SULLIVAN HEALTHCOL. 25 inches/1stjc/mark2nd

UCLA officials have presented to the University of California Board of Regents a plan to build $1.1 billion worth of new and reconstructed medical facilities at the school's Westwood and Santa Monica facilities.

The project would include the building of a new 500-bed UCLA Medical Center to be completed by 2003 and new inpatient and outpatient facilities at Santa Monica to be finished in 2002. The university's medical dental, nursing and public health schools would also be renovated under the plan.

Both the UCLA Center for Health Sciences and the Santa Monica-UCLA Medical Center suffered structural damage in the 1994 Northridge earthquake and the school has spent tens of millions of dollars on repairs that would largely be scrapped under the new plan.

The school says it studied the cost of bringing the facilities up to seismic codes and determined that it would cost more than building a new hospital.

The UC Regents will vote initially on the project in the spring, according to UCLA Center for Health Sciences Spokeswoman Linda King, and it must receive regent approval at multiple steps along the way.

"It's a full-on long-term approval process," King said. "They'll be approving each step along the way."

Kaiser consolidation

On the same day that it announced record growth in 1996 to the tune of about 187,000 new Southern California HMO members Kaiser Permanente said it will consolidate its northern and southern operation in the state into a single division.

Kaiser Foundation Health Plan and Hospitals will combine its traditionally dissected operations under Richard Barnaby, the organization's president and chief operating officer, while a permanent division president is recruited.

The consolidation caps five years of reorganization efforts at Kaiser aimed at cost savings and providing more uniform service throughout California, according Barnaby.

"Further consolidating statewide business operations enables us to more fully capitalize on the region's scale, size, and expertise by developing a single, unified strategy," Barnaby said in a prepared statement.

Jim Lott, vice president for policy at the Healthcare Association of Southern California, said the move will give Kaiser greater leverage in negotiating with group purchasing organizations like the Pacific Business Group on Health and the California Public Employees Retirement System.

"Each (Kaiser division) has been operating independently in negotiations with employers and purchasing groups. This consolidates the entire state into one negotiating unit which will do better for them in the long haul," Lott said.

Taxbreak cometh

The Los Angeles City Council will consider a motion next week to alter the city tax code to placate local HMOs.

The HMOs in question Blue Cross of California, CareAmerica Health Plans, Health Net, Maxicare Health Plans and Prudential HealthCare have griped that their businesses are unfairly taxed by the city's gross receipts tax, which charges them about $6 for every $1,000 in billings.

The HMOs say most of their revenue is "passed through" their books. In other words, the companies take in a large amount in billings, but immediately pay the bulk of that money back out to health care providers like hospitals and physicians.

The HMOs want their tax to be based on revenue minus payouts, and if they don't get it they're ready to pull up stakes and relocate to a city that sees things more their way.

"The HMOs affected by this problem have made it clear that they will leave Los Angeles unless some relief is offered," the motion by City Councilwoman Laura Chick reads. "These firms occupy hundreds of thousands of square feet in Los Angeles, employ thousands of city residents in thousands of quality jobs, and pay millions of dollars in utility user taxes and property tax."

Blue Cross, CareAmerica, Health Net and Prudential are all located in Woodland Hills, which is in Chick's district, while Maxicare is in downtown L.A.

"What we're saying is they're kind of a holding pool (for money)," said Ian Filep, a legislative assistant to Chick.

But, others argue, so is every other business. "Just about any corporation, as well as any small business, could use that same logic," observed Goetz Wolff, a professor of urban and regional economics at UCLA's Graduate School of Urban Planning.

Instead of categorizing HMOs separately at the local level, Wolff proposes, why not seek a statewide standard for taxing them?

"Rather than giving into what seems like corporate blackmail it might be better for the city to think about leveling the playing field for the whole of California," he said.

What color is your MSA?

Unlike its beleaguered cousin Blue Cross, the non-profit Blue Shield of California last week got a thumbs-up from the California Department of Corporations to begin offering medical savings accounts to customers.

Blue Shield is the first health plan in the state to get such approval. The accounts are a way for people to set aside money in tax-free, interest-earning bank accounts to cover health care expenses.

The accounts are paired up with high-deductible catastrophic health insurance, so that when a medical cost arises, account holders pay the first several thousand dollars of expense out of the account, after which insurance picks up the rest.

Blue Shield will offer two MSA plans, one with a deductible of $1,500 to $2,250 for an individual, and $3,000 to $4,500 for a family. The other is geared toward people who have been denied health insurance elsewhere.

Blue Cross, meanwhile, is awaiting approval of its own MSA plans, after tangling with the DOC over an MSA ad it ran in December in the Wall Street Journal. That ad, called premature by the DOC, led to a $150,000 fine for the company.

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