HomeMy WebLinkAboutMINUTES - 10162001 - C.116 TO: BOARD OF SUPERVISORS == o n ra
FROM: JOHN SWEETEN, County Administrator o, .; s Costa
DATE: OCTOBER 16, 2001
County
sra coun`�'t �
SUBJECT.- REVISED RESPONSE TO GRAND JURY REPORT NO. 0102 ENTITLED
"DISPOSITION OF DISCOVERY HOUSE"
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
ADOPT report as the Board of Supervisors' revised response to Grand Jury Report No. 0102
entitled, "Disposition of Discovery House".
BACKGROUND:
The 2000-2001 Grand Jury filed the above-referenced report on May 29, 2001, which was
reviewed by the Board of Supervisors on June 5 and subsequently referred to the County
Administrator and the Health Services Director for comment. Subsequent to the adoption of
the Board's response on August 7, 2001, the Grand Jury requested additional information
regarding the timeframes in which specified analyses were to be prepared. Attached is a
revised response prepared by the County Administrator that clearly specifies:
A. Whether the finding or recommendation is accepted or has been implemented;
B. If a recommendation is accepted, a statement as to who will be responsible for
implementation and a definite target date;
C. If a recommendation requires further analysis, an explanation of the parameters of the
analysis and a timeframe for the matter to be prepared for discussion by the County;
D. A delineation of the constraints if a recommendation is accepted but cannot be
implemented within a six-month period; and
E. The reason for not accepting or adopting a finding or recommendation.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
d,l _de�
✓R OMMENDATION OF COUNTY ADMINISTRATOR RECOMMEN ION OF BOARD COMMITTEE
PPROVE OTHER
SIGNATURE(S):
ACTION OF BOARr October 16, 2001 APPROVE AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
X UNANIMOUS(ABSENTNone ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED October 16, 2001
CONTACT: JULIE ENEA(925)335-1077 JOHN SWEETEN,CLERK OF THE
BOARD OF SUPERVISORS AND
COUNTY ADMINISTRATOR
CC: PRESIDING JUDGE OF THE GRAND JURY
GRANDJURYFOREMAN
COUNTY ADMINISTRATOR
HEALTH SERVICES DIRECTOR
PUBLIC WORKS DIRECTOR
BY DEPUTY
MOM "Go
ivy
sit ,. 7. ;Q Aw"wom " r "Quo!
AT 7,L
. .. !r n '.. .' .�:._..... +1:.• �., -r;'..� - :.��..:'l.. _ '1. ... ,. ..
1
G
Disposition of Discovery House October 16, 2001
County Revised Response to Grand jury Report No. 0102 Page 1
RESPONSE TO THE CONTRA COSTA GRAND JURY REPORT NO. 0102
DISPOSITION OF DISCOVERY HOUSE
1-0 DING - - -
.......:::..:
.........:....:..::.::.
1. Discovery House is the only county-owned residential treatment facility for
substance abuse in Contra Costa County. There are 11 additional, privately
owned, residential treatment facilities under contract with the County.
Response: Agree.
2. Clients who are refused admission by contract facilities, because they are ill or
difficult to handle, can be treated at Discovery House.
Response: Agree.
3. Discovery House has a record of clients who have successfully completed the
substance abuse program. These positive results are recognized by Contra Costa
County Substance Abuse Services and the support staff of Richmond Drug Court.
Response: Agree.
4. The Contra Costa County Department of Public Works has determined that it can
only purchase the minimum properties necessary to realign Pacheco Blvd.
Therefore, The current plan is to purchase a portion of the northern side of the
residential lot east of Discovery House for right of way use.
Response: Agree.
5. As planned, the Pacheco Blvd. realignment will deprive Discovery House of all the
areas needed and used for outdoor recreation, gardening and storage of food
supplies and equipment. Further, the only structure for group therapy meetings
and dining will be demolished and lost for use.
Response: Agree. Unfortunately, the outdoor area is not Discovery House property,
but County right-of-way property, which must be used to accommodate the realignment
of Pacheco Blvd. Discovery House has used the outdoor area with the County's
permission for over twenty years.
6. Contra Costa County, through the Department of Public Works, is willing to
purchase the entire lot east of Discovery House rather than a portion of it, if it can
reach an agreement with the Health Services Department to allow a method of
financing over a period of time.
Response: Agree.
7. Until recently, there has been no planned effort undertaken by the County
Department of Health Services, and the Department of Public Works to maintain
the Discovery House Program.
Response: Partially agree. Repairs and maintenance have been conducted, but the
age and condition of the building make major improvements uneconomical. The
availability of the adjacent parcel provides a new opportunity to enhance the program.
The realignment of Pacheco Blvd. is not slated for implementation until 2003. The
Health Services and Public Works Departments are proceeding in a manner consistent
with the timeline of the realignment project.
w: alone Ir
..sow,
..... ._ .. ..t li"� :t'.:.. r•11.7 ... 1 � r • ..la!�'� .' .t'� .. _. _..V. ... n ..."L•�:.'.:4.
.1tt,•:il.'.\5..+,;..•+is.. .. 0557c5:. ..... - •. . ..n :i t... ._
.. .. ... .:t . .� i..... 11
. I� :. r i•.. r ':,r i .:;j'': !' .. .irk.. .. .�'.. ° ..
or" w ...
,Oils
s
'i.
4 . :ts r...•^. .1. .i 1 1� ;i1V; l;r: e:!�'1 ..j'�1 ii:1.... •1'.T �� •4•''.i4i, .. .. 1 .
::i-•0:l it' .. l:.'�115. tk: ;i. .. , a.. now Yuji 90 .r i
Disposition of Discovery House October 16, 2001
County Revised Response to Grand Jury Report No. 0102 Page 2
Acquisition of a new Discovery House Program site is part of the larger property
acquisition in connection with the realignment of Pacheco Blvd. The Public Works
Department is currently preparing the California Environmental Quality Act (CEQA)
document for acquiring the property; it is estimated to be completed by the end of
August 2001. It will then advance to the Community Development Department, which
could approve it by the end of September. After a required period of public review, the
Board of Supervisors will consider it. Assuming no problems, the Board could certify
the Mitigated Negative Declaration by early 2002. At that point, but not before, the
Real Property Division of the Public Works Department could be permitted to negotiate
with the property owners to purchase the adjacent parcel. This process can take up to
six months.
8. Proposition 36 will provide annual funding of approximately $3.1 million to Contra
Costa County, along with a mandate to treat substance abuse clients rather than
confine them in jail or prison. The California Department of Corrections forecasts
that 5,388 persons arrested for drug abuse in 2002, will not be incarcerated. But
they will still require substance abuse treatment such as the program offered by
Discovery House.
Response: Agree.
9. Recent events such as the community resistance to a mental health facility being
placed at a residence on Babel Lane in Concord prove it is very difficult to locate
resident treatment facilities in established neighborhoods.
Response: Agree.
10. According to Juvenile Court statistics, parental substance abuse is implicated in
over 85% of our County Court Child Placement hearings. This statistic highlights
the widespread effects of substance abuse and the corresponding need for
treatment programs within the county.
Response: Agree.
11. According to portions of the Center on Addiction and Substance Abuse Report,
written by Joseph A. Califano,Jr., President of the National Center on Addiction and
Substance Abuse at Columbia University, (Jan./98):
a. "Drug and alcohol abuse and addiction are implicated in the crimes and
incarceration of 80% -- some 1.4 million—of the 1.7 million men and women
behind bars in America."
b. The cost of proven treatment for inmates accompanied by appropriate
education, job training and health care, would average about $6,500 per
year. For each inmate who successfully completes such treatment and
becomes a taxpaying, law-abiding citizen, the annual economic benefit to
society – in terms of avoided incarceration and health care costs, salary
earned, taxes paid and contribution to the economy – is $68,800, a tenfold
return on investment in the first year."
Response: Agree.
nin.
REO MENDATI NS ..C M . .:. .
O
1. Using available Proposition 36 funding, acquire the entire residential property
adjacent to and east of Discovery House, in order to provide the land needed for
the realignment of Pacheco Blvd. and replace the area lost for use to Discovery
House.
5
. ':� .. � ♦ . of.1 i�1,�' 1 � ' ..!'. -,S. :5 � :'1'•,,•. �. ... _. 1
ami ..:v . 1!4.1.a\: ♦ .. . _ 1�7�. • I' .\+�.• .'i f• ..
• .1 1, ''411 -1��1._. 4 :f -. ...
, 1 i
Disposition of Discovery House October 16, 2001
County Revised Response to Grand Jury Report No. 0102 Page 3
Response: Requires further analysis. Proposition 36 funding cannot be used for the
cash purchase of land or buildings. The County is investigating the permissibility of
using Proposition 36 funding to pay the debt service on land and/or building costs
financed with capital improvement bonds. Such usage would assume that the
leaselbonds defeasance period will equal the life of the building and thus cover the
debt service. This investigation will be completed by the end of November, 2001.
If Proposition 36 funds are not permitted to be used to pay debt service, the relocation
of the Discovery House Program would have to be evaluated by the Board of
Supervisors in the context of the capital facilities master plan.
2. Acquire and install a suitable structure with appropriate sanitary facilities to
accommodate a group meeting room and any additional needed space on the
acquired property.
Response: Requires further analysis. The Family and Human Services Committee
of the Board of Supervisors examined the Discovery House issue at its
September 10, 2001 meeting, which was conducted at Discovery House and
included a tour of the site. The Committee requested staff to identify and
develop alternatives to the current situation, and analyze those alternatives
relative to the California Environmental Quality Act (CEQA), licensing,
cost(financing, capacity and zoning issues. The Grand Jury's recommendations
are included among the alternatives.under analysis by staff. Staff will continue
to report back to the Committee quarterly and anticipates providing a
preliminary analysis of options at the Committee's December 10, 2001 meeting.
3. Study the feasibility of expanding the Discovery House program by the acquisition
of additional properties in the nearby area.
Response: Requires further analysis. See response to Recommendation No. 2.
i'
. .'�4r�.,.:+C. - .. fir,.,, ... .. L;.. ',{�: � ,. .._. � a� . . � .� .. '�{•:
,•. .e.. i •._, iii.S�• s vissm n, . f
.en.. 1. �•,. . . . . +.•:7'w vi"A
fl" "vo.♦ c a . { .t YY_Y .�• • �J,�_
y r.
'AL on
.-, ..,..) r, .. .. a .. ) ... , .. .• ,. , .._ .. ark:. .. .
TO: BOARD OF SUPERVISORS =-
uontrCT
FROM: JOHN SWEETEN, County Administrator 8 i; ; = Costa
DATE: OCTOBER 16, 2001 -cout- County
a rJ
SUBJECT: REVISED RESPONSE TO GRAND JURY REPORT NO. 0103 ENTITLED
"HEALTH SERVICES FINANCIAL MANAGEMENT PERFORMANCE"
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
I
ADOPT report as the Board of Supervisors' revised response to Grand Jury Report No. 0103
entitled, "Health Services Financial Management Performance".
BACKGROUND:
The 2000-2001 Grand Jury filed the above-referenced report on May 29, 2001, which was
reviewed by the Board of Supervisors on June 5 and subsequently referred to the County
Administrator and the Health Services Director for comment. Subsequent to the adoption of
the Board's response on July 17, 2001, the Grand Jury requested additional information
regarding the timeframes in which specified analyses were to be prepared. Attached is a
revised response prepared by the County Administrator that clearly specifies:
A. Whether the finding or recommendation is accepted or has been implemented;
B. If a recommendation is accepted, a statement as to who will be responsible for
implementation and a definite target date;
C. If a recommendation requires further analysis, an explanation of the parameters of
the analysis and a timeframe for the matter to be prepared for discussion by the
County;
D. A delineation of the constraints if a recommendation is accepted but cannot be
implemented within a six-month period; and
E. The reason for not accepting or adopting a finding or recommendation.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
✓RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMME TION OF BOARD COMMITTEE
- APPROVE OTHER
SIGNATURE(S): '
ACTION OF BO D N October 16, 2001 APPROVE AS RECOMMENDED XX OTHER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
X UNANIMOUS(ABSENT None ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED October 16, 2001
CONTACT: JULIE ENEA(925)335-1077 JOHN SWEETEN,CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
CC: PRESIDING JUDGE OF THE GRAND JURY
GRANDJURYFOREMAN
COUNTY ADMINISTRATOR
HEALTH SERVICES DEPARTMENT
BY > DEPUTY
.I ..r i U
FL:, r .:i:6. y" O'S ,C?. mW; .. .: .. ..:\: x b4:=''iv,. .. ..y N ...q' .. '1 i._ ...'.i„ _ Al an: mAlm TO .. .
w NOW l W ME Q:. MA {"sly 11000, r', r. .: SKI 41114 MIS'}...:: , ...... 006 , e.
-. .. .. ..!7� 'T .. .I.. !i' ..-� �,.� ,., .. :3'::i�. r ... -,t::, !_' :i° .....,)�; , :moi�, '�hl , .....:.,.r..,r .^{, .. •� .. � i
Coll no
WAR! 117�14370 poll',
MV-111A 553MAT -MAT-,
.,. �,F. _ .. � iiti5..::0? . ,. .moi: !:..:�. ,,.'_1i. 5 ,�'Sis'•.,i•. ..... �'i:. _ ., _ :.i r�:t�. .. ^.,,_.'ji�;.'i
�i(� 4?:�• ... .. '� _. . ` ... . ... tl 'S. ,r;' .°: � 1� ...1 i�:' �.. ,.� ,.. Vii.' r ..
.�� 'i�..7',;. _ .:;��'1r'•:.. `l l.. ..r %�: ..r'' ... r��•f.� .. :.1{',\''^ .._. .. ;i;;i!.;;.,..:/1'_.'1`•_:41' .t ., ....s.-.
Response to the Contra Costa Grand Jury Report No. 0103
Health Services Department Financial Management Performance
yy y
..... ...... ... .. ..... .a . .. ... .... .. ... `:,C'. _:.,{ate �-G V%1
1. The fiscal year 1999/00, the Health Services Department exceeded its authorized
budget by approximately $10 million, requiring augmentation by the Board of
Supervisors from the General Fund. This budget overrun was equivalent to
approximately 22% of the funding already supplied from the County's General Fund
to the Health Services Department.
Response: Disagree. The finding is factually erroneous. The Department did not exceed
its authorized budget. The Adopted 1999/2000 Budget for the Health Services Department
authorized an expenditure amount of$484.6 million, offset by $439.2 million in revenue
and a County General Fund contribution of $45.5 million. The Department operated
within that budgeted amount and ended the fiscal year with a surplus of$127,000.
It is important to note that in the last 18 years, the Department has never had a negative
mid-cycle budget surprise. The budget issues are identified well in advance and presented
to the County Administrator's Office and the Board of Supervisors for policy discussions
and deliberations during the budget hearings. Upon adoption by the Board of Supervisors,
the Department aggressively pursues the budget goals adopted by the Board of Supervisors.
2. In fiscal year 2000/2001, the Health Services Department anticipates a budget
overrun in excess of $17 million that will also need to be satisfied by diverting
General County funds from other uses. This budget overrun is equivalent to
approximately 30% of the funding already supplied the Department from the
County's General Fund.
Response: Disagree. The finding is factually erroneous. The Department does not
anticipate a budget overrun. In preparation for budget deliberations for the FY 2000/01,
the Department advised the Board of Supervisors during a special workshop at a regular
public meeting on March 28, 2000 of a potential $10.4 million funding need that would
occur in the 2000101 fiscal year. This early reporting of anticipated budgetary needs is part
of the responsibility of the Department's financial management team, and enabled the
Board to make informed decisions regarding priorities for funding in the FY 2000101
budget. A detailed summary of the workshop is included in our response to Finding No. 8,
however, the major highlights of the presentation included:
- A discussion of the cost of providing care to uninsured patients
- A review of the County General Fund contribution to the Department.
- A discussion of how the Department has been dealing with shortfalls of one
nature or another for the past ten years due to the lack of a State and
National Health Care Policy
Working with the Department and the County Administrator, the Board of Supervisors
adopted a realistic budget for the Health Services Department under very limiting funding
constraints, and the Department successfully operated within the budget established by the
Board of Supervisors.
3. Expectations by the Health Services Department indicate funding from Federal and
State sources will not increase sufficiently to keep up with escalating health care
costs or may even decrease.
Response: Agree. Financing for indigent and uncompensated care has not been
adequately addressed at the State and federal levels. As long as the County is mandated
.. )!i.:�' � ... ... .., .. .. '�• .. - _•'i" .�1:,Vii', .+ .. ... .. ���'_. , .. .... !'•r:•
.., ?�.!.� � _•. ... j�. - ... � . '•t�• .:. , ,.. � -- .. _ � ... . . � ..� _ .j 1.
t'4:•r � ,. .. ,. ;r�t.'ir :({. ,. �!.. '.!': .. ,.)i'e.:> •,fit .. � � .,...:°1 ... .. .•„i.. � 19..,.. . :
.. . .• •,+�( - ..- .'! .. •, .. ... .. .:'.:',. . it .'.!.. .• ';�� .'f'( `, .,. ...
Revised Response to Grand Jury Report 0103 Page 2
Health Services Department Financial Management Performance October 16, 2001
under Section 17000 of the Welfare and Institutions code to provide health care services, it
will struggle with obtaining appropriate financing for the health care needs of its residents.
4. The Health Services Department anticipates demand for its services will continue to
increase as the county population and in-migration to the County increases.
Response: Agree. In a report issued by the California Association of Public Hospitals
(CAPH) in April 2001, it was reported that 54% of all hospital outpatient visits by
uninsured patients occur at public hospitals and health systems. As the population of the
County continues to increase and as the State economy continues to slow, it is probable
that more residents will rely upon the County Hospital and Clinics System to provide their
health care.
5. The following table reflects findings of actual and budgeted dollars for the Health
Services Department from the County's 2000-2001 budget - proposed by the
Department, recommended by the Finance Committee and approved by the Board
of Supervisors for expenditures from the County's General Fund. (Detailed
explanations for each budget unit are contained in the County Budget documents).
See Grand Jury Report for table.
Response: Partially disagree. Portions of the table are factually incorrect. The column
entitled "Actual 1998-1999" does not sum correctly. While the table purports to display
Net County Cost, in fact Net County Cost and Gross Appropriations are co-mingled in
several instances. For example, total expenditures (in millions) for the Homeless program
in 1999-2000 was $2.2, while the Net County Cost was $0.8, not $2.2 as indicated in the
table. The following table contains the correct figures from the County's books.
Net County Cost
($ in millions)
Final Budget Final Budget Final Budget
Description 1998/99 1999/2000 2000/01
Detention $ 6.5 $ 7.2 $ 7.1
Public Health $11.6 $ 11.9 $11.9
Conservatorship $ 1.0 $ 0.9 $ 1.0
Environmental Health $( 0.1) $ 0.1 $ 0.1
CCS $ 1.1 $ 1.1 $ 1.0
Enterprise Subsidy $13.8 $ 17.8 $29.5
Substance Abuse $ 1.5 $ 1.4 $ 2.1
Mental Health $ 3.2 $ 4.1 $ 4.6
Subtotal $38.6 $44.5 $57.3
Homeless Programs $ 0.8 $ 0.8 $ 1.7
HSD Total 39.4 45.3 129.0
6. There is a pattern of substantial and continuing increases in the County's net cost to
support the Health Services Department. The Approved Budget for FY 2000-2001
increased by 126% over Actual Expenditures of two years ago and increased by
66% over the last fiscal year when the projected $17 million budget overrun is
included.
F :.t. ... _ t'• Vii=.: ..a}y. T
evnef 144A .�••
.. � Vii: .. ���/-'t.)�. .. � � •. .. ,. al��. .'Y ,. .. 11';Jy... ... a. � .. ,ii ! ..:; , .Y:
dn
.• .�1 , ..� 1 ._ ... .. „4 J• •iJ'. .�, 1 V • , .. .. is '.,5,. ` . 'I:. , •
��� :iii r'.. '(" . . .' SJ 1, .f',. � .t ,''r.:i � . _ � 'J '.'. :,J 1..'1••.1. ..
.�1+r'. ". .' • Vit• 4:. :,�: _ .... a'. ±'.. ,'T•: ,'!, _... t._ . . ,. ...
. �^! . t:t f':: -` t ��__ r .'i... .. .� .. 'iia+ .-. ,., •. -• .. '
- i :/• �:4: 4 1.J _ �'T
.. _ i 11'.1. � ' .: f .. .. 1 ,)1. �.. ' � _ �•$i aC:^i �i. ..
�" CJs . .. t.. �l:'i: i S: •"' � .i ,' .. .:Y� .. .. n ,
i t' ,
Revised Response to Grand Jury Report 0103 Page 3
Health Services Department Financial Management Performance October 16, 2001
Response: Partially disagree. The numbers cited by the Grand jury are factually incorrect.
The following table identifies the Gross Appropriations and the Net County Cost (NCC)
(excluding the Homeless Program) for the years in question.
Fiscal Gross NCC as a Percent
Year NCC Appropriations Gross Appropriation
2000/01 $57,302,529 $524,452,057 10.93%
1999/00 $44,515,256 $482,416,290 9.23%
1998/99 $38,479,589 $465,326,778 8.27%
The establishment and funding of budget priorities is the jurisdiction of the Board of
Supervisors. The Board of Supervisors acknowledges both the trend of increasing County
General Fund support for health services and the lack of commitment at the State and
federal levels for financing health care. Additionally, the Board recognizes the need to
control operational costs, but also places a high priority on providing quality health care to
County residents. The increases in net County costs reflect cost-of-living adjustments for
County staff and Community Based Organizations, increases in employee benefit costs
such as retirement and group insurance, increases in the cost of pharmaceuticals and other
medical supplies, increased usage of Institute for Mental Disease (IMD) beds, augmented
Board and Care Homes due to the lack of viable alternative facilities within the County,
and increases in overhead charges from General Services, Human Resources, and Data
Processing.
7. The "Proposed" budget as submitted by the Health Services Department for FY
2000-2001 was reduced by $6.3 million or a reduction of approximately 11%
compared to the budget approved by the Board of Supervisors.
Response: Partially disagree. The Finding does not include an explanation of the
reduction. The $6.3 million reduction in "proposed" subsidy represents the difference
between the amount the Health Services Department requested in additional financing
and the amount the Board of Supervisors agreed to fund. The variance was addressed
through the Department's balancing plan, approved by the Board, which included such
items as closing the Home Health Agency, implementing the Nurse staffing program at the
Regional Medical Center, and other actions delineated in our response to Finding No. 8.
8. The Health Services Department Budget anticipates an overrun of $17 million for FY
2000-2001. This represents an increase of 29% over its approved county portion of
the budget.
Response: Disagree. The Department does not anticipate an overrun of the 2000-2001
budget and is operating within the Board-approved budget. To reiterate our response to
Finding No. 2, the Health Services Department identified budget issues in March 2000 and
was directed to return to the Board with a plan to cut costs. The plan comprised the
following actions:
- On June 21, 2000, the Contra Costa Home Health Agency was closed.
On August 1, 2000, the Department entered into a contract with Crestwood
Behavioral Health Care for skilled nursing services to transfer patients from
facilities called Institutes of Mental Disease as a cost saving measure.
Other cost containment efforts in the Department to ensure a balanced
2000/2001 budget by year-end included.
(a) Strict adherence to hospital and health center staffing guidelines
(b) Limited use of overtime and registries
(c) An ongoing review of Purchasing practices such as:
FAW. foil 1 V"A WO OT m 0mj inAVY,
V�J
1.
A.AQ TXV 11 i, 4 71 P
1� key m -413 ?TPA n q1 hm.o .0 look-t.
N oozy cov 0 00005. Yin!
TOM -n"Q- v :1!°.•.;(_ Al wmla My Sv an0
It wr m. v wv- ARTWO!
`Q V0113 MEW& 401 10 ->IA �w :W"A 10K nil..
ml! 1 �W
411
-Inc
72
Revised Response to Grand Jury Report 0103 Page 4
Health Services Department Financial Management Performance October 16, 2001
1. Renegotiated the Professional Hospital Supply agreement (est.
annual savings of$100,000).
2. Expanded the recycling program to include glass, plastics and cans
to reduce disposal fees (est. annual savings of$20,000).
3. Renegotiated purchasing agreement for Intravenous Solutions (est.
annual savings of$20,000 per year).
4. Reviewed major equipment maintenance agreements to ensure no
unnecessary coverages were being purchased.
5. Implemented a "Just In Time" forms inventory system (est. annual
net savings of$20,000, plus hospital now has use of 3,000 sq. ft.
of space previously used to store forms on-site).
6. Reviewed and verified that the hospital's current group purchasing
agreement for pharmaceutical supplies continues to result in the
lowest pricing available to the hospital.
(d) A continuance of the targeted hiring freeze (in place for eighteen
months)
(e) Implementation on October 1, 2000 of a Nurse Management system
based on patient acuity
The 2000/2001 First Quarter Budget Report to the Board of Supervisors indicated that the
Department was on track for meeting the budget goals. The 2000/01 Second Quarter
Report indicated the same, and the May 2001 Third Quarter Report validated the
Department's efforts.
9. The Audit Trail Listings (a detailed listing of all budget items) for the Health Services
Department for FY 2001-2002 Budget reflects the overwhelming majority of line
items are subject to an across-the-board cost increase based on inflation with no
reason given.
Response: Partially disagree. The 2001-2002 budget has not been published; therefore,
we must assume the findings actually refer to the 2000-2001 budget year.
The purpose of an annual budget cycle is to review and adjust as necessary budget line
items based on known factors at the time the budget is prepared. During annual budget
deliberations, the County Administrator's Office reviews the Health Services Department's
budget requests in detail and the Board of Supervisors reviews them at a summarized level
focusing on program needs Countywide. It is not unusual for the County to adjust most, if
not all, line items during the annual budget process.
.:...:.. ..
}.
1. The Health Services Department is a very large and complex organization, with
many programs and responsibilities. Continuous budget overruns of the magnitude
experienced in the last two years cannot be sustained without damaging other
important activities, services, and infrastructure for which the County is also
responsible.
Response: The Health Services Department has very little discretion in setting the priorities
for the services it delivers. The County has a legal mandate to be the safety-net provider of
health services to the community. This responsibility is the major distinction between the
public healthcare system and the private healthcare industry. When the cost of a good or
service (e.g., prescription drugs) exceeds the reimbursement the County receives, the
County does not have the option afforded to the private health care industry of denying the
good or service. The County may not remove itself from unprofitable lines of business.
The County is, in fact, the provider of these types of services, to the very recipients whom
private organizations often choose not to serve.
i
�? .}' .. •t is s. r. . .'e �+. .'/ , i : r � ,. � .,r ... { + ..l
Revised Response to Grand Jury Report 0103 Page 5
Health Services Department Financial Management Performance October 16, 2001
The Grand jury, throughout its report, refers to "budget overruns".. implying that the
difference between the Health Services Department's income and expenditures increases
during the year beyond what was initially budgeted. This is not correct; as the fiscal year
progresses, expenditures are adjusted to stay within budget levels. In addition, revenues
and grant opportunities are aggressively pursued to both enhance the delivery of health
services and minimize the obligation for health care costs to the County General Fund.
2. The Grand jury could find no significant effort by the Health Services Department to
critically examine its internal organizational structure and processes, maximize the
recovery of the reimbursable costs from Federal and State sources and from clients
who are not entitled to free services, reduce costs and provide services within the
Approved County Budget.
Response: To the Board's knowledge, the Grand jury neither interviewed nor requested
information from the Health Services Director, the Chief Executive Officer of the Hospital,
the Chief Executive Officer of the Health Plan, the Mental Health Director, the Public
Health Director or the County Administrator. Given the opportunity, these individuals
could have informed the Grand jury that the Health Services Department management
team meets on a weekly basis to review and balance the needs of an underserved and
medically needy population against the limited financing available from local, State and
federal levels, within the parameters set by the Board of Supervisors.
The County and the Department are mandated by Section 17000 of the Welfare and
Institutions Code to "...relieve and support all incompetent, poor, indigent persons and
those incapacitated by age, disease or accident, lawfully resident therein, when such
persons are not supported and relieved by their relatives or friends, by their own means, or
by State hospitals or other state or private institutions." The Health Services Department's
management team understands the challenge of carrying out this mission with less than
adequate funding. Past requirements to close facilities and curtail needed services instilled
throughout the organization an acute awareness of the need to regularly review areas for
quality and cost improvement potential to ensure that scarce dollars are used effectively.
Among other things, the Department has streamlined its purchasing process; modified its
physician pay plans; implemented a nurse acuity system, a pharmacy care management
system and numerous automated systems to more effectively deliver needed medical
services.
3. The Health Services Department is relying almost totally upon Federal and/or State
Governments for a solution to the financial crisis and may be discouraging efforts to
look within itself for discretionary cost saving measures to eliminate annual budget
overruns.
Response: See response to Conclusion No. 2.
4. It seems clear that the Health Services Department will not be able to continue
providing the level of health services they now do without causing significant
budget reductions in other critical county activities, services, and infrastructure. The
inevitable alternative would be to raise county taxes.
Response: See response to Conclusion No. 1. In addition, the Board of Supervisors has
little control over the level of tax proceeds and no ability whatsoever to raise "county
taxes". Proposition 13 fixes property taxes, the major source of County revenue, to a 2
per annum increase in valuation. Increases in other taxes or the levying of special
assessments must be approved by a two-thirds majority of the voters.
Like most County departments, the level of services provided by the Health Services
Department is directly related to population size and demand for services. We can expect,
it '\,' 'a' .— •-�� ! ` , - � �I•. '
Revised Response to Grand Jury Report 0103 Page 6
Health Services Department Financial Management Performance October 16, 2001
therefore, that as the County's population increases, the cost of providing services to this
population will increase accordingly. However, as long as the two increase at
approximately the same rate, a larger tax base should ensure that a given individual's taxes
will not be affected by increased service volume. If revenues continue to decline while
costs increase, the conclusion will likely be correct.
5. The Health Services Department has not scaled back departmental costs to a level
that can be reasonably met within existing and anticipated funding from Federal,
State and County sources.
Response. The Health Services Department balances its service delivery on an annual
basis based upon the variable funding available at the State, federal and local level. The
Department works closely with the County Administrator and the Board of Supervisors
throughout the year to identify potential budget concerns and seek guidance and
affirmation of the Board's direction.
r
- !ty
r.,
RE OMMEN. AT . N ••==���-
1. Initiate a comprehensive management audit of the Health Services Department by
an independent firm. This independent management audit should focus on
operational and organizational effectiveness.
Response: The recommendation requires further analysis. All things being equal, any
organization can benefit from qualified independent reviews of efficiency and
effectiveness, provided they are targeted and strategic, and provided that resources are
available and costs are reasonable. Further analysis of this recommendation may lead to
specific programmatic reviews. However, limited County resources prevent the Board of
Supervisors from ordering wholesale audits of County departments and programs without a
competent demonstration of specific problems. The Health Services Department has
utilized a number of independent firms to review service areas it has identified as high cost
or low productivity areas. Recent examples include:
➢ A six-month operational effectiveness review of the Richmond Health Center was
recently completed by Results Corportation. As a result, Rapid Action Teams have
been put in place to address issues such as staffing levels, the registration process,
Nurse and Doctor teams, medical supply preferences, etc.
➢ An assessment of the scheduling flow of the Operating Room as made by William M.
Mercer, Inc., and changes were subsequently made to improve patient care and to fully
utilize available resources.
➢ William M. Mercer, Inc., also assisted the Hospital in providing the appropriate number
of staff for rendering anesthesiology services.
➢ A review of the Department's case management activities was recently conducted by
Vivian Rittenhouse (G & R Healthcare Associates) with suggested changes to the way
services are delivered.
The Board of Supervisors agreed to consider hiring an outside auditor to conduct one or
more management audits of the Health Services Department and directed the County
Administrator to develop a Request for Proposals (RFP), with a recommended scope and
estimated cost for the audit(s). At the 2001-2002 Budget Hearing held on August 7, 2001,
the Board allocated$200,000 for the audit(s). Based on the budget allocation, the County
Administrator is developing recommendations for the scope of the audit(s) and is
preparing a draft RFP for consideration by the Board at its November 6, 2001 meeting.
It is anticipated that; subject to Board approval, an RFP would be issued in December
2001, a outside auditor selected in January/February 2002, with audit reports due back
from July through December 2002, depending on the final scope of the audit request.
1 , � .. .. �.1,. ir'r •_, ... :1.. ..'tr ft ::ilii r .rl :�1':� � ,. . t
0A a
f,'' ,Iti ...)' � .. .. ` , .r.5.,. •rpt, . .�.. 1 .,}' '�•.. ' .'.I!� Ir),I 1:'• .
;. ! . . .
i�...:.. � .' iia :'•.'�t�., �. � .. '-i. ., ': .. .�. .. .iS - .r.��
Ito
Nam, is
. . .1�, �. ...?1`. r - `.t��. t 'Y'_ � .' a ..�. 1':'.5� ' .. }: ''��••i�' .. .. ... .,.
- / � 1 � � �•is i;l .r :.t. �[:�t
i .��:. . •'' -, � . 1. , ... ... '. .1- � - �.i:� .. . ..'., ,
Revised Response to Grand Jury Report 0103 Page 7
Health Services Department Financial Management Performance October 16, 2001
2. Perform the management audit in logical organizational parts so that implementation
of any change would not be delayed pending completion of the total audit.
Response: The recommendation requires further analysis. See response to
Recommendation No. 1. The Health Services Department will continue to utilize
management reviews on a selective basis where the potential cost savings outweigh the
expense of a consultant firm. It is anticipated that the RFP to be considered by the Board
in November may result if approved, in more than one contract award in accordance
with potentially multiple audit requests.
3. Approve a realistic budget for the Health Services Department and require the
Department operate within that budget.
Response: The recommendation has been implemented. The Board of Supervisors has
approved a realistic FY 2001-2002 budget for the Health Services Department and the
Department has always operated within its Board-approved budget.
4. Require the independent audit firm make quarterly oral and written presentations to
the Board of Supervisors until the Health Services Department is operating with the
approved budget.
Response: The recommendation will not be implemented because it is not warranted. The
recommendation is based on the faulty premise that the Department does not operate
within its approved budget (see responses to Findings 1 and 2). The County Administrator
currently makes quarterly reports to the Board on the status of the County budget, all major
departments, and all departments that deviate from the established budget plan. These
reports provide an early warning signal for potential problems in future periods and allow
the Board to continually assess its priorities.
5. Consider requiring the Health Services Department utilize "zero-based" budget
justification procedures in preparing its Proposed FY 2002-2003 Budget to assist in
identifying those line items requiring reduction and/or controls in order to operate
within its authorized budget. These "Zero-based" budget justification procedures
require each line item of the budget be reduced to zero and any proposed
expenditure be fully justified as to need and amount.
Response: The recommendation will not be implemented because it is not warranted and
would decrease the efficiency of the budget process. Zero-based budgeting is a time-
consuming approach to budgeting practiced widely in the late 1970s and early 1980s, but
later abandoned by most governmental agencies because of its inefficiency. In the case of
the Health Services Department, zero based budgeting" would require the analysis of over
30,000 budget line items supporting programs and activities that are predominantly
mandated. Instead, the County reviews multi-year expense and revenue trends in an effort
to identify, clarify and justify expense and revenue projections that are inconsistent with
our trend analyses.
. I ,•
. ., ''t.� .:�.. `�>. ..._ � .. 1 1...,1 •t t 1. ..t,. .:..,; .,•._ i
t a,
. '1•• fit: . , �'.. ..•1�' t . .:'i.v�.. �'.!. . � .. �_ , ,. '
.'1:., ,'!t.. t:. . t, �.r t •.1. 'Y I' tl7' . ` .. 47., •� .',1: .." ..