Health of All Could Suffer

Hospitals are struggling financially here and everywhere. Because of medical advances and nearly a decade of cost-containment efforts by government and insurance companies, fewer people are hospitalized and their stays are shorter. The result is a surplus of beds.

At the same time, the burden of caring for indigent patients has increased. Fewer people have insurance, and government subsidies don’t cover costs.

Local examples of the impact of these changes in health care are abundant. Countywide, hospitals wrote off about 34% of gross revenues last year because of bad debts or underpayments. Employees are laid off periodically, most recently at Sharp Memorial and Grossmont hospitals. Two small hospitals have closed, and Physicians & Surgeons Hospital is threatened. Emergency rooms throughout Southern California are endangered because of the many indigent patients they serve.

As a result, competition is keen for privately insured patients, and deregulation has intensified it. No longer must a need be proved to the state to obtain permission for building a hospital. Today, marketing decisions can make or break a facility.

In this competitive search for patients whose insurance pays a higher percentage of costs, it’s easy to understand why UC San Diego has decided to build a hospital on its La Jolla campus, why Sharp expanded its network so rapidly, and why several hospitals are planning to build in fast-growing North County.

Each hospital follows its own business path, with little or no cooperation or planning among them. That’s not unusual in other business worlds, but it is a relatively new approach for hospitals and one that in the long run may not best serve them or the overall health-care system.

UCSD’s decision is a microcosm of the dilemma.

The university’s Medical School operates an aging, crowded hospital in Hillcrest, making it difficult to attract the privately insured patients needed for financial stability, or the faculty needed for educational quality. UCSD administrators decided that building a campus hospital and moving some of Hillcrest’s beds to La Jolla would address both problems.

In La Jolla, they could offer prospective faculty members the convenience of a nearby hospital and the chance for more-lucrative private practices, which in turn would provide more referrals of privately insured patients to the hospital. It also would position the 120-bed hospital in a fast-growing, affluent area of the county. Remodeling the old facility would make it more attractive to privately insured patients. The result will probably be a better medical school and less red ink.

In the process, however, UCSD will be expanding the total pool of beds in the county by about 40 to 50 at a time when occupancy rates are less than 70%, and it will be increasing the number of beds in La Jolla by about 20%. Two nearby hospitals, Scripps Clinic and Scripps Memorial--with occupancy rates of about 60%--could be hurt.

To a much lesser extent, so could others, if UCSD takes a larger share of the privately insured.

For the university, the strategy makes good sense, and the community will probably benefit as well from an improved teaching hospital. But a decision to build in a saturated area and for an amply served market is one that should not be based on the welfare of one institution alone.

Perhaps it’s time to reconsider some sort of regional health planning body. Cooperation and coordination among hospitals are essential to a viable health care system. With better coordination, perhaps UCSD might have been able to work out a cooperative arrangement with one of the other two La Jolla hospitals, and that would have benefited all the people as well as the institutions.