The Proposed Closing of Rancho Los Amigos National Rehabilitation Center (Exhibit)

Exhibit Comparing the Financial Capacity of Accredited Inpatient Rehabilitation Hospitals with Medi-Cal Contracts with the Capacity of Other Rehabilitation Hospitals in Los Angeles County, Fiscal Year 2001 Hospitals CARF-accredited, with Medi-Cal contracts Other rehabilitation hospitals Total Margin Equity as % of CARF with Medi-Cal/ Total Revenue as % of Other Hospitals 1.47% 3.10% 47.4% 54.50% 78.10% 69.8% 6. Declared willingness Currently, Rancho is apparently the only rehabilitation hospital in Los Angeles County of 33 on which data were available that is willing to accept Medi-Cal Pending patients.41 Some 26 of the 33 do have Medi-Cal contracts. Of these 26, only eight (including Rancho) are CARF-accredited.42 Even more disturbing, the seven accredited programs (excluding Rancho) have only 178 staffed rehabilitation beds. They clearly do not have the capacity to accept 100 or so displaced Rancho rehabilitation patients on an average day. Other hospitals may say that they are willing to accept Medi-Cal patients but their financial ability and their actual willingness to do so may be undermined by a combination of their lower payments and their clinical unpreparedness. Simply, a great number of hospitals do not now have the programs or the clinical expertise to handle the most severely ill or injured of Rancho’s patients, those who are ventilator-dependent, spinal cord-injured, and others. In my experience, alternative hospitals are usually more willing to promise to serve patients displaced by a hospital closing than they prove to be in practice. What is surprising in the case of Rancho is that the public record reveals no substantial declared ability and willingness to serve Medi-Cal patients displaced by Rancho’s closing. This absence is a product of three things: the low Medi-Cal rates paid to most private hospitals in Los Angeles County combined with the absence of available County DHS beds; the high cost of caring for Rancho’s patients; and the very considerable clinical needs of Rancho’s patients. 7. Potential for creaming If other hospitals in Los Angeles County actually prove able and willing to serve any of the Medi-Cal patients displaced by Rancho’s closing, those patients are likely to be the less severely ill patients. These are the patients on whom other hospitals will lose the least money—and also the patients who are likelier to fall within their clinical capacity to deliver relatively adequate care. This practice is called “creaming.” It is not illegal or even immoral. It is one of the ways that many hospitals—particularly those suffering financial distress—sometimes act. 8. Will the alternative caregivers serve Medi-Cal and Medi-Cal pending patients? In what numbers? According to Dr. Daniels Higgins, Director of Emergency Medical Services at St. Francis Medical Center, the “busiest private trauma center in Los Angeles County”: Rancho is the only facility I know of that will readily accept “Medi-Cal pending” and uninsured patients with rehabilitation needs. A typical rehabilitation candidate will have a gunshot wound to the spine, resulting in some form of paralysis. After providing acute treatment for the first week, we currently transfer such patients to Rancho. If the County shuts down Rancho, these patients will not have a place to go for rehabilitation. Private facilities will not accept “Medi-Cal pending” or uninsured rehab patients because it is not financial [sic] feasible to do so. St. Francis and many other hospitals have no capacity nor expertise to effectively treat rehab patients.43 Writing on the need for a 750-bed replacement facility for LAC-USC, Mark Finucane criticized those who claimed that a smaller facility could be sufficient if some care is contracted out to private hospitals: “Large scale contracting with the private sector requires both sufficient interest among providers and a viable funding stream. Funding is not present and interest is limited.” 44 Finucane’s assessment applies equally to the prospect of securing care for Rancho’s Medi-Cal and Medi-Cal pending patients at private hospitals in Los Angeles County. 9. Deficits of substitute inpatient and outpatient care for Medi-Cal patients In light of the evidence and analysis presented above, it appears that surviving caregivers will not be available, able, or willing to provide sufficient services Medi-Cal patients to substitute for those taken away by a closing of Rancho. The supporting evidence mainly concerns inpatient care. But substitute outpatient care for Medi-Cal patients is likely to be as inadequate as—or even less adequate than—substitute inpatient care. There are three principal reasons. First, outpatient Medi-Cal payment rates appear to be lower, relative to cost of care, than are inpatient Medi-Cal payment rates.45 It has been observed earlier that a) Medi-Cal inpatient payments to substitute hospitals appear to be substantially below payments to Rancho, b) other hospitals today see relatively small shares (compared with Rancho) of Medi-Cal inpatients patients, and c) other hospitals are therefore likely to try to cream less needful and less-costly-to-serve Medi-Cal patients. These forces are likelier to operate even more powerfully on the outpatient side—in light of the apparently lower outpatient rates relative to cost. Second, outpatient care usually tends to draw on the same clinicians, the same experience, and the same medical record as does inpatient care. Therefore, without an adequate base of inpatient services and long-term knowledge of each patient’s needs, it can be difficult to quickly understand or satisfactorily coordinate effective outpatient care. Third, because outpatient care is inherently more episodic and therefore prone to fragmentation, mal-coordination, and discontinuity of care, the value of an underlying base of medical record and long-term clinician-relationship is probably even more important on the outpatient side than on the inpatient side. D. Would Willing Substitute Caregivers Provide Care to Medi-Cal Patients That Is as Competent as Rancho’s? According to Forer and Duvall: RLANRC [Rancho] is a nationally recognized leader in rehabilitation for spinal cord injury, brain injury, post-polio, muscular dystrophy, and pediatric rehabilitation programs. Rancho is one of 16 model systems nationwide for spinal cord injury and brain injury, funded by NIDRR. Rancho is accredited by the Commission of Accreditation of Rehabilitation Facilities (CARF) for Medical Rehabilitation, Comprehensive Integrated Inpatient Rehabilitation – Hospital, Brain Injury Comprehensive Integrated Inpatient Rehabilitation Programs, Spinal Cord Injury System of Care, and Pediatric Rehabilitation Programs. Of the 34 rehab providers in LAC [Los Angeles County], only 10 are CARF Accredited: 10 Medical Rehab Programs, 10 Comprehensive Integrated Inpatient Rehab Program, 3 Brain Injury Programs, 2 Spinal Cord Injury System of Care, and only 1 Pediatric Rehab programs. There is an apparent lack of expertise in ventilator dependent quads, severe brain injury, and pediatric rehabilitation programs and services in LAC. Acute care services provided at RLANRC may include special orthopedic procedures, dialysis, tendon transplants, baclofen pump implants, wound care, constructive surgery for burn victims, neurogenic bowel/bladder, respiratory complications, and infections related to disability and chronic diseases. 1. Competence of alternative caregivers Rancho has been designated the Regional Spinal Cord Injury System for Southern California, one of sixteen model systems nationally.46 Specifically regarding the needs of Rancho’s patients, the competence of Rancho’s specialized and experienced individual caregivers, and the high degree of coordination of Rancho’s systems of care, how good are the individual services now provided elsewhere? How well-coordinated are they? How do they compare with those now given at Rancho? Overall, were Rancho to close, would non-Medi-Cal patients enjoy substantially superior access to appropriate services than would Medi-Cal patients? I believe that they would. As noted above, surviving facilities lack the physical capacity—the beds—the serve displaced patients. They are unlikely to be willing to accept substantial numbers of Medi-Cal patients displaced by the closing of Rancho, owing to a combination of high cost and low revenue associated with those patients. And, as now discussed below, they lack the systems of care required to treat the displaced Medi-Cal patients. a. Expertise Rancho serves large numbers of patients with various complex problems. It has built up decades of expertise in quickly and competently diagnosing and treating a wide range of problems. It will be hard for Individual physicians, hospital clinics, or inpatient services that see only a few such patients yearly to acquire this level of expertise. At best, this is likely to take a considerable amount of time. Rancho’s acute medical-surgical care is heavily oriented to the acute care problems of the seriously disabled patients it serves. These include wound care, special orthopedic procedures, implantation of electrical stimulants, and the like. Rancho does not typically function as a traditional medical-surgical hospital in this regard. Complex care that is oriented toward preserving or restoring functioning over many years is different from an episode-oriented acute care approach. Rancho is certified or accredited in five ways. It is accredited by the Commission on the Accreditation of Rehabilitation Facilities (CARF) as a Medical Rehabilitation Provider (MRP). It is also accredited as a Comprehensive Integrated Inpatient Rehabilitation Provider (CIIRP), and as a Spinal Cord System of Care (SCSC), and as a Brain Injury Program (BIP). Of the remaining 32 acute inpatient rehabilitation providers in Los Angeles County, only • nine are CARF-accredited (only seven with Medi-Cal contracts—with 178 staffed beds and far fewer empty beds), • nine are accredited as CIIRPs, (only seven with Medi-Cal contracts—again with 178 staffed beds and far fewer empty beds), • one is accredited as a SCSC (with 24 staffed beds and far fewer empty beds), and • two are accredited as BIPs (with 56 staffed beds and far fewer empty beds). Los Angeles County faces a shortage of certified rehabilitation programs with Medi-Cal contracts. Under these circumstances, expert substitute care for Medi-Cal patients displaced by Rancho’s closing will be extremely difficult to find. b. Coordination of different types of care at one time This integration of acute and rehabilitative services for disabled Americans makes for better outcomes at lower costs. Disrupting this integrated pattern of care will be harmful and expensive to Rancho’s Medi-Cal patients. Additionally, Rancho coordinates outpatient care across multiple clinics. A patient who needs care for a spinal cord injury, for example, might need skin care and also help with bladder problems. These difficulties can be addressed during one trip to Rancho. Many managed care organizations talk of coordinating or managing needed health services in order to cut cost and improve clinical outcomes. It appears that Rancho has evolved over the years to do this. Dismantling Rancho’s system of care will harm Rancho’s patients. c. Continuity of care over time Rancho’s patients tend to experience complex patterns of disability and illness. Caregivers who follow these patients over time have a much better sense of what works and what does not for each individual patient. Disrupting the continuity of patient care can be expected to degrade the outcome of care. Hospitals are not interchangeable pieces on a game board. Each has a unique and ecological relationship with its patients, its physicians and other workers, and its location. This is likely to hold with special power in Rancho’s case. At Rancho, patients and clinicians often get to know one another over years, even decades. Under these circumstances, a trusting relationship may be more likely to develop, and such a relationship can be expected to enhance a patient’s compliance with a clinician’s instructions and advice. Disrupting patterns of care by closing a hospital can undermines this health care ecology. It usually takes substantial time and effort for patients to re-weave their patterns of care. When a hospital closes, we have evidence that a very substantial share of its inpatients ceases to seek substitute care. Shepard found that 30 percent of the inpatients displaced by a hospital closing do not re-appear at surviving institutions nearby, at least not for some time.47 Rancho constitutes the most severe challenge in this regard. Many of Rancho’s patients are extraordinarily disabled, with complex medical, rehabilitative, pharmacological, and other needs. It will therefore require more time and effort to reweave their patterns of care. This is partly because their disabilities leave them relatively dependent on others, partly because their illnesses are often relatively complex, and partly because many patients had enjoyed long and trusting relations with their Rancho clinicians. d. Division will cause deterioration Other hospitals in Los Angeles County lack the capacity to provide these services currently. It would cost them money and time to build that capacity. By diffusing the capacity across many smaller programs, the opportunities to win financial economies of scale and the greater quality that comes from higher volume, practice, and expertise will both inevitably be lost. Care for Medi-Cal patients would deteriorate in the wake of Rancho’s closing because the smaller surviving programs would probably not be able to afford keeping available the wide array of specialized expertise long provided at Rancho’s larger facility. Indeed, closing Rancho will cause substantial clinical harm even if other hospitals are available, able, and willing to try to provide substitute care. Dispersing Rancho’s services flies in the face of overwhelming evidence that concentrating specialized health care in fewer and larger hospitals wins better outcomes and lower cost. Over the past 25 years, an impressive volume of health care research has provided clear evidence, in field after field of medicine, that experience counts—that higher volume, other things equal, means better outcomes and lower costs. This is shown in the fields of heart surgery,48 percutaneous cardiac interventions,49 heart attack,50 cardiac catheterization,51 surgery for cancer,52 heart transplantation,53 hip fracture,54 surgery in general,55 and trauma care.56 There is every reason to believe that this medical principle holds strongly for the both the rehabilitation services and the specialized medical and surgical services provided at Rancho. The evidence on this point, offered by both patients 57 and clinical experts 58 during the Beilenson hearing, is broad and deep and unambiguous. Further, according to Stevens, “The high volume of specialized care provided to pediatric, adult inpatients and outpatients at Rancho led to the development of expert treatment teams able to achieve excellent outcomes with medically complex patients.”59 Dismantling the special services and expertise accumulated at Rancho will harm MediCal patients disproportionately because they depend disproportionately on Rancho. Rancho exists in large part to address the special needs of the patients with long-term disabilities whose reduced earning power qualifies them for Medi-Cal disproportionately. 2. Arranging alternatives Alternative caregivers are not available, able, and willing to serve many or most of Rancho’s Medi-Cal patients. Even if appropriate alternative inpatient and outpatient services were available to Rancho’s Medi-Cal inpatients and outpatients elsewhere in Los Angeles County—and even if alternative inpatient and outpatient caregivers are able and willing to serve Rancho patients—it would be important to connect Rancho’s patients with those alternatives caregivers. Connecting patients with caregivers can be expected to be a difficult job. That is because Rancho’s patients tend to have complex problems, and this complexity means that they will require a case manager to assist them until they and their medical record are durably linked with a new medical home. They often require services from several different specialized caregivers. And these services are substantially improved when new caregivers understand all that has been done earlier in the course of the patient’s acute and rehabilitative care. For these reasons, it is disappointing that the County is apparently doing very little to plan for each Rancho patient’s safe landing at an alternative caregiver in the event of Rancho’s closing. If this pattern persists, it will result in sub-optimal care for a substantial share of patients, and could seriously harm unknown but potentially large number of patients. Some states, such as Massachusetts, require that if a nursing home proposes to close, suitably planned arrangements must be made to relocate residents. Long-stay nursing home residents often depend on the security and consistency of their circumstances— especially at a time when their own physical and cognitive abilities to protect themselves are waning. As necessary as suitable planning is for relocation of nursing home residents, it is at least as necessary for the Medi-Cal inpatients and outpatients who have come to depend on Rancho’s services. There are two reasons. First, many of Rancho’s services are not found elsewhere in Los Angeles County. When found elsewhere, they are often not of the same technical quality or expertise of Rancho’s current array of care. Second, when individual services are of high quality, they are often not woven together as they are at Rancho. This makes it vital to plan well in advance to identify appropriate discrete substitute services and to weave them together in service packages that are appropriate to each of Rancho’s patients. Rancho’s patients’ needs are often extraordinarily complex. Unlike nursing home patients’ services, Rancho’s patients’ services seldom can be met in one place. Arranging substitute care is not as easy as making a single phone call to identify an appropriate level of nursing home care in a convenient location. If the County is indeed not setting aside money to finance the preparation of individualized and comprehensive discharge plans for each Rancho patient—inpatient and outpatient—it is behaving irresponsibly. Why might the County fail to do this? Perhaps because it knows that services to replace those now provided at Rancho are simply not available elsewhere—or are not in adequate supply. Perhaps because it knows that other caregivers will not be willing to serve Rancho patients at the substantially lower Medi-Cal rates at which they are paid. Perhaps because it does not want these two things to become publicly known, as that knowledge would undermine its plan to close Rancho. Perhaps the County’s DHS staff simply does not have the time to plan for Rancho’s patients because it is already stretched precariously by the demands of budget-cutting, care-cutting, and employee cascading, and attempts at system reform. The County’s apparent failure to take responsibility for Rancho’s patients contrasts with Thomas L. Garthwaite’s description of County DHS’s commitments to improving care. According to Garthwaite: DHS is also committed to a revised system that is both more efficient and yields better health return for every dollar invested. A redesigned DHS system can produce a better health care delivery system with services of better quality, access to routine services through extended hours, urgent care clinics and phone consultation, and prudent use of specialty, inpatient and emergency services.60 But if a solution is to work, it should address the problem and its causes. Is the financial crisis in County DHS caused by an inefficient system or by inadequate revenue? Or, what share of the problem is caused by each? It seems clear that County DHS has to promise system reform as a condition of receiving continued federal help. The federal government may believe or seem to believe that its short-term financial aid to Los Angeles County is all that is needed—that if the County DHS only operates more efficiently, financing from existing sources will be adequate. Viewed in this way, the federal government uses its short-term aid to lever County DHS to become more efficient. If the federal government did not do this, it would have to address the reality that County DHS simply needs more and more tax money, year after year, from some level of government, in order to sustain health care in Los Angeles County. And no level of government is willing to acknowledge this publicly. Certainly, there are various types of inefficiencies and waste in any health system, public or private. But County DHS’s problems will not be solved through system reform and greater efficiency. That is because the main cause of its financial problems is that Los Angeles County does not have enough money to provide adequate-quality health care in adequate volumes to the residents of the county who need and seek it. In this sense, it appears that Rancho’s closing is both a way for the County to save some money in the short run, and also a way to demonstrate to Washington that County DHS is indeed undertaking system reforms. Both County DHS and Washington probably realize that the substance of what they call reform is diminished capacity to care for Medi-Cal and uninsured patients—both at Rancho and at LAC+USC. But both must, apparently, pretend that system reform will make it possible to provide more and better care with less money. When Dr. Garthwaite served as Under Secretary for Health in the Department of Veterans Affairs in 2000, he said to the Paralyzed Veterans of America that “ ‘ We can’t stop by saying [VA facilities are] good or even great. We have to ask, How can we make them even better.’ “61 Given the harm associated with closing Rancho, Dr. Garthwaite’s view of VA facilities seems to be exactly the right one to apply to Rancho. When a local government wishes to close a public hospital, it can be expected to promise that alternative services will be available and that access to care will not be harmed. In Washington, D.C., a considerable amount of incomplete or inaccurate information was put before the public by a local government anxious to close D.C. General Hospital.62 The substitute services arranged under contract have proven to be extremely unreliable and of low quality. The emergency room that was to be left open at the former D.C. General will now be downgraded to an urgent care center.63 The JCAHO has just issued a preliminary denial of accreditation to the main substitute hospital.64 According to the December 2002 – January 2003 poll of “nearly” 200 resident physicians by the Joint Council of Interns and Residents, 90 percent “of residents surveyed indicated that their patients could not receive the type of rehabilitation services provided by the Rancho Los Amigos National Rehabilitation Center at other public or private facilities in the County.” 65 The relevant questions concerned the availability of the kinds of services provided by Rancho at the resident’s own hospital, and the ability of patients from the resident’s own hospital to find services nearby that were comparable to Rancho’s. II. ARE THE COUNTY’S ESTIMATES OF ITS SAVINGS FROM CLOSING RANCHO ACCURATE? A. What Are the County’s Estimated Costs of Care at Rancho? Estimates of the saving to be won for the County by closing Rancho begin with the current County subsidy. This was $53.8 million in fiscal year 1999-2000.66 The Gill Balsano report estimated the County subsidy at about $70 million, apparently for fiscal year 2002-03.67 County DHS now estimates that the County would save $58.6 million in fiscal year 200304 if Rancho were to close by 15 June 2003.68 This apparently reflects planned payment of some $14.7 million to pay for care for uninsured low-income patients at other facilities.69 Along these lines, Blue Consulting estimates a saving to the County of $64.9 million, in fiscal year 2004-05, along with a sustained County contribution of $14.7 million for indigent care. B. What Are the County’s Estimated Savings from Closing Rancho? Blue Consulting summarizes ten scenarios for Rancho along with the County’s estimates of the savings associated with each. Five of the scenarios call for closing Rancho completely and the other five call for Rancho to become an independent medical authority.70 Baseline total County costs are assumed to be those associated with Rancho remaining open, and these are projected at $79.6 million for fiscal year 2004-05. Projected savings to the County range from • $64.9 million (if Rancho closes and the County’s future obligation is limited to the planned $14.7 million for care of uninsured low-income people) to • $21.7 million if Rancho remains open and becomes an independent medical authority, while the County’s cost of financing care of uninsured low-income people rises to $37 million. C. Are the County’s Estimates Accurate? 1. Problems identified by Blue Consulting Blue Consulting has raised a number of questions about the assumptions that the County made while estimating the savings from closing Rancho. Two of the ways in which Blue Consulting faulted the County’s estimates are: • “Some patients previously considered to be the responsibility of the County were simply not going to be served at RLANRC.” • “Services and payment sources could be ‘re-mixed.’ Some scenarios ‘re-mixed services and payers from low margin to high margin without any articulated clinical or marketing impact assessments.” 71 [Unfortunately, I am unable now to review the Blue Consulting report’s assessment of the County’s scenarios in depth because this assessment is unreadable because it is printed in mirror image in my copy of the Beilenson Administrative Record’s version of Appendix I-A, Beilenson Administrative Record, Vol. V, E-23, pp. 592 ff.] 2. Other problems The County’s estimates of its savings seem to rest on the difference between the County’s share of the cost of continued operation of Rancho minus the costs of purchasing substitute services for uninsured low-income patients from private hospitals. These estimates do not appear to include the continued net cost of serving Medi-Cal inpatients and outpatients who are forced to relocate from Rancho to other County DHS beds, emergency rooms, and outpatient clinics. The net cost is the difference between actual cost of care and Medi-Cal payments. A subtle but powerful problem is that the average cost of caring for patients in the County DHS system is ineluctably rising as the number of patients served is shrinking. That is because, as beds are cut, the patients who are hospitalized as inpatients are, on average, the sickest of the sick, the most urgent of the emergent. This, after all, is the purpose of good medical triage. Owing to this distillation-like process, the average cost of Medi-Cal patients displaced from Rancho will rise, but the Medi-Cal payment per patient-day may well not rise as quickly. If this happens, the cost per patient to the County of serving displaced Rancho patients in County DHS hospitals will rise substantially. Further, if Medi-Cal patients displaced by Rancho fail to obtain substitute outpatient care that is as clinically appropriate and effective as that provided by Rancho, patients who had been stabilized and rehabilitated by Rancho, and who had been served principally as outpatients, can be expected to de-stabilize and become more disabled. That will engender a higher volume of need for inpatient care than prevails today. And it can be expected that a high share of this additional volume will flow to surviving County DHS hospitals. These patients can be expected to experience longer inpatient hospitalizations at surviving County DHS hospitals than they would have experienced at Rancho because the surviving hospitals will, in all likelihood, lack the skill, experience, coordination, and continuity of care to treat these patients as efficiently and effective as did Rancho. And if County DHS appreciates the need to re-create Rancho’s services at one of the surviving hospitals, it will have to confront the persisting shortages of beds, skilled staff, and money that plague those County DHS facilities. Rancho inpatients would cost at least as much to serve at County DHS hospitals as they now cost at Rancho, were they to receive substitute care at other County DHS hospitals. That is because other County DHS hospitals lack the training or experience to efficiently manage the complicated and often esoteric problems faced by Rancho’s patients. Beck and Scroggins note that for patients with spinal cord injury, for example, rehospitalization rates range from 19 percent to 57 percent. When providers of longterm care are more competent, rehospitalization rates can be expected to be lower.72 In a French multi-center study, Klotz and colleagues found a much higher rate of rehospitalizations—74 percent—with an average of three additional hospital admissions per patient rehospitalized. Complications causing these additional hospitalizations included urinary and bowel problems, pressure sores, difficulty breathing, pain, and leg fractures.73 High rehospitalization rates and high complication rates testify to the substantial savings in annual cost of care per patient to be won through expert rehabilitation services. These rates also point to the high risk that Rancho’s patients will cost substantially more to serve, each year, were Rancho to close. Many patients who are today served at Rancho’s outpatient clinics will be forced to seek care at already-crowded emergency rooms,74 increasing cost of their own care and delaying care for other needy patients. Displaced Rancho patients could further clog intake to County DHS hospitals. The could also clog discharge from County DHS hospitals, as County DHS hospitals alone are believed to need access to 90 or more rehabilitation beds for their own discharges.75 If these beds are not available, either patients back up in County DHS hospitals, which already suffer unacceptably high occupancy rates,76 or they are discharged to nursing homes and other sites of care that are not staffed or paid at levels adequate to provide safe or clinically appropriate care. And that can be expected to result in further increases in demands for admission to County DHS hospitals. It appears, then, that the County’s projected savings are predicated on the denial of needed care, not on efficiencies—not on clinical efficiencies, not on financial efficiencies, and not on health system efficiencies. At the same time, the combination of a) reduced volumes of care and b) lower Medi-Cal payment rates at those hospitals that do serve some of Rancho’s Medi-Cal patients mean a marked reduction in total Medi-Cal payments flowing to all caregivers in Los Angeles County as a whole. The reduction in dollars to pay for care means reduced employment for therapists, nurses, physicians, aides, and other caregivers. They have less money to pay rent, by groceries, fix their cars, and the like. The resulting total loss of income typically equals 2.08 times the actual reduction in Medi-Cal payments.77 It is noteworthy that County DHS plans to close Rancho to cut its own budget deficit. This means that County DHS is acting in a way that has the effect of disrupting care for all of Rancho’s patients in order to save its own money. The County’s subsidy to Rancho equaled a little over one-third of the hospital’s total cost in fiscal year 19992000. This means that the County is leveraging disruption of clinical services whose value is almost triple its own subsidy cost in order to cut that subsidy. Indeed, if the County’s net real saving from closing Rancho—after shouldering the real cost of substitute care to displaced uninsured low-income patients and to Medi-Cal patients—is only one-half of its total current subsidy, then the County will be disrupting care worth roughly five or six times its dollar saving. Similarly, if Medi-Cal patients fail to receive effective rehabilitation services—because of Rancho’s closing and because of the lack, adequacy, or skills of alternative providers— they are much less likely to be able to work and pay taxes that accrue to Los Angeles County. ER and ICU delays and gridlock throughout Los Angeles County can be expected to grow if Rancho were to close. Rancho’s patients often require substantial amounts of care to prevent or minimize acute destabilization of their underlying illnesses. With the loss of Rancho, its clinical expertise, its commitment to combining inpatient and outpatient care, and its orientation to prevention and to heightened functioning, many patients will suffer otherwise preventable deterioration, disability, pain, and even death. Finally, the costs associated with closing Rancho should be assessed in light of capacity reductions elsewhere within the County DHS system. The proposed reduction of LAC+USC’s beds to 600 will increase the stress on a County DHS acute care system that is already bursting at the seams. The proposal for limiting the new LAC+USC to 600 beds rested on a combination of substantial contracting of acute care beds from private hospitals and on expansion of outpatient capacity.78 Persisting in those acute bed cuts—when one of County DHS’s own foundations for those cuts has been removed—demonstrates an unwillingness to face reality and a reckless disregard of the health and safety of the County’s residents. Closing Rancho in the absence of alternative hospitals that are available, able, and willing to receive Rancho’s patients constitutes an equally reckless disregard of the medical needs of Rancho’s patients. County DHS’s cuts in three areas at the same time—closing Rancho, cutting outpatient capacity, and cutting inpatient beds—can be expected to gravely diminish County DHS’s capacity to serve all of its patients. At the same time, growing over-crowding at County DHS hospitals will spill over to harm care at private hospitals. Together, these events will push health care in Los Angeles County closer to medical meltdown.