Help for county budget Ills seen in outpatient care. (Up Front).

Every day, cardiologists at Olive View-UCLA Medical Center face a dilemma that exemplifies the county's troubles in trying to close a widening gap in its $2.9 billion health department budget.

There, like at other county hospitals, they see a stream of patients suffering from congestive heart failure, a progressive weakening of the heart muscle that is one of the nation's fastest growing, age-related medical conditions.

The patients include a 49-year-old Burbank man who has been admitted to the hospital twice in the past four months. While there, he is administered intravenous diuretic drugs to flush excess fluids from his lungs, which build up from failing to take his medications. After a week of treatment in a hospital bed, he is sent on his way with medications - until he shows up next time.

"You just can't do a terrific job (with outpatient care) because of the resource issue," acknowledges Dr. Robin Wachsner, the chief of the hospital's cardiology program.

But here's the kicker.

While a hospital bed may cost $1,800 a day to operate, admitting a patient is one of the few ways that the county health department actually makes any money.

That's because under the government's Medicaid program for poor people, the county is reimbursed better for inpatient admissions than outpatient visits. So while the county could treat more congestive heart patients more effectively through a tailored outpatient program, only a few patients receive such treatment through a handful of pilot programs.

"You spend more money up front, but it's still cheaper than admitting them to the hospital," said Wachsner.

The county is trying to do something about the problem as part of its effort to close an estimated $709 million budget deficit it faces in three years--the result of spiraling medical costs, insufficient reimbursement, a declining $1 billion federal bailout and huge numbers of indigent patients.

It is seeking more flexibility in its funding formulas from state and federal officials that will allow it to establish outpatient disease management programs that will cut costly hospital admissions, while not also costing it money.

"It would be financial suicide to do it on a widespread basis now," says Dr. Jeffrey Guterman, the department's medical director for clinical resource management.

The county estimates that it earns $10 million treating the roughly 5,000 congestive heart failure patients who are admitted to county hospitals each year. But congestive heart failure is only one example of a funding system that rewards inpatient admissions, rather than cheaper outpatient care.

Other diseases that are candidates for such an approach are diabetes and asthma, where lack of consistent outpatient care can lead to recurrent inpatient admissions.

Frequent visits

In the case of congestive heart failure, the county estimates that a typical patient without sophisticated outpatient care will be admitted to the hospital three times each year, including twice to the emergency room. The patient also will be scheduled to see a doctor on an outpatient basis every three months at best.

All that treatment costs $18,417. But under the Medicaid reimbursement formula it receives $20,868 in federal funds for the treatment, allowing the county to earn $2,450 on the patient.

On the other hand, a disease management program with double the outpatient visits and in outreach component in which nurses contact patients to check up on them could cut those admissions by a third and cost just $16,350. However, under the reimbursement formula, the county receives $16,353 for outpatient services, essentially breaking even.

If the county receives the flexibility it wants, department Director Dr. Thomas Garthwaite believes county expenditures on disease management programs will lower total healthcare zosts while better treating more patients. That would be noteworthy should budget cutbacks Force the county to shut down hospital beds, as is now being considered.

The pilot program at Olive View for congestive heart failure patients has already proved itself, according to Wachsner. It's funded by a pharmaceutical company, which has been testing a new heart drug. That funding helps pay a nurse dedicated to the program, allowing the patients to be seen as once as once a month or more.

Carl Christie, a 65-year-old Agoura Hills resident, has been enrolled for the past two years, and was in the hospital last week for a flare-up of his congestive heart failure.

The flare-up left him short of energy and out of breath. That doesn't sound good, but it was the first hospital admission for Christie in three years. And it's been 10 years since he was first diagnosed with the disease, which traditionally has had a 50 percent mortality rate after two years, though new treatments are lowering that.

Through the program Christie not only gets the new drug, but regular check ups during which his medications are altered, as well as counseling on diet and nutrition. Compared with his previous care it has been "like night and day. I honest to God believe I could not be getting better care," he said.

Health Funding Sources

County must close $709 million gap in three years.

(in millions)


County    9.2%
State    33.2%
Federal  46.9%
Other    10.7%

Los Angeles County Department Health Services

Note: Table made from bar graph