LA County CEO paints bleak financial picture; public hospital closure a possibility

Los Angeles County is facing mounting financial pressures that will require deep cuts to a wide range of programs and potentially the closure of a public hospital, according to the county’s chief executive officer.

Fesia Davenport delivered the bad news to the Board of Supervisors in a presentation last week.

It's not just federal funding cuts weighing down the budget. L.A. County faces continuing liabilities from systemic child sexual abuse at its juvenile detention facilities, costs related to the Palisades and Eaton fires, and the possibility that the state will take over the troubled Probation Department and mandate significant new spending at the agency.

“We are looking at what I call a tidal wave of profound impacts all hitting at the same time,” Davenport told the board.

Cuts to the safety net

The cuts will primarily target public social and health services, Davenport said, so people living in or on the edge of poverty will suffer disproportionately.

Under President Donald Trump’s One Big Beautiful Bill Act alone, the county is projected to lose $714 million dollars over three years — mostly from Medicaid cuts that include reducing benefits, limiting provider payments and restricting eligibility. The number jumps to $1.5 billion over the next five years when you consider cuts contained in appropriations bills now moving through Congress, Davenport said.

The result will likely be thousands of county layoffs and the possible closure of a county public hospital, she said.

Closing a county hospital would be a last resort, the county CEO says.

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Gary Friedman

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Los Angeles Times via Getty Images

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The county has four public hospitals: L.A. General, Harbor UCLA, Olive View UCLA and Rancho Los Amigos National Rehabilitation Center.

“That will be a devastating blow to the residents who need us to provide a strong safety net now more than ever,” Davenport said. She emphasized that the county is at the very beginning of planning for cuts and that closing a hospital is a last resort.

Still, the mere suggestion raised alarm in the hospital industry.

Closing a public hospital would have a ripple effect on medical centers across the region, said George Green, president and CEO of the Hospital Association of Southern California.

“We have a very delicate system,” Green said. “Losing the beds in one hospital will place an enormous amount of burden on other hospitals that are already at or over capacity.”

He said private hospitals will suffer from Medicaid cuts too. Four million people are on Medicaid in L.A. County.

“With cuts of this size, we will in all likelihood see clinics and potentially hospitals close their doors,” he said.

Former county supervisor Zev Yaroslavsky said public hospitals are not only for indigent patients. L.A. General Medical Center in Boyle Heights, for example, has a premier trauma center that treats people severely injured in auto accidents across the region.

“Billionaires who get into an auto accident on the Harbor Freeway are going to be taken to General Hospital,” he said, and would feel the effects if the facility weren't there.

“Its like a nuclear bomb that’s been dropped on the social safety net,” he said, referring to the loss of Medicaid revenue and cuts to other programs, including food stamps.

Public health systems across the country are facing similar dire circumstances.

Public hospitals could see operating margins reduced by an average of 56% due to Trump's budget bill, according to the Commonwealth Fund, a nonprofit that studies and promotes access to healthcare.

“These adverse outcomes will affect not only Medicaid patients but also the entire community served by these hospitals, as lower revenues and increased uncompensated care could force hospitals to reduce staff or eliminate services,” according to the fund.

L.A. County has reduced beach cleanups among other services, with deeper cuts to come, the county CEO warns.

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Patrick T. Fallon

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AFP via Getty Images

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Other cuts

L.A. County officials are also concerned that major cuts could be coming to federal money that provides housing to people in the region following a meeting with a high-ranking Trump administration appointee and a new executive order from the president.

“The federal government has made a public policy choice to screw us,” county Supervisor Holly Mitchell said. “The rug has been pulled out from under you and us and the people of L.A. County.”

“I am really so distressed and upset,” Supervisor Hilda Solis said. “I think the public really has to understand that when cuts are proposed at this magnitude that there is going to be a drop in services and implications for those who are most in need, the most vulnerable.”

There are other strains on the county budget, Davenport said.

Earlier this year, the county agreed to pay out $4 billion to nearly 7,000 people who claimed they were sexually abused in foster care or probation department facilities.

Davenport said 2,500 such claims remain unsettled.

Solis wanted to know how much more would need to be paid out. “$2.5 billion,” she guessed. The county’s chief lawyer wouldn’t say but predicted it would be “very, very large.”

To pay for the first settlement, the county already has shortened hours at public parks and pools and cut back the youth Parks After Dark program.

In addition, the Palisades and Eaton fires have already cost the county $800 million. The number is expected to reach $2 billion in costs and lost revenue, according to Davenport.

Davenport said recently signed labor contracts with county unions will cost the county $2 billion over the next three years. To cover the cost of the deals, the county already has closed regional parks and lakes every Monday and Tuesday, closed the Santa Monica and Valencia offices of the Probation Department and reduced beach cleaning.

Supervisors will have to make even tougher choices in the coming years.

“These challenges are unlike any the county has seen,” Supervisor Lindsey Horvath said.