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Report: LA County Must Adapt for Healthcare Reform

Failure to adapt to the federal program could mean financial shortfalls and hospital closings, according to county officials.

Los Angeles County must move quickly to adapt to federal health care reform or risk huge financial shortfalls or hospital closings, according to a report released without comment Tuesday by the head of the county's hospital system.

The report was posted as part of the agenda for Tuesday's Board of Supervisors meeting, but discussion was postponed.

The Department of Health Services estimates that 70 percent of those currently uninsured in Los Angeles will be eligible for insurance through either Medicaid or the state's Health Benefit Exchange. Starting Jan. 1, 2014, about 200,000 low-income residents currently enrolled in Healthy Way LA, the county's program that pays for health care for income-eligible residents, will transition to Medicaid and be able to choose between a public and a private health care plan.

The county currently collects about $140 million in federal reimbursements caring for Healthy Way LA patients.

"What would be disastrous for L.A. County would be for the vast majority of HWLA patients to choose a different provider," DHS Director Mitchell Katz warned in the report.

In the 1990s, when Medicaid was expanded to cover pregnant women and their children, the number of deliveries in county hospitals dropped from about 43,000 annually to less than 3,000 in recent years, according to DHS.

Because hospitals operate with very high fixed costs, a drop in the number of patients served has a much bigger impact on revenues than on expenses. A drop in patient volume of 30 percent, for example, will only cut expenses by 5 to 10 percent, according to the report.

And because about 1.3 million people in the county are expected to remain uninsured even after the Affordable Care Act takes effect, the county is obliged to keep hospitals open and provide a full range of services, even if that means incurring big losses.

The county has already taken steps to try and improve the patient experience, including setting up a primary care model, retraining health care providers and making appointment times more flexible. But more needs to be done, Katz said, including expanding specialty care, improving overall customer service and using electronic health records to coordinate an efficient range of care.

The federal reimbursement system will also change, from payments based on the cost of providing care to flat monthly per patient fees. Medicare and Medicaid are also focused on paying based on positive outcomes rather than for specific services. The changes are intended to give local hospitals and clinics incentives to control health care costs.

But the reforms will also put more pressure on hospitals to "provide the right service in the right place by the right person," Katz said. That includes moving patients who require a lower level of long-term care -- like chronically ill, homeless patients -- out of hospitals and into facilities better suited to their needs.

The board has asked Katz to report monthly on the department's progress in prepping for 2014.

--ELIZABETH MARCELLINO, City News Service

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