Think Tank

Should California Reconsider Health Care Districts?

Shortly after World War II ended, the California Legislature passed laws allowing counties and communities to create special health care districts to ensure that low-income and underserved Californians have access to hospitals. These districts, most of them built around publicly owned hospitals, could levy taxes and gain access to special financing tools.

Over the past half century as the health care landscape changed, publicly owned and operated hospitals shrank or disappeared. Now, about 30 of California’s 74 health care districts do not operate hospitals.

A report last month by The Bay Citizen, which produces news sections for the New York Times, suggested “many of these districts stockpile vast reserves and divert money to administrative and operating expenses, including lawyers, election fees and board members who earn lifetime health benefits for part-time work.”

Critics suggest money devoted to keeping these organizations financially sound could be better spent on care for low-income Californians.

Proponents say the districts still serve valuable functions in some parts of the state.

A hearing on the issue is scheduled this week before the Assembly Committee on Accountability and Administrative Review.

Even without national health care reform, one could argue that the evolution of the health care industry in California has moved beyond the laws that created these special districts almost 70 years ago.

Now, with the Affordable Care Act poised to dramatically change the state’s health care system, we asked stakeholders and experts if California should be reconsidering health care districts.

We got responses from:

Health Care Districts Should Be Re-Evaluated

Health care districts, like many other special districts in California, have outlived their original purpose and should be re-evaluated in light of today’s needs.

When I was the mayor of Santa Clara, Calif., I served on several joint powers agencies, which are equivalent to special districts. The money we spent was as precious as the city’s general fund, and although our meetings didn’t garner as much attention as the weekly city council meeting, I always acted as though our decisions were made before a large crowd. Why? Because when you are a board member of a public agency that largely “flies under the radar” you want to make sure you are still in tune with your constituents and are doing what is best for the overall common good.

For the most part, special health care districts in our state have remained out of the limelight, and, therefore, have been able to hold onto their structure, boards and funds — even if needs changed and they no longer served a purpose. Worse yet, some districts are stockpiling funds while the uninsured go without health care.

As The Bay Citizen reported, the Peninsula Health Care District is unable to meet patient demands for care, even with a $43 million reserve. San Mateo County asked for a mere $4 million of that public taxpayer money to meet the need, but the request was turned down. The district is hanging onto the cash, spending only a tiny portion for health grants and a large percentage to pay administrative costs.

Part of the problem is due to a lack of oversight, and until the recent health care debate, a lack of involvement on the local level. To be sure, there are pockets throughout the state where good work is being done. But grand jury reports show a disturbing pattern of districts spending more money on administration and board retreats than health care.

Special health care districts are a perfect example of a good program that has lost focus and lacks accountability. While there are areas of the state where medical services are the district priority, until it is the priority of all districts, we should increase oversight and reconsider the way public funds are collected and spent on health care for our neediest.

Prevention, Wellness Start at Local Level

Many experts today believe the most effective and affordable strategy for health care reform is to prevent people from getting sick in the first place. This shift from a sick-care system to a true health care system — focusing on prevention, wellness and health promotion — is momentous.

In California, local health care districts have taken the lead in providing sustainable wellness and prevention services at the local level. We are aware that some hospitals are clinical leaders and some are not. We do not question the need for hospitals but insist that all hospitals work to the highest standards. The same principal applies to health districts, and those that do not meet high standards have considerable work to do. However, to say all health care districts are the same is to over-simplify, and doing so discounts the efforts of those who are leading the nation in wellness work. 

Communities are seriously in need of sustainable wellness and prevention services, and California health districts are increasingly filling that void. After World War II, health districts were formed to provide hospital services to communities. As the private sector stepped in to meet this need in some locations, California health districts like Beach Cities Health District have moved their focus upstream to prevention. We are now a national leader in preventive health, keeping the community well through science-based initiatives with measurable outcomes. 

When childhood obesity numbers started to rear their ugly head, BCHD was able to provide local school districts with evidence-based programs that continue to demonstrate positive measurable results. When nurses, physical education teachers and mental health services diminished from schools, we stepped in with sustainable dollars. When BCHD’s childhood obesity program — LiveWell Kids — recently let us know we were not starting early enough, our community launched nutrition and movement services for preschoolers. These are health district-funded prevention programs that will not disappear at the whim of state or grant funding.

As the debate wages on between funding senior services through managed care or Medicare, many don’t realize that a frail elderly person often needs very little assistance to maintain independence in the first place. Isolated seniors without transportation can gain access to essentials like food and prescriptions with support from a small army of volunteers. Glasses, diapers, baths, grab bars and dental care, not covered by any other program, are paid for with health district funds for those in need.  

When Californians are sick, they deserve the best possible care, and prevention services will never replace that. But preventing illness can increase the quality of life and effectively minimize the financial burden of our sick-care system. Communities with an effectively operating health care district do not have to struggle with the question of “if they should exist.” The question we are most often asked is, “How do we get one of these in our community?”

Districts Must Be Accountable

The evolution of the California Health Care District model has been based upon the concept that every community deserves access to life-saving and essential health care services.

In the 1946-1950 time frame, multiple communities voted to develop the model that would enable them to fund and support hospital-based care for their specific area. Primarily, these communities were in non-urban, agricultural regions that were not going to receive the support or attention from urban-based health systems. These systems were developed for the entire community, not just the low income.

Many of these publicly owned and operated health facilities now find themselves in urban areas and surrounded by highly competitive health systems. This has led to the realization by some health care districts that they must make a decision regarding their ability to fulfill their original mission.

The transformation of “hospital districts” into “health care districts” began when these community providers recognized and appreciated that health care is not only sickness or disease care that took place primarily within the walls of the hospital. Health care districts began to understand that locally provided programs and services that could be developed outside of the hospital would serve their communities very well.

As this transformation continued, the concept of being a healthy community began to show the way toward looking at programs that not only focus on disease prevention but actually broaden the idea of what it means to be a healthy community.

Community-based health care districts look at the total health of the community. That may range from nutritional counseling to drug counseling to programs that look at daily exercise programs for all ages.

Some community-based health care districts have funded and developed extensive relationships with rural health clinics and federally qualified health clinics. These organizations often become the principal primary care provider in that region or community.

This transformation troubles and confuses those who want to see health care as only defined by what happens in the hospital.

Rural and frontier-based health care districts are the providers of essential services and their communities understand the vital link that exists between them and those services. In these communities, direct support, both in tax-based resources and community philanthropy is understood and encouraged.

Health care districts are created by local action and should be held accountable to local support and acceptance. It is imperative that the local agency be prepared to tell its story and to make sure that the community, or region that it serves is appreciating and supporting its services. If it loses that support then its future is in peril.

Keeping Our Promise

Just as the health care landscape has evolved in response to medical advances, changes in delivery systems, complicated reimbursement formulas and changing demographics, so has the work of health care districts. While districts were originally formed to provide hospital services, today their mandate has evolved to caring for the long-term health of entire communities through community investments, partnerships and financial stewardship.

This evolution was recognized and codified in 1994, when Governor Pete Wilson (R) signed SB 1169, changing “hospital” districts to “health care” districts and reaffirming their power “to do any and all things that are necessary for, and to the advantage of any type of health promoting service or health care facility.”

The Peninsula Health Care District aggressively embraces its mission — that all residents enjoy optimal health through education, prevention and access to needed health care services. This means investing in community health programs that serve all of our 275,000 residents, as well as managing our financial resources to ensure that our community hospital and emergency department remain open.

In a 2006 detailed analysis of health care districts prepared for the California HealthCare Foundation, Margaret Taylor, retired director of the San Mateo County Health Services Department, concluded that “in an era of limited health resources, there is tremendous value in these districts and their dedicated health dollars. With the right focus and local input, they have the potential to improve the health status of communities and promote greater interest in community health.”

Lately, the Peninsula district has applied that same focus and input to invest more than $13 million in public and private programs that address five basic health priorities: access to basic care; healthy children; senior health and independence; reduction of risk behaviors and health care workforce recruitment and training. It also conducted a “gap” analysis to identify unmet community needs. Thus, the Peninsula district is building a 97-bed assisted living facility and working to bring dental care to the underserved, including low-income children and seniors.

Some demand we spend what we have, now, on indigent programs. This is dangerous and folly. The Peninsula Health Care District has a 50-year Master Agreement, approved by 92% of district voters, to ensure that hospital and core health services are preserved for our community over the next 50 years. We must plan and invest some of our resources for the future and honor our commitment and accountability to the taxpayers to keep the hospital open with a full-time ED if Sutter ever fails.

However, Peninsula district also recognizes the unusual strain on the public health system during this unprecedented economic downturn. During this time of need, the district board has committed $8 million to support county programs, community organizations serving the uninsured and most frail, and the five K-8 school districts in our area, impacting 20,000 children and their families. The Peninsula Health Care District holds itself accountable to residents, taxpayers and community partners, to ensure the health of our communities. We will keep that promise.