3 Southland Hospitals Failing the Poor, U.S. Says

Federal health officials have accused three Los Angeles-area hospitals of not complying with a federal requirement that they provide health care to poor people insured through the state’s Medi-Cal program.

At least one hospital in Northern California has also received a notice of non-compliance and 17 other hospitals statewide have been targeted for further study but not yet contacted, health and hospital officials said this week.

The actions by officials in the Office of Civil Rights of the U.S. Department of Health and Human Services arise from pledges these hospitals made several decades ago to serve the poor, in return for accepting millions of public health care dollars to modernize, expand or build new facilities.

If the federal government is successful in forcing additional hospitals to open their doors to Medi-Cal patients, state officials said that access to health care for the poor would be improved and the burden of providing this care would be spread more evenly among hospitals.

“If you can get some broader range of hospitals required to participate, you get better access for patients, and the state gets a better price,” said Mike Murray, executive director of the California Medical Assistance Commission, which negotiates Medi-Cal contracts with hospitals statewide.

At Methodist Hospital of Southern California in Arcadia, Holy Cross Hospital in Mission Hills and Northridge Hospital Medical Center in the San Fernando Valley, officials said they have been notified by federal health officials that they are not meeting their obligation to serve the poor, specifically because they are not under contract with the state of California to treat patients insured through the publicly funded Medi-Cal program.

Holy Cross Hospital is now trying to negotiate a Medi-Cal contract, according to Dan Perritt, the hospital’s chief financial officer. However, San Francisco attorney Steve Lipton said that both Northridge and Methodist hospitals are “respectfully declining” at this point to enter into negotiations.

“We’d all be best served if we can come to an amicable, timely, reasonable agreement on the issues,” said Virginia Apodaca, regional manager in San Francisco of the Office of Civil Rights. However, a stalemate may ultimately lead to litigation. She would not disclose the names of hospitals that have been served with notices of non-compliance.

In interviews, several hospital officials criticized the Office of Civil Rights for putting a “new twist” on their interpretation of hospital obligations set forth in the Hill-Burton Act--the post-World War II legislation that unleashed millions of federal dollars for hospital construction programs nationwide.

The legislation requires Hill-Burton hospitals to treat Medicare and Medicaid patients. In California, the Medicaid program is called Medi-Cal.

“Our view is that . . . the language (of the regulations) is real clear,” Apodaca said.

The controversy provides a glimpse at a complicated, competitive and confidential process by which state officials negotiate contracts with about 270 hospitals throughout California to treat hundreds of thousands of low-income patients insured through the state’s Medi-Cal program. Negotiations are private and the final rates, which are not publicly disclosed, vary from hospital to hospital.

In recent years, many hospital officials have complained that the rates are too low to cover their costs. Some hospitals, like Northridge and Holy Cross, have terminated their Medi-Cal contracts as a result.

Jeff Flocken, president of Northridge, said that for four years, Northridge had a contract with the state to provide in-patient hospitalization for Medi-Cal patients, but terminated the contract in 1986 “because we had not had a rate increase from the state in four years.”

Perritt said that Holy Cross Hospital contracted with the state since 1960 to treat Medi-Cal patients, but terminated the contract last July “because we couldn’t come to an agreement” on a fair rate of reimbursement. Medi-Cal patients, he pointed out, can get care at other hospitals in the area. Even so, he said Holy Cross is trying to renegotiate a Medi-Cal contract, independent of any pressure from the Office of Civil Rights.

“We feel it’s important for us to serve that population, but we need fair reimbursement,” Perritt said.

Other hospitals in Los Angeles County that received Hill-Burton funds but currently do not contract with the state to care for Medi-Cal patients include, for example, Glendale Memorial Hospital and Health Center, Queen of the Valley Hospital in West Covina and Torrance Memorial Hospital Medical Center. Hospital officials there said they have not been contacted by the Office of Civil Rights.

At Torrance Memorial, Vice President Ray Allen Rahn said Medi-Cal reimbursement rates are so low that contracting to provide care for these patients is “a good way to go broke.”

He said that his hospital would be reluctant to pledge to enter into a contract with the state to treat Medi-Cal patients when the terms are not known.

Attorney Lipton pointed out, “It would be like committing to buy a house without knowing the size or cost or it, or whether you can obtain financing or even if you’ll have a job to pay the mortgage.”