Bad Medicine?

If Austin's Public Clinics Go Private, the Poor Could Suffer

Nurse Angie Diaz attends to client Nubia Rivera at Rosewood-Zaragosa Clinic
photograph by Jana Birchum
Three weeks ago, Linda arrived here from Houston, alone and with no job prospects. And although she landed a spot at the Salvation Army downtown on Eighth Street and found work in home care, those were only temporary solutions, because Linda also arrived in Austin eight months pregnant. She says she doesn't have a partner or friends to help share costs, and no health insurance. She uses South Austin Health Center, a city public clinic, for her maternity care, and will probably have her baby at Brackenridge Hospital. All at the taxpayers' expense. Local taxpayers, that is. Linda is not on welfare and not on Medicaid, she says, but she also can't afford to pay for her own medical care. The bulk of Linda's costs, and the costs of others like her, will be absorbed by the city and county 13-clinic system under the Austin/Travis County Health & Human Services Department (HHS). Although Linda may eventually qualify for welfare and Medicaid, since she plans to quit work for a while and stay home with her child, she currently falls in the "unfunded" category of the medically indigent.

She's not alone -- not even close. Almost 40% of Austin/Travis County residents are defined as the "working poor" who are between 100%-200% of the poverty level, and therefore do not qualify for federal assistance, yet cannot afford health insurance. (Do you qualify? Get out your calculator. In 1996, the feds set the poverty level at $15,600 in yearly income for a family of four. Double that to $31,200 and you're at 200% of poverty.) Statewide, that portion of the population known as the working poor is growing very fast, much faster than the categories who are eligible for federal assistance: those over 65 years of age, or below 100% of poverty.

One former state Medicaid specialist, now a private consultant, attributes the growth of the working poor to the state's non-unionized work system and a low-paying, service-based economy. Four years ago, the projected percentage of Travis County's unfunded clinic patients was expected to continue at 8-12%, a normal range for "safety net" clinics and hospitals receiving Medicaid and Medicare funds. That figure has been far exceeded. As of September this year, more than 62% of clinic patients are designated "working poor" and don't qualify for federal aid.

Only a third of those, about 9,500 people, are registered under the city and county Medical Assistance Program (MAP). With consistent primary care at the clinics, the MAP patients can stay healthy and out of the hospital. The other two-thirds are not so fortunate; they're the ones who "fall through the cracks" if funds are cut, as they are not registered with any program. Although all the city's services are open to them, the non-MAP clients who are not covered by Medicare usually only come in for acute illnesses, and pay what they can at the time of service. Normally, that's not much -- they are on a sliding scale and only about 4% actually contribute to their medical bills; the other 96% can't afford to pay a dime.

Financially, there is little difference between MAP clients and the unfunded; both groups are paid for with local tax dollars, but the non-MAP patients are the most volatile, at-risk group, who tend to use the emergency room more than other categories of patients. "Most of the working poor are more concerned about putting food on the table than about taking care of their personal illnesses," explains Angie Diaz, a Registered Nurse who works out of the Rosewood-Zaragosa public clinic. "Health is not their number one priority, so they come in with a laundry list of problems, far too late to do preventive care, and they usually end up in the hospital."

The growth of the working poor in the Austin area, and how to continue to pay for their health services, is at the center of the current debate over what to do with the local public clinic system. Blame it on changes in the health care industry toward managed care, a reformist Congress looking to cut welfare and Medicaid funds, or on state economics, but the issue remains: Traditional public health care practices are under the gun. The pressure on public clinics to compete in a leaner, faster, private, managed care environment is threatening the basic philosophy behind them -- preventive, holistic health care.

It's true: Public clinics take too long to see patients; they're heavy on costly social services; patient registration is bureaucratic; there is no follow-up in billing the self-pay (unfunded) patients; leadership in the clinics is scattered, and what little there is, nurse-oriented and tied to the status quo -- the list goes on. As one former clinic worker noted, the clinics just seem to run themselves -- seemingly without any guidance at all. Clinic administrators blame these problems on lack of funding; city staff and politicians blame it on the stagnant and outmoded philosophy of public health care. Major clinic improvements in recent years, such as time limits on patient visits to encourage more efficiency, and the installation of a computer system to speed up administration, have done little to alleviate the concerns of clinic detractors who say it's time to shake things up. The best way to do that, according to Mayor Bruce Todd, may be to privatize, a move that some public health care advocates say could mean the demise of services that Austin's working poor desperately need.

Who's Minding the Clinics?

Because they were open to the working poor, in 1992, all 13 clinics that Health and Human Services (HHS) oversees in the Austin/Travis county area won classification as Federally Qualified Health Centers (FQHCs). That designation ensures them 100% "cost-based" Medicaid reimbursement and 60-80% "fee for service" Medicare reimbursement. HHS actually performs over and above the federal requirement, overseeing an additional non-FQHC site -- the David Powell AIDS clinic. The MAP program exceeds federal requirements as well. "We're one of the only cities with an insurance program for people under 200% poverty level," says Dr. Eduardo Sanchez, health authority for HHS. "We're looked upon not just as progressive, but as downright benevolent."

Of the 13 FQHC sites, the city is responsible for four main clinics -- East, Northeast, Rosewood-Zaragosa, and South Austin -- plus two smaller satellites in Montopolis and far South Austin, as well as a dental clinic and a Salvation Army clinic. The city clinics normally operate on a $15 million annual budget; $7 million of that is self-generating revenue from Medicaid and Medicare. The city's general fund subsidizes the rest with an additional $5 million for the FQHC operation, plus $3 million for MAP patient care reimbursement. The county administers the remaining five FQHCs in the rural areas of Manor, Pflugerville, Jonestown, Oak Hill, and Del Valle, for a total cost of about $2.25 million annually. Federal reimbursements equal $850,000, and county taxpayers throw in $1 million for operations and $400,000 for rural MAP patient care. How come the county clinics cost so little? As of September, they had just 12,209 visits, about one tenth as many as the inner-city clinics.

With so many being served in Austin, privatizing, and what may be the fallout of such a move, has been a topic of conversation not only at city hall but also among non-profit organizations like Family Eldercare, Inc., which networks services for the elderly. Family Eldercare executive director Karen Langley sponsored an emotionally-charged forum September 30 on the future of the clinics and the privatization issue.

Asked about her main concerns should the structure or ownership of the clinics change, Langley said she, like most of those in her organization, was "concerned about the erosion of public health care services for Austin's population. The bottom line is accountability -- it's a lot easier to keep the city council accountable than it will be a corporation."

Currently, the four main clinics that the city oversees provide adult, dental, pediatrics, maternity, and women's health care, plus access to a social worker who will refer clients to social services all over town. Most clients are seen by nurses, but two or three resident-level doctors are available on any given day, courtesy of the Central Texas Medical Foundation. Most clinics have an adjacent pharmacy, a full-service lab, a WIC center (the Women with Infant Children federal program), space for community meetings, and sometimes a satellite office for city utilities. Since the 1970s, the focus for public clinics has always been -- not just in Austin, but nationwide -- to provide the basics of preventive care: Disease control; family planning; nutritional education; child wellness programs and immunizations; teen pregnancy programs; and short-term mental health counseling. Providing acute primary care developed later over several years, as rising hospital costs forced the health department to look at ways to prevent the flood of medically indigent patients into Brackenridge Hospital.

Extra Services
For Those With Less

The majority of Austin/Travis County clinic users are Hispanic (50%), with the second highest ethnic group being African-American (20%). Almost all live in lower-income, or severely disadvantaged, areas. With the high number of Hispanic clients, bilingual clinic workers are a must. As important is a commitment from all to work under sometimes difficult conditions with patients who don't fit into the "normal" category of managed care clients. To put it bluntly, health care needs for people below or close to poverty are different -- and for the most part, concomitant with, their socio-economic needs.

"Working with someone with diabetes over 50 who has a career, is college educated, and well-off, is different from caring for someone with diabetes forcibly retired after 50, who doesn't have marketable skills, and who has a hard time getting food on the table," explains HHS health authority Dr. Sanchez. In other words, social services that may not be so important at a private primary care outlet such as Austin Regional Clinic, are imperative at the Rosewood-Zaragosa public clinic.

For example, nurse Diaz of Rosewood-Zaragosa tells the story of a young mother who came in with her newborn son suffering from an earache. A typical childhood illness, but no one could escape noticing bruises on the young mother's face, unmistakable signs of domestic abuse. In the examining room, the mother was counseled by the resident social worker and referred to the Battered Women's Shelter. In another case, a nine-year-old was recently shot in the projects near the clinic, and his mother, Diaz, and an APD neighborhood liaison managed to get the family transferred to a safer home in South Austin. Then there's the elderly client who suffers from hypertension because his grandson is heavily involved in gang activity; and yet another, like so many, who is illiterate and cannot speak English. These are everyday occurrences for Diaz and the other nurses. Certainly they are not the typical patients seen by private organizations.

Director of the HHS Primary Care Division, Shirley Brown
photograph by Jana Birchum
"You have to ask whether the patient is going to be compliant," says Shirley Brown, Acting Director of the Primary Care Division of HHS. And she questions whether private providers would provide the same level of care. "We have clients that have low literacy levels, they're not vocal, not responsive, living in areas with poverty and crime. Knowing those clients, we provide the extra services. You're not going to find somebody in the private sector -- not Seton, not St. David's -- who's going to deal with that kind of patient. The ones who may need STD [sexually transmitted disease] testing, counseling, and many other services -- private organizations are not going to have the network we have. I question whether they can do it faster and cheaper. And what do we call faster and cheaper?" she asks rhetorically.

But if the city transfers management to a private health organization, can't the city council demand, as a condition of the agreement, that the basics of care now provided be maintained? "How do you define basic primary care?" asks HHS spokesperson Dan Pickens. "The private agency will define it as narrowly as possible to not do too much, and the city will try to define it as broadly as possible since there are so many socio-economic issues tied up in clinic care. We're caught up in the health care industry changes -- what we practice is different from the medicine practiced elsewhere. If PCA says they can provide care for 70,000 people at the clinics, for the same amount of money that the city does for 45,000 people, I'll go with that. But the question is, are you making them well in terms of curing their earaches, or are you making them well in terms of their lives? And what will happen to the unfunded in a privatization scenario?" Pickens queries further. "Private organizations aren't going to want them if they can't pay."

"Having patients fall through the cracks has a lot to do with who owns us," adds HHS primary care director Brown. "We have maternal and child health, STD programs, birth control -- even if the city provides these services, they would have to take it out and separate it, particularly if Seton takes over," since Seton is run by a Catholic organization. "I don't know if I would be content with that. My concern is that if you narrow your focus of services -- if you don't take care of the high-risk clients -- how do you keep down your rate of pregnancies and STDs? Where would we be with the quality of care? There's an accountability problem."

While it was commonly known that Brown's predecessor, Sue Milam, who was also the director of the entire HHS department, was an advocate for privatizing, Brown says she is not. "I'm a patient advocate. That's all."

Some in the community have accused Brown and Milam (who was recruited by the city from a private managed care organization seven years ago) of benchmarking the clinics only with private health care organizations to make the public clinic system appear outmoded, inefficient, and in need of privatization. Brown admits that the department has not performed sufficient benchmarking, explaining only that she visited several private doctors' offices and private clinics in the area, including Seton East and People's Clinic. "Nothing has been formally prepared," she says. But she and Pickens both say that it's impossible to compare the Austin/Travis County clinics with other systems. "It's like comparing apples and oranges. First you have to look at all the services we provide, and ask whether they do -- well, they don't," says Brown.

Then the question is: What is Brown, as the head of the city and county clinics, prepared to do to keep the clinics public? "What we're prepared to present is: Here are the services we're providing -- this is how much it costs, and that you can't compare us to the private sector because they don't have all these services," Brown answers. "I am prepared to do that -- to separate out a cost comparison by talking about the nutritionists and the social workers. Under privatization, we may have a fragmented system. In order to be comprehensive about public health care, you have to look at all the components we offer. For example: If you don't work with our type of clientele on their diet regime, and a multitude of other factors in their lives, they end up in the hospital at a higher cost to the city. We need to paint a picture of inclusion of the services they get now -- that the patients we serve are high-risk, and that receiving the services they get will put them in better health. How do we do that? I don't know, we have to come up with a strategy. That's how we'll sell [the idea of keeping the clinics public]."

Hung Out To Dry

But it may be that the cards are stacked against staying public. It seems the clinics have been left to weakly flounder into deep waters, perhaps deliberately. Rose Lancaster, a member of the clinics' oversight board, told a Family Eldercare audience in September that she believes privatizing the clinics has long been in the works. The evidence, she said, lies in what has taken place under clinic administrative leadership, or lack of it.

"The clinics have suffered in the last year from an attitude on the part of the city administration and the mayor that the clinics would be privatized," said Lancaster. "The administrative coordinator position [for the clinics] was eliminated, the current director position is still filled by an acting director, and the administration sat on that vacancy for a long time. The medical director resigned in the spring, and that position has only been posted this month. There's low morale among the staff. Their ideas have been ignored -- mainly, in my opinion, because of a lack of leadership." In the end, such actions lead to only one conclusion, which Lancaster summed up with this analogy: "It's like having a rental house. You do some things to rent it, but a whole lot more things you don't do because you aren't going to have it in a while."

If Lancaster is correct about the lack of leadership at the clinics, how much weight do Brown and her anti-privatization rhetoric have with the council? To quote Jack Kemp from the recent vice presidential debates, "Weakness is provocative," and the clinics' weakness is a condition which has invited Seton Medical Center, and perhaps several other health care organizations, to look at obtaining the public clinic system as a way to improve their own competitive positions. At least two years ago, during its negotiations with the city over management of Brackenridge Hospital, Seton's president, Charles Barnett, expressed an interest in taking over the clinics -- a prospect that the council didn't pursue at the time, given citizen acrimony over losing the public hospital.

But Seton's interest has not waned. In fact, if Seton doesn't obtain the city and county clinic system, their future in Austin's tight market could be extremely tenuous. Seton's main competitor, St. David's Hospital, gained enormous financial strength last year, by merging with the biggest for-profit health care chain in the nation, Columbia/HCA. Two years ago, St. David's purchased four primary care/urgent care cinics in Austin. "Seton needs the clinics," observes HHS spokesperson Dan Pickens somewhat caustically. "They have to have them to survive. The money's not in hospitals any more, it's in primary care. The insurance companies are squeezing the belt so tight on hospital reimbursements, it's imperative that Seton and St. David's have a primary care system to keep patients out of the hospital and get reimbursement for minor acute care."

It came as no surprise to anyone that it was Mayor Todd -- the one accused of masterminding the Brack/Seton merger -- who pushed the debate to the forefront of council business this summer. Many saw it as a further move by the mayor and city staff to unload fiscal responsibility of public health care and hand over the clinics to Seton, as they did Brackenridge. The mayor and city staff publicly stress that privatizing the clinics is not the point of their efforts, and that the city is not negotiating with Seton at this time. "Some have predetermined that we will privatize," says Assistant City Manager Marcia Conner, who oversees HHS's city operations. "That's not necessarily how it will end up. The options are open."

Assistant City Manager Marcia Conner oversees HHS's city operations
photograph by Jana Birchum
Still, Councilmember Daryl Slusher, who stresses that -- contrary to rumor -- he is not against privatization, believes that city staff is leaning heavily towards it. "I really believe the focus has been on privatizing at the highest levels, and the clinics have been left to hang out there with no support," he says. As evidence, Slusher points to Conner's original idea of the ideal task force to consider, among other things, selling the clinics. Conner's version of the task force, as presented to the council in September, included no clinic workers, doctors, or public health care advocates. Opposition from Slusher and others on the council forced Conner to enlarge the group to 17 members, with more health care and community representation. (Councilmember Ronney Reynolds preferred Conner's original staff-heavy committee, complaining that a citizen-led group would "run amok," as so many of them do, he further admonished.)

Notwithstanding Reynolds' objections, the new formation passed. Conner has since toed the line, and now even she says she supports the new line-up. "From the city's perspective, it is not a privatization task force, and I'm happy with the proposed members," she says. The task force will "identify systems providing health care, examine the Medicaid and Medicare environment, the financial impact, and the concerns about whether the county is sharing their fair portion of the burden," explains Conner. "They'll be looking at several financing options: a health authority; dedicated monies; outside management; leasing clinics; selling clinics; and at how other systems are paying for it."

The task force members have not yet been appointed -- the council is awaiting approval of the group from the other governmental body in charge of the clinic system, the Travis County Commissioners Court. Assuming county approval, the task force will have 120 days to review clinic operations and future funding options. This issue, and the recommendations of the task force, are almost certain to become the battleground on which several political wars are fought -- from mayoral and council elections next year to possibly a citywide vote on a taxing authority.

Hemorrhaging Money

HHS's Pickens says that the question is "not whether to privatize, or not to privatize -- it's... who's going to pay?" Up to now, financing public health care for the city and the county has simply been a matter of maintaining the current level of commitment for the MAP patients out of local taxes, since federal government programs take care of the poorest of the poor, and most of the costs for the elderly. In fact, the city's investment in its clinic system has stayed flat for the last five years, despite over 20% growth in the population and a 34% increase in clinic visits (for 1996, that's an estimated 125,000 visits to all 13 clinics). The need is growing, but, as usual, the monies are shrinking. HHS budget analyst Thomas Watson confirms what city staff told the council at budget time: The health department is looking at losing $10 million over the next five years.

How did they get that figure? Watson and several top officials in the health department point to Congress, which is likely to produce time limits and cuts in welfare, which means that fewer people will be carried by Medicaid. Talk about states' rights -- Texas will be responsible for the health care of millions more of the working poor and indigent once they're kicked off the federal program. Anticipating this, there are bills being written this fall for the 1997 Texas Legislative session to create a 10-district statewide health care system. Each district -- and Austin/Travis County is named as one -- would be responsible for approximately a 30-county area. Funding could come from a variety of sources, including a district taxing authority.

Two more significant changes are in the works -- the city has received about $17 million in federal disproportionate funds annually for the past several years because it treats a "disproportionate" share of the community's indigent population through Brackenridge and the clinics. City officials expect those funds to be cut over the next year or two; Congress is also expected to eliminate the FQHC designation that ensures Medicaid and Medicare funding, and to cut Medicaid reimbursement from 100% to 80%, requiring recipients to produce a co-pay for services given to them. It is unlikely, says Pickens, that Medicaid patients, being the poorest in the community, will be able to contribute anything for services. And since the city and county are committed to serving patients "without regard to their ability to pay," the losses will, again, be absorbed by local taxpayers. In other words, he says, "the unfunded patient population -- given cuts in Medicaid, changes in welfare, and changes in the current cost-based reimbursement system -- could explode."

"One has to ask if this is a contrived emergency or a real emergency," he adds. "We are losing money and sources for money. We lost $350,000 this year, and that was with Medicaid" -- which, as noted above, provides 100% cost reimbursement. "In another three years, we'll be on capitation [a new form of insurance that caps reimbursement per individual, rather than per procedure, as is currently practiced], and lose another $250,000 because of that."

Keeping Accountability

As Mayor Todd said in a speech prior to the inauguration of new councilmembers this June, the decision to privatize Brackenridge was "a business decision" and the same should be considered for the clinics. In fact, when presented with the comment that it may be in the city's best interest -- financially speaking -- to shift the burden of health care to private sector, Pickens agrees. "Yes, it probably is in the city's best interest to get out of the clinics."

"But this shouldn't come as a surprise to anyone," Pickens adds. "We're finally coming full circle on a 20-year cycle. In the late Seventies, Brack was losing money, so we transferred the MAP system to the health department because no private doctors would see the poorest patients. We developed a series of clinics and we took all those patients. Now the federal government has made it possible to reimburse for those patients enough so that private companies are interested in having them for themselves. But now with welfare reform, many of those patients won't be under Medicaid, and we're back to a population of non-paying patients who will turn to the city for help. We also have a growing population who can't afford insurance -- the working poor."

At the Family Eldercare meeting, Medicaid consultant DeAnn Friedholm also said she believes the issue is far beyond privatization. "We should not get tripped up in whether health care is private or public, but focus on what is our commitment as a community to pay for health care for the indigent. Things are changing too fast. You're asking to be a dinosaur if you stick your head in the sand and ignore what's happening."

"If we agree that health care is a right, our decisions will be right on," she said, adding that the key to success with any future public/private partnership, or sale of the clinics, is that the city and the county stay accountable. "As the caterpillar in Alice in Wonderland said to Alice: What's important is who decides."

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