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United Western Medical Centers Selling Chain Its 2 O.C. Hospitals

July 13, 1996|BARBARA MARSH | TIMES STAFF WRITER

SANTA ANA — United Western Medical Centers, a small nonprofit health-care company that has been straining to compete against bigger rivals, said it plans to sell its two hospitals and a nursing facility in Orange County to a nationwide hospital chain.

The facilities are being sold to OrNda HealthCorp., making the Nashville, Tenn.-based chain the largest hospital operator in Orange County, hospital industry officials said. OrNda currently operates four local hospitals.

Officials from both firms said the transaction will allow United's hospitals to attract more managed-care business by offering members a far-flung network of providers in Orange and Los Angeles counties.

United owns the 288-bed Western Medical Center-Santa Ana, a 193-bed sister hospital in Anaheim and a skilled nursing facility in Santa Ana. The Santa Ana hospital, the oldest in the county and still one of the largest, is a full-service trauma center.

OrNda owns 49 hospitals in 14 states, including 11 in Los Angeles County. Its Orange County holdings include the 413-bed Fountain Valley Regional Hospital and Medical Center, Chapman Medical Center in Orange, Coastal Communities Hospital in Santa Ana, and Santa Ana Hospital Medical Center, which is absorbing another facility, Doctors Hospital of Santa Ana.

The sale must be first approved by boards of both companies and the state attorney general. Terms weren't disclosed.

Kenneth K. Westbrook, OrNda's senior vice president for its California operations, said the company may make other acquisitions locally and is continuing talks with other hospitals here. He also said the company plans to move its California headquarters to Irvine from Burbank because of the company's growing presence in Orange County.

If the sale goes through, United's hospitals should be able to offer stiffer competition for such rivals as Orange-based St. Joseph Health System, said Douglas L. Drumwright, United's president and chief executive. St. Joseph, which runs the 519-bed St. Joseph Hospital, has a strong reputation for quality health care, Drumwright said.

The United Western facilities would become part of an extensive network of hospitals that can be jointly marketed to employers and individuals on government-funded health-care plans who live throughout Orange and Los Angeles counties, officials said. United Western serves a broad spectrum of central Orange County's population and receives about half of its revenue through MediCal or Medicare.

Officials said that although United is financially sound, it faces increasing pressure to make its operations even more efficient. Westbrook said he doesn't expect cuts would be made in United's 2,450-employee work force and OrNda isn't considering closing any of United's facilities.

However, he said, OrNda would consider consolidating duplicated services, such as open-heart surgery, which is offered both at Fountain Valley Regional and Western in Santa Ana.

Though United has endured lots of turnover among its hospital executives in recent years, Drumwright said that he expects the operating team of hospital executives would remain in place after the merger. However, it has yet to be determined whether United's top managers--Drumwright himself and chief operating officer Charles Mack--would have roles with OrNda.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Health Deal Sealed

OrNda HealthCorp., which operates a chain of hospitals nationwide, will acquire two Orange County hospitals and a nursing facility from United Western Medical Centers. A quick look at the two hospital operators:

UNITED WESTERN MEDICAL CENTERS

Headquarters: Santa Ana

President and CEO: Douglas L. Drumwright

Facilities: Western Medical Center-Santa Ana, the county's oldest hospital; Western Medical Center-Anaheim; Western Medical-Bartlett, a skilled nursing facility in Santa Ana

1995-96 net revenue: $185 million

ORNDA HEALTHCORP.

Headquarters: Nashville, Tenn.

Chairman and CEO: Charles N. Martin Jr.

Hospitals: 49 in 14 states including four in Orange County, 11 in Los Angeles County

1994-95 net income: $71.3 million

1994-95 revenue: $1.8 billion

Sources: Bloomberg Business News, OrNda HealthCorp., United Western Medical Centers

Researched by BARBARA MARSH / Los Angeles Times

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