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Healthcare Privatization in Fresno County, California

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Healthcare Privatization in Fresno County, California ABSTRACT HOLLOW STATE, HOLLOW COMMUNITY? HEALTHCARE PRIVATIZATION IN FRESNO COUNTY, CALIFORNIA This study critically examines the concept of privatization utilizing the example of public hospital closures in California. The analysis is conducted through the framework of historical institutionalism and culminates in the concept of the hollow state. Its specific focus is on the case of Valley Medical Center in Fresno, CA. The case study tracks the developments leading up to the closure of the county hospital in 1996 until early 2010. The thesis also provides background on the public provision of healthcare and the medically indigent in the State of California. Connections are made between the privatization of public hospitals and the concept of social capital by highlighting the implications for local communities. Additionally, public hospital closures are explained as a case of degenerative policymaking. Finally, the study closes by making the case for universal access to healthcare services as a crucial component of democratic governance. Simon F. Haeder May 2010 HOLLOW STATE, HOLLOW COMMUNITY? HEALTH CARE PRIVATIZATION IN FRESNO COUNTY, CALIFORNIA by Simon F. Haeder A thesis submitted in partial fulfillment of the requirements for the degree of Master of Public Administration in the College of Social Sciences California State University, Fresno May 2010 © 2010 Simon F. Haeder APPROVED For the Department of Political Science: We, the undersigned, certify that the thesis of the following student meets the required standards of scholarship, format, and style of the university and the student’s graduate degree program for the awarding of the master’s degree. Simon F. Haeder Thesis Author Russell Mardon (Chair) Political Science Kurt Cline Political Science Monica Blanco-Etheridge Fresno Health Consumer Center For the University Graduate Committee: Dean, Division of Graduate Studies AUTHORIZATION FOR REPRODUCTION OF MASTER’S THESIS I grant permission for the reproduction of this thesis in part or in its entirety without further authorization from me, on the condition that the person or agency requesting reproduction absorbs the cost and provides proper acknowledgment of authorship. Permission to reproduce this thesis in part or in its entirety must be obtained from me. Signature of thesis author: ACKNOWLEDGMENTS It is impossible to credit every source of inspiration and advice supporting me in the completion of this project. However, several individuals must be singled out. First and foremost, I would like to thank my thesis committee members Dr. Russell Mardon, Dr. Kurt Cline, and Monica Blanco-Etheridge who skillfully guided me through this endeavor while allowing me to explore the topic freely. My appreciation also goes out to countless individuals in the Fresno healthcare environment who provided me with great insights into the forces that shape the region. Without their input, many nuances of the developments would have been loSt. I also would like to thank the employees at the California Department of Public Health and at Community Medical Centers who have been very accommodating and shared information and data willingly and quickly. Finally, I would like to thank my family for their tremendous patience, encouragement, and understanding. Yet ultimately, this work is dedicated to brave people like David Piercy and the forgotten and underserved populations of Fresno County who have been failed by their community and their local government. TABLE OF CONTENTS Page LIST OF TABLES . ix LIST OF FIGURES . x Chapter 1. INTRODUCTION . 1 Healthcare in America . 1 The Public Hospital in America . 3 Why Do Public Hospitals Close? . 7 The Uninsured . 14 Healthcare in California . 16 Fresno County and the Central Valley . 18 An Overview of This Study . 23 2. THE CONCEPT OF PRIVATIZATION . 26 Definitions of Privatization . 26 Definition of Goods and Services . 28 Different Forms of Privatization . 30 The U.S. Welfare State and Privatization . 34 Contracting for Services in the United States . 40 Models of Contracting . 43 Proponents of Privatization . 48 Opponents of Privatization . 58 The Financial Costs of Privatization . 75 The Changing Role of Government . 76 vii Chapter Page Political Science and Privatization . 81 3. THE INDIGENT AND THE PUBLIC HOSPITAL IN CALIFORNIA 83 A Brief History of Indigent Care and County Hospitals in California . 83 Counties and the Medically Indigent in California Today . 115 The Medically Indigent Service Program in Fresno County . 116 Why Do Public Hospitals Close in California? . 119 Overview of County Hospital Closures in California . 121 The Impact of Public Hospital Closures . 127 Shifting Care to Nonprofit Hospitals . 128 4. FRAMING THE CASE STUDY: THE HOLLOW STATE, DEGENERATIVE POLICYMAKING, AND SOCIAL CAPITAL . 133 The Hollow State . 133 Degenerative Policymaking . 137 The Concept of Social Capital . 142 5. HEALTHCARE PRIVATIZATION IN FRESNO COUNTY: THE HOSPITAL MERGER . 150 The History of the Fresno County Hospital Until the Early 1990s . 150 Tension Over the Proposed Merger . 156 The Report and Its Aftermath . 174 The Decision Is Made . 201 6. HEALTHCARE PRIVATIZATION IN FRESNO COUNTY: MOVING BEYOND THE MERGER . 214 The County Adjusts . 214 Hard Times at CMC . 217 A Changing Healthcare Environment in Fresno County . 221 viii Chapter Page The Era Joslin . 232 The County of Fresno Today . 244 7. HOLLOW STATE, HOLLOW COMMUNITY? A CASE FOR SOCIAL CAPITAL . 251 Comparing Fresno County . 251 The Healthcare Environment in Fresno County . 262 Social Capital in Fresno County . 269 The Hollowing Out of Government in Fresno County . 277 A New Model of Contracting? . 284 A Moral Evaluation . 285 REFERENCES . 292 APPENDICES . 373 A. THE BOREN AMENDMENT AND DISPROPORTIONATE SHARE HOSPITAL FUNDING . 374 B. LIST OF SELECTED ORGANIZATIONS AND TERMS AND THEIR ABBREVIATIONS . 380 C. LIST OF SELECTED INDIVIDUALS . 384 LIST OF TABLES Table Page 1. Uninsurance Rates in Selected States . 17 2. County Public Health Expenditures per Person in Poverty, 2003-2004, in U.S. Dollars . 20 3. Metropolitan Areas Ranked by Percentage of Population Living in Concentrated Poverty . 21 4. Typology of Goods and Services . 29 5. Types of Accountability Relationships . 72 6. Fresno County Medi-Cal Share FY 1967/68 through FY1976/77 in million dollars . 97 7. Net Costs for Health Programs for Fresno County FY1968/69 through FY1973/74 in million dollars . 97 8. County Programs for the Medically Indigent . 99 9. Fresno County MISP Expenditures FY1982/83 to FY1985/86 . 101 10. Public Hospital Governing Structures in California . 109 11. Fresno County MISP Income and Property Limits . 117 12. Comparison of Hospitals by Ownership Type . 131 13. Political Power and Social Construction of Target Populations . 139 LIST OF FIGURES Figure Page 1. Map of California counties and the location of county hospitals . 111 2. Location of MISP service providers presented against the backdrop of MISP recipients in 2000 by zip code . 119 3. Historic development of public hospitals in California from 1871 through 2008 . 123 4. Historic development of county ownership of public hospitals in California . 123 5. Development of hospital closures in California . 124 6. Percentage of hospitals in California by ownership type . 125 7. Income eligibility for single adults in California counties . 252 8. Historical development of MISP eligibility for single individuals in Fresno County as percentage of the Federal Poverty Level (FPL) from 1989 through 2010 . 253 9. Potential development of MISP eligibility levels for single individuals in Fresno County from 1996 through 2009 if adjusted by a variety of indicators . 253 10. County spending per medically indigent individual from FY1999 through FY 2005 for select counties . 254 11. County spending per medically indigent individual from FY 2000 through FY2005 . 255 12. Historical development in expenditures by service for the MISP in Fresno County from FY1999 through FY2008 . 256 13. Average enrollment in county medically indigent programs by county from FY1999 through FY2008 . 257 14. Enrollment in the Fresno County MISP from FY1999 through FY 2008 . 258 15. Enrollment in the Fresno County MISP from FY1999 through FY 2008 by gender . 258 xi Figure Page 16. Enrollment in the Fresno County MISP from FY1999 through FY 2008 by ethnicity . 259 17. Enrollment in the Fresno County MISP from FY1999 through FY 2005 by age group . 260 18. Enrollment in the Fresno County MISP from FY1999 through FY 2008 by family size . 260 19. Enrollment in the Fresno County MISP from FY1999 through FY 2005 by source of income . 261 20. Gross revenue for hospitals in Fresno from 1995 through 2007 . 262 21. Medi-Cal net revenue for hospitals in Fresno County from 1995 through 2007 . 263 22. Assets for hospitals in Fresno County from 1995 through 2007 . 264 23. Bonded debt for hospitals in Fresno County from 1995 through 2007 . 265 24. Acute care beds for hospitals in Fresno County from 1995 through 2007 . 265 25. Provision of bad debt as percentage of total by hospital in Fresno County from 1995 through 2007 . 266 26. Provision of charity care as percentage of total by hospital in Fresno County from 1995 through 2007 . 266 27. Bad debt, charity care, and DSH funding for hospitals in Fresno County from 1995 through 2007 . 267 28. Locations of hospitals in Fresno County in 1995 against the backdrop of residents by zip code . 268 29. Locations of hospitals in Fresno County in 2007 against the backdrop of residents by zip code . 268 30. Social capital in California by county in 1990 according to Rupashingha, Goetz, and Freshwater (2006) . 270 31. Social capital in California by county in 2005 according to Rupashingha, Goetz, and Freshwater (2006) . 271 32. Percentage of residents with high school degree in Fresno County by zip code . 271 xii Figure Page 33. Percentage of residents with college degree in Fresno County by zip code . 272 34. Percentage of residents who are non-citizen in Fresno County by zip code . 272 35. Voter turnout in California by county . 273 36. Percentage of White residents in Fresno County by census tract .
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