County will hang on to Rancho

DOWNEY - The plan to seek a private operator to administer Rancho Los Amigos Rehabilitation Center for operational and fiscal reasons has been shelved.Instead, the Los Angeles County Board of Supervisors has approved a proposal prepared by County CEO William Fujioka to effect significant savings in Rancho's operations and by extension those of the Department of Health Services (DHS) which is responsible for developing integrated and coordinated health care systems in the county. A review of Rancho's operations for the past seven years has not diminished its hallowed role as an effective manager of the medical, surgical, and rehabilitation needs of the most complex case-mix patients placed in its care. Fujioka estimates that from 2003 to 2010, Rancho has taken care of 74,000 outpatient visits and an average daily population of 190 inpatients. Indeed, because of the expertise accumulated at Rancho, DHS feels confident that it will be able to provide people with disability care that will, in Fujioka's words, "optimize functional recovery" but which will be achieved in a cost-effective manner. The key element of Fujioka's plan is to maximize Rancho's marketing opportunities taking advantage of the new announced Medi-Cal Waiver as well as patient referrals from the health plan pool. Negotiated contracts with these private health plans alone (such as Kaiser Foundation Health Plan, Inc., Aetna Health Management, LLC, Veterans Administration) can be expected to bring in savings of anywhere from $2-$5 million a year. The new Medi-Cal Waiver, said to be currently being negotiated by the state with the Centers for Medicare and Medicaid, is expected to generate annual revenues of $5-$10 million. Savings from an expanded Coverage Initiative (CI) program that will kick in when the federal Healthcare Reform is implemented in 2014 should contribute $3-$5 million (the CI expansion is expected to provide coverage for patients who are currently uninsured). An integral part of the plan for Rancho is to develop additional cost savings proposals to take advantage of surfacing opportunities over time. A three-pronged program to realize operational efficiencies and revenue opportunities at the hospital and hence for DHS has been outlined as follows: 1.) By redesigning its outpatient delivery system, Rancho has increased the number of patient visits by 10,000 a year without additional personnel. It goes without saying that DHS as a whole has softened the blow suffered with the closure of Martin Luther King Hospital. On average, Rancho is seeing an additional 50 inpatients per day, which translates to 1,000 additional admissions per year. What this means is that areas are being looked at where decreased costs and increased productivity can be effected; 2.) As already mentioned, enhanced revenue streams should be generated from contracts with private health plans, etc.; and 3.)‚ÄàAs part of its programmatic changes, Rancho is helping manage the overflow of patients from LAC+USC Medical Center and Harbor-UCLA Medical Center, while quality of care is maintained. These three measures are expected to result in $6.2 million in savings. Indeed, with economic, innovative, and technological challenges crying for creative and courageous actions, Rancho, along with DHS, has been arming itself to compete effectively in the general health care market. Fujioka still has to submit another proposal to form a group whose job will be to help focus everybody's energies in positioning the county health system to be competitive in the years ahead.

********** Published: June 11, 2010 - Volume 9 - Issue 8