More than any other large metropolitan area, L.A. County relies to a great degree on federal dollars to support its health care system a trend that increased in the 1990s as the recession cut into state and local revenues.

"The federal government (is where) we really tapped into for funding because there was no one else to turn to," said Donald C. Petite, controller for the county's Department of Health Services.

Federal health care funds were boosted last year by the County Medicaid Demonstration Project, also known as the 1115 Waiver.

The program, brokered by Gov. Pete Wilson and the Clinton Administration following the county budget shortfall for the 1995-96 fiscal year, offered $364 million for county health care the first year (and lesser amounts in following years), but required the county to make the transition from a system based on inpatient care to one based on outpatient services.

"It's the smarter, most effective way of providing health care," said Burt Margolin, former health czar for the county, adding that public health care systems are starting to imitate private health maintenance organizations in emphasizing preventive care.

For the 1997-98 fiscal year, L.A. County is expecting $1.01 billion in federal funding for its hospitals, medical centers and health care programs.

That accounts for more than 43 percent of the county's $2.3 billion health care budget up from this fiscal year, when Washington contributed 38 percent of total health care funding.

Petite said federal funding started going up significantly in the early '90s because the county having lost a large share of its own revenues when California began seizing a greater share of property taxes from counties took greater advantage of federal health care programs.

The county started facing a series of cuts in federal funding this fiscal year, which runs through the end of June. Some of the cuts came in the form of reduced federal funding for public hospitals serving a large number of poor people, but most came from a massive reduction in county health services. This meant the county was able to collect fewer subsidies from the federal government.

County officials say they are optimistic that the Department of Health Services will regain much of its lost federal funding through a series of proposals, including reinstatement of lost funding for public hospitals serving a high number of Medicaid and uninsured patients, as well as continued funding for the 1115 Waiver program.

The second biggest source of funding comes from the state, which supplies 35 percent of county health care dollars a percentage that has remained fairly constant since 1993.

The smallest funding of health care even smaller than an "other" category that includes revenues from patients who pay out of their pockets and the fund carryover from the previous year comes from L.A. County itself.

This fiscal year the county was responsible for only 7 percent of health care funding the same amount expected for the next two fiscal years.

"The county health care budget is almost totally dependent on state and federal money," said Brian Johnston, president of the L.A. County Medical Association, a physician advocacy group.

There are some who believe the county could offer a higher quality of health care and health care that better serves the needs of the local population if it had greater control of its programs.

Whatever its source, where does the more than $2 billion for health care go?

Most of it nearly 70 percent is used to support the county's six largest hospitals Los Angeles County-USC Medical Center, Harbor/UCLA Medical Center, Martin Luther King/Drew Medical Center, Rancho Los Amigos Medical Center, Olive View/UCLA Medical Center and High Desert Hospital.

Nearly 17 percent is used for the various health care programs an AIDS program, an alcohol and drug recovery program, immunization programs and programs for handicapped children. Just more than 6 percent is used for administrative and computer network costs.

Petite said that spending levels for the county's various hospitals and programs have remained relatively constant over the last several years.

"The only facility that's really taken a hit is Rancho Los Amigos, because we've been trying to take them to privatization," Petite said. Two years ago that facility had nearly $150 million in funding, Petite said, but had been reduced to almost $107 million this fiscal year.

Helen Jew, chief of expenditure management in the Department of Health, said that the biggest unknown is how much funding the county will get from the federal government, which itself is involved in budget negotiations.

"We can't quite determine how it's going to impact (our budget)," Jew said. "For now we're kind of ignoring it until we can get something from Washington and determine what the impact is."

In the use of funds, Katherine Barger, L.A. County Supervisor Michael Antonovich's health deputy, expects a continuation in the trend of less inpatient days and more outpatient, ambulatory care a trend dictated by federal funding and one that public health care across the country is following.

"That's really where health care is going," she said.

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