Federal cuts spur layoffs at hospitals.

Faced with millions of dollars of lost revenue from the federal government, several local teaching hospitals have begun eliminating hundreds of positions, mostly in administrative and clerical spots.

Most prominent has been UCLA Medical Center. which last month announced that 200 jobs in hospital management and support services would be dropped, effective immediately. Sixty-six full-time employees were laid off, temporary workers were let go, and open start positions at the hospital will not be filled.

"We were $43 million in the black last year and we want to stay there," said UCLA health sciences spokesman David Langness.

Other layoffs have taken place at Loma Linda University Medical Center and USC University Hospital.

Officials at local hospitals said patient care would not be adversely affected by the layoffs because most of the staff reductions came in administrative areas.

"UCLA Medical Center will continue to take the necessary steps to remain financially healthy." Dr. Michael Karph, director of UCLA Medical Center, said in a prepared statement. "When we are vigilant about costs, we can stay fiscally sound, which allows us to preserve jobs and serve the community."

Teaching hospitals took the brunt of the Medicare cuts required by the federal Balanced Budget Act, according to Jim Lott, executive vice president of the Healthcare Association of Southern California. Before the bill, UCLA, Loma Linda and USC received subsidies for each student doctor who worked there as a resident.

But after the legislation was passed, the subsidy was capped at the number of residents the teaching hospital employed during 1996. Now if the number is exceeded, the hospital doesn't get any extra federal dollars.

The budget act also cut back the extra payments provided to teaching hospitals for treating patients who were on Medicare. The reductions are being implemented by the federal government in stages, Lott said, with the final round of cuts scheduled for 2002.

The Balanced Budget Act is expected to reduce these kinds of Medicare payments to hospitals nationally by $25 billion between 1998 and 2002, according to a study by the Congressional Budget Office.

UCLA reports a loss of $20 million in revenue this year because of the measure, said Langness. USC University Hospital lost $10 million this year, and the USC/Norris Comprehensive Cancer Center saw an $11 million decrease over two years. Figures were not available from Loma Linda, which is believed to be eliminating several hundred positions.

Lott said other local teaching hospitals, including Martin Luther King/Drew University and County-USC Medical Center, are not taking as much of a hit because Medicare dollars are being retained as part of a federal bailout earlier this decade.

"Teaching hospitals were disproportionately impacted by the Balanced Budget Act," Lott said. "Unless Congress intervenes, they're probably going to have to cut costs even more."

The American Hospital Association has launched a major lobbying effort to get the Medicare spending limits repealed. Several bills are now before the House Ways and Means Health Subcommittee that propose rolling back the limits.

Local teaching hospitals are rallying behind the lobbying effort, encouraging employees to send letters to their congressional representatives and participating in a campaign designed by the AHA to deluge key players on Capitol Hill.

Langness doesn't foresee additional layoffs at UCLA. But others in the health care field aren't so sure. Hospitals like UCLA continue to face low reimbursement rates from health maintenance organizations, in addition to losses caused by the Balanced Budget Act.

"Everybody is watching their revenue lines go down," Lott said. "If we don't get things turned around, every hospital is going to have to cut costs."

He believes reduced HMO reimbursement rates are depriving local hospitals of much-needed money.

"It's like three, 800-pound gorillas are controlling 80 percent of the market - Blue Cross, PacifiCare and Health Net," Lott said. "Because we have these three in a market where there is an oversupply of hospitals, they have been able to get huge discounts from hospitals and from there continue to ratchet (reimbursements) down."

Walter Zelman, president of the California Association of Health Plans, does not believe that reimbursement rates are too low to sustain full hospital staffing.

"There is a tendency of provider groups and hospitals to blame managed care organizations for financial stress they may be experiencing." he said. "I hear a lot of evidence from people in the plans that different provider groups are doing better than others that are given the same payment rate."

UCLA officials said salary increases have also hit the hospital hard, especially those that resulted from collective bargaining efforts led by a union representing nurses. But that assertion outraged David Johnson, director of the University of California negotiation division for the California Nurses Association.

"It's absurd," Johnson said. "I think the reality is that nurses at UCLA still need their wages increased."

Although the recent revenue declines have caused turmoil at places like UCLA and Loma Linda, some hospital staff members are thankful the cuts weren't deeper.

Earlier this year, hospitals affiliated with UC San Francisco and Stanford University announced that they intend to eliminate 2,000 positions and possibly shut down one of the hospitals in the network.