New Pressures Confront High-Tech Medical Care : Transplants: Plight of the uninsured raises questions for L.A. facilities. Competition heightens.

In the rarefied world of organ transplantation, Los Angeles County boasts an embarrassment of riches.

Three of its major hospitals--UCLA Medical Center, Cedars-Sinai Medical Center and USC University Hospital--compete fiercely with one another for preeminence in this prestigious niche. In an effort to attract research grants and paying patients, they have recruited top specialists and invested millions of dollars in equipment and laboratory facilities.

But another sort of embarrassment threatens the hospitals’ ambitions: the medical plight of nearly 3 million Los Angeles County residents without health insurance.

The uninsured are prey to illness and death from things most Americans never have to worry about. Among them were thousands of children in Los Angeles stricken in the recent measles epidemic. Forty children died. Many of those deaths, health officials say, could have been prevented with a $15 dose of vaccine.

Such tragedies in Los Angeles and elsewhere have brought harsher scrutiny to high-tech specialties whose stunning accomplishments--such as the first-ever pig liver to human transplant at Cedars-Sinai in October--have attracted international attention.

Critics question whether the price of such wizardry is too high. They say that to support transplant programs, hospitals jack up the costs of other services, rendering some of them inaccessible to the poor and uninsured. And they ask whether $150,000 for a liver transplant might be better spent vaccinating 10,000 inner-city youngsters.

Now, with funds for all types of health care dwindling in a sagging economy, transplant surgeons increasingly are forced to wrestle with such questions.

President-elect Bill Clinton has promised reforms that his policy advisers say will effectively shift money from high-tech care to basic medical services. In the meantime, health insurers are putting unprecedented pressure on organ transplant programs to cut costs and prove their worth.

All this has dramatically changed the playing field for UCLA Medical Center and Cedars-Sinai, both established transplant centers, and for USC University Hospital, whose transplant program is getting under way.

Mired in a long history of, at times, parochial competition, the hospitals must find a way to sustain national-level quality with less money. At the same time, observers say, they will face new pressures to address the medical needs of the uninsured.

“We have to overcome history and a lot of arrogance,” said Dr. James R. Klinenberg, Cedars-Sinai’s senior vice president for research. “It’s not a question of (which transplant program) has a right to exist, but how can we coexist in a way that benefits the community.”

First Transplant in 1954

Transplant medicine is a relatively new science, dating back to the first successful kidney transplant between identical twins in 1954.

Over the years, hearts, lungs and livers have joined the list of transplantable solid organs, as well as combinations such as heart-lung and pancreas-kidney. New drugs to counteract the body’s natural rejection of foreign tissue permitted thousands of patients to benefit from this remarkable surgery.

From the beginning, though, organ transplants have been extraordinarily expensive. In addition to the operation itself, transplant patients require intensive care, blood transfusions, extensive laboratory tests and costly anti-rejection drugs.

Liver transplants today go for upward of $150,000, lungs can be $135,000 or more, hearts hover around $100,000 and kidneys are $40,000 to $50,000. Complications with any of them can easily drive the bill over $200,000.

The prices leave most people aghast, said Ellen Severoni, whose research group, California Health Decisions, monitors public opinion on health care issues. The vast majority of those she has surveyed believe this sort of high-tech medicine is a major cause of our nation’s runaway health costs.

What the public fails to see, transplant surgeons contend, is the long-term savings the transplant cures may offer. A successful kidney transplant pays for itself within five years through savings on weekly dialysis treatment and complications of the condition. That makes it the most cost-effective treatment for end-stage kidney disease, said UCLA kidney expert Dr. J. Thomas Rosenthal.

He rejects as bogus any connection between transplants and the health care system’s money woes. Americans need the full range of medical services, transplants as well as vaccines, Rosenthal said. It is senseless to blame one niche of medicine for the failures in another, he said.

But critics use a more global cost-benefit analysis to make exactly that case.

When UCLA Medical Center, Cedars-Sinai and USC University Hospital choose to pursue costly therapies benefiting relatively few patients, they siphon resources from areas of greater need in the community, such as immunization, these critics say.

The contrast between the haves and have-nots in health care is particularly sharp in Los Angeles County, where one-third of the population lacks health insurance--a higher proportion than in any other metropolitan area in the nation.

“Los Angeles is a living, breathing, hyper example of what is wrong with the American health care system,” said Arthur Caplan, director of the Center for Biomedical Ethics at the University of Minnesota. “You’ve got too many children who can’t get a leg up on life, because their prenatal care stinks, they can’t get a measles vaccine, or their diabetes goes unchecked for too long.”

Yet in its major hospitals, Caplan added, the city offers some of the finest medical care in the world--”if you have money. Then you can have pig liver transplants, gene therapy, anything you want.”

Indeed, money is why some hospitals go into the transplant business, health economists say.

Although a program’s start-up costs can be considerable, transplant centers historically have been well paid by insurers. Hospitals also see potential profits in the prestige such programs confer.

Hospital consultant Marian Jennings says many of her clients want transplant programs because they consider them a lure for medical talent as well as for patients who might be impressed by this badge of cutting-edge sophistication.

The burgeoning popularity of these programs is seen in statistics kept by the United Network for Organ Sharing, the federally mandated watchdog agency for transplant medicine. In the last five years, the agency has measured a 39% increase in heart transplant centers in the United States, while liver programs have leaped 70%.

The one thing that has not increased is the supply of donor organs--a problem with grave implications for the quality of transplant medicine, should the proliferation of centers continue. Some transplant experts believe there already are too many.

The more organ transplants a hospital does, the better chance the patient has of surviving, studies show. But with more transplant centers competing for a limited supply of organs, expertise can only be diluted, said Dr. Douglas J. Norman. incoming president of the United Network for Organ Sharing.

Perhaps nowhere in the country are the medical and ethical problems of proliferating transplant centers more apparent than in Los Angeles. They are compounded by the politics of competition among two medical schools and three hospitals, all vying for insured local patients and national recognition.

As the relative newcomer, USC University Hospital has endured some icy blasts from its Westside rivals, Cedars-Sinai and UCLA Medical Center, where officials have grumbled about yet another transplant program in Los Angeles. USC also stepped on sensitive toes when it tried to lure Cedars-Sinai’s liver transplant specialist, Dr. Leonard Makowka, and UCLA’s heart transplant specialist, Dr. Hillel Laks.

But UCLA Medical Center and Cedars-Sinai are not exactly collegial, despite their common ties to UCLA’s medical school.

UCLA Medical Center, which ranks second among hospitals nationally in volume of heart and liver transplants, last summer grabbed the chief of Cedars-Sinai’s lung transplant program, Dr. Paul Waters, who now directs the specialty at UCLA.

And, though they operate within a few miles of each other and are both professors at UCLA, Cedars-Sinai’s Makowka and UCLA Medical Center’s Dr. Ronald Busuttil head up competing liver transplant programs.

Hospital and university officials acknowledge that money could be saved and patients could benefit by closer cooperation between these programs. But the drive of each hospital to ensure its economic survival has sabotaged these efforts as, in some cases, have egos of program leaders, officials say.

“It always gets down to the same issues of power: Who is going to control?” said Cedars-Sinai’s Klinenberg, who in addition to his duties at the hospital is an assistant dean at the medical school. Cedars-Sinai performed its first kidney transplant in 1965 and added hearts and lungs in 1988, livers in 1989.

“There is no effort to organize anything on behalf of the community,” said Dr. Michael Zinner, chief of surgery at both the university medical school and UCLA Medical Center. Both Klinenberg and Zinner say they and administrators of both hospitals have begun monthly meetings to foster closer ties.

Zinner blames California’s unregulated health care economy for pitting hospital against hospital in a fight for insured--and therefore, profitable--patients. Unlike states where so-called “certificate of need” laws require hospitals to prove community need before they can launch a costly new program, California has effectively discouraged such joint planning, Zinner said, by letting hospitals decide for themselves what services to offer.

The hospitals naturally gravitate toward moneymaking ventures. Transplant medicine has been one of them--so long as hospitals pick paying patients to receive the limited supply of donor organs.

“If (a patient) is uninsured and unemployed, he’s got a problem,” UCLA’s Busuttil said bluntly.

The expensive competition that results, however, burdens far more than the institutions involved, critics say.

E. Richard Brown, a professor of public health at UCLA, said patients subsidize these costly and duplicative programs either directly through higher payments for routine medical services, or indirectly through taxpayer supported health insurance programs such as Medicare and Medicaid (called Medi-Cal in California). And because having insurance coverage is often a prerequisite for transplant surgery, some of those whose tax dollars subsidize these services will never be able to benefit from them.

“It is a wonderful sort of microcosm for what ails the American health care system,” said Dr. Robert Tranquada, former dean of the medical school at USC and chairman of Los Angeles County’s Task Force for Health Care Access. “There is money to do this kind of thing. And there isn’t money to address the basic health care needs of the uninsured.”

Clinton’s election has been interpreted as a mandate to correct these inequities. And his remarks to date--touting “managed competition” over the free-wheeling health care market of the 1980s--presage a change in economic incentives for hospitals.

Marilyn Moon, a health economist at the Washington-based Urban Institute and an adviser to the Clinton transition team, said the change inevitably will favor “primary care,” such as immunizations, over high-tech medicine, such as transplants.

That means government money for transplant research will be less available to UCLA Medical Center, Cedars-Sinai and USC University Hospital. And insurance money, both from government programs and private companies, will be tighter too--the result, experts say, of industry efforts to prove it can spend health dollars wisely.

“There is no doubt that the payer community is exerting its muscle,” said Dr. Steven Udvarhelyi of the Prudential Insurance Co., one of the nation’s largest private purchasers of medical services. “We have to ask ourselves as a country whether there are too many of these (transplant) centers, and whether there ought to be some consolidation.”

Prudential has been in the vanguard of the insurance industry’s shift to “selective contracting” for organ transplants and other expensive treatments. Because transplant surgery is difficult, and because the consequences of poor work can add tens of thousands of dollars to a patient’s bill, Prudential and others say they are buying the service only from hospitals with good track records.

Survival Rates Emphasized

The concept originated with the federal government’s Medicare program. Ron Milhorn, an analyst for the U.S. Health Care Financing Administration, said it has proven to be “one of the most successful things” Medicare has done to curb costs and assure medical quality. For Medicare approval, hospitals must have one-year survival rates of at least 73% for heart transplant patients and 77% for liver patients. They must also have at least two years experience and perform at least 12 heart or liver transplants in each of those years.

In California, Blue Cross, Blue Shield, Kaiser Permanente and the state’s Medi-Cal program have all embraced selective contracting for organ transplants. The insurers say they will not contract with hospitals that do not meet their standards of quality and experience in performing transplants. They predict they will use fewer hospitals as tougher national standards emerge for transplant medicine.

Blue Cross of California is paring its hospital list. Dr. David Chernof, the company’s medical director, said the current list emphasizes geographic convenience for the patient as well as quality. The new list will be based entirely on quality, and hospitals will have to re-qualify for inclusion every year--a policy many insurers are adopting.

Chernof believes the policy change will help steer patients to good programs and squeeze duplicative ones out of the health care system. In theory, it should free money for hospital- or community-based services that address unmet medical needs, such as immunization. Yet Chernof is also implementing the policy with some chagrin, knowing well what is at stake for local institutions.

“We have two teaching programs (UCLA and USC) who would feel second-class if they didn’t have a transplant program, plus the biggest and most prestigious private hospital (Cedars-Sinai) in the western United States,” Chernof said. “How are you going to deal with that? What are you going to say--’Go fly a kite?’ ”

Perhaps not in those words, but experts say some transplant centers will not survive the economic squeeze.

While Blue Cross ups the competitive ante, California’s Kaiser Permanente is pushing down fees. It has structured deals with UCLA Medical Center and others on its contract list that pay them only for the surgery, allowing Kaiser to tend to patients’ pre-surgical and follow-up care in its own, lower-cost hospitals and clinics. The result is thousands of dollars less for transplant centers for each Kaiser case.

Insurers also are getting tougher about paying for medical complications, forcing transplant surgeons and hospitals to take the loss on recovery delays and repeat surgery.

It all adds up to much shakier financial footing than UCLA Medical Center and Cedars-Sinai enjoyed when they expanded their transplant programs in the 1980s, and when USC University Hospital launched its ambitions in the field.

Each is scrambling to adapt to the rapidly changing rules. Each also acknowledges that while the competition for survival is a national one, they cannot ignore the plight of the medically underserved at home.

“We have to recognize that it’s a brave new world out there and we have to do things differently,” said Cedars-Sinai’s Klinenberg.

Buying Transplants

Health insurers, relying on tougher quality standards for organ transplants, are becoming more selective about which hospitals they will pay for these difficult and costly procedures. Here are the California hospitals chosen by the government’s Medicare and Medi-Cal programs, and by some major private insurance plans, listed according to the number of contracts their transplant programs have won.

HOSPITAL MEDICARE MEDI-CAL PRUDENTIAL Stanford University Hospital, Heart Heart Heart Palo Alto Lung Heart/Lung California Pacific Medical Center Heart Heart Heart San Francisco Liver Liver UCLA Medical Center Heart Heart Los Angeles Liver Liver UC San Francisco Heart Heart San Francisco Liver Liver Liver Kidney Cedars-Sinai Medical Center Heart Los Angeles Liver Loma Linda Medical Center Heart* Loma Linda Sharp Mem. Hosp., San Diego Heart Heart St. Vincent Medical Ctr., L.A. Kidney Sutter Memorial Hosp., Sacramento Heart

HOSPITAL KAISER BLUE CROSS Stanford University Hospital, Heart Heart Palo Alto Kidney Lung Lung Heart/Lung Heart/Lung California Pacific Medical Center Heart Heart San Francisco Kidney Kidney Liver Liver UCLA Medical Center Heart Heart Los Angeles Kidney Liver Liver Heart/Lung UC San Francisco San Francisco Liver Liver Kidney Cedars-Sinai Medical Center Heart Los Angeles Liver Liver Lung Heart/Lung UC San Diego Medical Center Heart San Diego Lung Lung Heart/Lung Heart/Lung Loma Linda Medical Center Heart* Heart* Loma Linda Kidney Sharp Mem. Hosp., San Diego Heart St. Vincent Medical Ctr., L.A. Sutter Memorial Hosp., Sacramento Hoag Memorial Hospital, Newport Beach UC Irvine Medical Center, Orange Scripps Memorial Hospital, La Jolla UC Davis Medical Center, Sacramento Kidney Alta Bates Medical Center, Berkeley Kidney

HOSPITAL BLUE SHIELD Stanford University Hospital, Heart Palo Alto Lung Heart/Lung California Pacific Medical Center Heart San Francisco Liver UCLA Medical Center Heart Los Angeles Liver UC San Francisco Heart San Francisco Liver Cedars-Sinai Medical Center Heart Los Angeles Liver Lung UC San Diego Medical Center Heart San Diego Loma Linda Medical Center Heart* Loma Linda Sharp Mem. Hosp., San Diego Heart St. Vincent Medical Ctr., L.A. Heart Sutter Memorial Hosp., Sacramento Heart Hoag Memorial Hospital, Newport Beach Heart UC Irvine Medical Center, Orange Heart Scripps Memorial Hospital, La Jolla Liver UC Davis Medical Center, Sacramento Alta Bates Medical Center, Berkeley

* pediatric cases only