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HEALTH CARE INDUSTRY : NME to Slash Employment in Santa Monica

July 12, 1994|NANCY RIVERA BROOKS | TIMES STAFF WRITER

National Medical Enterprises said Monday that it will eliminate a quarter of the jobs at its Santa Monica headquarters to simplify operations and reduce costs.

NME, which employs 900 people, said it will lay off 200 of them and eliminate 40 jobs that currently are unfilled. Most of those laid off will be corporate personnel in Santa Monica.

The hospital operator, which last month pleaded guilty to eight criminal counts and agreed to pay a record $379 million to settle a government fraud investigation primarily involving activities at its psychiatric hospitals, said it expects to save $32 million a year after making the cuts.

The company has already paid more than $200 million to settle lawsuits brought by insurers and patients. The suits allege misdeeds such as false imprisonment, billing fraud and conspiracy. The government charged that NME paid kickbacks and bribes to doctors, referral services and others so patients would be referred to NME's psychiatric and substance-abuse hospitals in 30 states, then fraudulently billed Medicare and other federal programs.

The restructuring announced Monday comes after a three-month study by the McKinsey & Co. consulting firm. It is part of a corporate plan to focus on its 35 general acute-care hospitals, which are the source of most of NME's profits.

In addition, the government settlement requires NME to sell its psychiatric and substance-abuse hospitals; the company recently agreed to sell 47 psychiatric hospitals to Charter Medical Corp. for $200 million. So far, NME has agreed to sell 85 of the 135 hospitals and clinics it once owned.

NME's overhaul gives the firm "a more nimble, cost-effective corporate structure with which to compete in today's extremely competitive health care industry," said Jeffrey C. Barbakow, the chairman and chief executive who was hired last year to clean up the company.

NME is still studying the question of whether it will move to a new headquarters. It expects to have an answer by August, a company spokeswoman said. NME's current home base has 300,000 square feet of space, and the company no longer needs such a large headquarters, she said.

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