County's budget woes bypassing health department.

These may be dire times financially for Los Angeles County but no one would ever know by looking at the health department's budget.

Although the department has struggled with funding shortfalls for years and faces big cuts to close a projected $800 million deficit in 2007-2008 (when its latest federal bailout will have expired), this year it's doing just fine.

The health department is adding 340 positions and making capital improvements that are helping push its budget to $3.4 billion from $3.3 billion in the coming fiscal year.

Health department officials make no apologies. "When you are running a $3 billion medical system there are some critical areas where you need to invest," said spokesman John Wallace.

Funds for the expenditures come from a variety of sources, including federal grants, state aid and $481 million in carry-over, largely from federal funds that will be gradually depleted as the bailout expires.

The biggest new costs will be in information technology. The department plans to add 80 positions and upgrade an outdated, dysfunctional computer system.

Some of the money is going to help develop a virtually paperless medical records system at the new Los Angeles County/USC Medical Center under construction. The county also wants to create a system in which patients' records will be available online throughout its health network.

Another big goal: better management of pharmaceutical costs, which have been skyrocketing nationwide and had previously been managed at individual facilities. The department is seeking to buy pharmaceuticals in bulk for the entire system, with the goal of getting better prices from suppliers. The pharmacy unit gets 17 new positions.

Other areas slated for additional manpower include contract management, bioterrorism preparedness and nurse staffing. A new state law requires hospitals to follow strict nurse-to-patient ratios.