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June 02, 2004

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Publication Date: Wednesday, June 02, 2004

Cover story: Uncertain future for San Mateo County Medical Center Cover story: Uncertain future for San Mateo County Medical Center (June 02, 2004)

The county has made quality health care for the most vulnerable a high priority. But surging costs and changes on the South County's health-care scene make the future of its hospital uncertain.

By Renee Batti
Almanac News Editor

Life was good for Joanne O'Grady when she was a 30-something career woman, able to afford a home in the high-priced Bay Area.

A longtime employee of Genentech with a robust salary and good health benefits, she felt challenged and engaged by her work. "I thought I'd never leave my job," she says, looking back.

But life changed abruptly about eight years ago when Ms. O'Grady was in a car accident that damaged two disks in her neck. Not one to throw in the towel easily, Ms. O'Grady went through two surgeries while keeping her job, and thought she would be able to live with the pain of her injury.

Then, about three years ago, she was involved in a second accident, causing the pain from her prior injury to flare to an unbearable level. She had to leave her job.

And, in doing so, she had to part with her health insurance -- even though her need for medical care was extreme. During the next few months, she tapped into money she had saved over the years to pay for visits to a series of doctors, with unsatisfactory results, she says. "They were very unsympathetic," and her pain was getting worse as arthritis began to settle into her damaged neck, she recalls.

"It was just excruciating, and no one would help me," Ms. O'Grady says. With her limited funds dwindling, and her despair and concern over possibly losing her San Bruno home growing, she turned to San Mateo County health services at the suggestion of a friend. And that, she says, turned her increasingly bleak outlook for the future into hope.

Growing number seeking help

In seeking help from the county -- traditionally and legally the health-care provider for those with few, if any, alternatives -- Ms. O'Grady joined the rapidly growing number of county residents who receive medical care in county-run clinics, located from Daly City to Menlo Park; and in the San Mateo Medical Center on West 39th Avenue in San Mateo, which comprises the county hospital and a number of clinics.

And while Ms. O'Grady's treatment is partially funded by the state's Medi-Cal system, a vast number of patients cared for through the county program are completely without insurance, even though many of them work.

"Your readers know our patients," Dr. Scott Oesterling said during a recent interview with an Almanac reporter. They are the nannies, gardeners, housecleaners and tree-trimmers who tend to the day-to-day needs of the more affluent in the community, he said.

Dr. Oesterling, a Menlo Park resident and a physician with the county's obstetric and gynecology clinics, is an eloquent advocate of a vigorous and continuing county effort to give "the best medical care that can be provided" to those who can't afford insurance or out-of-pocket care.

But he and other county health workers and elected officials are growing increasingly concerned that severe budgetary problems and a medical workforce shortage -- which may be worsened with the planned building of a new hospital in San Carlos -- will undermine the county's program, and possibly force the closure of the hospital.

"We're in a lot of trouble," Dr. Sang-Ick Chang of the San Mateo Medical Center recently told a task force organized by Supervisor Jerry Hill to examine health-care and hospital-construction issues in the South County.

Supervisor Rich Gordon, a member of the task force, followed Dr. Chang's statement with a dire warning that the county hospital, which provides 95 percent of the medical care for the county's uninsured, "could go away in a matter of months."

Not so soon -- maybe

Last week, Supervisor Gordon offered a somewhat less bleak picture for the hospital's immediate future. Although the hospital is operating in the red, the deficit has shrunk enough in the last year that when the supervisors vote next month on whether to "plug the hole" with money from the reserves, they are likely to do so, Mr. Gordon said.

That fix, however, is becoming less and less possible as the increasing strain on the county's budget continues to force spending cuts. Closing the hospital -- or leasing it to a private health-care provider -- is likely to be a serious consideration next year if funding problems are not worked out within the year.

The prospect of closing the hospital serving the most challenging patient-population in the county is not a welcome one for officials from the other hospitals providing care to county residents. At a recent county task force meeting, Dr. Chang described the county hospital's challenges in providing medical care to the poor, the homeless, the mentally ill, the substance abusers, the victims of violent crimes, prisoners, and the many patients who don't speak English or are illiterate, or whose cultural backgrounds make medical care complicated and difficult.

If the county hospital closes, he warned administrators from Sequoia Hospital, Kaiser Permanente, the Palo Alto Medical Foundation, and Stanford Hospital, "you would all have to step up to the plate" to provide care to the uninsured and "underinsured" now under the county's care.

The response from officials from the private hospitals was unanimous: They would be ill-equipped to take on the burden. "We all take charity cases now," said Dr. David Druker of the Palo Alto Medical Foundation. "But none of us could rise to the level of care" now provided by the county hospital, he added.

Glenna Vaskelis, president of Sequoia Hospital in Redwood City, said private hospitals couldn't duplicate the complex social structure and outreach program of the county's hospital, and noted that the hospital's shutdown would create "an access problem extraordinaire" for the most vulnerable residents of the county.

Respect and dignity

Dr. Chang, Dr. Oesterling and Dr. Bryan Gescuk recently discussed the complex web of care the county provides for those residents during a break from their busy day.

Earlier in the day, Dr. Gescuk had treated a 17-year-old boy with lupus, with complications to his kidneys; the boy, he says, "couldn't even afford the $5 co-pay."

Although the medical staff encounters many people through the day with a range of social and economic problems that may complicate treatment, working there "is a remarkably rewarding experience," Dr. Gescuk says. The structure of care ensures that doctors and nurses seeing a patient for one reason will connect him or her with other medical staff or resources if they see the need, the doctors emphasize.

"Patients get a very personal level of care here," Dr. Oesterling notes. Staff members are from diverse cultural backgrounds, and are often called upon to help deal with cultural barriers that might otherwise prevent a patient from getting needed care, he says.

"We're making sure that everyone gets access to sound medical care -- the best medical care that can be provided," Dr. Oesterling says. "All of us have a belief that health care is a right. ... It's just not acceptable for people to go without health care."

The doctors also emphasize the relationship of mutual respect and caring that hospital staff members try to establish with all patients. "It's a progressive, caring environment" in which patients are treated with dignity, Dr. Gescuk notes, adding, "For some patients, we're the best part of the day."

Dr. Chang echoes that remark, explaining, "Here they are treated with dignity and respect -- and that's something they don't always get in their everyday lives."

Dr. Chang also notes that the county's program is set up to help patients learn about financial assistance and other programs they may be eligible for. And, for patients like the teenager who couldn't afford the co-pay, there are waiver procedures that staff will assist with, he says.

Ms. O'Grady, the San Bruno resident, has been seeing Dr. Chang for her neck injury for two years, and recalls her first visit with him. "I told him, 'I don't know what to do with myself -- I'm ready to throw in the towel.' And he said, 'no, don't do that.' ... I don't know what I would have done without Dr. Chang."

The staff, she says, helped her with Medi-Cal and Social Security applications, and treatment she has received has reduced her pain and may lead to a recovery of abilities she has lost over the years.

"They've been so good to me, and I see them taking such good care of other patients," she says. "They really do care, and it's nice to have someone in your corner like that."

Financial struggles

Nancy Steiger, the hospital's CEO, says the hospital is about $5 million in the red so far this fiscal year, though she said that figure is likely to shrink by about half by June 30, the end of the fiscal year. When she took the top post about two years ago, "the total liability was $50 million," she says, and she and her staff have worked diligently to cut that figure by finding all available funding sources and using every dollar as efficiently as possible.

Both she and Supervisor Gordon say a huge frustration is the county's ineligibility to receive federal funding available to other hospitals that provide a disproportionate share of health care to Medi-Cal patients, known as indigent care. The funds are not available because of a "weird nuance" in the funding provisions that unfairly penalizes the hospital for a system the county set up to deliver Medi-Cal care more efficiently and broadly, Ms. Steiger says.

"It's fundamentally wrong that we don't get these funds," which would total an estimated $7 million to $9 million annually, she says. "We're trying like crazy to get this changed."

The San Mateo facility is the only county hospital in the state that is ineligible for the funds, Mr. Gordon says. Although he is "somewhat pessimistic" that the county's lobbying efforts to change the funding provision will pay off in time to lessen the budget crunch this year, he says "it's something that in the long term has to get fixed" if the county is to continue running the hospital.

With a $163 million budget for this fiscal year, the hospital receives $55 million annually directly from the county. The remainder of funding comes from patient fees (51 percent); government funding (12 percent); and other operating revenue (5 percent).

Part of this year's cost overrun is the result of a severe nursing shortage -- a statewide problem that hits hospitals with tight budgets hardest. To make up for the shortage this fiscal year, the hospital will spend an unbudgeted $2 million to $3 million on temporary nurses hired through a temp agency or through a nursing registry, Ms. Steiger estimates.

The under-reimbursement of Medi-Cal care, which represents a significant part of the county hospital's work, is another burden on the hospital's budget. Many doctors in private practice won't even take on Medi-Cal patients because the state's reimbursement doesn't begin to cover costs, hospital officials say.

In this fiscal year, patients will have made an estimated 203,000 outpatient clinic visits, an increase of 5 percent from last year; and 33,500 visits to the emergency room, a 5 percent increase from last year on top of a 20 percent increase the year before that.

The total number of surgeries performed is estimated at 2,000, a 4 percent increase from last year; and admissions are expected to reach about 3,800, an increase of 6 percent from last year on top of a 12 percent increase the year before that.

Closing the hospital would not mean the county could walk away from its legal responsibility to ensure that the uninsured have access to medical care. It would have to contract with other medical services to provide care, but county decision-makers have long held that the best, and least expensive, way to deliver high-quality health care to the county's most vulnerable residents is to operate its own hospital.

What's next

The county task force created by Supervisor Hill last met at the end of March, and is set to release its recommendations next week. In the course of five meetings, the group's discussion evolved in an unexpected way, a number of observers agree.

It was originally formed when it appeared the Palo Alto Medical Foundation (PAMF) was serious about plans to build a full-service hospital in the South County. What would the introduction of a new hospital mean to medical care for county residents? And how might the new facility adversely affect Sequoia Hospital, which faces a state-mandated 2013 deadline to rebuild or seismically upgrade its facilities; and Kaiser hospital, which is planning to triple its Redwood City campus?

These questions were addressed by the task force, which also brought Stanford Hospital, Lucile Packard Children's Hospital and the county's hospital into the discussion. But as the discussions progressed, what emerged clearly to many participants as the greatest threat to health care in the county was the possible closure of the county's hospital.

The task force's recommendations include bringing the county's two taxpayer-funded health-care districts into the picture as possible funding sources for indigent care in the county. That includes the district that serves residents in the North County and formerly operated Mills-Peninsula Hospital; and the Sequoia Healthcare District, which co-owns Sequoia Hospital with Catholic Healthcare West (CHW).

The Sequoia district alone raises more than $4 million annually through taxes, and has assets of about $60 million.

The recommendations also include urging private hospitals to collaborate in workforce training and development programs, and to invest in workforce housing.

Another key recommendation is to urge hospitals to discuss indigent care, and how it might be shared to take some of the burden off the county hospital.

Noting that San Francisco General Hospital provides only about 78 percent of indigent care, compared with the 95 percent taken on by San Mateo County, Supervisor Hill has stressed that the county's private hospitals should be willing to do more.

Those hospitals, he notes, don't pay taxes, and they should be giving back more to those communities they thrive in. At the last task force meeting, Supervisor Hill told the hospital administrators at the table: "When you're a nonprofit, you need to do more. If you want to move into this community, you have to provide charity care in this community. If you want to play in this community, you need to pay in this community."

Mr. Hill said last week that he will try to set up a mechanism for bringing the hospitals together to create a strategic plan on providing indigent care in the county.

Both Ms. Vaskelis of Sequoia Hospital and Dr. Druker of PAMF say they are willing to discuss the issue further with the county. Both also note that their agencies provide a number of health-education and other programs that serve low-income and disadvantaged communities in the area.

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