Los Angeles: Haves and Have-Nots Lead to a Divided System

Center for Studying Health System Change


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Background

Los Angeles (LA) County’s population of 9.9 million comprises more than a quarter of all state residents. The market’s population growth rate has been below the state average (8% in the past decade compared with the state average of 14%), but it represents a significant number of new residents given the large population base. Besides population size, the LA region is remarkable for its diversity. It has a lower proportion of whites, and a higher proportion of African Americans, Latinos, Asians, foreign-born residents, and adults with limited or no English language skills compared with California as a whole.

Los Angelinos face considerable educational, economic, and health challenges. Educational attainment among LA residents is somewhat lower than for California as a whole. The proportion of households with annual incomes above $50,000 is lower than the state average, and the proportion of the population living in poverty is significantly higher than for California overall. Unemployment in LA reached 10.8% in January 2009, nearly two-thirds higher than a year ago and slightly higher than the state average of 10.6%. Los Angeles residents are more likely to be uninsured or covered by Medi-Cal than residents of the state as a whole, and they are more likely to report fair or poor health than Californians generally.

Many large employers have left Los Angeles, leaving a market of largely mid- to small-sized firms, although several large firms with headquarters elsewhere do have significant operations in the area. Labor unions are strong in LA, especially those in the entertainment, health care, and public sectors. Health care unions exercise strong influence over policy decisions such as proposed closures of hospitals and county clinics.

Issues to Track

The hospital and physician markets in LA are highly fragmented, with no single dominant organization. Hospitals and physicians do compete, but the competition has not been aggressive and numerous examples of collaboration exist, including a new trend toward hospital-physician joint ventures. HMOs remain dominant in LA, but PPOs are gradually gaining ground as purchasers seek lower premiums and health plans seek the less stringent regulatory oversight that PPOs enjoy in California. The safety net is stronger than it was a decade ago, largely because of the efforts of local leadership, but financial and other challenges persist. The following are among the key issues to track:

  • Will the gap continue to widen between have and have-not providers? Will there be more hospital consolidation in response to increasing financial and other pressures, including the hospitals’ need to secure capital to fund construction to meet state seismic requirements?
  • Will the recession result in tighter alignment between hospitals and physicians? What influence will the recession have on hospital-physician relationships?
  • Will the shift from HMO to PPO products continue? What impact will it have on hospital-physician relationships? On costs?
  • As the Los Angeles safety net evolves, what will be the impact on access by residents and demand on other area providers? Will Martin Luther King Jr.-Harbor Hospital reopen? To what degree will there be a shift of primary care from county clinics to FQHCs via the PPP program?

Since 2009, CHCF has published a series of regional market studies that examine the health care markets in specific regions across California. These studies highlight the range of economic, demographic, and health care delivery and financing conditions in California. They are published as part of the CHCF California Health Care Almanac, an online clearinghouse for key data and analyses examining California’s health care system.