District of Columbia: Information on Health Care Costs (Letter Report,
04/22/96, GAO/AIMD-96-42).

Recent studies on the District of Columbia's health care system have
concluded that the city's health care problems are aggravated by such
social factors as high rates of poverty, crime, substance abuse, and
unemployment. These factors account for the sizable numbers of persons
who do not seek preventive health care and cannot pay for medical
treatment, the inappropriate use of D.C. General Hospital for primary
care, and the many trauma care patients at area hospitals. To help
Congress evaluate various restructuring proposals being considered for
the District, this report discusses the District's health care budget
and the composition of the District's health care system, including the
number of Medicaid recipients and uninsured and the distribution of
hospitals and clinics.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-96-42
     TITLE:  District of Columbia: Information on Health Care Costs
      DATE:  04/22/96
   SUBJECT:  Locally administered programs
             Disadvantaged persons
             Municipal governments
             Health care cost control
             Health centers
             Hospitals
             Mental care facilities
             Facility repairs
             Health services administration
             Health care programs
IDENTIFIER:  Medicaid Program
             DC Financial Management System
             District of Columbia
             Medicaid Management Information System
             
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Cover
================================================================ COVER


Report to Congressional Requesters

April 1996

DISTRICT OF COLUMBIA - INFORMATION
ON HEALTH CARE COSTS

GAO/AIMD-96-42

District Health Care Costs

(901674)


Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families With Dependent Children
  CMHS - Commission on Mental Health Services
  DHS - Department of Human Services
  FMS - Financial Management System
  HCFA - Health Care Financing Agency
  HMO - health maintenance organization
  ICF/MR - intermediate care facilities for the mentally retarded
  DCHA - District of Columbia Hospital Association
  MMIS - Medicaid Management Information System
  NHC - neighborhood health clinic
  PBC - Public Benefit Corporation

Letter
=============================================================== LETTER


B-265725

April 22, 1996

The Honorable James T.  Walsh
Chairman
The Honorable Julian C.  Dixon
Ranking Minority Member
The Honorable Rodney P.  Frelinghuysen
Member
Subcommittee on the District of Columbia
Committee on Appropriations
House of Representatives

At your request, we are providing baseline information on the
District of Columbia's health care system to help evaluate the
various restructuring proposals the District is considering in light
of consistently rising health care expenditures, limited resources,
and pending legislative changes.  Specifically, you asked us to
answer questions concerning the District's health care budget and the
composition of the District's health care system such as the number
of Medicaid recipients and uninsured and distribution of hospitals
and clinics.  To respond to your questions, we looked at many aspects
of health care in the District.  In doing so, we also identified
several additional issues that we thought would benefit your
deliberations.  This letter and the accompanying appendixes discuss
those issues as well as respond to your specific questions. 

Recent studies\1 on the District's health care system have concluded
that the District's health care problems are aggravated by social
factors, such as high rates of poverty, crime, substance abuse, and
unemployment in the city.  Such factors, these studies found, in turn
contribute to (1) a certain segment of the population that does not
seek or obtain preventive health care and is unable to pay for its
health care, (2) the inappropriate use of D.C.  General Hospital for
primary care services, and (3) a large number of trauma care
recipients at area hospitals.  It is critical that any action taken
by the District also consider these social factors. 

Throughout this report, we cite numerous figures for the District's
health care expenditures.  We did not perform an audit to verify that
these figures were correct, but rather only summarized and performed
financial analyses of the information provided by District officials. 
In some cases, we found discrepancies between figures cited in
reports with those maintained in District accounting records for data
that was supposed to be reporting the same thing.  Also, in some
instances, we received conflicting information about program
expenditures from the same source.  Wherever possible in this report,
we used figures as recorded in the District's accounting
records--Financial Management System (FMS)\2 --which were audited by
an independent accounting firm for fiscal years 1991 through 1994. 
Fiscal year 1994 data was used, unless otherwise specified, because,
at the time of our review, complete information regarding fiscal year
1995 was not available. 


--------------------
\1 Final Report of the Mayor's Blue Ribbon Panel on Health Care
Reform Implementation, February 1995; District of Columbia Health
Sector Analysis Final Report, Lewin-VHI, Inc., December 5, 1995; and
Final Report of the Mayor's Task Force on Long Term Strategies to
Improve the District of Columbia's Public Health Care Delivery
System, January 1994. 

\2 FMS is the District's accounting system which tracks budget and
actual expenditures. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The District's involvement with the health care system is extensive
and complex.  The Department of Human Services' (DHS) mission is to
meet the health and welfare needs of individuals and families in the
District by ensuring the development and implementation of health and
social service policies.  This is accomplished through the activities
of the following four separate commissions: 

(1) The Commission of Public Health sets public health care policy,
administers the District's preventive care and alcohol and drug abuse
service programs, and provides health care services directly at D.C. 
Village nursing home and the 11 neighborhood health clinics.  D.C. 
Village nursing home provides long-term care and neighborhood clinics
provide various services such as dental and pediatrics services to
many citizens who cannot afford to pay for health care. 

(2) The Commission on Health Care Finance sets Medicaid program
policy, such as optional services that will be provided and changes
to its eligibility criteria.  It also administers and finances the
Medicaid program. 

(3) The Commission on Mental Health Services administers the
District's mental health care system, which includes the operation of
Saint Elizabeths Hospital, a 360-acre historic landmark. 

(4) The Commission on Social Services processes applications to
determine applicants' eligibility for various social programs,
including Medicaid. 

In addition to the activities of the four commissions, the District
also provides public health services to all District residents at
D.C.  General Hospital public hospital. 

On March 1, 1996, Mayor Marion Barry introduced to the D.C.  City
Council legislation creating a public benefit corporation intended to
consolidate many of the functions just described above.  The Mayor
stated that the corporation, which is intended to be financially
self-sustaining in the near future, will compete in the private
health care arena by (1) integrating District government health care
services, (2) emphasizing preventive care, and (3) dedicating D.C. 
General Hospital to critical care and specialized medicine. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :2

To analyze the District's health care budget, Medicaid program, cost
of District medical services, the placement of health care
facilities, and the financial condition of District hospitals, we

  -- performed detailed analyses of the District's FMS and the
     Medicaid Management Information System (MMIS) database of
     Medicaid claims processed during the period covered in our
     review;

  -- performed detailed analyses of patient information and
     expenditures from D.C.  General and Saint Elizabeths and the
     audited financial statements for the 13 private hospitals;

  -- reviewed Medicaid cost settlements and cost reports for
     hospitals and long-term care facilities, federally required
     Health Care Financing Agency reports, the District's cost
     reimbursement method for the 11 public clinics, reports
     analyzing and offering recommendations on the District's health
     care system and on the uninsured, and literature on national
     health care trends;

  -- interviewed officials in the Mayor's Office, each of the
     commissions under the Department of Human Services, the D.C. 
     Hospital Association, other private health care experts,
     officials at all of the 13 private District hospitals, and
     officials at First Health, the District's Medicaid claims
     processor; and

  -- performed numerous site visits, including visits to all of the
     private hospitals operating in the District, D.C.  General,
     Saint Elizabeths, the District-run nursing home (D.C.  Village),
     several District operated public clinics, and one private
     clinic. 

We conducted our work between July 25, 1995, and December 15, 1995,
in accordance with generally accepted government auditing standards. 
Appendix V provides further details of our scope and methodology. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :3

The District's health care expenditures\3 increased 25 percent from
fiscal years 1991 to 1994.  In fiscal year 1994, the District's
health care expenditures totaled a reported $1.246 billion,
representing approximately 27 percent\4 of total District
expenditures for fiscal year 1994.  Our review showed that four
programs--Medicaid, mental health, D.C.  General Hospital, and public
health--accounted for $1.16 billion, or about 93 percent, of the
District's 1994 total health care expenditures and that the Medicaid
program alone contributed $768 million, or about 62 percent of all
health care expenditures. 

Medicaid is the District's fastest growing health care program. 
Medicaid program expenditures increased 53 percent over the 4 fiscal
years from 1991 to 1994, compared with a 52-percent increase in
Medicaid expenditures nationwide.  Although expenditures for mental
health and D.C.  General still represented about 20 percent of the
District's total health care expenditures in 1994, they have
decreased about 9 percent and 7 percent, respectively, since 1991. 
Public health expenditures increased about 17 percent over the same
time period. 

We also found the following: 

  -- The District does not collect much of the specific cost
     information, such as the type and cost of services provided in
     its MMIS system.  This information is generally recognized as
     vital for measuring and managing Medicaid and thus the District
     is impaired in attempting to reliably know and control its
     program costs.  Although District officials stated that this
     information can be collected from other sources, the data cannot
     easily be converted into a usable form for data analysis. 

  -- Saint Elizabeths Hospital and its surrounding buildings are in
     disrepair.  Costs to renovate were estimated at $119 million in
     1985, the most recent renovation information available.  And,
     resources needed to maintain the facility have not been
     available for many years, thus accelerating deterioration. 

  -- The District government runs both the public hospital and the
     public clinics, but it does not coordinate fully between D.C. 
     General Hospital, the hospital-run clinics, and the neighborhood
     clinics.  In addition, from fiscal years 1991 to 1994, the
     District provided a total of $309 million in subsidies, $75
     million of which was characterized as loans, to cover large
     operating deficits.  And, in fiscal year 1994, D.C.  General
     reported nearly $78 million in uncompensated care.  Several
     studies have called for closing D.C.  General because of the
     costs to renovate the facility, the hospital's inefficient
     operations, and the concern over the quality of care provided. 


--------------------
\3 Fiscal year 1994 data was used, unless otherwise specified,
because, at the time of our work, complete information regarding
fiscal year 1995 was not available. 

\4 The District of Columbia Comprehensive Annual Financial Report,
Year Ended September 1994, reported total expenditures of $4.7
billion. 


   PURPOSE OF APPENDIXES
------------------------------------------------------------ Letter :4

Appendix I contains our responses to specific questions your office
asked about trends in the District's health care budget and actual
expenditures of health care and Medicaid programs, the financial
condition of District hospitals, statistics on Medicaid recipients
and the uninsured population, the cost of medical services, and the
placement of health care facilities. 

Appendix II provides information on the additional issues that we
think would be beneficial to your deliberations on health care.  It
provides additional information on Medicaid, Saint Elizabeths, public
health, and D.C.  General Hospital--the four programs that constitute
the primary sources of the District's health care expenditures for
fiscal year 1994. 

Appendix III contains specific recommendations from various
comprehensive studies of the District's health care system.  It
includes the current status of the recommendations, which indicates
that, overall, very little action has been taken. 

Appendix IV summarizes the results of a study of the District's
public sector health facilities--such as D.C.  General and its
clinics--performed by the U.S.  Public Health Service, Office of
Engineering Services.  This study, referred to as the Deep Look
Survey, consisted of a site visit, an in-depth inspection of the
facilities, and follow-up recommendations with cost estimates.  Our
summary describes the facility being studied, the problems cited, and
the costs to repair them. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :5

In commenting on a draft of this report, the Mayor of the District of
Columbia generally agreed with the findings and stated that the
report could be useful in evaluating the District's progress in
transforming its health care system.  The Mayor also responded that
his proposed Public Benefit Corporation (PBC), legislation for which
was forwarded to the City Council on March 1, 1996, would serve as
the umbrella agency for providing cost-efficient health care for the
District.  The Mayor listed key functions of the proposed PBC, which
include reorganizing D.C.  General and the District's 11 community
health clinics into a 24-hour integrated delivery system and
consolidating health care systems such as pharmacy and information
systems to allow for better planning and linkages between public and
private health care resources.  A copy of the Mayor's comments is
included in appendix VI. 


---------------------------------------------------------- Letter :5.1

If you have any questions about the information in this report,
please call me at (202) 512-9510 or Deborah Taylor of my staff at
(202) 512-9395.  Major contributors are listed in appendix VII. 

Gregory M.  Holloway
Director, Governmentwide Audits


RESPONSES TO QUESTIONS ON THE
DISTRICT'S HEALTH CARE SYSTEM
=========================================================== Appendix I

BUDGET QUESTIONS


      QUESTION ONE
------------------------------------------------------- Appendix I:0.1

What were the District's total health care budget and actual
expenditures for each of the last 4 years and how were the budgets
allocated among the various programs and activities? 


      GAO RESPONSE
------------------------------------------------------- Appendix I:0.2

As shown in figure I.1, both the District's actual and budgeted
health care expenditures have experienced steady growth from fiscal
years 1991 through 1994.\1 Actual spending by the District for health
care programs grew 25 percent, from $997 million in fiscal year 1991
to $1.245 billion in fiscal year 1994.  However, except for fiscal
year 1993, the District's health care budget did not keep pace with
District spending. 

   Figure I.1:  Health Care Budget
   and Actual Expenditures
   1991-1994

   (See figure in printed
   edition.)

Source:  District's Financial Management System and the DHS
Controller's office. 

The District's Financial Management System (FMS) does not organize
health care programs into one health care budget.  For our analysis,
we included about 97 percent of the District's health care related
programs---both the appropriated and nonappropriated funds.  We did
not include certain miscellaneous items for which the District incurs
health care related expenses, such as police, fire, and corrections
department medical services.  These items accounted for approximately
$44 million of expenditures for fiscal year 1994.  Further, we did
not include employee-related health care benefits, such as health
care insurance and disability compensation.  We considered these as
costs of employment rather than health care costs. 

We segmented the District's health care system into the four largest
programs.  The remaining programs were grouped together and
categorized as "other." Table I.1 compares the District's health care
budget and actual expenditures for fiscal years 1991 through 1994. 



                               Table I.1
                
                 The District's Health Care Budget and
                          Actual Expenditures

                         (Dollars in millions)

                                  Fiscal    Fiscal    Fiscal    Fiscal
                                    year      year      year      year
Program                             1991      1992      1993      1994
------------------------------  --------  --------  --------  --------
Medicaid
Budget                              $427      $513      $677      $727
Actual                               501       589       680       768
Difference                          (74)      (76)       (3)      (41)
Public Health
Budget                               138       152       159       151
Actual                               122       121       132       142
Difference                            16        31        27         9
Mental Health
Budget                               165       158       137       136
Actual                               156       145       138       142
Difference                             9        13       (1)       (6)
D.C. General
Budget                                99       108        93        81
Actual                               117       128       103       108
Difference                          (18)      (20)      (10)      (27)
Other
Budget                               102        98        87        85
Actual                               102        89        81        85
Difference                             0         9         6         0
======================================================================
Total
======================================================================
Budget                              $931    $1,029    $1,153    $1,181
Actual                              $998    $1,072    $1,134    $1,245
======================================================================
Difference                         $(67)     $(43)       $19     $(64)
----------------------------------------------------------------------
Note:  Budget amounts reflect the revised budget, which may have
included any supplemental budget amounts received. 

Source:  FMS and DHS Controller's office. 

From fiscal years 1991 through 1994, spending for the Medicaid
program consumed an increasing share of the District's total health
care expenditures--from 54 percent of total health care expenditures
in fiscal year 1991 to 62 percent in fiscal year 1994.  With the
exception of public health, the remaining portions of the District's
health care categories have decreased since fiscal year 1991. 


--------------------
\1 At the time of our work, actual expenditures for fiscal year 1995
were not available. 


      QUESTION TWO
------------------------------------------------------- Appendix I:0.3

What were the District's Medicaid budgets and actual expenditures for
the last 4 fiscal years for which information is available?  Provide
a detailed breakdown for fiscal years 1993 and 1994--the 2 most
current, complete years. 


      GAO RESPONSE
------------------------------------------------------- Appendix I:0.4

As shown in figure I.2, Medicaid expenditures increased 53 percent
from $501 million in fiscal year 1991 to $768 million in fiscal year
1994.  Although the Medicaid budget also increased from fiscal year
1991 to fiscal year 1994, actual Medicaid spending exceeded the
Medicaid budget in each year during that period.  Fiscal year 1993 is
the only year that Medicaid expenditures approximated the Medicaid
budget. 

   Figure I.2:  District Medicaid
   Program Budget and Actual
   Expenditures 1991-1994

   (See figure in printed
   edition.)

Source:  District's Financial Management System and the DHS
Controller's Office. 

Historically, the three largest expenditures for the District's
Medicaid program have been for inpatient hospital services, nursing
facility services, and intermediate care facilities for the mentally
retarded (ICF/MR).  During fiscal year 1994, these three Medicaid
services accounted for 72 percent of total Medicaid spending. 

We analyzed the Medicaid Management Information System (MMIS)
database for the fiscal years 1993 and 1994, and through July 31,
1995.  This database contains the District's Medicaid claim and
payment information.  Since the 1995 data were incomplete, table I.2
shows the trend in spending for the three largest Medicaid
expenditures only for fiscal years 1993 and 1994. 



                           Table I.2
            
              Three Largest Medicaid Expenditures

                     (Dollars in millions)

                          Fiscal              Fiscal
                            year   Percent      year   Percent
Medicaid service            1993  of total      1994  of total
----------------------  --------  --------  --------  --------
Inpatient hospital          $279        42      $349        45
Nursing facility             134        20       149        19
ICF/MRs                       64        10        64         8
Other                        190        28       217        28
==============================================================
Total                        667       100     779\a       100
--------------------------------------------------------------
\a District officials could not reconcile total Medicaid payments per
MMIS to FMS-recorded expenditures for fiscal year 1994. 

Source:  First Health--Unaudited MMIS data. 

Inpatient hospital services have historically been the single largest
Medicaid program expenditure and accounted for about 45 percent of
total Medicaid expenditures in fiscal 1994.  From fiscal years 1993
to 1994, inpatient hospital expenditures increased 25 percent, from
about $279 million to $349 million. 

Nursing facility services have historically been the second largest
Medicaid expenditure.  While the elderly population of the District
historically accounts for about 10 percent of Medicaid recipients,
nursing facility services accounted for about 19 percent of total
Medicaid spending in fiscal year 1994.  From fiscal year 1993 to
fiscal year 1994, nursing facility services expenditures increased 11
percent. 

Expenditures for intermediate care services for the mentally retarded
(ICF/MR) have historically been the third largest Medicaid
expenditure.  ICF/MR expenditures remained flat from fiscal years
1993 to 1994, totaling $64 million for both fiscal years. 


      QUESTION THREE
------------------------------------------------------- Appendix I:0.5

For Medicaid recipients, what are the most costly Medicaid services
in the District--for example, physicians visits, hospital stays,
trauma care, emergency care, acute care, long-term care, etc.?  What
are the most costly services provided to the uninsured? 


      GAO RESPONSE
------------------------------------------------------- Appendix I:0.6

Based on our analysis of Medicaid claims processed through the MMIS,
the two categories of claim types which had the highest average
payment per claim were for inpatient hospital stays and long-term
care, which includes nursing facility services and ICF/MR.  Figure
I.3 shows the average payment per claim during fiscal years 1993 and
1994.  Fiscal year 1995 data are not shown since we could not analyze
a complete year. 

   Figure I.3:  Medicaid Services
   With the Highest Cost per Claim

   (See figure in printed
   edition.)

Source:  Unaudited MMIS data. 

For fiscal year 1995 (through July 31, 1995), we identified
additional information recorded in MMIS regarding the diagnosis
categories with the highest billed costs for inpatient hospital
services, the largest Medicaid claim type.  Table I.3 summarizes this
information. 



                         Table I.3
          
           Diagnosis Categories With the Highest
                        Billed Costs

                                Number        Total billed
                                    of           charges\a
Inpatient hospital diagnosis    claims       (in millions)
----------------------------  --------  ------------------
HIV                              1,043               $14.9
Single live birth                3,844                10.2
Pneumonia                        1,057                 8.7
Newborn respiratory problems       267                 6.2
Single live born--caesarean      1,054                 5.2
 section
Congestive heart failure           584                 5.0
Respiratory failure                 87                 4.0
Dehydration--alcohol/drug          479                 3.5
 detoxification
Schizophrenia                      523                 3.4
Respiratory distress newborn        86                 3.1
==========================================================
Total                            9,024               $64.2
----------------------------------------------------------
\a Billed charges usually represent amounts greater than the
District's payment to providers for claims processed.  Our analysis
showed that approximately 75 percent of total billed charges were
paid to providers by the District. 

Source:  First Health--Unaudited MMIS data. 

Our analysis of the inpatient hospital claims also showed that
treatment for burn-related injures had one of the highest single
costs per claims.  For claims paid through July 31, 1995, four claims
submitted by hospitals for burn-related services had billed charges
totaling more than $1.5 million. 

Detailed information about the largest cost of health care services
provided to the uninsured was not available because there is no
system like MMIS that captures claims for the uninsured.  However,
our work at all District hospitals\2 showed that live births were the
service most often provided by hospitals to uninsured patients.  In
addition, uninsured patients with HIV-related conditions, drug and
alcohol treatment, and full-term deliveries with major problems were
some of the most resource-intensive, and therefore the most costly,
services to provide.  Also, because St.  Elizabeths provides
approximately 77 percent of its care to uninsured persons,
psychiatric care is another costly service. 

DEMOGRAPHICS QUESTIONS


--------------------
\2 Although we performed work at all District hospitals, this
analysis was performed on 10 of the hospitals, including St. 
Elizabeths.  The remaining 5 hospitals could not provide us this
information. 


      QUESTION ONE
------------------------------------------------------- Appendix I:0.7

What is the current number of Medicaid recipients, the number of
uninsured residents, the number of Medicaid and Medicare enrollees,
and the number of privately insured residents? 


      GAO RESPONSE
------------------------------------------------------- Appendix I:0.8

We could not obtain exact numbers of uninsured and privately insured
individuals within the District.  The District does not maintain
information about its residents' health care insurance status. 
However, several organizations have estimated the number of uninsured
persons living in the District. 

Table I.4 represents the most current information available on the
number of District Medicaid recipients, Medicaid and Medicare
enrollees, nonelderly uninsured residents, and the number of
privately insured residents accessing services in District hospitals. 
The sources of this information are also provided.  We could not
substantiate the accuracy of this information. 



                                    Table I.4
                     
                      Insurance Status of District Residents

                            Most
                         current     Total
                          fiscal    number
                            year        of      Source of information (all
Category               available   persons      information is unaudited)
---------------------  ---------  --------  --  --------------------------------
Number of Medicaid          1995   124,000      District of Columbia Fiscal Year
 recipients                                      1996 Operating Budget, Volume
                                                 II
Number of Medicaid          1994   141,000      Commission on Health Care
 enrollees                                       Finance
Number of Medicare          1993    81,320      Department of Health and Human
 enrollees                                       Services (HHS)
Number of                   1993   100,000      Employee Benefit Research
 (nonelderly)                           to       Institute (EBRI)
 uninsured residents               125,000

Number of privately         1994    74,515      Hospital data based on number of
 insured                                         discharges
--------------------------------------------------------------------------------

      QUESTION TWO
------------------------------------------------------- Appendix I:0.9

How many current Medicaid recipients and uninsured residents are
"working poor?"


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.10

The number of Medicaid recipients and uninsured residents considered
to be "working poor" was not readily available from any of the
sources we researched.  However, based on an average of 100,000
uninsured, the Blue Ribbon Panel\3 estimates that 80,000 are working
poor.  We could not confirm the accuracy of this number.  Also, we
could not find any information that estimated the number of Medicaid
recipients considered to be working poor. 


--------------------
\3 Final Report of the Mayor's Blue Ribbon Panel on Health Care
Reform Implementation, February 1995. 


      QUESTION THREE
------------------------------------------------------ Appendix I:0.11

How many of the District's children are currently without health care
coverage? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.12

Based on a recent GAO report,\4 it was estimated that in 1993,
23,850, or 16.7 percent, of the District's children were uninsured. 
Also according to the same report, in 1993, 64,962, or 45.4 percent,
of the District's children were on Medicaid.  We could not readily
obtain more current information. 


--------------------
\4 Health Insurance for Children:  Many Remain Uninsured Despite
Medicaid Expansion (GAO/HEHS-95-175, July 19, 1995). 


      QUESTION FOUR
------------------------------------------------------ Appendix I:0.13

What is the District's current physician distribution rate? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.14

The physician distribution rate, according to the Blue Ribbon Panel
Report, is defined as the ratio of physicians that maintain a
practice within a specific location to the specified location's
population.  We could not determine the District's physician
distribution rate.  However, this report states that the private
physician distribution rate is highest in parts of the city with
moderate and high income populations, such as Wards 1 and 2.  Wards 1
and 2 also represent the District's central business area and
contains the three teaching hospitals--Howard University, Georgetown
University, and George Washington University.  The ratio of private
practice physicians to population is lowest in areas of the city with
concentrations of the neediest populations, such as Wards 7 and 8. 


      QUESTION FIVE
------------------------------------------------------ Appendix I:0.15

How many public health clinics are currently in the District, how are
they distributed throughout the District, what are the conditions of
the clinics, and how are they paid for (nonprofit, taxpayer-funded,
etc.)? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.16

The District maintains 11 publicly funded clinics which are
administered by the Commission of Public Health.  These clinics are
located in all wards except Wards 3 and 4.  The greatest
concentration of clinics is in Ward 2 (three clinics).  Wards 5, 6,\5
and 7 each have two clinics.  The remaining two clinics are located
in Wards 1 and 8.  All DHS clinics have limited hours, operating from
8:15 a.m.  to 4:45 p.m., Monday through Friday. 

In addition to the 11 public health clinics, there are several
clinics located within D.C.  General Hospital.  D.C.  General is in
Ward 6.  These clinics have the same schedule as the DHS clinics, but
services vary depending on the day of the week.  For example, on
Mondays the clinics may offer dental services and, on Tuesdays, they
may offer vision services. 

We identified 25 private clinics which were mentioned on several
lists as being the District's private health care clinics; therefore,
we included these as the primary private clinics.  There may be other
private clinics in the District.  Lastly, there are three federally
funded and operated clinics in the District.  These clinics are
funded and operated by the U.S.  Department of Health and Human
Services. 

Table I.5 shows each neighborhood health clinic (NHC) we could
readily identify and its location, except for those clinics located
within D.C.  General Hospital. 




                                        Table I.5
                         
                          Clinics Operating in the District and
                                      Ward Location

                                                                          Federally
                                                                          funded and
        D.C. (DHS) government                                             operated
Ward    clinics                       Private and/or free clinics         clinics
------  ----------------------------  ----------------------------------  ---------------
1       Adams Morgan NHC              Whitman Walker                      Upper Cardozo
                                      New Summit Medical Center           Health Center
                                      Zacchaeus Free Clinic               (adult and
                                      Columbia Road Health Services       children)
                                      So Others Might Eat
                                      Mary's Center
                                      Community Medical Center
                                      Spanish Catholic Center
                                      Community of Hope

2       Walker-Jones NHC              Health Care for the Homeless        None
        Claridge Clinic               Washington Surgi-Clinic
        Southwest NHC                 Planned Parenthood
                                      Women's Comprehensive Clinic
                                      Center for Ambulatory Surgical,
                                      Inc.
                                      Yater Clinic

3       None                          Washington Clinic                   None

4       None                          The Women's Clinic (Washington      None
                                      Hospital Center)
                                      The Washington Free Clinic
                                      La Clinica del Pueblo
                                      Greater Washington Health Center
                                      Hillcrest Women's Surgi-Clinic, NW

5       Woodridge NHC                 Center for Life (Providence         None
        Eckington Child Health        Hospital)
        Clinic

6       15th Street NHC               Columbia Hospital Teen Center       None
        Anacostia NHC

7       Hunt Place NHC                Hillcrest Women's Surgi-Clinic, SE  East of the
        Benning Heights NHC                                               River Health
                                                                          Center (adults
                                                                          and children)

                                                                          Washington
                                                                          Senior Center
                                                                          (adults only)

8       Congress Heights NHC          S.E. Medical Clinic                 None

=========================================================================================
Total   11 DHS clinics                25 private clinics                  3 federal
                                                                          clinics
-----------------------------------------------------------------------------------------
Source:  District's Commission of Public Health, District of Columbia
Hospital Association (DCHA), Final Report of the Mayor's Blue Ribbon
Panel on Health Care Reform Implementation, February 1995, and
private clinics. 

Table I.6 illustrates the type of services offered and the number of
patient visits for each public clinic. 



                                    Table I.6
                     
                     Public Clinics, Services Offered, Ward,
                     and Number of Patient Visits During 1994

                                                                       Number of
                                                                         visits,
Public Clinic       Services offered                            Ward        1994
------------------  ----------------------------------  ------------  ----------
Hunt Place NHC      Full service,\a pediatrics, and                7      13,587
                     pharmacy
Congress Heights    Full service, pediatrics, and                  8      11,635
 NHC                 pharmacy
Southwest NHC       Full service, pediatrics, and                  2      10,785
                     pharmacy
15th Street NHC     Full service and pediatrics                    6      10,257
Anacostia NHC       Full service, pediatrics, and                  6       9,800
                     pharmacy
Benning Heights     Full service and pediatrics                    7       8,903
 NHC
Walker-Jones NHC    Full service, pediatrics, and                  2       8,356
                     pharmacy
Woodridge NHC       Full service and pediatrics                    5       5,309
Eckington Child     Pediatrics                                     5       1,518
 Health Clinic
Claridge Clinic     Limited services                               2       1,177
Adams Morgan NHC    Full service                                   1       1,108
--------------------------------------------------------------------------------
\a Full service clinics offer the following services--adult medicine,
OB/GYN, family planning, and dental. 

Source:  District's Commission of Public Health. 

A recent study\6 of the D.C.  public sector health facilities,
performed by the U.S.  Public Health Service, Office of Engineering
Services, determined that many of the DHS clinic facilities are
substandard.  Examples of substandard conditions range from lack of
accessibility for the disabled to electrical code violations.  The
cost to renovate the clinics was estimated at $9 million.  In
addition, the cost to renovate clinics located at D.C.  General
Hospital was estimated at $849,000.  (See appendix IV for a summary
of the results of the study.)


--------------------
\5 Ward 6 now has three clinics, due to the relocation of the
Eckington Child Health Clinic from Ward 5. 

\6 U.S.  Department of Health and Human Services, Public Health
Service, Deep Look Survey - D.C.  Public Sector Health Facilities,
August 1995. 


      QUESTION SIX
------------------------------------------------------ Appendix I:0.17

What is the current general financial condition of District
hospitals?  How many are privately-owned?  What is the number of beds
per capita?  How many emergency rooms are there and where are they
located?  Per capita, are the District's numbers above or below the
national average?  Are they above or below those of other local
jurisdictions? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.18

We evaluated the hospitals' financial performance by reviewing
measures of their profitability.  Our analysis was based on the
hospitals' fiscal year 1994 financial statements, the most recently
available.  For 11 of the 15 District hospitals, operating profit
margins were below the 1993 national average of 3.02 percent (the
most recent year available), with 6 reporting negative operating
margins.  The combined operating margin for the 15 hospitals during
their fiscal year 1994 was -$214,583,157 on operating revenues of
$2,067,878,592 or a net loss of 10.4 percent.  Table I.7 shows the
hospitals' operating profit margins, which measure the hospitals'
profitability with respect to providing patient care. 



                         Table I.7
          
            District Hospitals' Operating Profit
                           Margin

                                Operating profit  Operatin
                                     margin as a  g Margin
                                   percentage of       (in
                               operating revenue  thousand
Hospital                      (Fiscal year 1994)        s)
----------------------------  ------------------  --------
Psychiatric Institute of                  -172.2  $(9,669)
 Washington, D.C.
D.C. General Hospital                     -116.7  (87,287)
                                                        \a
Saint Elizabeths Hospital                 -110.8  (95,192)
                                                        \a
Howard University Hospital                 -17.5  (34,677)
Children's National Medical                 -7.2  (15,104)
 Center
George Washington University                -1.0   (2,077)
 Hospital
Washington Hospital Center                    .5     2,261
Georgetown University                        1.1     2,730
 Hospital
Greater Southeast Community                  1.4     2,827
 Hospital
National Rehabilitation                      1.6       944
 Hospital
Hadley Memorial Hospital                     2.2       538
Nationwide average (1993)                   3.02       Not
                                                  applicab
                                                        le
Providence Hospital                          3.1     3,627
Columbia Hospital for Women                  3.1     2,301
Sibley Memorial Hospital                     5.9     6,004
Hospital for Sick Children                  20.5     8,190
----------------------------------------------------------
\a In our financial analysis for the District's two public hospitals,
we excluded the $47 million subsidy provided to D.C.  General and
$104 million appropriation provided to St.  Elizabeths, in fiscal
year 1994, because these amounts are not operating revenue and thus
should not be included when calculating operating margins. 

Source:  Hospitals' audited 1994 financial statements, except for
George Washington University Hospital, Saint Elizabeths, and the
Psychiatric Institute of Washington, D.C., whose financial statements
were unaudited. 

As of June 30, 1995, 15 nonfederal hospitals operated 4,877 beds
within the District of Colombia.\7 Of the 15 hospitals, 2 are
operated by the District of Columbia, 11 are not-for-profit
hospitals, and 1 is a for-profit hospital owned by a partnership. 
Eleven of the 15 hospitals, operating 3,558 beds, provide acute care
services (for patients admitted with severe, but not chronic,
conditions), while the remaining 4 operating 1,319 beds provide other
types of inpatient care, primarily long-term psychiatric care. 
Table I.8 lists the 15 hospitals, the number of beds they operate,
and their ownership type. 



                               Table I.8
                
                    District Hospitals' Capacity and
                    Ownership (as of June 30, 1995)

                                               Bed
Hospital name                             capacity  Ownership
----------------------------------------  --------  ------------------
Saint Elizabeths Hospital                      941  District-owned
Washington Hospital Center                     874  Not-for-profit
Greater Southeast Community Hospital           387  Not-for-profit
Howard University Hospital                     375  Not-for-profit
Georgetown University Hospital                 359  Not-for-profit
Providence Hospital                            342  Not-for-profit
George Washington University Hospital          318  Not-for-profit
Sibley Memorial Hospital                       275  Not-for-profit
D.C. General Hospital                          258  District-owned
Children's National Medical Center             188  Not-for-profit
National Rehabilitation Hospital               160  Not-for-profit
Hospital for Sick Children                     119  Not-for-profit
Columbia Hospital for Women                    110  Not-for-profit
Psychiatric Institute of Washington,            99  For-profit
 D.C.
Hadley Memorial Hospital                        72  For-profit
 Total bed capacity in D.C.              4,877  Not applicable
----------------------------------------------------------------------
Source:  District of Columbia Hospital Association and hospital
financial statements. 

Table I.9 shows the location of District hospitals by ward and which
hospitals operated emergency rooms and/or trauma centers as of June
30, 1995.\8



                               Table I.9
                
                District Hospital Location and Emergency
                         Room Services Provided

                                                    Emergenc  Trauma
Ward  Hospital                                      y room    center
----  --------------------------------------------  --------  --------
1     Howard University Hospital                    Yes       Yes

2     Georgetown University Hospital                Yes       Yes
      George Washington University Hospital         Yes       Yes
      Columbia Hospital for Women                   No        No

3     Sibley Memorial Hospital                      Yes       No
      Psychiatric Institute of Washington, D.C.     No        No

4     Children's National Medical Center            Yes       Yes
      National Rehabilitation Hospital              No        No
      Washington Hospital Center                    Yes       Yes

5     Providence Hospital                           Yes       No
      Hospital for Sick Children                    No        No

6     D.C. General Hospital                         Yes       Yes

7     None

8     Saint Elizabeths Hospital                     No        No
      Hadley Memorial Hospital                      Yes       No
      Greater Southeast Community Hospital          Yes       No

======================================================================
Tota  15 hospitals:                                 10        6 trauma
l     2 public                                      emergenc  centers
      13 private (2 for-profit, 11 not-for-         y
      profit)                                       rooms
----------------------------------------------------------------------
Source:  District of Columbia Hospital Association information. 

As shown in table I.9 above, 10 of the 15 hospitals provide emergency
room services, and 6 of the 10 hospitals operate both an emergency
room and a trauma center. 

Finally, in 1993, the most recent data available, the District had
the highest acute care bed per captita ratio in the Washington
metropolitan region--7.5 beds per 1,000 person.  The regional average
was 2.5 beds per 1,000 person.  Figure I.4 shows the number of acute
care beds per 1,000 population for the District and surrounding
jurisdictions in 1993. 

   Figure I.4:  Washington
   Metropolitan Region Acute Care
   Beds per 1,000 Population-1993

   (See figure in printed
   edition.)

   Source:  SACHS Market Planner
   and 1992 AHA Guide to
   Healthcare.

   (See figure in printed
   edition.)


--------------------
\7 Two federal hospitals, the Veterans Affairs Medical Center and the
Walter Reed Army Medical Center, also operated 501 and 680 beds,
respectively, in the District as of June 30, 1995. 

\8 Trauma centers typically have higher costs to operate than
emergency rooms because they handle patients with life-threatening
injuries, such as gunshot wounds, trauma from automobile accidents,
and heart attacks. 


      QUESTION SEVEN
------------------------------------------------------ Appendix I:0.19

On what basis are hospitals, public clinics, and emergency rooms
strategically placed?  Is a master plan or a patient needs analysis
used to determine their location? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.20

There is no master plan or patient needs analysis for determining the
location of hospitals, clinics, or emergency rooms.  According to the
Blue Ribbon Report, the District maintains the same health care
system that existed 30 years ago.  Hospital administrators decide the
placement of hospitals, community services offered, and types of
emergency services offered.  The Commission of Public Health decides
the placement of community clinics, hours of operation, and services
offered. 


      QUESTION EIGHT
------------------------------------------------------ Appendix I:0.21

Are there any unique circumstances in the District compared to other
major cities that would result in higher costs for the District to
provide health care? 


      GAO RESPONSE
------------------------------------------------------ Appendix I:0.22

While we did not identify any circumstances unique to the District,
District hospital officials stated that there were three factors that
contributed to hospitals' operating costs: 

  -- high salaries for professional staff,

  -- high cost of treatment due to complexity of patient cases, and

  -- high cost of medical malpractice insurance. 

Hospital officials stated that these costs were generally higher in
the District than national averages or in surrounding jurisdictions. 
We did not verify this information. 


TRENDS IN DISTRICT HEALTH CARE
========================================================== Appendix II

To respond to specific questions you asked (see appendix I for our
responses to those questions), we analyzed information relating to
many aspects of the District's health care system.  During our
analyses, we uncovered several issues that we felt were extremely
important to any study of health care in the District.  This appendix
discusses those issues in detail. 

SUMMARY

First, prior GAO work\1 has shown that more extensive use of managed
care may have the potential to control Medicaid expenditures.  Our
work has also indicated that good information on the cost and use of
services plays a critical role in overseeing managed care to realize
cost savings and assure quality of care.  Our review of the District
showed that, currently, the city does not collect much of this vital
information or conduct the analyses needed to effectively manage its
programs. 

Second, according to hospital officials and a planning study,\2

Saint Elizabeths Hospital and surrounding buildings are in serious
disrepair.  The District's Commission on Mental Health Services (also
known as Saint Elizabeths Hospital) spent approximately $142
million,\3 or 11 percent of total District health care expenditures,
in fiscal year 1994.  The majority of its expenditures were related
to providing patient care.  The most recent renovation information
available is a 1985 estimate of $119 million.  Also, hospital
officials state that resources needed to fully maintain the buildings
and systems of the west and east campuses have not been available for
many years.  Officials stated and the planning study reported that,
as a result, deterioration of the buildings and system was
accelerated. 

Third, our work and studies\4 showed that although the District
government runs both the public hospital and the public clinics, it
does not coordinate medical services, preventive care programs, or
patient information between D.C.  General Hospital, the hospital-run
clinics, and the neighborhood clinics.  Expenditures at D.C.  General
Hospital were $108 million,\5 or 9 percent of total District health
care expenditures, in fiscal year 1994.  The District provided D.C. 
General $74 million in subsidies, of which $27 million was
characterized as loans, during fiscal year 1994 to offset its
expenditures.  In addition, expenditures to operate the District's
public health clinics for this period totaled $21 million.  District
officials acknowledge that the failure to integrate its public
facilities contributes to the costliness of delivering public health
care.  For example, recipients obtain costly services at a hospital
that could be provided at less cost at a public clinic were the
facilities integrated. 

Several external studies\6 concluded that D.C.  General Hospital, in
its present state, is not competitive relative to the 13 private
hospitals operating in the District.  The studies provide immediate
short-term changes to improve the operations of the hospital and the
services it provides, as well as potentially lowering costs. 
Alternatively, because of various factors including the cost to
renovate the hospital, several studies have recommended closing the
facility.  Recent estimates to renovate the hospital are $112
million, and estimates to build a new facility are $126 million. 

The District provides additional health care services to its
residents through its Commission of Public Health.  During fiscal
year 1994, Public Health expended $142 million,\7 or 11 percent of
total District health care expenditures.  Public Health administers
numerous programs, the three largest, including Medicaid
expenditures, are (1) the Alcohol and Drug Abuse Administration, (2)
the Ambulatory Health Care Administration,\8 and (3) D.C.  Village,\9
the District-run nursing facility. 

BACKGROUND

Health care expenditures in the District rose steadily between fiscal
years 1991 and 1994.  In fiscal year 1991, expenditures for the four
largest programs--Medicaid, mental health, public health, and D.C. 
General Hospital--were $895 million.  These same programs accounted
for $1.16 billion in expenditures during fiscal year 1994.  This
increase, coupled with limited resources and pending legislative
changes for programs such as Medicaid, have caused the District to
examine options for restructuring its health care system. 

The Congress is considering major legislative changes to the Medicaid
program.  The changes could include (1) setting a predetermined
ceiling on federal health care funds to each state rather than
unlimited matching federal funds and (2) basing the ceiling on funds
each state is granted on a new formula.  The legislative changes
would limit the growth in the District's Medicaid grants to 3.5
percent between fiscal years 1996 and 1997 and 2 percent between
fiscal years 1998 and 1999.  Under the current Medicaid program, the
District's Medicaid grants increased 15 percent between fiscal years
1993 and 1994. 

Public Health's two primary roles are to provide education and
prevention programs and ensure adequate access to health care for all
District residents.  Many of Public Health's programs are supported
by the Medicaid program or are intended to support D.C.  General's
mission.  Therefore, we focused on Public Health as it relates to
these two roles.  We do not discuss Public Health separately, but
rather the need for basic information from the Medicaid program to
make management decisions about the placement and types of education
and prevention programs in our Medicaid discussion.  Also, our work
at the 11 neighborhood clinics is discussed along with that on D.C. 
General and the lack of integration between the clinics and the
hospital. 

Numerous studies have been performed to identify problems with the
District's health care system and to suggest solutions. 
Recommendations from some of these reports are summarized in appendix
III. 

MEDICAID PROGRAM LACKS ESSENTIAL
COST INFORMATION

Health care providers submit claims for eligible services provided to
District Medicaid recipients to First Health, a District contractor. 
First Health processes the claims through the Medicaid Management
Information System (MMIS) to determine the amounts to be paid for
each claim.  MMIS either approves or denies the claims based on
various parameters within the system, such as an approved provider or
Medicaid recipient number.  Denied claims are sent back to the
providers.  The District sends approved payments directly to the
providers and draws down the related federal share payment from its
annual federal matching Medicaid grant. 

Reimbursements to hospital, long-term care,\10 and Health Maintenance
Organization (HMO) providers comprised more than 75 percent of
Medicaid expenditures in 1994.  However, the program's information
system either does not collect sufficient cost and service data for
these providers or the District does not utilize available
information to determine if funds are being spent most effectively. 
Providers are reimbursed costs based on (1) cost reports which detail
total operating costs of hospitals and long-term care facilities and
which are audited often 2 years after the providers' operating
year-end and (2) pre-established rates for HMO providers. 

The District attempted to determine the HMO provider rates by using
the full cost of Medicaid services for the Aid to Families With
Dependent Children (AFDC) population, discounted by 7.5 percent. 
However, data needed to perform this calculation was not readily
available in the District's information system.  As a result, the
pre-established rates for reimbursing HMOs do not reflect the true
cost to provide these services and may be excessive.  In addition,
the District does not capture data necessary to ensure that those
rates are competitive.  Until the District is able to determine its
providers' actual costs for delivering each type of health care
service, it will not be able to determine reasonable reimbursement
rates to effectively control costs, nor will it be able to recognize
unreasonable reimbursement requests. 

The MMIS system collects information on all Medicaid claims and
groups them in 13 claim types, the largest of which were inpatient
hospital, long-term care, and outpatient care for fiscal year 1994. 
Our analysis of MMIS showed the following. 

  -- The District does not routinely reconcile detailed amounts in
     the MMIS database to its accounting records--Financial
     Management System (FMS)--which records payments made to
     providers for Medicaid claims.  Although District officials
     attempted to reconcile 1994 amounts in response to our review,
     they could not explain an $11 million difference between MMIS
     data ($779 million) and FMS data ($768 million). 

  -- Detailed information about the type of services provided and the
     cost of those services is not maintained for many of the claim
     types in the MMIS system.  For example, an analysis of the HMO
     claims data--the largest category of claims reimbursed on a
     pre-determined, negotiated rate (known as the capitation rate)--
     revealed that the type of services provided by a practitioner,
     such as prenatal care versus well-baby visits, and the itemized
     costs of providing each type of service are not captured in the
     system.  Instead, all services provided under HMO claims were
     described as "other." District officials state that it does
     collect information on the service utilization of HMO members,
     but the information is in aggregate form, and is not
     comprehensive enough to allow for any kind of systematic
     financial or programmatic analysis.  According to District
     officials, the Commission on Health Care Finance is now in the
     process of expanding these reporting requirements to address
     these shortcomings. 

  -- Hospital claims data--the largest category of claims
     paid--contained information about the type of services provided
     and billed charges; however, no analysis is conducted to compare
     costs of treating the same condition across hospitals to
     determine which hospitals are least expensive. 

  -- MMIS inpatient hospital claims data for 52,577 claims totaling
     $347 million did record diagnosis; however, payment data was not
     recorded for each claim. 

Lack of descriptive information about specific services provided and
cost hampers the District's ability to (1) compare and contrast the
cost-effectiveness of providers, (2) determine the reasonableness of
cost reimbursements, (3) assess the appropriate levels of patient
care, (4) forecast future health trends, and (5) determine what
education and prevention programs should be provided. 

To illustrate, it would be useful for the District to know what
services a patient participating in an HMO received and their costs. 
This basic information would allow the District to compare providers
delivering a similar service and determine who was providing care at
the least cost.  This would subsequently enable the District to more
effectively evaluate the cost-effectiveness of HMOs and use this
information as a tool for evaluating proposed capitation rates and
selecting HMOs to participate in its managed care program.  This
information could also be used by the District in performing quality
reviews of providers to assess whether the appropriate levels of care
are being administered. 

Our work also revealed instances where the information that is
collected was not useful. 

  -- The District does not collect cost information about optional
     Medicaid services in a manner that is useful for cost
     containment.  Each state may elect to provide an additional 34
     services\11 above those services required under federal
     regulations.  District officials estimate that these optional
     services, such as physical therapy and hospice care, cost
     approximately $180 million, or 23 percent, of total Medicaid
     spending.  However, we could not substantiate this figure
     because of the way costs were grouped in the MMIS database. 
     While some optional services are easily identified, such as
     dental services, others are not.  For example,

Under federal government regulations, "eyeglasses" are an optional
service states can choose to provide.  Although the District provides
this service, the claims data we analyzed did not use "eyeglasses" to
define services under this claim type, but rather categorized all
vision related claims under the broad category "vision." Therefore,
the District cannot determine how much it spends on providing
eyeglasses to its Medicaid population. 

Similarly, "physical therapy," another option provided by the
District, is not a recognized service in the database and, thus, the
District cannot determine how much it spends to provide this service. 

In instances where the District has collected necessary information,
it did not always use the information to adequately oversee the
program.  For instance, our analysis of the MMIS database showed that
7 percent of total claim payments, or $29 million, processed in 1994
was for recipients with zip codes outside the District.  Since MMIS
did not include payments of approximately $342 million for inpatient
hospital claims, this amount is probably understated.  District
officials stated that these claims were for individuals who lived
outside of the city but were still wards of the state, such as
children in foster care and individuals in nursing homes.  However,
the District does not investigate any of these cases and continues to
pay claims as long as individuals have a valid Medicaid recipient
number.  Thus, an individual may move out of the city and continue to
receive the District's Medicaid benefits for an undetermined period. 

Given the District's resources and rising health care costs, this
type of information is important to the District.  Obtaining
information on the cost of providing specific optional services will
be critical to the District not only in making informed decisions
about what services should be continued or eliminated, but also in
quantifying potential cost-savings.  The District could also make
better use of the information it collects to monitor the Medicaid
program. 

Our work also revealed anomalies in the MMIS database that District
officials could not explain.  These are discussed in detail in
appendix V.  For instance, long-term care claim types contained (1)
claims where the gender codes were categorized as unknown and (2)
claims that had negative amounts paid.  Although the District has a
system to capture demographics on those eligible for Medicaid, the
MMIS is not designed to routinely report demographics on Medicaid
recipients.  Thus, the District does not have an accurate demographic
profile of its Medicaid recipients nor does it know the financial
impact of the negative amounts paid. 

FACILITIES AT SAINT ELIZABETHS
HOSPITAL NOT BEING ADEQUATELY
MAINTAINED

The Commission on Mental Health Services (CMHS) administers the
District's mental health system within DHS.  Inpatient and some
outpatient services are provided at Saint Elizabeths Hospital.  The
District houses inpatients on the east campus and uses a portion of
the west campus for administrative purposes and some patient care. 
As a result of actions taken under the Saint Elizabeths Hospital and
District of Columbia Mental Health Services Act, the District
currently owns most of the east campus and the federal government
owns most of the west campus.\12 The Secretary of the Interior
designated Saint Elizabeths Hospital a national historic landmark in
1990. 

The federal government's portions of the west campus are vacant.  The
District pays for the maintenance and upkeep of the entire west
campus but is not reimbursed by any other source.  Costs to annually
maintain the west campus were estimated at $6 million in 1993.\13
Hospital officials estimated costs to maintain vacant, federally
owned buildings at approximately $1 million per year through fiscal
year 1991.  According to hospital officials, some of the west campus
is necessary for the operation of the east campus since (1) the
current configuration of the east campus could not provide all
patient services without substantial improvements, including
significant asbestos removal, and (2) the boiler plant, which is the
main source of heat for the east campus, is located on the west
campus; however, the boiler is in serious disrepair. 

Section 4(f)(1) of the act required the Secretary of Health and Human
Services (HHS) to contract for a physical plant audit of the existing
facilities at Saint Elizabeths Hospital to assist the Mayor in
developing a comprehensive mental health system plan.  The physical
plant audit was required to recognize any relevant national and
District codes and estimate the useful life of existing facility
support systems.  Section 4(f)(2) provided that, after the audits,
the Secretary was to initiate and complete repairs and renovations of
the physical plant and facility support systems--as necessary to meet
any applicable code requirements or standards--of Saint Elizabeths
Hospital that were to be used by the District of Columbia under the
comprehensive mental health system plan.  In 1991, section 4(f)(2)
was amended to authorize the Secretary to provide the Mayor with
funds to complete such repairs and renovations. 

In 1985, the U.S.  Department of Health and Human Services conducted
the required physical plant audit of all existing facilities of Saint
Elizabeths Hospital.  At the time, the estimated cost to bring the
physical plant and facility support system into compliance with
applicable laws and codes was $56.5 million.  This audit assumed that
the District would temporarily use the west campus for its
operations, but that eventually all hospital operations would be
consolidated on the east campus.  The District has filed a complaint
in the United States Court of Federal Claims seeking recovery of
amounts the District alleges the United States owes it under various
provisions of the act.  The complaint alleges that the United States
neither made nor provided the District all the funds necessary to
make the repairs and renovations indicated by the 1985 audit.  The
complaint seeks about $60 million based on the difference between the
estimated cost of the repairs and the amount the United States
previously provided the District, as adjusted for inflation. 

The District also hired a contractor to estimate the additional costs
to renovate the facility for patient use.  These costs were estimated
at $62 million.  The additional costs were not necessary to comply
with the requirements of the transfer.  Even if the District prevails
in its suit and recovers the amount claimed, it is unclear how the
District intends to fund the remaining repairs and renovations to
Saint Elizabeths identified by the District's audit.  In addition, it
is unclear how much the historic landmark designation has affected
the 1985 audit's cost projections for repairs and renovations. 
However, it is not unreasonable to assume that they will increase as
a result of the designation. 

Section 8(b) of the act required the Mayor to submit to the Congress
for approval a master plan for the use of the remaining untransferred
property at Saint Elizabeths.  The plan was submitted to the Congress
in December 1993.\14 Section 8(b) provides that if a law is enacted
approving the plan, the Secretary is required to transfer the
property to the District in accordance with the approved plan without
compensation.  The plan submitted to the Congress called for
renovating and restoring the west campus for institutional, retail,
and support-type facilities, using the guidelines for historical
properties.  However, the planners noted that the market for such
users at this location was weak.  During the process of developing
the master plan, three alternatives consistent with the historic
landmark designation were examined.  Their costs ranged from $116
million to $128 million.  No other comparable use plan was prepared. 

The plan also recommended that the transfer of the west campus not
proceed until the mutual interests of the federal and district
governments were reconciled since, according to the planners, the
District "does not have the resources to undertake adaptive reuse of
the west campus and that current transfer would adversely impact both
the historic resource and its potential contribution to the national
and local economies." Also, it states that the Commission on Mental
Health's budget to fully maintain the buildings and systems of the
west and east campuses has been severely underfunded for so long that
the "inevitable deterioration of the buildings and system has been
accelerated," and the District must address the most critical
conditions on a crisis management basis. 

According to District officials, the majority of its fiscal year 1994
mental health expenditures were for patient care.  We did not perform
an audit or efficiency study of these costs, but hospital officials
estimate that patient costs will remain relatively constant over the
next few years.  Since most of the budgeted mental health funds are
used for patient care, such as physician and staff salaries and
contracts for outpatient community housing, hospital officials stated
that they have not been able to dedicate substantial funds for
facilities improvement.  Currently, the District is in the process of
studying its mental health care system to identify ways to reduce
costs and improve efficiency. 

OPERATIONS OF PUBLIC HEALTH CARE
ARE INEFFICIENT AND FACILITIES ARE
DETERIORATING

Operating expenses for D.C.  General Hospital were $141 million in
fiscal year 1994.  Several studies\15 on the hospital, including our
comparison of fiscal year 1994 operating results (see table I.7 in
appendix I) show that, in its present state, D.C.  General is not
competitive relative to the 13 private hospitals operating in the
District.  The studies provide immediate short-term changes which
could improve the operations of the hospital and the services it
provides, as well as potentially lower costs. 

The number of patients served at D.C.  General has decreased, and the
physical condition of its 53-year old facility has deteriorated. 
Some of the decrease in patients served is attributed to the shift of
Medicaid recipients by the District to managed care organizations
such as HMOs and the hospital's poor physical condition.  In
addition, none of the four HMOs serving the Medicaid AFDC population
are associated with D.C.  General and thus would not routinely send
their members there for treatment. 

The District's 11 public clinics are not integrated with D.C. 
General.  The clinics and D.C.  General Hospital do not (1) share
patient data, (2) maintain a referral network, or (3) coordinate
patient care and programs.  This lack of coordination

  -- allows recipients to obtain services at the public hospital
     which, according to District officials, could be provided for
     less at a public clinic;

  -- prevents the District from adopting a strategic outlook to
     delivering public health care;

  -- forces the public facilities to compete for resources which
     would possibly be better shared; and

  -- may cause duplicative and unnecessary services to be provided to
     citizens. 

For instance, during our visit to D.C.  General, we observed patients
who used the walk-in emergency room services to refill a prescription
or obtain treatment for a headache.  One asthmatic patient received
treatment for a condition which, according to hospital officials,
could have been more appropriately treated by the patient's primary
care physician.  Because patient records were not available at the
hospital, hospital staff had to run routine tests before treating the
patient.  This information would have been readily available if the
patient had gone to his or her primary care physician.  Also, during
our visit, hospital officials stated, and we observed, that patients
had gone to the emergency room and lab work had been performed, but
that the patients left before the results were known.  Hospital
officials stated that often these individuals return to the emergency
room another day and the tests are done again.  In some cases, a
patient's condition worsens between visits and the patient has to be
hospitalized. 

During fiscal year 1995, the Office of Engineering Services in the
U.S.  Department of Health and Human Services conducted a survey\16
of the hospital and concluded that it was in such disrepair that it
would exceed $112 million to renovate or $126 million to build a new
facility.  The $112 million cost to renovate does not include an
additional $849,000 which the same study estimates is the cost to
repair the public clinics located within the hospital.  The report
cited serious deficiencies including poor heating, ventilation, and
air conditioning; asbestos; unsanitary conditions in the obstetrics
and gynecology department; inoperative laundry equipment; and
inadequate ventilation in the surgical pathology lab. 

In addition, the same survey identified numerous deficiencies at
seven of the public clinics.  Estimates to repair the deficiencies
exceed $9 million.  The deficiencies include poor heating,
ventilation, and air conditioning; filthy and clogged filters; no
emergency power or fire alarm system; and overcrowding.  Appendix IV
summarizes the results of this study. 

These same studies (see footnotes 15 and 16) also reported that (1)
the hospital facilities are in major disrepair--estimates to repair
or renovate the facility exceed $112 million, (2) hospital operations
are inefficient and noncompetitive with the private sector, and (3)
the quality of health care could be improved.  In addition, D.C. 
General reported nearly $78 million of uncompensated care during
fiscal year 1994.  From fiscal year 1991 through 1994, the District
provided a total of $309 million in subsidies, of which $75 million
was characterized as loans, to cover large operating deficits. 
Detailed recommendations for solving problems at D.C.  General and
the public clinics have been provided to the District.  These
recommendations, which range from closing the hospital to integrating
the clinics with the hospital, are summarized in appendix III. 


--------------------
\1 Arizona Medicaid:  Competition Among Managed Care Plans Lowers
Program Costs (GAO/HEHS-96-2, October 4, 1995). 

\2 A Master Plan for the West Campus of Saint Elizabeths Hospital;
Devouax and Purnell Architects - Planners, P.C., September 1993. 

\3 Total operating expenses for Saint Elizabeths were $207 million
for fiscal year 1994.  This includes $65 million of Medicaid
expenses, as well as depreciation and accruals. 

\4 Final Report of the Mayor's Blue Ribbon Panel on Health Care
Reform Implementation, February 1995 and District of Columbia Health
Sector Analysis Final Report, Lewin-VHI, Inc., December 5, 1995. 

\5 Total operating expenses for D.C.  General were $141 million for
fiscal year 1994.  This includes $33 million of Medicaid expenses. 

\6 District of Columbia General Hospital--Operational and Financial
Viability Plan, dated May 1994, and U.S.  Department of Health and
Human Services, Public Health Service, Deep Look Survey - D.C. 
Public Sector Health Facilities, August 1995.  The Deep Look Survey
was a series of in-depth studies of the physical condition of D.C. 
General and several public clinics. 

\7 Total operating expenses for the Commission of Public Health were
$181 million for fiscal year 1994.  This includes $38 million in
Medicaid expenditures. 

\8 The Ambulatory Health Care Administration is responsible for the
District's 11 neighborhood health clinics. 

\9 We did not perform detailed work at D.C.  Village because the
District plans to close the facility in April 1996.  According to
District officials, they are experiencing difficulty in placing
residents in other nursing homes and did not believe they would be
able to meet the April 1 deadline. 

\10 Long-term care includes nursing facilities services and
intermediate care facilities for the mentally retarded. 

\11 According to the U.S.  Health Care Financing Administration, the
District elected to provide 26 of the 34 optional services;
nationwide, the average was 24. 

\12 The Saint Elizabeths Hospital and District of Columbia Mental
Health Services Act, Public Law
No.  98-621 (1984), authorized the Secretary of Health and Human
Services to transfer to the District of Columbia all property at
Saint Elizabeths Hospital needed by the District's Department of
Human Services to provide mental health and other services under the
District's comprehensive mental health system plan.  On September 30,
1987, the Secretary transferred title to almost all of the portion of
Saint Elizabeths that is commonly referred to as the east campus and
several buildings on the portion of Saint Elizabeths that is commonly
referred to as the west campus for these purposes. 

\13 A Master Plan for the West Campus of Saint Elizabeths Hospital;
Devouax and Purnell Architects - Planners, P.C., September 1993. 

\14 A Master Plan for the West Campus of Saint Elizabeths Hospital;
Devouax and Purnell Architects - Planners, P.C., September 1993. 

\15 Four Years Later--The Rivlin Report Revisited:  An Assessment of
Progress in the District of Columbia, Final Report, December 1994,
and District of Columbia General Hospital--Operational and Financial
Viability Plan, May 1994. 

\16 U.S.  Department of Health and Human Services, Public Health
Service, Deep Look Survey - D.C.  Public Sector Health Facilities,
August 1995. 


STATUS OF RECOMMENDATIONS
========================================================= Appendix III

Over the past several years, various comprehensive studies have been
conducted on the District's health care system.  We reviewed four of
these studies and categorized the resulting recommendations into
"fully implemented," "partially implemented," and "not implemented,"
based on our analysis.  Many of the recommendations relate to the
establishment of a Public Benefit Corporation (PBC).  This
corporation would restructure the District's health care system to
separate the health delivery functions from public health policy and
regulatory functions.  According to District officials, the
establishment of this corporation is still in the planning stages,
with partial implementation anticipated by April 1996 and completion
by September 30, 1996.  We view initiatives that are still in the
development or planning stages as ongoing, but continue to categorize
them as "not implemented."

Additionally, the status of these recommendations reflects the
representations of District officials.  We did not confirm the status
of implementation nor did we evaluate the effectiveness of the
District's actions to implement the recommendations.  The four
studies we reviewed are

  -- Four Years Later:  Rivlin Report Revisited, December 1994 (RII);

  -- Final Report of the Mayor's Task Force on Long-Term Strategies
     to Improve the District of Columbia's Public Health Care
     Delivery System, January 1994 (LTS);

  -- Final Report of the Mayor's Blue Ribbon Panel on Health Care
     Implementation, February 1995 (BR); and

  -- District of Columbia General Hospital - Operational and
     Financial Viability Plan, May 1994 (K). 

                                                                      Not
                                      Fully           Partially       implemente
Issue           Recommendation        implemented     implemented     d
--------------  --------------------  --------------  --------------  ----------
Public health   (1) Create a new                                      X
care delivery   Public Benefit                                        Plan for
system          Corporation to                                        partial
                separate the health                                   implementa
                delivery functions                                    tion by 4/
                from public health                                    1/96,
                policy and                                            completion
                regulatory                                            by 9/30/
                functions. (RII, BR,                                  96.
                LTS)

                (2) Reconstitute the                  X
                current Commission                    Anticipated
                of Public Health to                   completion
                a cabinet-level                       9/30/96.
                Department of
                Health. (BR, LTS)

                (3) Restructure D.C.                                  X
                General (and Saint                                    Part of
                Elizabeths-RII)                                       PBC.
                under the new Public                                  Partial
                Benefit Corporation,                                  implementa
                with D.C. General to                                  tion by 4/
                serve as an acute                                     1/96,
                care facility. (BR)                                   completion
                                                                      by 9/30/
                                                                      96.

                (4) Effectively use                                   X
                health professionals                                  Ongoing.
                such as nurse
                practitioners, nurse
                midwives, and
                physician
                assistants. (BR)

                (5) Involve health    X
                professionals in any  Effective 10/
                government-           95.
                organized group or
                initiative seeking
                ways to improve the
                delivery of health
                care in the
                District. (LTS)

                (6) Develop an                                        X
                organized system to                                   Developing
                collect, analyze,                                     new system
                and report health                                     in
                statistics and                                        coordinati
                information;                                          on with
                establish mechanisms                                  the
                for data uniformity                                   federal
                and linkage; and                                      government
                provide valid and                                     .
                timely data capable
                of supporting
                program and
                management decisions
                and forecasting
                future health
                trends. (LTS)

                (7) Create an                         X
                oversight board with                  Advisory Board
                representatives of                    for D.C. Gen.
                the city and                          Legis. to
                community to set                      explore
                policy for the                        establishment
                hospitals and the                     of PBC board.
                clinics. (RII)

                (8) Create a                                          X
                private, not-for-                                     Ongoing.
                profit, self-                                         Anticipate
                sustaining                                            d
                corporation working                                   completion
                in cooperation with                                   9/30/96.
                the new D.C.
                Department of Public
                Health to create and
                administer health
                research projects.
                (LTS)

                (9) Establish an      X
                office or bureau      Reestablished
                within the            1/96.
                Department of Public
                Health to collect
                and disseminate
                health statistics in
                the District
                uniformly. (LTS)

                (10) Direct the                       X
                Department of Public                  Anticipated
                Health to work with                   completion 9/
                public and private                    30/96.
                hospitals and other
                providers to develop
                a comprehensive
                approach to ensure
                access for all
                residents to acute
                care services. (LTS)

                (11) Support the                                      X
                operation of the
                D.C. General
                Hospital
                Association. (LTS)

                (12) Establish a                      X
                formal relationship
                between the
                Department of
                Corrections Health
                Services and the new
                Department of Public
                Health. (LTS)

                (13) Determine                                        X
                whether to transfer                                   Final
                the Emergency                                         determinat
                Medical Service                                       ion being
                (EMS) Bureau of the                                   made.
                D.C. Fire Department                                  Discussion
                (DCFD) to the new                                     s concern
                Department of Public                                  privatizin
                Health, or whether                                    g
                it should remain as                                   ambulance
                a separate bureau                                     services.
                within the
                DCFD.(LTS)

                (14) Evaluate the                     X
                current EMS response                  New dispatch
                system to determine                   system in
                what improvements,                    place.
                if any, should be                     Additional
                made to the dispatch                  evaluation
                system and how EMS                    ongoing.
                responds to calls
                for assistance.
                (LTS)

          (15) Direct EMS and                                   X
                the Department of                                     Centralize
                Public Health to                                      d trauma
                develop a patient                                     registry
                monitoring system to                                  to be
                follow up and refer                                   establishe
                patients seen by EMS                                  d in FY
                staff for post-                                       1996.
                emergency treatment.
                (LTS)

Primary care    (1) Develop a system                                  X
                of primary care by                                    Ongoing.
                redirecting a
                significant amount
                of public health
                resources from acute
                and chronic care to
                preventive health
                services. (BR, LTS)

                (2) Replace the                                       X
                current 11 public
                clinics with a
                reduced number of
                regional primary
                care centers. (RII,
                BR)

                (3) Integrate the                     X
                District's public                     Currently
                clinics, including                    integrating
                their information                     clinics with
                systems, into the                     D.C. General
                operation of various
                hospitals, with a
                view towards
                improving referral
                relationships
                between the clinics
                and District
                hospitals. (K, LTS)

                (4) Establish a                                       X
                central authority                                     Part of
                responsible for                                       PBC.
                coordinating primary                                  Partial
                health care services                                  implementa
                provided by the                                       tion by 4/
                public sector to the                                  1/96,
                District's most                                       completion
                vulnerable                                            by 9/30/
                populations. (BR)                                     96.

                (5) Identify the                                      X
                public sector                                         Ongoing.
                resources that will                                   Anticipate
                be required to                                        d
                deliver necessary                                     completion
                health services in                                    9/30/96.
                an economical and
                effective manner to
                the citizens of the
                District of
                Columbia. (LTS)

                (6) Increase the                                      X
                cultural sensitivity                                  Ongoing.
                and bilingual
                resource capability
                of employees
                throughout the
                public health care
                system, and promote
                primary health care
                education throughout
                the community,
                including the
                Spanish-speaking
                population. (LTS)

                (7) Increase access                                   X
                to primary and                                        Ongoing.
                preventive care
                through incentives
                directed at the
                private health care
                sector. (LTS)

                (8) Support national                  X
                efforts to increase                   Primary care
                the number of                         cooperative
                primary care                          agreement and
                practitioners by                      grants being
                offering incentives                   implemented.
                to medical and
                dental students and
                health care
                providers to enter
                into primary care.
                (LTS)

                (9) Support training                                  X
                for individuals from
                different cultural
                backgrounds to be
                health care
                providers. (LTS)

                (10) Support          X
                continued
                cooperation between
                the Commission of
                Public Health and
                the D.C. Public
                Schools to provide
                health services in
                D.C. public schools
                and support for
                public health
                programs for
                students. (LTS)

                (11) Direct the                                       X
                Department of Public                                  Ongoing.
                Health to work with
                the D.C. Public
                Schools to develop
                programs to promote
                the mental and
                physical well-being
                and environmental
                needs of school-
                aged children in
                order to promote
                good health into
                adulthood. (LTS)

          (12) Support                                          X
                continued training                                    Ongoing.
                for careers in
                health services by
                the D.C. Public
                Schools and the
                University of the
                District of
                Columbia. (LTS)

Long-term care  (1) Provide a                                         X
                unified case
                management system
                for continuity of
                care and appropriate
                level of care for
                persons being
                treated in public
                and private long-
                term facilities.
                (LTS)

          (2) Evaluate the                      X
                need for the
                District government
                to continue to
                operate long-term
                care facilities in
                light of current and
                projected future
                incentives for
                private sector
                initiatives in this
                area. (LTS)

D.C. General    (1) Contract with                     X
Hospital        the new Public                        Completion
                Benefits Corporation                  anticipated 9/
                (PBC) for prison                      30/96.
                care and specify
                levels of care for
                the medically
                indigent population.
                (K)

                (2) Replace the core                                  X
                building of D.C.
                General, purchase
                and remodel an
                existing hospital
                for D.C. General, or
                close D.C. General
                and distribute
                patients to area
                hospitals. (RII)

                (3) Establish a                       X
                Facility Practice                     Tentative
                Plan for physicians                   frame work
                currently employed                    developed.
                at D.C. General and
                the public clinics.
                (K)

                (4) Integrate the                                     X
                public clinics with                                   Part of
                D.C. General                                          PBC.
                Hospital to improve                                   Partial
                the quality and                                       implementa
                cost-effectiveness                                    tion by 4/
                of care provided                                      1/96,
                through the sharing                                   completion
                of operational                                        by 9/30/
                resources and                                         96.
                management systems.
                (K)

                (5) Identify a        X
                financial team to
                target a reduction
                in net accounts
                receivable from 119
                days to 75 days. (K)

                (6) Implement all     X
                nonlabor expense
                reduction
                recommendations. (K)

                (7) Reorganize the                                    X
                administrative                                        Part of
                support functions                                     PBC.
                and                                                   Partial
                responsibilities.                                     implementa
                (K)                                                   tion by 4/
                                                                      1/96,
                                                                      completion
                                                                      by 9/30/
                                                                      96.

                (8) Put the goals                                     X
                and objectives of                                     Part of
                the Leadership/                                       PBC.
                Management section
                of the hospital
                strategic plan into
                operation. (K)

                (9) Transfer                                          X
                hospital employees                                    Part of
                to the PBC and allow                                  PBC.
                the corporation to
                establish a
                personnel system,
                including
                recruitment and
                retention policies
                and wage and salary
                administration. (K)

                (10) Track and        X
                monitor length of
                stay information by
                DRG. (K)

                (11) Implement a DRG                                  X
                optimization program                                  Evaluation
                and apply for a                                       underway.
                "fee-for-service"
                provider designation
                to allow the
                hospital to function
                as a managed care
                provider. (K)

                (12) Reduce linen     X
                usage through
                internal controls
                and education. (K)

                (13) Implement        X
                inventory reduction
                and control
                recommendations. (K)

                (14) Enforce and      X
                monitor the policy
                requiring proof of
                D.C. residency as a
                prerequisite for
                registration for
                nonemergency care.
                (K)

                (15) Consolidate the                                  X
                inpatient pharmacy
                and implement a co-
                payment policy for
                the outpatient
                pharmacy. (K)

                (16) Develop a plan                                   X
                to reconfigure
                outpatient pharmacy
                services, similar to
                other public
                hospitals. (K)

                (17) Consolidate the  X
                administrative
                support structure
                for the Georgetown
                and Howard
                Ambulatory Care
                Clinics into one
                outpatient center.
                (K)

                (18) Integrate the                    X
                Emergency Services                    Completion
                (ECC, Psychiatry                      anticipated 7/
                Emergency, and                        31/96.
                Pediatric Emergency)
                into one Emergency
                Care Center. (K)

                (19) Undertake a                                      X
                systematic review of
                all programs,
                clinical and
                academic, to assess
                the relative
                contribution of each
                program to the
                hospital's mission
                and the specific
                role of each in the
                hospital's future.
                (K)

          (20) Reduce           X
                workforce to levels
                consistent with
                industry norms. (K)

Saint           (1) Develop a         X
Elizabeths      community mental
                health care system.
                (RII)

                (2) Reallocate staff  X
                to direct patient
                care. (RII)

          (3) Hire additional   X
                physicians. (RII)     Currently
                                      underway.

          (1) Establish an                                      X
Independent     independent
commission      commission to
                further develop and
                implement the reform
                initiatives
                recommended in the
                Blue Ribbon report.
                (BR)

Regulatory      (1) Adopt tort                                        X
reform          reform measures with
                provisions which are
                comparable to those
                of Maryland and
                Virginia, including
                those relating to
                caps on noneconomic
                loss, attorney fees,
                collateral source,
                periodic payments,
                statute of
                limitations, and
                certificate of
                merit. (BR)

                (2) Enact insurance                                   X
                reform in the small
                employer market.
                (BR)

                (3) Designate the                                     X
                new D.C. Department                                   Part of
                of Public Health as                                   PBC.
                the State Health                                      Partial
                Authority for the                                     implementa
                District of Columbia                                  tion by 4/
                with the                                              1/96,
                responsibility to                                     completion
                implement and                                         by 9/30/
                coordinate the                                        96.
                District's Health
                Care Reform
                Initiative, which
                includes
                establishing health
                alliances,
                certifying health
                plans, monitoring
                quality/
                availability of
                health care, and
                implementing
                insurance reform.
                (LTS)

                (4) Transfer                                          X
                licensing authority                                   Part of
                for health care                                       PBC.
                providers in the                                      Partial
                District of Columbia                                  implementa
                from the Department                                   tion by 4/
                of Regulatory                                         1/96,
                Affairs to the new                                    completion
                Department of Public                                  by 9/30/
                Health. (LTS)                                         96.

          (5) Transfer the                                      X
                licensing of                                          Part of
                hospitals and health                                  PBC.
                facilities to the                                     Partial
                new Department of                                     implementa
                Public Health. (LTS)                                  tion by 4/
                                                                      1/96,
                                                                      completion
                                                                      by 9/30/
                                                                      96.

Managed care    (1) Develop a                         X               X
                managed care                          Half of Aid to  Full
                program--could                        Families With   implementa
                include the                           Dependent       tion by 8/
                Supplemental                          Children (AFDC  96.
                Security Income                       and AFDC-
                (SSI) Medicaid                        related)
                eligible and,                         enrolled in
                possibly, the                         HMO.
                indigent. (RII)

          (2) Vigorously                                        X
                explore use of a                                      Full
                Medicaid waiver to                                    implementa
                develop models such                                   tion by 9/
                as those which are                                    30/96.
                being implemented in
                other states,
                designed to better
                use resources. (BR)

Financing/      (1) Expand use of     X
expenditures    Medicaid              Implemented in
                reimbursement for     1992.
                residential care
                facilities for
                delinquent youth in
                out-of-state
                facilities (for
                mental health) and
                to create prenatal
                care package to be
                financed by
                Medicaid. (RII)

                (2) Seek an increase                  X
                in the inpatient and
                outpatient Medicaid
                reimbursement rates
                by enactment of the
                State Health Plan
                Amendment. (K)

                (3) Initiate on-      X
                site Medicaid
                enrollment at the
                time of admission or
                initial encounter at
                D.C. General. (K)

                (4) Consider doing a                                  X
                feasibility study on
                establishing a
                hospital cost review
                and cost setting
                commission for
                District hospitals
                to control cost and
                capacity, as well as
                a mechanism for the
                equitable
                distribution of
                uncompensated care
                among District
                hospitals. (BR)

                (5) The District                                      X
                should vigorously                                     Ongoing.
                pursue an improved
                Medicaid match. (BR)

                (6) Facilitate the                                    X
                Medicaid enrollment                                   Ongoing.
                process, especially
                for those with
                language and/or
                social impediments.
                (BR)

                (7) Establish a                                       X
                mechanism to review                                   Proposed
                the Medicaid benefit                                  cuts
                package and identify                                  planned in
                opportunities to                                      FY 1997.
                reduce optional
                benefits. (BR)

                (8) Create an                                         X
                indigent care trust
                fund to spread costs
                to subsidize health
                care costs for the
                uninsured. (RII)

                (9) Reduce District                                   X
                health expenditures                                   Planning
                in the range of $80                                   to cut
                to $100 million                                       approximat
                (from fiscal year                                     ely $80
                1994 base) to bring                                   million in
                District                                              FY 1997.
                expenditures closer
                in line with other
                jurisdictions. (BR)
--------------------------------------------------------------------------------

DEEP LOOK SURVEY COSTS TO FIX OR
REPLACE DISTRICT HEALTH CARE
FACILITIES
========================================================== Appendix IV

During fiscal year 1995, the Office of Engineering Services in the
U.S.  Department of Health and Human Services conducted a survey of
D.C.  General Hospital, its surrounding clinics, and seven of the
District's public clinics.  The surveys consisted of site visits,
in-depth inspection of the facilities, and follow-up recommendations. 
Each recommendation includes a cost estimate to fix noted
deficiencies.  However, since the inspections were limited,
additional costs could accrue. 

Public                                      Size
health        Total costs to                (sq.
facility      fix/repair      Age           ft.)      Description of problems
------------  --------------  --------  --------  --  -------------------------------------
D.C. General
and
Surrounding
Clinics

D.C. General  $112,266,586\a  Ranges    1,039,07      (1) Poor roofs and floors;
Hospital                      from             6      (2) Evidence of asbestos;
                              1927 to                 (3) Poor heating, ventilation, and
                              1979                    air conditioning (HVAC);
                                                      (4) Poor maintenance of hospital and
                              Average                 evidence of
                              53 years                vandalism;
                                                      (5) Patient toilets deteriorating and
                                                      not well
                                                      maintained;
                                                      (6) Hazardous material and specimens
                                                      not
                                                      stored in locked areas;
                                                      (7) Laundry equipment not properly
                                                      working;
                                                      (8) Exterior clinic wall crumbling;
                                                      (9) Severe sanitation problems in OB/
                                                      GYN;
                                                      (10) Elevator out of service;
                                                      (11) Handicap ramp in disrepair;
                                                      (12) Flooded mechanical room and
                                                      inoperative
                                                      emergency generator;
                                                      (13) Ventilation in surgical
                                                      pathology lab inadequate
                                                      and a health hazard;
                                                      (14) Ceiling problems; and
                                                      (15) Violation of life safety codes
                                                      in Archibold Hall.

Sexually      $144,701        Built in     9,824      (1) Severely overcrowded\b;
Transmitted   (renovate)      1943 and                (2) Hazardous conditions in pipe
Disease                       renovate                crawl space;
(STD) Clinic  $50,000         d in                    (3) Education center not operating
at D.C.       (annual         1987                    due to lack of
General       maintenance                             funds;
Hospital      contract)       Was                     (4) Faulty windows and water damaged
                              intended                ceiling;
                              to be                   (5) Roof damaged;
                              temporar                (6) HVAC upgrades needed; and
                              y                       (7) Lack of routine maintenance and
                                                      shortage of hot
                                                      water.

Tuberculosis  $224,705        Built in    10,560      (1) Preventive maintenance
(TB) Clinic   (renovate)      1943 and                necessary;
at D.C.                       renovate                (2) Fire door holders needed;
General       $50,000         d in                    (3) Air flow inadequate--poor
Hospital      (annual         1987                    ventilation;
              maintenance                             (4) HVAC system energy efficient, but
              contract)       Was                     not the
                              intended                preferred design for reducing risk of
                              to be                   TB
                              temporar                transmission;
                              y                       (5) Portable air filters not
                                                      effective; and
                                                      (6) TB infection control guidelines
                                                      not met.

Karrick Hall  $269,237        Built in       Not      (1) Patient rooms need refurbishing;
at D.C.       (renovate)      1964        stated      (2) Asbestos abatement needed for
General                                               pipe insulation
Hospital      $75,000         Was                     removal;
              (annual         intended                (3) Electrical work needed;
              maintenance     to be                   (4) Smoke detectors not spaced
              contract)       temporar                correctly;
                              y                       (5) Handicap access problems;
                                                      (6) HVAC repairs needed;
                                                      (7) Plumbing fixtures need
                                                      replacement;
                                                      (8) Laundry equipment not fully
                                                      operational;
                                                      (9) One or two elevators broken; and
                                                      (10) Routine preventative maintenance
                                                      needed.

Detox Center  $83,487         Built in       Not      (1) Bathrooms need refurbishing;
at D.C.       (renovate)      1943 and    stated      (2) Repair of walls and replacement
General                       renovate                of windows
Hospital      $60,000         d in                    needed;
              (annual         1987                    (3) Repair of rear security door
              maintenance                             needed;
              contract)       Was                     (4) Handicap access problems;
                              intended                (5) Repair of air conditioning system
                              to be                   needed;
                              temporar                (6) Additional water fountains
                              y                       needed;
                                                      (7) Replacement of ceiling tiles
                                                      needed; and
                                                      (8) Preventive maintenance needed.

TRAIN II      $64,948         Built in    14,400      (1) Preventive maintenance needed;
Clinic at     (renovate)      1943 and                (2) Repair of windows needed;
D.C. General                  renovate                (3) Replacement of door frames and
Hospital      $50,000         d in                    hardware
              (annual         1987                    needed;
              maintenance                             (4) Air flow inadequate--poor
              contract)       Was                     ventilation;
                              intended                (5) Replacement of ceiling tile
                              to be                   needed;
                              temporar                (6) Removal of debris from roof and
                              y                       drains needed;
                                                      (7) Handicap access problems; and
                                                      (8) Poor ventilation and air flow--
                                                      heat and humidity
                                                      cause pneumatic controls to
                                                      malfunction.

Women's       $62,265         Built in    11,000      (1) Preventive maintenance needed;
Services      (renovate)      1943 and                (2) Closed circuit T.V. system needs
Center at                     renovate                repair;
D.C. General  $50,000         d in                    (3) Holes in floors--drill covers
Hospital      (annual         1987                    needed;
              maintenance                             (4) Carpet in children's play area
              contract)       Was                     should be
                              intended                replaced with new safety floors;
                              to be                   (5) Inadequate air flow--poor
                              temporar                ventilation;
                              y                       (6) Repair and replacement of doors
                                                      and ceiling
                                                      tiles necessary;
                                                      (7) Handicap access problems;
                                                      (8) Heat and humidity have caused
                                                      pneumatic
                                                      controls to malfunction; and
                                                      (9) Electrical problems.

===========================================================================================
Cost to
renovate
D.C. General
Clinics,      $849,343
excluding
maintenance
costs

Public
Clinics

Benning       $441,120        23 years     5,750      (1) Undersized exam rooms;
Heights                                               (2) No departmental waiting;
Health                                                (3) Not handicap accessible; and
Clinic                                                (4) Poor ventilation and temperature
                                                      controls.

Walker-       $728,165        20 years     6,380      (1) Deteriorated exterior;
Jones Health                                          (2) Not handicap accessible;
Center                                                (3) Ventilators and lavatories are
                                                      old and need
                                                      replacing;
                                                      (4) Obsolete electrical equipment
                                                      with code
                                                      violations; and
                                                      (5) Boilers, pumps, water piping, and
                                                      insulation
                                                      need replacing.

Adams Morgan  $199,770        18 years     3,100      (1) Ceiling damaged;
Health                                                (2) Inadequate air flow--poor
Center                                                pneumatic controls;
                                                      (3) Obsolete electrical equipment
                                                      with code
                                                      violations;
                                                      (4) Various obsolete systems needing
                                                      replacement;
                                                      and
                                                      (5) Handicap access problems.

Anacostia     $812,015        27 years     6,750      (1) Severe overcrowding;
Health                                                (2) Life safety code problems;
Center                                                (3) Patient care guideline problems;
                                                      (4) Poor HVAC and controls do not
                                                      work; and
                                                      (5) Electrical code violations.

Claridge      $294,510        28 years     1,650      (1) Damaged floors, walls, and
Health                                                ceilings from water
Center                                                leaks and lack of maintenance;
                                                      (2) Space does not meet program
                                                      requirements--
                                                      needs complete renovation and
                                                      upgrade;
                                                      (3) Handicap access problems;
                                                      (4) Inoperative cooling system;
                                                      (5) No fresh air circulation--
                                                      filters are filthy and
                                                      clogged;
                                                      (6) No emergency power or fire alarm
                                                      system; and
                                                      (7) Electrical code violations.

Southwest     $2,261,669      56 years    19,860      (1) Severe overcrowding;
Health                                                (2) Poor space configuration;
Center                                                (3) Numerous life safety code and
                                                      patient care
                                                      guideline problems;
                                                      (4) First and second floors need
                                                      major renovation;
                                                      (5) Replace elevator to correct code
                                                      violations;
                                                      (6) Damaged exterior, doors, windows,
                                                      and roof
                                                      need replacing;
                                                      (7) Handicap access problems;
                                                      (8) Health and cooling units are not
                                                      controllable;
                                                      (9) Poor ventilation;
                                                      (10) New chiller needed;
                                                      (11) Asbestos problems;
                                                      (12) No sink in exam room and lab;
                                                      (13) Possible underground fuel leaks;
                                                      and
                                                      (14) Normal and emergency power
                                                      systems need
                                                      replacing.

RAP, Inc.     $4,288,615      40 years    36,000      (1) Exterior and interior damage and
(drug                                                 disrepair on a
treatment                                             large-scale\c;
center)                                               (2) Major renovation and space
                                                      utilization planning
                                                      needed;
                                                      (3) Doors, windows, and portions of
                                                      roof need
                                                      replacing;
                                                      (4) Handicap access problems;
                                                      (5) Facility would be extremely
                                                      expensive to
                                                      renovate; and
                                                      (6) Mechanical, electrical, and
                                                      plumbing systems
                                                      need replacing.

===========================================================================================
Total cost
to renovate
public        $9,025,864
clinics
-------------------------------------------------------------------------------------------
\a This is the cost to renovate D.C.  General Hospital.  The cost to
build a new hospital and renovate the Ambulatory Critical Care Center
is $126,492,766.  The survey concludes that it would be more
cost-effective to build a new, smaller facility, rather than renovate
the existing hospital complex. 

\b STD clinic lost the lease to its second clinic site, which causes
this site to be severely overcrowded. 

\c Building was abandoned for 4 years and exterior and interior
reflect universal, large-scale damage and disrepair. 

Source:  Individual survey reports provided by Dr.  Marlene Kelly,
D.C.  Commission of Public Health. 


SCOPE AND METHODOLOGY
=========================================================== Appendix V

To analyze the District's health care budget and actual expenditures
for fiscal years 1991 through July 31, 1995, we

  -- performed a detailed analysis of the District's Financial
     Management System (FMS), the accounting system which tracks the
     District's health care budget and actual health care
     expenditures. 

To address your questions on the Medicaid program, we

  -- performed a detailed analysis of the MMIS database of Medicaid
     claims processed during fiscal years 1993, 1994, and as of July
     31, 1995;

  -- interviewed (1) officials in the Mayor's office, in each of the
     Commissions under the Department of Human Services, at the D.C. 
     Hospital Association, at all of the 13 private District
     hospitals, and at First Health (the District's Medicaid claims
     processor) and (2) other private health care experts;

  -- reviewed Medicaid cost settlements for hospitals and long-term
     care facilities for fiscal years 1993 and 1994; and

  -- compared MMIS payment information, federally required Health
     Care Financing Agency (HCFA) reports, and FMS accounting data. 

To respond to your questions on the cost of medical services, we

  -- performed a detailed analysis of the MMIS database of claims
     processed during fiscal years 1993, 1994, and as of July 31,
     1995;

  -- interviewed (1) officials in the Mayor's office, in each of the
     Commissions under the Department of Human Services, at the D.C. 
     Hospital Association, at all of the 13 private District
     hospitals, and at First Health and (2) other private health care
     experts;

  -- reviewed Medicaid cost reports for hospitals and long-term care
     facilities for fiscal years 1993 and 1994;

  -- interviewed officials in the Commission of Public Health to
     determine the District's cost reimbursement method for the 11
     public clinics; and

  -- performed a detailed analysis of fiscal year 1994 patient
     information and expenditures from the D.C.  General Hospital and
     Saint Elizabeths Hospital. 

To respond to your questions on the placement of health care
facilities, we

  -- interviewed officials in the Mayor's office, in each of the
     Commissions under the Department of Human Services, at the D.C. 
     Hospital Association, and at all of the 13 private District
     hospitals;

  -- reviewed reports analyzing and offering recommendations on the
     District's health care system; and

  -- performed numerous site visits, including visits to all 13
     private District hospitals, D.C.  General Hospital, Saint
     Elizabeths Hospital, the District-run nursing home (D.C. 
     Village), several public clinics, and one private clinic. 

To address issues on the financial condition of District hospitals,
we

  -- interviewed officials in the Mayor's office, the Commission on
     Mental Health Services, D.C.  General Hospital, the D.C. 
     Hospital Association, and the 13 private District hospitals;

  -- reviewed reports analyzing and offering recommendations on the
     District's health care system;

  -- performed a detailed analysis of financial statements for the 13
     private hospitals (for the two most recent fiscal years
     available audited statements were used when possible);

  -- compiled and analyzed hospital cost data for all 15 hospitals
     for calendar years 1993 and 1994;

  -- reviewed literature on national health care trends;

  -- performed a detailed analysis of fiscal year 1994 patient
     information and expenditures from the D.C.  General Hospital and
     Saint Elizabeths Hospital; and

  -- performed numerous site visits, including visits to all of the
     private hospitals operating in the District, as well as D.C. 
     General Hospital and Saint Elizabeths Hospital to understand
     their operations and observe their facilities. 

To obtain information on the uninsured, we

  -- reviewed numerous reports from experts on the uninsured and

  -- examined the methodologies for obtaining these statistics. 

During our review, we identified the following limitations to the
data we analyzed: 

  -- The Medicaid database contained numerous anomalies, such as
     gender codes categorized as unknown and unexpected negative
     values, which District officials could not explain. 

  -- The data from the MMIS database could not be reconciled to FMS
     data. 

  -- Detailed Medicaid cost data for hospitals is not provided to the
     District.  Instead, reports with summary costs are submitted by
     hospitals at varying year-ends and subsequently audited by a
     District contractor.  We did not examine the adequacy of the
     audits.  In addition, the District is at least 2 years behind in
     having the audits performed. 

  -- Detailed demographic data is tracked by the MMIS database. 
     However, much of the hospital costs for fiscal years 1993, 1994,
     and part of 1995 were not included in the database.  As a
     result, demographic information for these costs is not
     available. 

  -- Some of the hospital information we analyzed to assess the
     financial condition of the hospitals was unaudited. 

  -- The patient data we analyzed from Saint Elizabeths and D.C. 
     General Hospital were unaudited. 

  -- Estimates of the number of uninsured ranged from 100,000 to
     125,000.  More exact figures could not be obtained. 

We performed our work from July 25, 1995 to December 15, 1995, in
accordance with generally accepted government auditing standards. 




(See figure in printed edition.)Appendix VI
COMMENTS FROM THE MAYOR OF THE
DISTRICT OF COLUMBIA
=========================================================== Appendix V



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Deborah A.  Taylor, Audit Manager
Phyllis Anderson, Audit Manager
Russell Hand, Audit Manager
Margaret A.  Sherry, Senior Auditor
Lynn M.  Dudley, Senior Auditor
Claudine Makofsky, Senior Auditor
Wilma Matthias, Senior Auditor
Christopher Warweg, Auditor
Nancy Kong, Auditor
West Coile, Auditor
Meg Mills, Communications Analyst


*** End of document. ***