Supervisors Support Hospital Expansion Plan : Financing: The board backs a $51-million proposal to pay for a five-story outpatient wing at Ventura County Medical Center.

By ERIC WAHLGREN and CARLOS V. LOZANO

Oct. 11, 1995 12 AM PT

SPECIAL TO THE TIMES

VENTURA — Despite a chorus of protest from taxpayer advocates and officials from a rival hospital, Ventura County leaders voted Tuesday to forge ahead with a $51-million financing plan for new construction at the county’s hospital.

Following a six-hour hearing, the County Board of Supervisors reaffirmed support for issuing $51 million in bond-like certificates to pay for a new, five-story outpatient wing at Ventura County Medical Center.

Two months after privately owned Community Memorial Hospital lost a legal battle to block the new wing’s construction, hospital representatives on Tuesday tried to dissuade the supervisors from moving forward with the project.

“This project is not necessary, it’s financially unsound and its construction would adversely affect the private sector,” said Jim Prosser, an attorney for Community Memorial.

But the supervisors rejected that argument, saying that the plan is financially sound and that the county desperately needs to upgrade its medical facilities. They said they hoped that their action would put an end to the acrimony between the two hospitals.

“I think the time has come to move on and to stop what I consider the Hatfield-and-McCoy battle,” Supervisor Judy Mikels said.

Tuesday’s marathon session unfolded into something resembling a courtroom drama with legions of physicians, health experts and attorneys from both hospitals testifying about the proposed ambulatory care center.

County officials maintain they need the new wing to replace aging facilities, condemned buildings and expensive leased office space. The $33-million wing would house outpatient clinics, a medical laboratory, cafeteria and other offices.

The project also includes a $6-million parking facility with space for about 650 cars. The county would use the remaining money to pay off interest on the bonds.

Hospital officials called the new center a key part of the county’s effort to provide outpatient care for Medi-Cal and uninsured patients through a network that now includes six satellite clinics.

“This modernization is an absolute necessity,” said Dr. Samuel Edwards, the county hospital’s medical director. “The old facilities were not built with this in mind.”

But Dr. Richard Reisman, medical director of Community Memorial’s Center for Family Health, said the days when Medi-Cal patients could only go to public hospitals for specialty care are over.

Reisman predicted that the new construction would become a relic in the rapidly changing health care field.

“Medical patients have many alternatives,” said Reisman. “I urge you not to build a museum to the old, no-choice paradigm of medicine.”

The Ventura County Public Facilities Corp., which presided over the meeting along with the Board of Supervisors, must now approve the financing plan before the bonds can be sold. The corporation’s five-member board, appointed by the supervisors, will consider the issue at an Oct. 24 meeting.

The certificates “will probably go out to market in early 1996,” Thomas Mahon, the county’s auditor-controller, said in an interview last week. “I doubt if we can get them out before.”

Throughout Tuesday’s hearing, Community Memorial representatives speculated that the large portion of state funding the county is counting on to help pay for the project may soon dry up.

A 1988 state law provides funding for public hospital projects based on the percentage of Medi-Cal patients the facility treats.

County officials said they expect the state to provide reimbursement for 65% of the project’s cost, because 65% of the hospital’s patients receive Medi-Cal insurance. But in a videotaped statement, Gail Wilensky, a prominent national health expert representing Community Memorial, told the Board of Supervisors that with Medicare spending reductions now being considered by Congress, a project that relies on such funds “is on very shaky ground.”

Although Virgil Toney, the state’s chief of Medi-Cal operations, told the supervisors that the county could potentially lose the funding, he thought that was unlikely. According to Toney, once the state approves the reimbursement, which is expected, the Legislature would have to take special action to rescind funding.

Mike Saliba, president of the Ventura County Taxpayers Assn., likened the board’s decision to go forward without a guarantee of state funding to gambling with taxpayer money. He said that if the state defaults, the county would be responsible for all the costs of the new center.

“This project could result in a financial disaster for this county,” Saliba said. Mindful of last year’s financial disaster in Orange County, the Board of Supervisors initially approved issuing $51 million in bond-like certificates in December, 1994. But the board asked the county auditor-controller to report on the soundness of the project before the certificates were sold.

The financing plan was further stalled by Community Memorial’s lawsuit attempting to halt the construction project. Among several claims, the suit asked that the medical center--a state-mandated provider of last resort--stop treating privately insured patients.

What particularly rankled Community Memorial officials was a county plan to allow its 6,000 employees to use the county medical center for hospitalization and basic health care. They charged that the plan constituted unfair competition.

But in July, a judge threw out many of Community Memorial’s claims, putting the financing plan back on track. Community Memorial has appealed the judge’s decision.

Also Tuesday, the board approved replacing CS First Boston with Smith Barney as the financing plan’s underwriter because First Boston bailed out of the municipal bond market in the wake of the Orange County debacle.

Wahlgren is a Times correspondent and Lozano is a staff writer.