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Tenet Agrees to Sell L.A.-Area Hospitals

September 01, 2004|Lisa Girion | Times Staff Writer

Tenet Healthcare Corp. said Tuesday that it had agreed to sell three Los Angeles-area hospitals to a private investment group led by the facilities' managers for an undisclosed amount.

The prospective new owners said they would continue operating as acute-care centers the 370-bed Centinela Hospital Medical Center and the 358-bed Daniel Freeman Memorial Hospital, both in Inglewood, and the Daniel Freeman Marina Hospital in Marina del Rey. The group also pledged to keep all three emergency rooms open.

The buyers are a private group of investors led by Centinela Chief Executive Michael Rembis and Harris Koenig, chief executive of the two Freeman hospitals. Rembis will serve as chief executive and Koenig as senior vice president of Centinela Freeman HealthSystem, a private, for-profit firm established to operate the three hospitals.

Michael Finnigan, former chief financial officer of Hollywood Park, said he would serve as chairman of the firm. He expects the deal to close by early November.

Finnigan said the new hospital company was backed by Westridge Capital, a private equity firm, and counted among its investors Ira Kaufman, who was instrumental in building Centinela from its roots as a 12-bed facility.

About 70 doctors contributed to a fund that paid for the group's due diligence, and all 1,400 physicians who practice at the three hospitals, as well as certain community members, will be invited to invest in the operating company.

The three hospitals are among 27 that Santa Barbara-based Tenet in January announced it would divest, including 19 in California. Tenet is trimming the chain to 69 hospitals in an effort to turn a profit.

The company has posted losses in recent quarters and is the subject of numerous federal investigations into its Medicare billings, physician recruitment and other practices.

Julie Inouye, founder of a community-based organization that fought to keep Daniel Freeman Marina Hospital open when Tenet wanted to close it two years ago, criticized Tenet for refusing to consider her group's bid. Her group had secured a $10-million commitment in an effort to acquire the hospital, she said.

Tenet spokesman Steven Campanini said, "All interested parties had an equal and fair opportunity to enter the bidding process. We considered bids from a range of potential buyers."

Finnigan said Tenet would retain liability for any legal sanctions at the three hospitals from activity occurring before the deal closed.

He said he believed the new company could operate the hospitals more efficiently than Tenet.

"We will be exploiting the strengths of each of these properties," he said. "And we believe we can continue to operate the hospitals at a profit and offer excellent services to the community."

Shares of Tenet closed up 16 cents to $10.42 on the New York Stock Exchange.

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