A year after health care crisis, partnership system paying off.

What a difference a year can make.

Last fall, Los Angeles County's public health care system was on the verge of collapse: The Department of Health Services faced a $655.5 million budget deficit, unionized health care workers were striking in response to growing layoffs, and a plan to shut the sprawling Los Angeles County-USC Medical Center had raised cries of protest from community leaders and patient advocates.

The broiling disaster was averted when the federal government stepped in at the last minute with a five-year, $350 million bailout package that helped plug the immediate budget holes and kept County-USC running.

But while the crisis now seems like a bad dream to many employed in the health care system, it is one they know can recur if subsequent plans to transform the system should fail.

The bailout deal, put together by local, state and federal officials, requires the county to downsize inpatient capacity and increase outpatient care by 50 percent.

So far, local officials say, L.A. has met its end of the bargain. And a good thing, too; to remain eligible for the federal money, the county must prove each year that it is making significant headway toward transformation.

In the first year of the program, the county cut 300 beds at various facilities and signed contracts with 27 private companies and foundations to run 42 clinics and two hospitals. The county is currently negotiating on another 15 contracts that would bring 70 of its 77 medical facilities under management by public-private partnerships, according to Nancy Rubin, executive officer at Health Services.

The facilities currently operated through public-private partnerships are mostly small medical clinics that function as primary-care units for indigents, or others who are uninsured or otherwise cannot pay to see a physician. They include the Compton Health Center, the Norwalk Health Center, the Pico Rivera Health Center and the Hollywood-Wilshire Health Center.

Two county-owned hospitals, Queen of the Valley Hospital in West Covina and Pomona Valley Hospital, are also now run by private companies. While remaining in county hands, County-USC will likely be torn down sometime in the next decade, and replaced with a smaller facility.

The transformation from public to private faced rough sledding at first, but for the most part the partnerships are working, participants say.

"We were one of the first ones, and I can tell you at the start it wasn't easy because the county wasn't contributing anything other than space," said Dr. Susan Fleishman, director of medical services at the Venice Clinic, which with 75,000 patient visits a year claims to be the busiest free clinic in the country. "But now it's better because the county is now contributing some money as well."

While the health care budget is re-negotiated with Board of Supervisors annually (it was $3.6 billion for 1995-96), cost-cutting, savings from the partnerships and four more years of federal money have eased concerns over another major shortfall.

Private clinic operators have been motivated to partner with the county in part out of self-preservation. If the county closed its public clinics altogether, the private clinics would be inundated with indigent and uninsured patients.

In the case of the Venice clinic, the county had threatened to close two nearby clinics - a different one in Venice and one in Santa Monica. Under the partnership agreement, Venice Family Clinic and the county now jointly operate all three outlets. The Venice Family Clinic receives per-patient payments from the county for running the two formerly public clinics, though it would not disclose how much.

From the county's point of view, the partnership fulfills the health department's mandate to provide medical services to the indigent and uninsured while cutting costs, said Rubin.

"This is a restructuring of the entire public health system," she said. "We're not only making a big investment in outpatient care through the clinic system, we're also doing it at a lower cost."

At the end of the five-year program, the system should be sufficient enough to survive without extra-budget federal support, officials say.