LOS ANGELES: DECIDES NOT TO PRIVATIZE COUNTY HOSPITAL

      The Los Angeles County Board of Supervisors will not approve
 the privatization of Rancho Los Amigos Medical Center, 
 Los Angeles Times reports.  County supervisors said that their
 decision not to privatize the hospital was based on an
 independent report conducted by Peat Marwick LLP.  The county had
 originally projected that privatization would yield $40 million
 in savings over seven years.  However, the report, which was
 released September 10, said that the projections were no longer
 valid due to funding decisions by the state and federal
 governments and specifics of the "proposed contract" with
 Catholic Healthcare West Southern California.  Specifically, the
 report showed that savings from privatization would be only about
 $9 million.  The plan to privatize the hospital had been part of
 an effort to cut $120 million from the county health system this
 year; Rancho has already "sustained tens of millions in cuts
 since the summer of 1995."  
      RESPONSES
      Los Angeles Health Services Director Mark Finucane agreed
 with the board's decision to hold off on privatizing Rancho.  He
 said, "We have explored all of those options people have asked us
 to explore ... and the short answer is keeping Rancho as part of
 the county system is a wise policy and a wise business decision." 
 Finucane noted that the state and federal governments have
 allocated $26 million to Rancho, providing that the hospital
 remains a public facility.  However, he said the hospital will
 still have to come up with "several millions of dollars worth" of
 cuts this year.  Finucane also said that although the federal
 government had pushed for privatization, officials from the
 Health Care Financing Administration "are OK" with the new
 decision.  He said, "They don't want us to privatize for
 privatization's sake.  What they want us to do is explore
 alternative ways of delivering service."  Finucane added that the
 hospital will have to consider ways to "act more like a private
 hospital in order to survive, most notably by dramatically
 increasing its census count and filling about 40 chronically
 empty beds in the 210-bed facility."
      OTHER HOSPITALS  
      Finucane denied that the board of supervisors' decision
 signals a "fundamental change in the direction of the health care
 system."  However, the Los Angeles Times notes that while the
 county had been considering privatizing High Desert Hospital in
 Lancaster, officials backed off those plans when "no firm
 expressed interest in operating the hospital without a guaranteed
 profit that would have required a significant subsidy from the
 county" (Meyer, 9/17).  Los Angeles County has been working for
 two years to overhaul its financially strapped health care
 system.  Click here for two past stories on the overhaul.