There were decidedly mixed feelings last September when the Chris Brownlie House shut down.

The 25-bed facility in Elysian Park was the first hospice opened by the AIDS Healthcare Foundation, back in 1988. While some of its 40 employees were transferred to other positions within the organization, several were laid off.

"This is a bittersweet moment," said AHF President Michael Weinstein. "We are thrilled that new AIDS drug therapies are working and that people with HIV are living longer, healthier lives. However, this has increased the demand for outpatient care as many providers are finding while decreasing the demand for end-stage care."

Indeed, AHF has seen a 50 percent reduction in the use of its inpatient facilities in the past year, and it began running into red ink.

"We had to shut down the facility to cut our deficits. And our other facilities are now focused on a lower-level, residential type of care," Weinstein said.

The rapid changes in the fortunes of facilities such as Chris Brownlie may be traced to saquinavir, ritonavir and indinavir the three protease inhibitors that have achieved remarkable success in reducing the viral levels in HIV-positive patients and in restoring such patients' health.

According to a study of 500 Los Angeles AIDS patients by disease management firm Clinical Partners, the improvement has been dramatic. The average length of a hospital stay went down from seven days in 1994 to three days as early as this year.

Ditto with related inpatient and clinical costs. Such costs averaged $258 per patient per month in 1994, and were down to $104 in 1996. As of February 1997, they were $3 a month.

"The rates are changing monthly," said Dick Daly, chief executive officer of Clinical Partners, which is based in San Francisco. "That means, if you're running an AIDS sub-acute clinic, you're out of business."

But Daly added that much of the savings on hospital-related costs has been offset by increases in the cost of treating AIDS with drugs. The cost of filling a protease inhibitor prescription can easily run $15,000 to $20,000 a year.

Evidence that many AIDS patients are clearing out of other hospitals, and treating their condition at home with drugs, can be seen through the ever-expanding role of the state-sponsored AIDS Drug Assistance Program.

Established in 1987, ADAP subsidizes drug regimens usually the outpatient variety for state residents with annual incomes below $50,000 and without private insurance or Medi-Cal eligibility.

Its funding has increased almost exponentially in recent years, from $17.5 million in fiscal 1995-96, to $55 million this fiscal year. Gov. Pete Wilson's office projects an $84 million budget for 1997-98.

"There was a revolution last year in terms of available drugs," said Michael Montgomery, who heads the AIDS early intervention office for the California Department of Health Services. "But at the same time, instead of the traditional AZT treatments, which cost about $3,000 a year, you're looking at a combination of drugs which cost $5,400 to $7,100 apiece per year. And even more-effective drugs are being approved by the (Food and Drug Administration) almost monthly."

But keeping up with the ongoing development of newer, more-effective drugs and their various costs is proving complicated for providers.

For example, Montgomery noted that actuarial work to determine the cost of a certain drug can mean a delay of several months between FDA approval and ADAP adding it to its list of drugs it will subsidize.

That lag time means hospitals such as the Los Angeles County-USC Medical Center often treat hundreds of AIDS patients with no hope of receiving reimbursement. ADAP does not make retroactive payments for prior purchases of drugs it later agrees to subsidize.

"There's often a long wait to get ADAP approval," said Dr. Ronald Kaufman, chief of staff at County-USC. "On the other side, we do feel ethically bound to treat the patients with the newest and most-effective drugs available, so we do it, even though it helps put the hospital in financial jeopardy."

Kaufman could not say how much the hospital spends for AIDS drugs for which it is not reimbursed.

Montgomery said great efforts are made to minimize the funding gap, but noted that "ADAP is not an entitlement program like Medi-Cal. We have to make sure our (state and federal) funding is in order, and that is always a dilemma."

Another concern is that current and future versions of protease inhibitors may not remain effective over the long haul. Daly noted that, according to his most recent patient census, about 10 percent are experiencing increased viral levels again a phenomenon being experienced nationwide by a similar-sized minority of patients.

"There appears to be some people who are experiencing an emerging resistance to the drug therapy," he said, adding that even while being attacked by protease inhibitors, the AIDS virus can replicate millions of times a day. In turn, those replications can lead to thousands of viral mutations, sometimes creating new strains that cannot be suppressed.

"The unanswered question is whether the AIDS virus has reached a low point before stratifying into versions that are resistant to current therapies," Daly said. "It's a serious concern."

For reprint and licensing requests for this article, CLICK HERE.