ARIZONA: MARICOPA COUNTY SYSTEM TO BE PRIVATIZED
The Maricopa County Board of Supervisors voted 3-2 Monday toThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
lease the financially troubled county health system to a private
consultant. In what the ARIZONA REPUBLIC calls "the biggest
privatization of a public-health system in the United States,"
Healthcare Partners Inc. (HPI), run by Stan Ching of California,
would take over the $600 million health care system.
CONTROVERSY: However, some board members criticized the
selection of Ching and the entire selection process. Some
members objected to the bidding process, arguing that all medical
providers, not just non-profit organizations, should have been
included in the competitive bidding. County Administrator David
Smith, "warned board members" that Ching had only $8 million of
the required $30 million in operating funds. Smith said, "I'm
concerned about the financing. Somebody will have to be the
banker. Payrolls have to be met. ... It renders this thinly
capitalized, at best."
SUPPORT: Ted Williams and Merlin DuVal, both negotiators
for the county, argued that Ching "should be allowed to meet the
working-capital requirement with upfront payments from the
Arizona Health Care Cost Containment System" (AHCCCS). AHCCCS is
the state's Medicaid program; HPI would manage the AHCCCS
contracts under the deal. Chair of the Board Ed King said of the
county system, "It needs to be rescued. We've got to take some
risks." The county system provides almost $50 million worth of
care for the indigent each year through its 453 beds at the
Maricopa Medical Center and its 13 clinics. Four managed care
plans participate in the system. The medical center had a
deficit of $6 million last year; financial analysts predict an
accumulated shortfall of $58 million by the year 2002.
TIME LINE: HPI must receive a tax exemption from the IRS by
Nov. 1 for the deal to proceed. County supervisors plan this
week to establish an independent oversight board for the
privatized health system in order to "qualify for the federal tax
exemption." Under the deal, "Ching would lease the county
facilities for $12 million a year, freeing them from the
bureaucracy and procurement rules that keep the system from
competing" (McCloy, 10/1).