Cuts Worked Too Well, County Says : Health: Loss of patients has cost $24 million in revenues, memo reveals. So many workers have quit that hundreds of people may have to be hired.

Los Angeles County’s efforts to dramatically downsize its health services network has--unfortunately--worked better than anyone intended, officials said Monday.

So many patients have stopped using its hospitals and clinics over the last few months that the county has lost at least $24 million in much-needed revenue, according to a memo to the Board of Supervisors.

The downsizing also has scared off many of the county’s own health care workers: In September, 388 employees resigned from the Department of Health Services, more than double the normal rate of attrition.

The flight of workers has grown to such a level that now the department needs to do some quick rehiring to “stabilize” the system, according to Assistant Health Services Director Walter Gray.

“People have gone and found new jobs,” Gray said. “They feel the system is a bit too unstable for them.”

Indeed, last month the county laid off at least 2,700 health care workers and began privatizing some of its 39 community clinics. But for most of the summer, the county expected much worse. Officials had been gearing up to close all six comprehensive health centers, most clinics and lay off as many as 10,000 workers.

Gray said he plans to ask the Board of Supervisors as early as today to rehire potentially hundreds of employees just to get the department back to the levels it was trying to reach with the recent layoffs.

The loss of the health workers, problematic by itself, is part of a larger dynamic that has been causing even more concern among top county officials in recent weeks: They say their efforts to slash health services in the face of huge projected deficits has scared off too many county residents from county health clinics and hospitals that had been slated for closure. Now, they fear those patients may never come back.

Chief Administrative Officer Sally Reed and just-retired health services Director Robert C. Gates warned county supervisors in a memo made public Monday about the “recent, sharp decline in workload” well beyond what they had anticipated.

Reed said Monday she is worried that the situation could result in a downward spiral, in which the level of health services keeps dropping to meet reductions in demand, which would bring in less Medi-Cal revenues, which would necessitate further cuts in service to balance the budget.

“We need to know if there are temporary or fundamental reasons for it,” Reed said. “It is very precarious.”

In the memo to the board of supervisors, Reed and Gates said preliminary analysis suggests the problem could be a temporary one, due to the employee attrition and the public’s confusion and uncertainty over what services are still available.

But they also recommended that the county further investigate the situation to prevent any long-term loss of so many patients. Already, an estimated $24.3 million has been lost due to the lack of patients insured by Medi-Cal, the vast majority of those losses coming from the Northeast cluster that includes County-USC Medical Center and smaller comprehensive health centers and clinics, the board memo states.

“It is a similar problem here as elsewhere,” said Douglas Bagley, executive director of the Northeast cluster. “It’s what you would expect in a situation like this. When you say something is going to be closed, people don’t show up for treatment. Word needs to get around that [some of] the services have been restored.”

Reed said she is particularly concerned about the possibility that private hospitals are creating a structural problem by luring away too many patients with Medi-Cal, which would necessitate a further downsizing of the health department. Gray said he hopes and suspects that patients will begin coming back to county hospitals once they know many services have been restored.

To combat the decline in patients, the county is taking steps such as beefing up the staff of Medi-Cal eligibility workers, rescheduling patients and issuing public service announcements to “clarify the current availability of services.”