ABLEnews Extra

                    Grave Concerns

          [The following file may be freq'd as MC50918.*
          from 1:275/14; and other BBSs that carry the
          ABLEFiles Distribution Network (AFDN) and ftp'd
          from ftp.icdi.wvu.edu on theInternet. Please
          allow a few days for processing.]


Grim Prognosis for South Bay Hospital System
Feeling effects of health care revolution

David A. Sylvester, Chronicle Peninsula Bureau

Over the past 30 years, as Santa Clara County exploded with growth
from the burgeoning electronics industry, it also developed one of the
finest hospital systems in the Bay Area.

Thirteen hospitals range from Stanford Medical Center in Palo Alto in
the north to tiny Saint Louise Hospital in Morgan Hill. In between lie
a string of top-notch community hospitals, including two run by Kaiser
Permanente. For those who cannot afford private care, the county
operates Santa Clara Valley Medical Center.

Now, the system is on the verge of vanishing.

Sweeping changes in medicine, new insurance programs broadly called
"managed care" and possible cuts in Medicaid and Medicare are forcing
hospitals to admit fewer patients, cut costs and merge with larger
health systems.

Already, half of the county's hospital beds are empty. Last week, CBS News'
"48 Hours" used El Camino Hospital in Mountain View as its example of the
cutbacks, short staffing and empty beds that hospitals around the country
will soon be facing.

The county's 13 hospitals, licensed for about 3,800 beds, are operating
with significantly fewer and have only 1,909 filled. According to a study
by New Century Healthcare Institute, the county will need only 1,600 beds
by the year 2006.

If that prediction is accurate, more than half of the community
hospitals in Santa Clara County could disappear; patients with serious
illnesses and major emergencies may find only a few large central
hospitals left, with many surgeries performed at small outpatient
clinics.

In the nine-county Bay Area, there are 73 hospitals, yet only 39 will be
needed over the next decade, according to the institute. "It's going to
get pretty ugly," said study author Wanda Jones.

The signs of this impending change are now emerging:

-- In San Jose, the most prominent victim is the four-hospital Good
Samaritan Hospital System, which is about to be sold to a larger
chain. Its losses are expected to exceed $30 million this year, after
Good Samaritan failed to cut costs and consolidate operations quickly
enough. Among the possible purchasers are Columbia/HCA Healthcare
Corp., Sutter Healthcare and Tenet Healthcare Corp.

-- In Mountain View, some community doctors are rebelling against the
effects of changing the public El Camino Hospital into what is called
"an integrated delivery system" operated by the private, nonprofit
Camino Healthcare. Some doctors complain that cost-cutting moves are
hurting patient care, and the public hospital board that acts as the
hospital's landlord has hired a special investigator to look into
whether Camino Healthcare has violated its lease and agreement to
maintain quality health care.

-- In May, O'Connor Hospital and Saint Louise Hospital in Morgan Hill
merged with Catholic Healthcare West, the chain of hospitals operated by
Roman Catholic religious orders. The sale expands the Catholic system to 24
hospitals in California, Arizona and Nevada.

-- Even world-renowned Stanford Medical Center is worried that its
training programs are in jeopardy from the cuts in Medicaid and
Medicare programs that have been proposed by Republicans in Congress.
The federal programs have traditionally subsidized physician training,
and any cuts could translate into fewer doctors trained in residency
programs.

These are only the early signs of the changes that "managed care"' is
forcing throughout the medical system. Instead of paying for each
procedure performed, insurers agree only to pay for each patient's
entire health care for the year, whether the patient has a head cold
or a heart attack.

In theory, this system of payment is supposed to encourage preventive
medicine and reduce unnecessary medical procedures and hospitalization. In
practice, critics say, it forces health care providers to keep patients out
of hospitals and treat them in less e0xpensive outpatient clinics or at
home, even when such care is not appropriate. As a result, hospitals are
left with vacant wings and floors.

"It's very hard for a nonprofit to shut the door on itself," says New
Century's Jones. "The public has not really got it that these closures
will hurt access to care."

So far, no hospital has actually closed, but there have been some
attempts to dismantle units at hospitals. Good Samaritan has
considered closing several units at San Jose Medical Center, including
the well-regarded trauma unit, but an outcry from doctors has
persuaded the hospital to postpone plans.

Camino Healthcare is proposing to sell its kidney dialysis unit to
raise money to stem its losses, but doctors say the move would
undermine one of the hospital's most profitable treatments.

Some hospitals are finding ways to live with the changes or avoid the
worst of their effects. The 204-bed Alexian Brothers Hospital in San
Jose has done quite well by defying conventional wisdom and staying
independent of larger chains. It has cut costs, avoided setting up
expensive treatment units, such as open-heart surgery or pediatric
intensive care, and focused on basic0 care for its patients on the east
side of town.

"We may be a single hospital, but we're a low-cost hospital," says
Alexian chief executive Steve Barron. "Joining a system doesn't solve
the basic problem. You still have too many hospitals. Somebody is
going to go out of business."

Kaiser Permanente is spending about $300 million to replace its
337-bed Santa Clara hospital during the next four to five years with a
252-bed facility. Kaiser is sticking with its traditional system of
providing both doctor and hospital.

Santa Clara County also is embarking on an expensive building project,
the $200 million construction of the North Tower at Santa Clara Valley
Medical Center. The tower will replace a 35-year-old building that no
longer meets earthquake standards and has reduced the hospital's
capacity to 302 licensed beds.

Executive Director Bob Sillen foresees widespread closings among the
private hospitals and says Valley Medical will be the only one to
accept the uninsured and poor. "You're going to see less and less
ability and willingness of private hospitals to take these patients,"
he said. "The crisis will be less and less a crisis of money than
having access to health care."

Supervisor Ron Gonzales and others have questioned whether the county
is making a major mistake by undertaking its most expensive project
ever at an uncertain time.

"It's going to bankrupt the county," said New Century's Jones.

The county's biggest private hospital, at Stanford University, is now
profitable after cutting costs by $80 million over the past five years and
investing in new advanced treatments that attract patients from throughout
the state and elsewhere in the world. Peter Van Etten, Stanford Medical
Center's chief executive officer, likens Stanford to a technology business
that must keep developing new, advanced products as the older ones become
basic commodities.

At the same time, Stanford has purchased two doctors' groups to compete for
insurance contracts under "managed care," even though Van Etten has
reservations about the direction of the new programs. "We see the
juggernaut of managed care as entirely price-driven and very destructive
to the delivery system," he said. "I have grave concerns about it."

[San Francisco Chronicle, September 18, 1995]

CURE Comment: We share Van Etten's "grave concerns" about the managed
              care juggernaut . . . literally.

     Brought to you as a public service by ABLEnews. A
     Fidonet-backbone echo featuring disability/medical       
     news and information, ABLEnews is carried by more than       
     500 BBSs in the  US, Canada, Australia, Great Britain,     
     Greece, New Zealand, and Sweden. Available from Fidonet      
     and Planet Connect, ABLEnews is gated to the ADANet,       
     FamilyNet, and World Message Exchange networks.      
     (Additional gating welcome on request.) The echo may be
     reached via telnet at <http://www.icdi.wvu.ed>.
                                     
     ABLEnews text files (suitable for bulletin use) are
     disseminated via the ABLEFile Distribution Network,
     available from the filebone, Planet Connect, and
     ftp.icdi.wvu.edu.

...For further information, contact CURE, 812 Stephen St., Berkeley
Springs, WV 25411. 304-258-LIFE/258-5433 (CUREltd@ix.netcom.com)

