery of irrational politics in order to bring medicine back under the umbrella
of authentic public control.
The rootstock o f these arguments is a longing for rational planning and a
sensible organization and mobilization o f medical resources for the good of the
entire community. It is a utopic vision and an unabashed ideological banner but
one adherents cling to ferociously. “Keep politics out of health care,” barks one
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zealous physician shouting his war cry. Health care decisions, they say, must be
separated from political decisions otherwise the medical system will suffer from a
myopic, short-term perspective tied to election results and the talismen of the
pollsters’ stock in trade. Politicians alter their views to fit prevailing public
sentiment more frequently than the wind shifts direction, critics say, driving an
often irrational mobilization o f health care resources and forging health policy that
is not in the best long-term interest o f society. As evidence, those who spurn
politics point to how unions encumber progress or how the illogical method of
downsizing used to layoff patient care workers in the County health system,
instead of administrators and bureaucrats, is politically motivated. ‘I f you were
making decisions on a medical basis,” suggests one observer, “you wouldn’t fire
worker bees. You wouldn’t fire nurses.” A particularly virulent strain of
gerrymandering, as one commentator suggests, the politics is culturally and racially
divisive, an outcome that negatively impacts patients and their families. “We don’t
seem to be able to get beyond the next election to look at the long-term,” laments
one physician. “I don’t think the leadership o f the city has gotten .. . much
beyond the special interest group involvement.” One administrator is so frustrated,
she has resorted to praying for an illusory “benign dictator” to overcome the
bureaucratic and political friction in the system. ‘1 would like to be in charge,”
exclaims another observer. “I know, medically, how to prioritize. I would like
somebody [in charge] who knows that and who has the commitment and right
attitude and spirit to be linked up with somebody who’s fiscally responsible and
ju st be empowered.”
Yet, efforts to depoliticize publicly provided services have several potential
pitfalls, snares even more escape proof than those set in the political landscape.
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For instance, an overarching Health Authority, even one not fully independent of
political structures, is a hair trigger for further competition between the public and
private sectors, cliquish elitism and self-dealing by members of the purportedly
non-political governing body. For instance, a kind of “esprit de corps” or implicit
comraderie between the regulating body and industry leaders could develop,
threatening the impartiality of the Authority’s decisions. After all, its members
would be drawn, at least in part, from the same pool as those being regulated. Old
time acquaintances and collegial attachments could raise the spectre of favoritism
and inequitable treatment. That a government agency could be “captured” by an
industry is “hardly surprising,” argues James Freedman,
given the facts that administrative agencies and those whom they
regulate have certain kinds of advantages each over the other, that
employment opportunities generally move from both agency to
industry and industry to agency, that long-term dealing with the
problems of an industry inevitably leads to a greater sympathy and
understanding for the industry’s attitudes, and that living on terms
of harmony with one’s formal adversary is, for many regulators, a
more comfortable and rewarding way o f professional life than
engaging in perpetual combat, however sublimated it may be
beneath the forms of legal actions. (58-9)
And, in a 1997 report to the House Republican Task Force on Privatization by the
U.S. General Accounting Office (GAO), government officials surveyed on their
efforts to privatize public services almost unanimously conveyed that independent
oversight of the process by a unit outside the government agency in charge is
critical to its integrity (18). In addition, a kind o f elitist cabinet to govern the
vast health care system in Los Angeles would alarm more than a few thinkers. “I
guess I don’t like the idea of having a dictatorship prevail. . . or a small, exclusive
council. . . , ” says one health care executive. Instead, she would want to broaden
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the discourse in a forum inclusive of all providers. ‘1 think you have to bring
representatives from a ll sectors of the delivery system to the table and say, ‘this is
our situation. Let’s put all of our bright heads together and solve it.’” Indeed,
American culture has always been wary of intellectuals, marked by periods of
pervasive resentment.
Woodrow Wilson, surely one of the most intellectual of American
politicians, asserted during his 1912 campaign for the presidency:
‘What I fear is a government of experts. God forbid that in a
democratic country we should resign the task and give the
government over to experts. What are we for if we are to be
scientifically taken care of by a small number of gentlemen who are
the only men who understand the job. Because if we don’t
understand the job, we are not a free people. We ought to resign
our free institutions and go to school to somebody and find out
what it is we are about.’ (Freedman 48)
Indeed, social engineering, or its euphemism rational planning, seem to most often
be advocated by those want to actually remove rational discourse from the political
process, thereby subjecting it only to a small number of elites and, unintentionally,
alienating the public and democratic institutions from the process, institutions
which, under this logic, are mere conduits for ochlocracy. “It’s got to be folks like
me,” chirps one CEO of a private hospital. “It really does . . . because we are the
experts.”
Yet, the combination of policy and self-interest is tantamount to an
egregious conflict of interest. If the members of the governing body are to be
tapped from the same crop of local health care leaders, by definition, they would
theoretically be in a unique position to self-deal and parcel out various treats to
themselves and their associates. Furthermore, the proposed Health Authority
would be particularly susceptible to political strife. Now, the reins of health care
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administration have been transferred from a bureaucracy directly accountable to an
elected body, on the one hand, to an independent council treading on more equal
ground as the Supervisors. The kind of hard-nosed vigilance required to keep any
bureaucracy from taking liberties with its power would be washed away in the ebb
of “political cover,” and council members could actually wind up competing with
the Board for the loyalty o f various political constituencies in efforts to pressure
Supervisors to go along with and enact sundry proposals purportedly
recommended on behalf o f the community but which really are in the exclusive
interest o f the health care organizations that are piloted by members o f the
governing body.
Politics is ubiquitous, then, inescapable, rightfully permeating every avenue
of public life. Self-dealing, elitist self-interest, the inevitable apparition of political
gamesmanship to foist profitable policies on elected officials and, in return,
politically dominate the Health Authority by stacking its membership and
informally manipulating its decisions in closed-door sessions are all possible
outcomes of depoliticization. Health authorities have never worked, argues
William Shonick, as evidenced by their decline in New York, Chicago and
Indianapolis (92), and, as Theodore Litman points out in his textbook Health
Politics and Policy, “the future role of government in health will be the product of
politics with respect to the nation’s social, political, economic and health care
traditions and system” (36). The process of personal influence, patronage and
special interest politics are, in short, ineluctable.
Thus, the medical community in Los Angeles is a perplexing creature. On
the one hand, physicians, administrators and entrepeneurs on both sides of the
great public-private divide converge in their moral imagination and ethical code.
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Virtually all support universal access to health care, in some way, and, despite the
various arguments ranging from social utility to existential compassion, are
fervently insistent that society bear a collective responsibility to provide medical
care to those who are unable to pay for it. Although some resent the federal
government’s unwillingness or inability to seal the nation’s borders, the vast
majority unequivocably support the provision of medical care to the undocumented
residents of the County for the same reasons. Yet, when economic questions
enter, a theoretical and ideological brawl erupts between public and private health
care providers, a phenomenon perhaps explained by their radically divergent
visions, practices and organizing principles. Private entities are typically more
flexible and more efficient because they are unencumbered by the usual trappings
of a governmental bureaucracy. Public agencies, on the other hand, are burdened
with the responsibility to render account to the community o f its dealings, both in
the ends achieved and the means used to achieve them. The private sector touts
standard economic theory in support of the view of most of its members that
County health services should be privatized to a large extent. In doing so, they
deify the singular virtue o f efficiency realized through competition and private
ownership. They advocate four chief proposals, one to offer a low cost insurance
plan to the poor, another to compel the health department to contract out many of
its health services to private hospitals, another to reassign the indigent and
uninsured patient population to HMOs and another to solicit the help of charitable
donations.
Conversely, the public sector, to a large extent, disavows free market
mechanisms, claiming that medical care is an essential social good, not a
commodity to be traded for other goods subjectively deemed worthwhile by the
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individual consumer. Instead, they point out the inadequacies of economic theory
and the notable failures of the market to operate in adherence to unrealistic
assumptions about human nature and commercial behavior, and argue that the
body o f literature comparing private and public enterprises is inconclusive and
cannot support the hypothesis that the former are, by definition, more efficient.
Clearly grasping the threats to public cooperation and harmony, patients,
employees and other stakeholders in the health care system as well as the integrity
o f the system itself from efforts to privatize it, they advocate, instead, a balance
between the creativity and flexibility of the private sector and the stability and
accountability of the public sector. But, most of all, they attest to the evils of
political intrusions in health care and staunchly recommend an immediate and
absolute divorce between irrational politics and the more logical erudition of
scientific management and expert planning. In short, one wants to privatize the
system, the other depoliticize it.
Chapter Seven
The Problem of Solidarity: A Theory of Public Bureaucracy, Politics and
Moral Discourse
As the interviews have reflected, much of the discussion surrounding the
crisis within the County health care system focuses on two policy
recommendations that are actually mirror images of each other. On the one hand,
those in private sector institutions, considering the County system antiquated,
inefficient and bureaucratic, endorse a variety of proposal to privatize its services.
On the other hand, even though physicians and administrators within the sprawling
County system staunchly defend their hospitals and clinics, they nevertheless
protest that theirs can be a bureaucratic, overly politicized system, breeding
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mediocrity, apathy and the worst kind o f bureaucracy. In their eyes, however,
public services should not be privatized but should be depoliticized in a judicious
effort to implement a rational, just and efficient health care delivery mechanism for
the people of Los Angeles County. Yet, these appeals complement each other.
Both disparage the County bureaucracy, governmental machinery and political
gamesmanship that they perceive cripple the efficiency and effectiveness of
delivering quality medical care, a goal they believe should be the singular focus of
the County health care system.
This chapter is a response to these proposals. A rational argument in
defense of politics, it is one voice to be joined with the many opinions set forth by
the various commentators in the study’s de fa cto roundtable of moral discourse.
In essence, it will argue that petitions to depoliticize and privatize essential human
services is not only unrealizable but also imprudent because such actions would
undermine political accountability, civic responsibility and ultimately the integrity
of the national dialogue on democracy and ethics that protect stakeholders
involved in rendering or receiving those public services. Starkly put, policy
choices that contract out governmental services to private sector organizations
with the sole intent to insulate decision making from political forces could
ultimately sacrifice social responsiblity for strict utility, substantive rationality for
mere instrumental effectiveness and, ultimately, justice for efficiency. It is a poor
understanding of terms such as “bureaucracy” and “politics” that promotes a
knee-jerk reaction, calling to privatize or depoliticize essential government
services, whereas a proper understanding would clarify the role of bureaucracies in
performing critical public functions and, in doing so, achieving social justice and
promoting the common good.
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The first critical distinction is between bureaucratic, multi-purpose
institutions and single purpose, highly mobile and ostensibly efficient
corporations— the customary recipients of government contracts to provide public
services. The former, stemming from their public or quasi-public character,
possess a legal duty to safeguard the democratic values of due process, justice,
equality and equity and a charge to work for the advancement o f the common
good that many private sector corporations, by definition, lack. As is evident from
the remarks elicited from County physicians and administrators, that duty forms a
rather thick moral culture that is shared internally by committed institutional
members, whereas single-purpose, highly efficient organizations often lack that
same collective ethical character or merely establish a thin moral veneer designed
to ensure the successful completion of operational processes and corporate goals.
Where certain private sector corporations may indeed be driven by self-imposed
aspirations to work for the benefit o f society, they are often perceived as incidental
or merely supplemental to the primary economic objectives o f the company.
Yet, what sets public and quasi-public bureaucracies apart from private
entities is not merely a fundamental moral identity defined by a duty to seek justice
and a desire to advance the common good, per se, but also the method by which
those twin ends are achieved. Democratic structures, such as open forums and
public hearings, are primary vehicles that create and nourish the moral imagination
of justice-seeking institutions. Unlike single-purpose organizations, public
institutions have a responsibility to balance the rights and welfare of numerous
stakeholders. It is precisely this judicial role that is the prerequisite and catalyst for
the development o f structures designed to ensure fairness in internal conversations
and discourse among the institution’s participants. To take this point even further,
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a model will be proposed for understanding not only how moral discourse within
justice-seeking organizations serves justice and promotes the public interest but
also why these institutions bear these particular responsibilities.
It could, for instance, be argued that bureaucracies, often superficially
characterized as inert, self-serving asylums for inept officials, no more protect
rights and advance the common good than private organizations do. But, such
invectives would disregard the structures that exist in these institutions: the
internal and external forums permitting free and open discussion that ensure
fairness and cooperation. Scientific management and methodical administrative
strategies, which require the language of rational planning and communication,
forge a culture of reason and conscience in the institution conducive to
justice-seeking. But, it is the political considerations, what critics decry as baleful
posturing, the very human interactions and relationships driven by individual
personalities, their needs and their notions o f the good life that push towards a
shared understanding of what is common and what is good. Therefore, without
political accountablity, reason becomes mere rationalism, and individual
conceptions of the good become mere expressions of will-to-power. But with the
rational adjudication o f competing claims and rights asserted in dialogic forums,
tempered by the exigencies of political accommodation, a shared moral character
begins to permeate these institutions, transforming them into bearers of the
common good and seekers of justice.
In this way, public and quasi-public bureaucracies are not efficient
creatures, nor are they intended to be. They are multi-purpose institutions, not
streamlined servants o f expediency. One purpose may indeed be to efficiently
mobilize and coordinate a variety of resources to provide some good or service
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such as health care to the community. But other purposes demand attention to not
only what is accomplished but how it is accomplished. They require that
justice-seeking institutions mediate contending claims about how to advance the
common good, about how to preserve fairness and equality, about how to
collectively agree on what ought to be accomplished in the first place. There is a
difference between the blind efficiency sought after by free market gurus seeking
to privatize or depoliticize public bureaucracies and the type of instrumental
rationality characteristic of justice-seeking organizations. The former, by the very
definition o f the kind o f organization that possesses it, pays little regard to diverse
claims that encumber productivity, such as moral claims asserted by employees,
customers, investors, taxpayers or other government agencies and interest groups.
Even the tradition and historical consciousness of the community itself, the sense
of stability and civic pride that at one time bolstered public institutions assert a
collection of ethical claims that only justice-seeking institutions will consistently
honor. Private companies do not always ignore these constituencies; rather, they
do heed the interests o f various constituencies, but only insofar as they advance
corporate objectives. By contrast, when public institutions adjudicate competing
claims, they are not only advancing political goals and the public interest but they
are also helping to shape the moral complexion of the community through
discourse. Efficiency is a useful tool to advance shifting corporate, and even social
goals. It is, however, in no way absolutely indispensable to the end sought. Public
discourse, on the other hand, by virtue of its inextricable relationship and exclusive
pathway to advancing the common good, is. In this way, public and quasi-public
institutions, and the free and open discourse they engender, are intrinsic goods,
goods that have merit in and o f themselves and are not contingent on how efficient
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they are or how productive they can be or what other intermediate ends they serve,
for public institutions serve the final end of social organization: democratic
freedom in the context of a narrative of the common good actively constructed,
shared and lived out in community.
In the end, this dissertation will argue that the values of utility and
efficiency should not be taken for granted in social policy. They are not, in every
case and in every circumstance, the most critical or even the most appropriate
principles from which policy decisions should be drawn. They are but one
instrument in society’s decisional tool chest. Thus, efforts to privatize or
depoliticize essential human services in the name of economic efficiency and social
utility miss the mark because they overlook the critical importance of politics.
Political and moral discourse is denuded and decontextualized when the normative
claims of religious, cultural and other narrative traditions are excluded only
because they do not fit the narrow rationalism o f a cost-benefit calculus or a
strictly quantitative analysis. The context of asserted moral principles is shed, the
communities that validated them and gave them life sidelined. In short, when the
political and ethical claims that are important for particular communities are
marginalized, the very stuff of public discourse is lost. What is left is a gaping hole,
a vacuum immediately filled by utility and efficiency together fallaciously posing as
society’s overarching ideology. To suggest that public services ought to be turned
over to the private sector or that they ought to be insulated from the vagaries of
politics because doing so would increase economic efficiency and augment social
utility sounds innocent and rational enough. But, ultimately, when politics is
peripheralized from decisions that are of tremendous importance to the public,
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accountability is sacrificed and the process o f political conversation itself is
ultimately corrupted.
M oral Discourse and The Problem o f Solidarity :
A preoccupation of sociologists like Emile Durkheim in the late nineteenth
century was a complete understanding of how a community’s definition o f its
common good is fashioned. To him, it was clear that in primitive and
pre-industrial societies, members shared a kind of tribal, collective and mechanistic
solidarity that underscored conformity, engendering an economy built upon
relatively similar tasks and activities. The very survival o f the social unit, he
thought, depended upon the faithful execution of chores and duties similarly
designed for all other individuals. From this solidarity, collective representations
emerged as a common morality or religion. Society, he argued, worshiped itself
and deified its own worldview, creating enduring totemic symbols that represented,
at once, both the divine and society itself. Following the industrial revolution,
however, social organization became more complex, more splintered. Work was
increasingly divided, classified and more and more specialized, bringing out a
gradual diffusion o f shared values and a new religious order that Durkheim called
the “cult o f the individual.” As such, collective representations became
increasingly more difficult to sustain as they now had to be synthesized from
personal, individual value systems that tended to diverge somewhat from a cultural
norm. Thus, advanced, post-industrial societies increasingly suffer from an identity
crisis, one that signaled the break down of a shared value structure. The basic
dilemma “is that there are some issues the resolution o f which matters for society
as a whole, and hence must be resolved collectively,” writes John Donahue. “But
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collective decisions must be governed by individual values, which means that
public criteria must somehow be derived from private criteria” (23).
Amidst this moral crisis in highly evolved societies, modem discourse has
become interminable, as Alisdair McIntyre argues, giving rise to emotivist cunning
where participants merely disguise their will-to-power or selfish interests under the
cloak of rational argumentation. Society, he contends, has been reduced to the
endless banter of warring narratives. He blames the failure of the “Enlightenment
Project” as its crowning achievement was to divorce fact from value, what is from
what ought to be and empiricism from moral philosophy. In doing so, it cursed the
“naturalistic fallacy,” or the notion that moral conclusions may be arrived at
through an examination of what actually exists, what actually is believed in various
communities, and cut the sails of an Aristotelian moral philosophy that defined
ethics as the virtuous behavior of humans living in a community in an effort to find
true happiness. In its stead, analytic philosophy, the new discipline of the
Enlightenment, sought to base ethics on more abstract notions of human nature,
rights, even intuition, rather than debase itself by acknowleding the epistemological
validity of moral values embedded in the ethical experiences of different
communities at different times in history. It was a vacuous undertaking, McIntyre
argues, for two reasons. First, preconceived, a priori theories of human nature
and rights cannot themselves be validated as first principles except by the arbitrary
judgment of philosophers. Second, as Kierkegaard pointed out, an “existential
system” is impossible. Philosophers, he argued, are mere minions of the society
they live in. Even perspicacious logicians cannot live utterly divorced from their
lived value systems. They cannot live within a social context and simultaneously
concoct legitimate theories about human nature which themselves are contingent
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on social experience. Thus, as Nietzsche pointed out a century earlier, moral
reflection disintegrated into either the mere will-to-power or the coercive
expression of self-interest, on the one hand, or abstruse unverifiable theories, on
the other. For McIntyre, the two have been integrated, marking a disparity
between speech and intent. Modem discourse has become a deteriorating
hippodrome for moral gladiators, each camoflauging nihilistic self-interest in the
acceptable guise of reason and logic. The result is Pandemonium, he suggests.
Moral realism has failed, leaving the avenue unobstructed for ethical relativism and
emotivism. In short, genuine ethical conversation has been truncated, leaving a
morally baffled society in its wake.
In response, other ethicists have come to the rescue, contriving helpful and
more roseate theories o f fruitful moral discourse in modem society. Jeffrey Stout,
for instance, rejects the assumption that all ethical argumentation is emotivist and
interminable. Instead, he points to the many moral platitudes Americans already
share such as a devotion to tolerance and liberty. For those disagreements that still
confound communities, he calls for a type of “moral bricolage” and a modest
pragmatism, one that goes beyond ethical subjectivism because it is imbued with
practical reason but never reaches the lofty horizon of moral objectivism. Instead,
a modest pragmatism, meets ethical reflection in the messy, social circumstances
from which the dilemma is derived. John Rawls also searches for a common fund
of moral inspiration in modem societies all of which seek to forge a shared
“political conception o f justice.” To do that, the detachment of “comprehensive
doctrines” or the unjustified convictions and faith beliefs is required, he argues. In
order to arrive at an overlapping consensus about norms, he contends, participants
in an ethical dialogue must shed their particular untested beliefs and vested
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interests. They must temporarily put aside their religious or cultural convictions
and converse only in the moral language o f reason. In other words, they may only
substantiate their claims with good reasons, not through faith or by appealing to a
particular cultural tradition. Because participants in the process o f rational
argumentation about morality and ethics are abstracted from different narrative
traditions and communities with potentially divergent moral viewpoints and rival
normative stances, the justifications for arguments put forth must be entirely
rational and universally acceptable. In short, they must be intelligible to all moral,
cultural and religious traditions. Although variations on his model allow
participants to introduce narrowly construed beliefs for the sole purpose of
illustrating some universal principle, faith and reason must nevertheless be held
apart in tension.
The German philosopher Jurgen Habermas, in his model of discourse
ethics, also severs reason from faith, but only temporarily and dialectically. In an
attempt to resurrect the now defunct eighteenth century philosopher Immuanel
Kant vanquished by postmodern sensibilities, Habermas wants to demonstrate that
moral judgments can be universal, that ethics need not be flushed down the
subjectivist’s drain. To do so, he posits an analogy between facts and values to
suggest that moral conclusions are to normative statements as factual conclusions
are to assertoric statements. In other words, intersubjective normativity, or that
set of universally shared ethical principles, is epistemologically comparable to how
observers arrive at what are considered to be indisputable facts. The common
factor is discourse. Scientists discover factual truth through agreement, just as
ethicists discover moral truth through consensus. That universal consent is
achieved through an ethical discourse that is subject to a set of a priori
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presuppositions of communication that transcend individual cultures and traditions,
to which even Habermas’ detractors must tacitly agree on pain o f committing a
performative contradiction while in the process of disputing them. These are
seemingly obvious rules such as the mutual guarantee of free expression in a
dialogue open to all participants willing to engage reason, the duty to consider
opposing arguments fairly and the obligation to display basic, intellectual honesty.
Yet, Habermas makes a further distinction, one that both Stout and Rawls
do not. He argues that when participants enter the arena o f moral discourse, they
must shed their “lifeworlds,” the particular cultural or religious communities from
which their stock o f untested, postulated moral axioms are derived. In the dialogic
forum, in other words, reason and logic alone must prevail. Once participants
leave the discussion table, however, they re-enter their lifeworlds, don themselves
once again with the moral fabric of their accepted traditions, and put into action
the universal moral principles previously assented to, except that they are now
colored by the exigencies of their lifeworlds, interpreted by their particular cultures
and integrated into the community’s ongoing narrative. The process is similar to
Stanley Hauerwas’s description of how religious communities actively decipher
and assimilate new information revealed from above to reinvigorate their guiding
narratives on an ongoing basis. In this way, ethical knowledge is both actively
constructed at the table of discussion and passively received when it is integrated
into the lifeworld o f the community. The social paradox between a society that
must both manufacture truth in order to control it and simultaneously fool itself
into believing that it is an immutable, cosmic truth in order to fully accept it, as
Peter Berger points out, is preserved in the process.
Thus, the active fabrication o f moral wisdom through reasonable discourse
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is like the logic of a system. It decontextualizes and disembodies the experiences
of the lifeworld and its uncritical acceptance of de fa cto ethical claims. The
language and logic of the system severs ethical reflection into “moral questions” of
justice, those principles to be tested under the scrutiny of rational discourse, and
“evaluative questions” of the good life, those postulations taken for granted in the
lifeworld (106). Practical-moral discourse, therefore, distances the ethical
preconceptions of the lifeworld, isolating them from abstract, moral reflection. It
draws a critical distinction between justice, reason and rights tossed about in the
systemic world of moral discourse, on the one hand, and divine revelation, the
good life and an enveloping worldview merely assumed in the cultural lifeworld.
Thus, a dialectic exists, swinging like a pendulum, at one moment, toward rational
discourse and, at another moment, toward the implementation of universal moral
principles through a process Habermas calls “communicative action”:
In the sphere of ethical life [the lifeworld], questions of justice are
posed only within the horizon of questions concerning the good life,
questions which have always already been answered [his
emphasis]. Under the unrelenting moralizing gaze of the participant
in discourse this totality has lost its quality of naive acceptance, and
the normative power of the factual has weakened. . . . Under this
gaze the store of traditional norms has disintegrated into those
norms that can be justified in terms of principles and those that
operate only de facto. The fusion of validity and social acceptance
that characterizes the lifeworld has disintegrated. With this, the
practice of everyday life separates into the component of the
practical (into norms and values that can be subjected to the
demands of strict moral justification) and into another component
that cannot be moralized (a component that comprises the
particular value orientations integrated to form individual and
collective modes o f life). . . . [But] to become effective in practice,
every universalist morality has to make up for this loss of concrete
ethical substance .... Universalist moralities are dependent on
forms of life that are rationalized in that they make possible the
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prudent application o f universal moral insights and support
motivations for translating insights into moral action. Only those
forms of life that meet universalist moralities halfway in this sense
fulfill the conditions necessary to reverse the abstractive
achievements of decontextualization and demotivation. (107-109)
Thus, moral objectivists have been searching desperately for theories of moral
discourse that defeat the seemingly insurmountable opposition from ethical
relativists and emotivists like Alisdair McIntyre. But it is Habermas’ fundamental
theoretical distinction, his espousal of an essential dialectic between reason and
revelation, between logical discourse and passively accepted truth, between
systemic justice and communicative action, that will prove invaluable later in fully
understanding the role public bureaucracies play in shaping political discourse.
Yet, Habermas fails to crystallize the institutional context o f such rational
discourse or explain how and where such a moral forum would be constructed.
The theory is sound, but the application seems suspect. But it is precisely this
problem, the dearth of institutions in modem society capable o f nurturing social
solidarity and moral imagination that particularly plagued Emile Durkheim in the
nineteenth century. As industrialization produced a greater and greater division of
labor and specialization among workers, economic as well as social bonds became
increasingly fragmented, he argued. However, societies that had passed from a
tribal sort of collective solidarity to the moral rarefaction, disharmony and
atomistic individualism characteristic of advanced, industrialized societies, he
theorized, would find a new sort of social cohesion to fill the void and reverse the
moral decay of economic progress. This, he called “organic solidarity,” a
communitarian harmony based on the tenuous strings of familiarity linking diffuse
specialized interests in society. To gather these strings together, he took his
inspiration from the fraternity manifested in the growing trade union movement, on
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the one hand, and the increasing acrimony between laborers and capitalists, on the
other, and joined the increasing number o f scholars concerned with finding a “third
way” between the vagaries o f capitalism and the oppression of socialism.
His particular brand o f corporatism sought to revive the community’s
moral spirit by bringing together workers and owners in industry-specific
corporations intended to act as a cohesive political, economic and social body.
Within that association, workers and businesspeople would eventually find a kind
o f intimacy and warmth for each other, an affection brought on by their ongoing
proximity with one another. Members would find in that corporation an emotional
and economic home, a mutual support society, even a religion o f sorts:
For it is impossible for men to live together, associating in industry,
without acquiring a sentiment o f the whole formed by their union,
without attaching themselves to that whole, preoccupying
themselves with its interests, and taking account of it in their
conduct. This attachment has in it something surpassing the
individual. This subordination of particular interests to the general
interest is, indeed, the source of all moral activity. (The Division of
Labor in Society 14)
As the corporatist movement grew, Durkheim believed that smaller local trade
groups would consolidate into larger national and international institutions,
connecting them to public life in general. Thus, just as economic organizations
were to become safe harbors from the causticity of the labor markets by
assembling a solidarous community sharing a collective moral consciousness, their
amalgation would become the driving force of social integration overall. “A
nation,” he argued,
can be maintained only if, between the State and the individual,
there is intercalated a whole series o f secondary groups near
enough to the individuals to attract them strongly in their sphere of
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action and drag them, in this way, into the general torrent o f social
life. (28)
Today, only dim vestiges o f those corporations can be seen in the separate
trade associations and labor unions now in existence. Although neo-corporatist
institutions are alive and well in Europe, in the U.S. such creatures are an
economic anathema to be parked in the mausoleum of other fortunately extinct
conceptual relics. Yet, often overlooked is the extent to which modem
corporations can and do act as moral communities, something akin to the
secondary groups animated by a sense of camaraderie and sociability. Work and
family programs, employee benefits and social events such as company picnics and
after work gatherings, for instance, are designed to not only instill loyalty among
workers to the firm but also to each other. Modem corporations exhibit many of
the same criteria such as flexibility and specialization that Durkheim proposed in
his theory of occupational organizations. Thus, it is not inconceivable that, even
today, large-scale, multi-purpose economic institutions, both public and private,
under the right conditions, could rejuvenate some sense of organic solidarity and
kindle at least a neophytic moral life shared between participants.
How Bureaucracy Shapes Public Discourse:
It is public institutions and government bureaucracies, however, that may
be particularly capable of integrating the myriad private value systems as James
Freedman proposes in his book on administrative law:
. . . Erik Erikson has wisely suggested in his Jefferson Lectures that
‘American democracy, if it is to survive within the
superorganizations of government and commerce, of industry and
labor, is predicated on personal contacts within groups of optimal
size-optimal meaning the power to persuade each other in matters
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that influence the lives of each.’ Until we create a society in which
greater opportunities for such personal and communal interaction
are made possible institutionally [my emphasis], the influence o f all
bureaucratic organizations— not just those of the federal
government— is likely to remain a source of profound concern. (43)
Thus, there may be a place for public institutions to help shape, and not merely
react to, the moral character of American society. As Phillip Selznick suggests,
large multi-purpose organizations may be a satisfactory model of social
integration. As opposed to autonomous, smaller and more efficient single-purpose
organizations, larger institutions, because they are often saddled with the task of
juggling many competing claims made by various constituencies, act as a sort of
social coordinating mechanism, conjoining their particular agendas with the
pressing demands o f the common good through socially responsible behavior.
On the other hand, bureaucracies are usually perceived as highly effective
vehicles trained solely to mobilize resources and complete projects expeditiously,
not as coordinating mechanisms for political cohesion and the common good. Max
Weber, the nineteenth century father o f bureaucratic theory, described bureaucracy
as the most efficient form of productive organization. “It is superior to any other
form in precision, in stability, in the stringency of its discipline, and in its
reliability” (The Theory of Social and Economic Organization 337). Bureaucracies
are characterized as the preeminent organizations for rational and deliberative
calculation, motivated by a formalism, even a ritualism, dedicated to the faithful
execution of tasks in accordance with predetermined rules of procedure established
by an impersonal, objective and specialized hierarchy. They adhere to an
instrumental type o f reasoning, the kind that passively accepts predefined goals and
engages in the unimaginative task of marshaling assets to complete the assignment
in the most efficient manner without questioning the goals themselves.
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Yet, bureaucracies are not characterized by pure instrumental rationality
alone, but rather a more modest one. They are, in other words, also concerned to
some extent with the ends as well as the means o f a given project. As both Weber
and Selznick suggest, bureaucrats are at least concerned with the integrity and
purity of their own particular discipline when executing orders. As a general rule,
functionaries will be reluctant to jeopardize the reputation o f their respective fields
for the sake o f an expeditious completion o f a given task. Efficiency, then, is not
the only hallmark of bureaucratic organization. As John Donahue points out,
loyalty to the common good, fealty to the ideals of their training and devotion to
the authenticity of the bureaucratic process itself are also values that have an
impact on the actions of public officials. A type of “bureaucratic honor,”
analogous to the social honor Max Weber contended civil servants seek in equal
measure as monetary reward, permeates many public institutions mollifying the
austerity o f the impersonal and rote administration o f rules. “By honor,” Donahue
writes,
I mean that instrinsic sympathy between a civil servant and the
goals o f his [sic] organization, and the propensity to advance these
goals without compulsion or certainty of material reward. In a
soldier or a diplomat honor involves patriotism, in a teacher love of
learning, in a judge a devotion to justice, and so on. (88)
In most multi-purpose bureaucratic institutions, in fact, there are enclaves
of specialists, what Weber called a “college of experts,” each of which share a
particular worldview and value system that impacts how they approach various
problems and activities and their conception o f bureaucratic honor. “A particular
policy perspective may be inherent in the very discipline that a professional
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practices,” argues Thomas McGarity in his remarkable book on the role of
regulatory analysis in public bureaucracies.
Because health scientists are likely to be more risk averse than
economists [for example], they often resolve ambiguities and
uncertainties in favor o f protecting public health, without as much
regard for the economic consequences. Lawyers in the
enforcement division generally prefer command and control
standards, because they are easier to understand and enforce.
Agency economists are likely to suggest taxes and performance
standards. . . . (119)
Alisdair McIntyre argues that these mindsets are part and parcel of specific
practices, instrinsically valuable activities inculcating in practitioners a set of
task-specific virtues to guide them in performing and to help them derive happiness
and satisfaction from the activity. For example, accuracy for the accountant,
affability for the public relations expert, benevolence for the doctor and wisdom
for the administrator are all virtues that are important to all activities but
particularly important in those respective practices. Thus, unlike the singular
function evident in Durkheim’s industry-specific corporations, public institutions
embody a variety o f specialist corps, each with its own set of professional values
and loyalties.
Yet, these groups of experts also vie for empowerment with other
stakeholder groups or constituencies such as customers, suppliers, other affiliated
institutions and the general community, a rivalry that often results in a kind of
partisanship and fomentation of internal and external factions. When this occurs, it
is the generalist or the non-expert, who
must possess the intellectual capacity to integrate diverse streams of
information and opinion into a single current of policy, the moral
capacity to question whether the experts’ emperors may sometimes
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wear no clothes, and the executive capacity to establish dominion
over the wayward tendency of career subordinates to evade control
.... (Freedman 53-4)
It is the “amateur,” as Harold Laski points out, who is the moral “broker of ideas,”
the one devoted to the common good and not merely expert rectitude. It is the
modest pragmatic who mediates the moral discourse within a bureaucratic
organization, reconciles conflicting policy recommendations and tempers the strict
rationality o f specialists with the interests of the general public and the lessons of
political and economic experience. It is the generalist who plucks the most
promising regulatory shoots, skillfully blending them into an administrative
potpourri. Thus, bureaucracies are not just bastions of instrumental reason. They
also foster a morally charged sense of pride and honor that is specific to each type
of specialist in the organization. And the moral lifeworlds of each different
specialist in a bureaucratic organization is mediated by a generalist who sits atop
the organization and encourages a conversation between competing ethical claims
raised within.
The outcome of that kind of moral discourse in bureaucratic organizations
is both procedural and substantive justice. Procedurally, government agencies
protect the legal and political values of equality and due process inherent in its
legislative, executive and judicial functions. They institute public hearings to
gather the testimony of those who will likely be most affected by its policies and
regulations, they follow statutorily imposed guidelines for managing resources, and
they adjudicate cases with fairness and impartiality. Substantively, government
operations do have the capacity to achieve justice as well. As Eisenstadt points
out in an introduction to his collection of edited essays by Max Weber, certain
types of breakthroughs in the reified pattern of social institutions can spark the
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imagination and innovation to achieve new insights even within the bureaucratic
“iron cage”:
At each such breakthrough there emerges the tendency, or at least
the potentiality, to extend the scope of rationality in posing the
basic problems o f the major symbolic and cultural spheres in a more
rational way, that is, in terms of growing abstraction in their
formulation, of growing logical coherence and general phrasing,
and to some extent also in the ranges of answers attempted to these
problems. Such possibilities of extension of rationality are to a very
large extent tantamount to the extension o f the potential o f human
creativity and ranges of human freedom, (lii)
In addition, there is an integral connection of sorts between the procedural
meticulousness of government agencies and the level of equity exhibited in the final
outcome in the course o f fashioning just regulations, scrupulously stewarding
public resources and arbitrating competing interests. “The procedural rules by
which an institution reaches substantive decisions,” argues Freedman, “inevitably
convey a telling indication of the fairness of its methods, the extent o f its interest in
protecting individual rights, and the depth of its commitment to attaining just
results” (129). Weber himself suggested that it is the paradoxical antilogy of
government’s capacity to at once both limit the freedom of citizens and liberate
them, to both confine human behavior and free its imaginative sources, and to both
organize social impulses as well as explain and justify them that drives the need to
try to understand bureaucratic organizations. The most “universal characteristic,”
Weber thought, is
the need to find meaning and justification in the social and political
arrangements by which daily life is authoritatively bound. The
quest for understanding and the implications of the American
administrative process is finally a search for the sources and
definition of its legitimacy. (Freedman 265)
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If bureaucracy actually ignites the creative pursuit of human fulfillment, and if one
aspect of human fulfillment is fairness, then government agencies must indeed in
some way be justice-seeking institutions.
On the other hand, it is precisely their enormous salience and importance to
society that also renders them vulnerable to charges o f a tyrannical despotism in
the execution of their tasks, a repressive tedium in the work o f their employees and
an unyielding obstinancy in their subservience to inflexible rules. In short,
bureaucrats are caught, using the words of Weber’s famous phrase, in an “iron
cage,” trapped by their own formalism and slavish adherence to the rubrics of
exaggerated precision, uncompromising stability and bland instrumentalism.
Government agencies are perpetual and inevitable, maturing from their youthful
optimism and charismatic conviction that the ills of society will finally be
vanquished, to the routinized petrifaction of an antiquated bureaucracy dampened
by the weight of seemingly intractable problems and ebbing public support and
dispirited by its own rigidity and hulking overgrowth. As Freedman points out,
It is interesting to reflect that Weber himself understood the fear of
many European social philosophers that bureaucracy could fracture
the integrity o f the individual and destroy a society’s sense of
community. . . . The tensions that Weber felt between his
conviction that bureaucratic organization was indispensable to
industrialized societies and his fear that bureaucracy might
ultimately destroy the human spirit are with us still. (43)
Thus a seemingly irreconcilable tension emerges. On the one hand, public
institutions are bearers of justice and servants of the common good. On the other
hand, they can be both stilted in their priggish formality and stultifying to those
whose interests remain under the institution’s control. The key to unlocking the
mystery is in discovering the artificial, one-dimensionality of bureaucracies which
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have been disinfected or sanitized from the so-called septic effects of politics.
First, however, it is necessary to understand how the public and private sectors
differ functionally and structurally.
Private and public sectors serve different theoretical purposes. In fact, the
private sector was first solidified from the molten precursor of personalized
religion:
Privatized and marginalized religion actually grew out of its
antithesis, namely the increasingly rationalistic, impersonal and
asocial character of the public sphere. As social reality became and
continues to become an oppressive, frustrating and alienating force,
precisely because o f its systematic and actively reconstructive
character, the private sphere, and hence private religion, was
positioned as an illusory escape to irrationality, a coping mechanism
or a forum for egotistical, private behavior, serving to mystify and
justify the public sector itself by counterbalancing the latter’s
alienating nature with an ascriptive and comprehensive ‘life world’.
(Gustafson, The Structural Function of Private Religion and the
Failure o f Public Religion 2-3 )
Thus, the private sector, as a social construct, is the offspring of a public sector
gone awry. As the “iron cage” of bureaucracy became more and more confining
through its adamant adherence to uncompromised principles of logic and
instrumental rationality, it became, little by little, more incommodious. The private
sector, or what is analogous to Habermas’ lifeworld, evolved out of the need to
retreat from the alienating effects of too much rationality expected in the public
center characterized by the “iron cage” of bureaucracy.
In the same way, politics tempers bureaucratic punctiliousness to rules and
procedures. It is the irrational component that moves participants in dialogic
forums to speak both with reason and with emotion, both with objectivity and with
their self-interest at heart. The loss of that component, of that emollient for the
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abrasiveness o f an exaggerated rationality leaves behind a denuded, demystified
public sector, a constellation of aloof public institutions far removed from the
everyday concerns of the “lifeworld.” Max Weber also feared this, describing its
emergence as a type of overaccess to the public sector. As modernity progresses,
direct participation in the social center may develop into a
growing apathy toward the very central values, symbols and
centers, not because of the lack of possibility of access to them but
because o£ in a sense, overaccess to them. Thus the
demystification of the world may come about in the phenomenon
that the attainment of participation in many centers may indeed be
meaningless, that the centers may lose their mystery, that the King
may be naked indeed. (Eisenstadt Iv)
In this way, when politics and the irrational, mystical axioms o f the lifeworld are
peripheralized, the public square is consequently denuded, left bare by a harsh
ultra-rationalism. Thus, bureaucracies do indeed harbor pockets of substantive
rationality. They do encourage moral discourse and help, in that way, to shape
public values. But they also try to marginalize politics. They try to set aside all
that is thought to be irrational in deference to the values of efficiency and utility.
In short, they try to scrub away the impurities of political discussions about
morality and social policy.
The Advantages and Disadvantages o f Depoliticization:
Proponents of depoliticizing public services, on the other hand, enumerate
the many advantages of protecting the independence of government agencies from
politicians and the political process. Ensuring a bureaucracy’s autonomy, they say,
will guarantee its impartiality, continuity, stability and singular devotion to the
public interest (Freedman 60). Thomas McGarity, in his interview-based analysis
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of how regulatory analysis is used in government bureaucracies, summarizes what
proponents say are the many advantages detailed cost-benefit analyses have in
forging highly rational public policy:
Insisting that decisions must be based upon more than the exercise
of raw political power, comprehensive analytical rationality
distinguishes between politics and policy. . . . Regulatory analysis
‘holds the promise o f bringing more neatness, order, and precision
out o f the political and philosophical quagmire within which much
regulatory policy now finds itself.’ The regulatory analyst believes
that well-conducted regulatory analyses can guide agency decision
makers to rational decisions that are more than mere political
accomodations. . . . Moreover, a good regulatory analysis can
shield rational decisions from parties who have only their own
narrow interests in mind. Although a regulatory analysis document
may not satisfy the losers o f the regulatory battle, it can reassure
remote decision makers in the White House and Congress and
members of the general public that the decision was reached in a
consistent and nonpartisan fashion.
The establishment of the first independent regulatory agency, the Interstate
Commerce Commission in 1887, in fact, was buttressed by a cornucopia of similar
arguments. In an effort to stem the increasing externalities and social maladies
foisted on communities by the growth of unbridled capitalism and laissez fair
government, supporters rallied around regulatory commissions, citing advantages
such as the application of expert knowledge to enigmatic social problems as well
as the flexibility and continuity of rational public policy forged in the public’s best
interest. Although the Commission was not originally intended to be politically
independent, “it soon became evident that without the ability to exercise
legislative and judicial pow er on an independent basis the ICC w ould never
become an effective regulatory body [his emphasis]” (Woll 36-7). Intrusions by
Congress and the President were checked by legislation as well as court decisions,
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including the landmark case H um phrey’ s Executor, that protected the tenure of
chief officials in regulatory agencies, and prohibited informal Congressional forays
into the policies and procedures of agencies (Freedman 61-2). Even the health
care industry could not escape the unswerving eye of the “rationalist approach,” as
Theodore Litman argues. In a period o f unrestrained inflationary growth in
medical costs, analysts proposed similar quantitative techniques and “scientific
management” for depoliticizing health care policy, making it more objective and
“value-free.” The rationalist approach, he contends, has become a value unto itself
with a “rich, cultural folklore extolling market forces over government” (80).
Yet, efforts to depoliticize public policy have serious limitations, both
practical and theoretical. First, regulatory analysis is means-oriented and therefore
quickly becomes confounded when faced with the endless array of conflicting
goals and ends to be achieved. Other problems include: (1) the inevitable
inadequacy of factual information; (2) the ambiguities of assessing economic
outcomes, costs and benefits of different policy options; (3) the unavoidable bias
inherent in information solicited by the regulatory agency from private industry; (4)
the difficulties associated with some quantitative models, methods for evaluating
margins of errors and insufficient analytical resources; and (5) the troublesome
task of communicating analytical results coherently to program office officials,
upper-level decision makers and politicians (McGarity 125-39; 161).
In addition, the potentially dangerous elitism of experts is exacerbated by
their political independence. The expert’s stock in trade is what McGarity calls
“comprehensive analytical rationality,” a type o f ingrained mentality and
entrenched bureaucratic culture that investigates all dimensions o f a given problem,
breaking it down into its smallest components and objectively, dispassionately
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examining and analyzing the raw data. It is a type of unrelenting logical positivism
“dominated by the paradigms of neoclassical microeconomics” (5). The process is
fairly straightforward: identify a problem and its causes, clarify and rank goals,
review all possible alternatives for resolutions, weight the costs and benefits of
each alternative and elect the option that is most closely aligned with the end-goal
to be achieved (McGarity 10). It heralds virtues such as neutrality, a quantitative
disposition, objectivity, completeness, consistency and meticulous analysis
(McGarity 13). The powers of quantitative analysis were also optimistically
enshrined in the New Deal literature of the early twentieth century. “The New
Deal believed in experts,” reports James Freedman.
Those who rationalized its regulatory initiatives regarded expertise
and specialization as the particular strengths of the administrative
process. . . . If public regulation was to be effective as an
instrument of social and economic reform, it would have to rely, as
the British had, upon ‘a highly trained and disinterested permanent
service, charged with the task of administering the broad policies
formulated by Parliament and of putting at the disposal of
government that ascertainable body of knowledge on which the
choice of policies must be based.’ (Freedman 45)
The dangers of overreliance upon an independent cadre of unaccountable
and autonomous experts, however, abound. For instance, an indiscriminate trust in
the powers of logic and expertise can magnify potential mistakes, spinning the
destructive results out of the control of decision makers. As Frances Rourke
argued:
The greatest danger that these quantitative techniques o f analysis
present is the possibility that they may arm error with the seeming
support of scientifically established fact, giving ill-advised policy
greater credence. When this occurs, the finely honed rationalizing
instruments of managerial science can become dispensers of
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irrationality measured out with mathematical precision, (as quoted
in McGarity 134)
In addition, overdependence on a group o f self-governing elitist
academicians threatens democratic values which the very political process that is
repudiated by regulatory analysts was crafted to protect. In short, the unmerciful
and incessant logical course meted out by an elite circle o f scientists and
economists is, in the final analysis, contrary to the notion of public accountability.
As to issues such as these, many Americans may feel about
administrative expertise the same way that Learned Hand felt about
an absolutist power of judicial review: that ‘it would be most
irksome to be ruled by a bevy of Platonic Guardians.’ The
legislative decision to ‘take things out of politics’ by delegating
significant issues of public policy to an administrative agency . . .
merely changes the forum in which they will be decided from one
that draws its strength from its political responsiveness to one that
takes its definition from its expertise and independence. (Freedman
51)
But an uncritical confidence in experts may do more harm than magnify the
risk of errors or threaten democratic values and political responsiveness; it may
also sever the hope and faith society has in the integrity of the political process, the
public square and each other.
The notion of some analysts that knowledge will carry the day is
absurd. Knowledge does not and cannot govern. . . . Once we
realize that problems of public policy are not solved but adjusted by
policymakers, then it should be clear that the degree of trust within
our society is equally as important as knowledge. (Meltsner 270)
(emphasis added)
Thus, the political independence of government agencies poses a threat, at
least in theory, to political accountability:
. . . The theory upon which the independence of the commission is
based represents a serious danger to the growth of political
democracy in the United States. The dogma of independence
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encourages support o f the naive notion o f escape from politics. . . .
Because it is based upon a mistaken concept of the political process
which undermines the political theory of democracy, the
commission has significantly antidemocratic implications.” (Marvin
H. Berstein as quoted in Freedman 72)
As Freedman suggests, almost every president since the New Deal has been
sufficiently disturbed by what the President’s Committee on Administrative
Management reporting to Roosevelt in 1937 called the “headless fourth branch” of
government, that they have nearly all ordered a study of the danger the
independent bureaucracies pose to democratic processes (Freedman 17; 7). And
as John Maurice Clark alludes in his seminal book Social Control o f Business:
One disquieting symptom is the frequency with which, when a new
reform is suggested, ways are sought to ‘keep it out of politics.’
Politics is the democratic way o f governing; is it becoming
necessary, then, to keep government itself out of politics, (as
quoted in Freedman 59)
Yet, the real objection to independent agencies, public benefit corporations,
public authorities and other similar bureaucratic structures is not their
independence p er se, or the fact that their structure is marked by an overlap
between legislative, judicial and executive functions as both of these may be
necessary for effective regulatory control. Instead, the real objection regards the
intent o f policymakers to depoliticize essential political functions when they are not
convenient to the parties involved or expedient enough in terms of economic
efficiency. There is, in fact, a difference between demanding that government
agencies be effective— a valid demand— and efficient— a potentially invalid demand if
it compromises the ability of the agencies to be responsive to political
constituencies, the electorate or members o f Congress. There is also a significant
difference between delegating Congressional or Executive authority to agencies as
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a necessity o f governing modem institutions and demanding that agencies be
entirely independent of the political process only to ensure a divorce between
political accountability and administrative efficiency.
In addition to these concerns— the practical limitations of systematic
analysis and the threat of experts and their self-governance to political
responsivenes and institutional accountability— a third, more theoretical, worry
gnaws at the democratic conscience. By clinging so fast to neo-classical economic
theory, bureaucratic analysts and reformers favoring privatization and
depoliticization not only exhibit an unwitting bias in their conclusions, they actually
erect a fallacious meta-ethic, reducing public policy to mere utility and efficiency
and marginalizing public values. In the narrow moral instrument of cost-benefit
analysis, the broader matrix o f ethical criteria is often neglected because o f the
tendency to dismiss the “soft” variables of human behavior and the difficulty of
technocrats to recognize the collectively shared goals o f a community (McGarity
125; 134). The complex and often logically untidy store of social values is
ignored, in part, because of the analyst’s atrophied and withered model of human
nature:
Proponents of quantitative cost-benefit analysis often fail to draw a
vital distinction between human beings as self-satisfying consumers
and human beings as citizens in a polity or members of a
community. They assume there is no difference between how
people value certain things in private, individual transactions and
how they would wish a social valuation of those same things to be
made in public, collective decisions. Professor Sagoff has observed
that: ‘We are not simply a group of consumers, nor are we bent on
satisfying self-regarding preferences. Many o f us advocate ideals
and have a vision of what we should do or be like as a nation. And
we would sacrifice some of our private interest for those public
ends. . . . Why should we believe that the right policy goal is the
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one that satisfies only the self-interested preferences o f consumers?
Why should we not take into account the community-regarding
values that individuals seek through the political process as well?
(McGarity 150)
The shortcomings of cost-benefit analyses, then, becomes unambiguously
clear when policy questions create a perplexing dilemma between the value of
some social good that would come only at the expense of a certain number of
human lives, and the value o f human life itself. The rather mindless insertion of
some surrogate price to substitute for the metaphysically indeterminate value of a
single human life, such as the “human capital” approach that computes the net
present value of future earnings or the “willingness to pay” approach that estimates
the price at which a reasonable person becomes willing to pay for some reduced
probability of continued existence, is reductionistic, trite and, at best, simplistic
(McGarity 143-9). Not only is the methodology “incapable of capturing the rich
variety of moral concerns that regulatory decisions inevitably evoke,” it also
discounts public goals “such as justice, fairness and autonomy” in favor of the type
of consumer preferences expressed in the free market (McGarity 143). It is a
defective process and mentality that ultimately narrows the analyst’s field of moral
vision as well as stunts and fossilizes the moral imagination behind policy making:
In a wise and subtle essay published in 1930, Harold Laski outlined
the limitations of the expert. The expert, he said, tends ‘to make
his subject the measure of life, instead of making life the measure of
his subject.’ . . . Indeed, ‘the more highly expert he is, the more
profoundly he is immersed in his routine, the less he is likely to
know of the life about him.’ The consequence is ‘an inability to
discriminate, a confusion of learning with wisdom.’ And because
the expert lacks a ‘flexibility of mind’ as he approaches the margin
of his special competence, he ‘dislikes the appearance of novel
views’ that may call into question the validity of his own knowledge
and conclusions. Laski concluded: ‘My point may perhaps be
made by saying that expertise consists in such an analytic
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comprehension o f a special realm o f facts that the power to see that
realm in the perspective o f the totality is lost.’ (Freedman 52)
The underlying proclivity of regulatory analysis and bureaucratic rationality
is to rummage around the sphere of available policy options for the precise
quantitative outcome that will testify, without error, to the correct and unwavering
result, a result that is uniformly legitimate because it maximizes benefits over costs
and therefore efficiency. Thus, the value of efficiency is elevated to the moral
status of a “meta-value that trumps all other conflicting values,” ignoring the fertile
ground teeming with conflicting values and principles and the moral ecosystem
bom amidst and evolving according to the sometimes contradictory experience of
human relationships (McGarity 153). Bureaucrats of this stripe glorify utilitarian
calculus as the only honest way to forge public policy because they are steeped in
intellectual and social heritage in the classical economics of
unfettered contract, consumer sovereignty, and perfect markets . . .
as against distributive ends, procedural and historical principles, and
the values . . . associated with personal rights, public goods, and
communitarian and ecological goals. (Tribe 105)
Yet, the professionally inculcated, uncritically adopted and indiscriminately
implemented worldview of neo-classical economic theory is disguised as universal,
as the only set of moral principles rationally defensible in the Habermasian systemic
world of ethical discourse.
Having ostensibly depoliticized regulatory decision making by
ridding it o f unruly and emotional political discourse, they
repoliticize it by injecting sub silentio their own political values. . .
. To the extent, however, that goal ranking becomes muddled in the
instrumental operation of measuring alternative policies against
preexisting goals, the political aspects o f the regulatory analyst’s
participation can be hidden behind a false veneer o f objectivity. As
Professor Tribe has noted: ‘Ideology has often sought to
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masquerade as analysis, deriving a power it could never justly claim
from the garb of neutrality it has at times contrived to wear.’
(McGarity 157)
Thus, an intolerable performative contradiction is inadvertently committed
by some bureaucrats and regulatory analysts. Whereas their methodology feigns
the neutrality, objectivity and probity of scientific precision, their hidden utilitarian
agenda and unstated economic assumptions about human nature and social order
belie the impartiality of their ethical system o f justice in social policy. In this way,
the concealed principles animating neo-classical economic theory are, in
themselves, moral principles derived from a particular lifeworld, a specific social
and intellectual heritage and a certain experiential context. Though seemingly
rigorous methodology o f quantitative analysis fabricates a mirage that cost-benefit
analyses are the most rational, logical and fair way to arrive at moral judgments
and social policy, they are but a thin veneer for these silent principles and
clandestine political values. The fastigium of this latent defect in moral reasoning,
however, is the counterfeit political accountability rendered to the community and
the false impression of free and open moral discourse that these types o f rational
analyses create.
Re-politicization: Understanding the Lifeworld
Try as they may, however, regulatory analysts cannot escape the ubiquitous
and protracted reach of politics. Nor can bureaucratic organizations and public
institutions. Political independence, in the final analysis, is illusory and deceptive.
Above and beyond the theoretical misgivings enunciated above, both the President
and members o f Congress, in reality, encroach on the professed autonomy of
government bureaucracies in informal and often covert ways. For instance, as
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Freedman argues, the President exercises the sole power to appoint the
commissioners on independent agencies, cabinet members and high level officials
in other government institutions, and wields the informal, surreptitious power to
demote or ask for the resignation of commission members and high ranking
executives. In addition, government agencies depend on much needed cooperation
from the Department of Justice in order to enforce their regulations and judicial
rulings and rely on the Office of Management and Budget (OMB) to authorize
departmental budget requests and legislative recommendations before Congress
and establish various conventions for accounting practices and standardized fiscal
assumptions. Finally, the sheer “force o f presidential will and prestige is so great
and the limits to the appropriate exercise of presidential persuasion sufficiently
unclear that few agencies can long persist in pursuing a course contrary to the
President’s firm desires” (Freedman 65-6).
Congress also exercises hiring authority when it confirms nominees to their
bureaucratic posts. In addition, because Congress originally created these
bureacratic creatures and annually approve their budget appropriations, they also
possess the legal power and commission to oversee the broad duties and
operational responsibilities of the agencies and the power to make legislative
inquiries into specific cases the agencies have handled which have been brought to
the attention of congressional leaders by their constituents. Because these
communications are not ex parte, they do not violate any of the formal regulations
intended to preserve bureaucratic independence. Finally, Congress wields the
instrument for the public rebuke of government agencies and their leaders. In this
way, they have the informal authority to hold impromptu hearings and override
administrative rule making at the behest of powerful interest groups (Freedman
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62-8). Thus, regulatory agencies may be independent statutorily and other
bureaucratic institutions theoretically, but the informal powers of Congress and the
President thwart those efforts, in effect infusing government institutions with a
spirit of public accountability and saturating their regulatory cocktail with a
piquant political elixir.
But politics serves many purposes, one o f which is to protect the structures
o f a constitutional democracy.
Members of democracies see government not only as a mechanism,
complementary to the market, for serving individual appetites but
also as the expression and the instrument of moral and philosophical
aspirations. People have preferences about the world around
them— for more fellowship, less hunger, more democracy, less
torture, and so on. . . . Ultimately, politics is the mechanism, and
political appeal is the measure. (Donahue 20-1)
Furthermore, Peter Woll, in his landmark book, argues that American bureaucracy
is accountable to and responds to the demands of a constitutional democracy
precisely because it is a vital component of the political structures that preserve
that democracy itself (177). In fact, Woll contends that public bureaucracies are
actually more representative than other majoritarian democratic organizations
because they alone are most suited to develop an esprit de corps with private
sector organizations under its jurisdiction, permitting increased access by political
interest groups to decision makers both within the regulatory agency itself and, by
virtue of the close ties between the agency and Congress, to those in Congress as
well (175). Yet, powerful political constituencies begin to form around the
agency, orbiting it like a satellite, at times threatening to collide with it. In fact,
they oftentimes are the impetus for the institution’s creation and survival.
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It cannot be too strongly emphasized, then, that the process leading
to the establishment o f administrative agencies is highly political,
and administrative functions and organization are essentially
determined by political factors. . . . Agencies must have strong
political support from the community itself, whether from groups,
political parties, or individuals, in order to become established and
to survive. (Woll 42)
In essence, then, political constituencies, including Congress itself, the White
House, various state and local governments, private interest groups and large
corporations, hold a potentially baleful power over public institutions, often
restricting their actions to those commensurate with the interests of their most
prominent constituencies. Thus, despite the theoretical function of politics in
stabilizing a constitutional democracy, it is not difficult to understand how easy it
is for critics of politics to be overwhelmed by its more noxious odor, a stench
wafting up from the putrefaction o f monied interests.
Yet, politics of all stripes is ubiquitous. It is essential in maintaining the
integrity of moral discourse or the theoretical probity of public dialogue in general.
It is this argument that justifies the critical and indispensable role of politics in
shaping public policy for areas such as health care delivery. To understand this, a
brief return to the theory of Jurgen Habermas and Max Weber is necessary. As
Weber posited, three spheres of human activity make up any cultural tradition: the
cognitive sphere, the aesthetic sphere and the practical-moral sphere. Insofar as
these three spheres are blended or fused together, a type of narrative is created, a
story that gives a particular community a sense of identity and a feeling of
solidarity. The result is what Habermas called a “life w o r ld that social context
from which a shared fund of untested, passively accepted and uncritically
communicated moral axioms and ethical judgments are drawn and actions are
guided. But when those three spheres are disconnected and held apart under the
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analytical scrutiny of rational argumentation and discussion, a type of logical
system is created because now the components of the tradition are being
scrutinized and analyzed from a supposedly objective point of view.
Yet, as Habermas argues, effective moral exchanges are those which are
able to universalize individual norms or moral assertions through ethical discourse.
It is an ability that is only empowered by the continuous interplay between system
and lifeworld and the repeated movement between the disconnection and fusion of
logical discourse and passively accepted truth, of normative principles rationally
tested in the forum of public dialogue and presupposed moral axioms, and of the
three spheres making up a complete lifeworld. In short, it is the lateral motion
between system and lifeworld that effectuates moral consensus and normative
truth. Without the naked quality o f logical discourse, social norms remain
permanently under a cloak of mystery and irrationality. But without the protective
veil o f the lifeworld to preserve order and safeguard society from chaos at least
conceptually, moral principles universally assented to in the rational, dialogic
forum will never be assimilated or acted upon in the social environment. Thus, for
Habermas, the dialectic is one that forges a new moral synthesis by sustaining a
constant rhythm between principled argumentation in the system and
“communicative action” in the lifeworld in a way that assures the smooth re-entry
o f universal ethical standards into the lifeworld.
But Habermas provides a mere simulacrum to understand how such a
process would occur. Because it cannot occur in a vacuum, moral discourse
requires an institutional forum; its lofty ideals must be accomplished through a
process rooted in the material reality of a structure conducive to the articulation
and discussion of rational claims. This dissertation contends that productive
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organizations like public bureaucracies provide such a structure because their
systematic nature, public character and justice-orientation make them ideal
candidates to organize a kind o f social conversation on commonly held moral
values. The following discussion builds a case for understanding how public
bureaucracies shape social values through moral discourse.
The “iron cage” of Max Weber’s denuded and bureaucratic social center is
analogous to Habermas’s rational system, and the dichotomy between system and
lifeworld is most clearly displayed in the parallel dichotomy between the public and
private spheres of a liberal society. As argued earlier, the notion of the private
sector, as a concept distinct from the public sector, erupted from the sublimation
o f a collective desire to escape from the latter’s repressive rationality by
constructing for itself the more placating irrational realm of the former. Private
life, then, is a true lifeworld in that it uncritically accepts unexamined moral
postulations and ethical preconceptions which may have evaded rational
verification in a dialogical forum. Church dogma, religious beliefs and cultural
assumptions are examples of the both irrational, yet soothing character of private
life. On the other hand, public life, at least formally, is a true system in that it
parries the seeming illogical foolishness of untested religious or cultural assertions
percolating within the lifeworld, and, in doing so, fabricates a social reality that is
infinitely malleable, constantly changing and entirely responsive to the social mind
and will, attesting to a vitalist belief in the self-determination o f the collective
spirit.
If, then, public life is distinguinshed by its unwavering rationality to the
exclusion of irrational judgments and its actively reconstructive character, any
functional or economic organization, by virtue of its unparalleled ability to actively
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manipulate its complex, external social environment, must be a type o f logical
system acting within the framework of the public sphere that is marked by the type
o f bureaucratic reason which Max Weber both admired and feared. Only if an
organization were actually guided by the principles o f inefficiency and irrationality,
or if it reveled in a type o f uselessness and dysfunctionality could it truly be called
a private sector entity. Associations dedicated to relatively ineffectual objectives
such as learning for its own sake or faith or any other type of intrinsically valuable
good, for instance, are true private sector organizations. Thus, even so-called
private economic enterprises, by their very commitment to the efficient production
of goods and services, are actually clothed in the same systematic and pragmatic
garb of scientific management as public institutions.
Indeed, scientific management, as a theoretical construct, and pragmatic
instrumentalism, as an analytic philosophy, are functional corollaries, each seeing
the managerial, bureaucratic task as one of proactive negotiation and manipulation
of the external social and legal environments. Unlike the professions which
presuppose their external environments, management, the stock in trade of
productive associations, is really more difficult, more precarious because it must
pragmatically disarm and reconfigure the surrounding social context. Management,
by definition, involves the arduous chore of applying pure instrumental reason to
the resources in the external environment in order to actively reconstruct that
environment. The three spheres of cultural traditions and social life are somewhat
brazenly uncoupled, removing the social veil that previously justified a certain
pattern o f communal life by insulating it from critical inspection. Thus, given that
bureaucratic institutions, both public and private, are subject to the analytic
discipline o f the scientific management function and dedicated to the rational
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mobilization of resources to achieve predefined ends in the most efficient way
possible, they are both rational systems and both operate in a public or quasi-public
milieu.
Yet, because the goal of moral discourse is the systematic and objective
examination of a social tradition in order to accumulate a reserve of universally
accepted, rationally tested moral sentiments to be lived out in the everyday reality
o f the lifeworld, only those institutions that are also committed to seeking justice
or to preserving the value of free and open argumentation can be vehicles to
promote the moral imagination of a community. If truly public institutions, then,
are logical systems by virtue of their commitment to the rational management of
both human and non-human resources within a social tradition, and if they are
justice-seeking by virtue of their commitment to procedural and substantive justice,
as argued earlier, then they must also be ethical systems as well as a sine qua non
of moral discourse. Thus, there is a close connection between Habermas’s system
of m oral discourse, the systematic and hyper-rational quality of public life
populated by a flock of bureaucratic institutions, the rationalistic character of
productive organizations led by the postulates and logic o f scientific management
and pragmatic instrumentalism, and the m oral reason nurtured in public
bureaucracies. They are all characterized by an exaggerated form of logic devoid
of any phantasms slipped in by private lifeworlds. In the final analysis, the kind of
logical detachment that inspires universal moral assent in Habermas’s theory of
discourse ethics is also deeply rooted in public institutions devoted to advancing
the common good, promoting the public interest and preserving justice. Public
institutions, then, are the institutional embodiment for the logical system of
discourse Habermas forgot to mention. They are the forums for moral discourse.
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Yet, a difficulty arises. The problem is that management theory tacitly
restricts the manager’s and organization’s actions to a set of conditions
predetermined by the external social environment. It instills a mind-set of
adaptation or accomodation to the broad parameters o f the environment. Strategic
management textbooks, for instance, repeatedly raise the spectre of an all
encompassing social milieu that envelopes the solitary corporation, miring it in a
quagmire of legal, moral, psychological and sociological complexity. The
manager’s job is to successfully navigate the economic vessel around these
estuarial hazards by adapting to them or accommodating them in some way.
Rather than changing the composition of the swampland itself or actively engaging
the outside environment in an effort to manipulate it and transform it, as a true
pragmatic instrumentalism would have it, management experts recommend
corporate adjustment to fit with the complexion of the social context within which
the organization must survive and through which it will flourish. Marketing
strategists create products congruent with the aesthetic taste of consumers instead
of working to reverse destructive preferences and esurient consumption,
international management theorists insist that transnational corporations adapt to
indigenous customs and conventions rather than challenging questionable ones,
and financial officers for the most part passively conform to the internal logic o f
Wall Street rather than daring to dispute the corrosive effect it may have on some
industries, companies or investors. In business school, the message is clear: for an
organization and its cadre of management experts to flourish, they must learn to be
chameleonic lemmings.
Thus, what appears at first blush to be active reconstruction and
reconfiguration of the organization’s external environment is, in actuality, merely a
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blind reaction to internalized social conventions. On the one hand, management
theory stresses a systematic, scientific mind-set and approach for the organization,
an uncoupling o f what Habermas calls the “unproblematic horizon of a concrete
historical form o f life,” which, in the process, individuates the organization, setting
it up as an asocial institution antecedent from the fused lifeworld of the society
within which it finds its own existence (108). On the other hand, in doing so,
social conventions and moral sentiments are tacitly and passively internalized as
evidenced by the unit and measure of change found in the the organization and not
the surrounding environment. Goals and objectives go unquestioned, are assumed
and thus become part of a strategy to maneuver within, but not transform, a
seemingly immutable external environment.
The cause of the contradiction is precisely the one-sided, bureaucratic,
means-oriented rationality that eschews true dialogic engagement with political and
moral claims promoted by various cultural, moral or religious traditions. It blinds
the organization to its latent power to spark discourse about public values and
catalyze social change because it simply dismisses politics as an unwanted
nuisance. In the process, the ethical content of those comprehensive moral
traditions is lost and so the daunting external world inhabited by an exploding
population o f fragmented and contradictory world-views is perceived as an
objectivating, alienating and unchangeable social reality best dealt with through a
host o f accomodation techniques and adaptation strategies rather than as fertile
ground for public dialogue and moral conversion. In other words, a rationalism
that emphasizes means and above all evades ends will, by definition, never subject
whatever ends and goals are chosen to the scrutiny of free and open discussion and
moral argumentation.
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The Habermasian dialectic between system and lifeworld cleaves rational
arguments from unverifiable moral postulates. It distinguishes between the realms
o f justice, embodied by logical discourse free from the untested, evaluative claims
o f the good life, and that o f particularized cultural, historical or religious patterns
o f life. Insofar as rational arguments seek the universalizability of moral principles
and not specific conceptions of the good or particular lifestyles, they seek justice.
Whereas a lifeworld attempts to conserve a distinct way of life and even shelter its
unique world-view from the harsh rays of unfettered inquiry, a moral system
endeavors to crystallize a small, but universal set of ethical principles that apply
equally across all historical and cultural locations. But in doing so, free and open
discourse becomes vacuous, depleted of moral content precisely because
evaluative claims made by various lifeworlds and cultural traditions are
disregarded. Rational argumentation is stripped of its substance and moral
discourse is mutated into mere procedure and the bare formalism of deductive
reasoning. In short, values and principles that are taken for granted in the
lifeworld are peripheralized and the reasoning process is thus denuded.
Indeed, in the strictest sense, principles o f justice are also moral claims
about the good for human existence. They are, in fact, no more than those rights
and principles which resonate in the human imagination and are valued universally
because they embody generalizable ideals crucially important for social interaction
and have been repeatedly tested in the crucible of human affairs and found to be
precious as a moral good. But if a ll moral questions are quarantined and held at a
distance from rational discourse, then that discussion has forfeited its ethical
content and has been deprived o f those primary assumptions and conflicting
world-views crucial to the logical interchange of moral conceptions and judgments.
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Without the values and principles asserted by various narrative traditions, the
realm of the system, the analytical uncoupling of the cognitive, aesthetic and
practical-moral spheres of the integrated story is dispossessed of any content from
which moral judgments may be universally reached and rationality is distorted into
a naked syllogistic rationalism.
As with any void, a moral vacuum cannot be maintained for long.
Something else will rush in to fill it. In the case of the public sector, an evaluative
claim about a particular form of the good life masquerades as a universal principle
of justice. In the Weberian social center occupied by a corps of bureaucratic
institutions, pragmatic instrumentalism, or utility, and the theories of neo-classical
economics, or efficiency, are falsely exalted to meta-values. As argued earlier,
efficiency is blindly taken as the supreme end of institutional endeavors and human
nature is speciously assigned a self-interested, egoistic, rapacious and acquisitive
character. Although proponents of cost-benefit analyses contend that public policy
which is scientifically constructed promotes an “orderly and structured dialogue,”
pure systematic reasoning to the exclusion o f particular evaluative claims actually
insulates it from public scrutiny by narrowing the decisional methodology to one
focused on a quantitative utilitarian calculus or economic analysis (McGarity 122).
Yet, those two values are, in fact, merely postulated and have not been
substantiated or universally accepted as professed. They are only one set of ethical
concerns that have come to dominate political discourse crowding out other
evaluative claims such as autonomy, solidarity, interdependence and compassion.
In this way, efficiency with a select focus on means is said to trump all other values
and utilitarianism with a select focus on outcomes and social engineering is said to
triumph over other intrinsic principles. In short, the detachment of logic from the
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universe of lifeworlds creates a substantive vacuum which is subsequently filled by
utility and efficiency asserting their hegemony over all others, feigning scientific
neutrality, objectivity and resilience to rational debate, and usurping the forum for
moral discourse, corrupting its integrity in the process.
In contrast, when moral assertions are united with logical claims, when the
presuppositions of religious and cultural traditions are joined with those of rational
discourse, when conventional moral standards are coupled with the critical
examination o f generalizable principles of justice, when lifeworld and system are
married, when, in short, politics and rational planning are wed, then reasonable
debate will have something to argue about, moral discourse will be
recontextualized, dialogic forums will be filled with ethical content and moral
imagination, and public policy will be both rational and sensible. Genuine
management, authentic rationality and true justice operate on the cusp between
system and lifeworld, between public and private, between instrumental and
substantive reason, between quantitative decisional outcomes and deliberative,
ratiocinative choice made with respect to the particular community’s ultimate
values, in short, between punctilious social engineering and rudimentary political
ideals.
The result may be similar to what Thomas McGarity calls
“techno-bureaucratic rationality.” As distinct from “comprehensive analytical
rationality,” which marginalizes political claims and other values not amenable to
the rigors of systematic inquiry and methodical investigation, this form of policy
making logic is a kind of bureaucratic intuition and perspicacious realism gleaned
from administrative prudence, political maturity and the type of developed
practical wisdom Aristotle called “phronesis.”
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[It is] a rationality built on a unique understanding of the regulatory
universe that is bom out of frustrating hands-on experience with
unanswerable questions o f extraordinary complexity. It is, in a
sense, a ‘second best’ rationality that recognizes the limitations that
inadequate data, unquantifiable values, mixed societal goals, and
political realities place on the capacity of structured rational
thinking, and it does the best that it can with what it has.
(McGarity 5-6)
In short, it is a kind of muddling through or what Lindblom called “bounded
rationality.”
Thus, the Habermasian dialectic between the system and lifeworld
antitheses is not ultimately resolved in the “communicative action” that is said to
ensue in the lifeworld after universal principles which have been assented to in
rational discourse are applied to and implemented in particular communities. It is
not, in other words, just a re-entry strategy to ensure a soft landing as universal
moral agreement is translated into what Rawls calls the “comprehensive doctrines”
of the lifeworld. Rather, the continuous interaction of the discursive pendulum
swinging to and fro between system and lifeworld is one that fundamentally
preserves the integrity o f moral discourse itself. By sustaining the dialectic’s
integrity, the decontextualization of the social context and the denudation of the
public forum for systematic, rational discourse is prevented, and attempts to pass
off particularized values as universal and foist principles unique to one moral
tradition on all communities is foiled.
Politics alone, of course, is tyrannical and scarcely leads to wise choices. It
justifies the will o f the strongest majority and makes power the central organizing
principle of social activity. Rationality alone, however, is also hopelessly
oppressive as it creates a fraudulent and spurious world-view, elevating counterfeit
claims of moral transcendence and neglecting competing ethical views of the good
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life. When brought together in a way that is not yet fully understood, system and
lifeworld, law and politics, justice and the common good can work together to
craft policy that is acceptable to all. It can forge a consensus of social values and
create what Rawls calls a shared “political conception of justice,” without the
ethical rarefaction that comes with the ostensible virtues o f social engineering and
rational planning.
The political and legal literature on administrative law and bureaucracy
often suggests that social institutions are characterized by pure instrumental reason
and that goals which they pursue are decided in a separate, politically charged
arena. The oft-cited philosophy is that Congress provides the institution with its
charge and the bureaucracy executes that charge in the most efficient manner
possible. Yet, as argued earlier, government agencies are not only bastions of
instrumental rationality, but also forums within which moral claims and disputes
are adjudicated. Their systematic, formal, ritualistic character and exaggerated
logic is coupled with their twin emphasis on the production of socially valuable
goods and services and advancement of the common good embodied in their
justice-seeking orientation, makes them ripe agents of moral discourse and social
change in the way Habermas envisioned it.
But only when the political component is acknowledged and confronted are
public institutions legitimately able to hammer out their institutional goals, lend
credence to the process of “communicative action” and discover the grist for
protecting and truly shaping public values. When government bureaucracies and
time-honored public institutions seek to advance the common good and guarantee
equal justice for all, they are, in part, realizing Durkheim’s concept of organic
solidarity. Even as organizations must still get on with the business of their
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particular business, in the course of doing so, by the very fact that they bring
people and constituencies together in a kind of institutional warmth, they give form
to that conception of justice and the common good itself. And when political
considerations are integrated, a fusion of interests results over time, social
expectations are both created and fulfilled and common meaning is increasingly
found in liberal societies so fragmented by competing visions of morality. This is
exactly what corporatist movements attempt to do. By aligning the interests,
expectations and moral visions of various actors within large-scale, multi-purpose
bureaucracies, a type of social cohesion, or, as Jonathon Boswell calls it, “public
cooperation” is cultivated amidst the fragmented individualism and freedom liberal
societies promote.
Thus, moral discourse is still a valid endeavor. The defeat o f ethical
realism and objectivism need not be replaced by the nihilism o f moral relativism.
The philosophical work embarked on by Habermas, Stout, Rawls and other
theorists is not in vain. Yet, radical conceptions of logical dialogue and rational
argumentation must be tempered with a fuller understanding of how political and
other non-rational claims are not annoying aggravations to be eschewed or
traditional worlds to be re-entered after having filled up at the table of reason, but
are stalwart gargoyles guarding the forum o f public discussion against the
infiltration of a counterfeit rationality and the reduction of social justice to a mere
utilitarian and economic calculus. Politics, then, as it is permitted to enter the
arena of political discourse as a legitimate actor, ensures a truly free and open
dialogue by redistributing the balance between what is exclusively public and
subject to scientific reason and what is private and the subject of privileged moral
conceptions. The inclusion of political considerations permits speakers to bring
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their community’s own ethical baggage and moral imagination to the table. In
doing so, politics is ultimately a central fixture not only in a constitutional
democracy but, more importantly, in a liberal society where conflicting
world-views must be weaved, at least to some extent, into a cohesive moral fabric
if any common meaning is to be found.
Of course, detractors of governmental bureaucracies levy numerous
criticisms. Public officials are said to be just as self-interested as entrepreneurs in
the private sector, pandering to the politicians supervising their agency and
cloaking their own individual desires in the rhetoric of the public interest (Lovik
23-7). Special interest groups infect government agencies, factionalizing the
bureaucratic and political processes, procuring legislation favorable to their
concentrated self-interest at the expense of the public’s more diffuse interests, and
creating an indestructible and unyielding “iron triangle” between politicians,
bureaucrats and lobbyists (Friedman, Tyranny of the Status Quo). Interest group
politics contaminates the political corpus spreading factions like a virus, eroding,
as John Donahue contends, “democratic accountability” (55), and consummating
James Madison’s worst fears as expressed in the Federalist 10:
. . . A number of citizens, whether amounting to a majority or
minority of the whole, who are united and actuated by some
common impulse of passion, or of interest, [is] adverse to the rights
of other citizens, or to the permanent and aggregate interests of the
community, (as quoted in Woll 22-3)
Health care, incidentally, is one of the worst offenders. In 1992, 740 health care
organizations had offices in Washington and since 1979, 370 health PACS have
contributed $150 million. And the funds expended in lobbying efforts to defeat the
Clinton Health Security Act in 1994 made it the “most heavily lobbied legislation
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in recent history” (Litman 15-7). Therefore, detractors contend that true moral
discourse cannot exist in the corrupt pecuniary environment of campaign
contributions. Finally, they say, bureaucracies are simply inefficient.
On the other hand, criticisms such as these illustrate nicely the unwitting
bias defenders of neo-classical economics display in their reasoning. The
“self-evident” assertion that homo economicus is the natural state of humanity, for
instance, is rarely supported by the anthropological and historical evidence.
Nevertheless, champions of the free market presuppose its truth and then project
its assumptions about human nature onto public officials as an obvious truth
(Shonick 94). In doing so, political economists act much like analytic philosophers
who first deny the relevance o f socio-historical contexts to their abstract, asocially
derived theories but who then must justify them using the rhetorical, logical and
linguistic resources o f a particular social context. The abstract conceptions of
human nature espoused by economists in “public choice theory,” for instance, defy
differences across time and culture, yet must rely on empirical results from data
extracted from the activities o f chosen communities to demonstrate their efficacy.
By mechanistically attributing emotivist incentives and self-interested motives to
bureaucrats, critics create a theoretical fiction.
In addition, to say that interest group politics factionalize the public’s
interest and compromise the common good presupposes the preexistence of some
overarching and unified collective will and begs the question of how the public’s
interest is determined in the first place. It discounts the assumptions of democratic
pluralism and overlooks the hypothesis that the common good is forged as a result
of compromise between contending interests. Emotivist dialogue may, indeed, be
rooted in political discourse, but it is nevertheless shrouded in the language of
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rational, moral discourse and subject to the logic o f the law. Thus, in reality, the
public’s interest is defined by the very process economists repudiate. The real job
of the politician is not so much to slavishly represent the public, as if such an a
priori collective will existed independent of the contending factions and special
interests that are scorned, but to be the bearer o f democratic responsibility, so that
when decisions are made that seem to neglect the overall community’s interests,
someone electable is held accountable.
Furthermore, it is commonplace to create a taxonomy distinguishing
between appropriate political considerations and inappropriate partisan objectives.
Lobbying, interest group pressure, campaign finance tactics and other strategic
maneuvers are supposedly examples o f the latter. Yet, all of these stratagems,
ignoble as they may be, comprise the universe of the lifeworld because these are
values the actor holds dear. In short, they motivate both strategic as well as
communicative action. They may appear inappropriate in the context of one
particular policy debate, but, on a more general level, they are still loyalties to
which the institutional actor is ethically bonded however subjective those values
may be defined. They are moral predilections which are spawned by the agent’s
institutional location. So, for example, a health insurance executive is entirely
justified in expending corporate funds to defeat a bill which is perceived to
threaten the viability of free market medicine, a value to which that moral agent
clings dearly precisely because of his or her position in the private sector of health
care delivery. It is only in the public forum that competing political values, such as
justice and equity, are given due consideration and a fuller moral discourse is
achieved.
474
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Finally, it should be understood that bureaucracies are intentionally
inefficient. Their reason for being is not to maximize productivity or profitability
or any other external reward. “Productive efficiency is simply not the cardinal
virtue of civil service organizations. Public agencies are characteristically
structured to guarantee due process and administr

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Asset Metadata

Creator Gustafson, Roger Gunnar (author)

Core Title Gambling with public health: How government officials brought Los Angeles County to the brink of disaster

School Graduate School

Degree Doctor of Philosophy

Degree Program Religion

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag health sciences, health care management,health sciences, public health,OAI-PMH Harvest,political science, public administration,sociology, public and social welfare

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Miller, Donald (committee chair), [illegible] (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c16-123582

Unique identifier UC11334486

Identifier 3041460.pdf (filename),usctheses-c16-123582 (legacy record id)

Legacy Identifier 3041460-0.pdf

Dmrecord 123582

Document Type Dissertation

Rights Gustafson, Roger Gunnar

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA