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Fiscal woes jeopardize area hospitals

Nearly two dozen are at risk. Losing even a few would mean greater strain on the region's healthcare network.

September 23, 2007|Daniel Costello and Susannah Rosenblatt | Times Staff Writers

Nearly two dozen private hospitals in Los Angeles and Orange counties, accounting for up to 15% of beds in the region, are in dire financial straits and in danger of bankruptcy or closure, according to hospital administrators, industry experts and state data.

The troublesome development follows the closure of community clinics and hospitals in recent years that has left the healthcare system seriously overburdened.

For The Record
Los Angeles Times Sunday, October 07, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 42 words Type of Material: Correction
Hospital finances: An article in Section A on Sept. 23 about the financial peril facing a growing number of Southern California hospitals said Downey Regional Medical Center treated 70 trauma patients during one day last month. The hospital treated 70 emergency-room patients.

If even a few other hospitals close or reduce costly critical-care services, it could mean longer ambulance rides to hospitals, additional delays in emergency rooms and less access to care, especially for poor and uninsured people.

Among the hospitals in poor financial health, according to industry analysts, are Downey Regional Medical Center, Centinela Freeman Health System in Inglewood, Brotman Medical Center in Culver City, Century City Doctors Hospital and four Orange County hospitals owned by Santa Ana-based Integrated Healthcare Holdings Inc. including Chapman Medical Center in Orange and Western Medical Center in Santa Ana, one of three trauma centers in the county.

In interviews, senior executives at Centinela and Downey said they were considering closing their emergency rooms. Downey's chief operating officer, Rob Fuller, added that his hospital could close entirely as early as next year if its financial picture didn't improve soon.

"It's fasten your seat belt it's going to be a bumpy ride time," said James Lott, executive vice president of the Hospital Assn. of Southern California, a trade association.

The financial woes result from a multitude of developments:

* An increasing load of uninsured and low-income patients has resulted from overcrowding and the shutdown of public facilities. The number of uninsured patients visiting private hospitals, particularly in poor areas, has increased by one-third in Los Angeles County since 2002. California's Medi-Cal program for the poor reimburses hospitals at one of the lowest rates in the country.

* The closure of Martin Luther King Jr.-Harbor Hospital in Willowbrook last month left half a dozen nearby hospitals to absorb most of the 47,000 patients who used the public hospital's emergency room last year.

* Smaller community hospitals are drawing fewer patients as a few larger facilities attract a growing share of doctors and insured patients.

* As insurers have consolidated in recent years, they've squeezed many smaller facilities. Private insurance companies generally pay higher rates to larger hospitals with greater bargaining power.

* New, stricter state mandates on nursing ratios have raised labor costs, and a 2013 deadline to retrofit all hospitals to better withstand a major earthquake is estimated to be costing medical facilities $110 billion statewide.

The strains are being felt by patients.

Natalia Sanchez of South Gate took her 86-year-old mother, Emilia, to St. Francis Medical Center this month after the elderly woman suddenly lost feeling in her body. They waited 13 hours in an emergency room corridor before the mother was placed in a room. Even then, Sanchez said, she could never seem to find her mother's doctor. The experience was so frustrating that Sanchez moved her mother to a different hospital.

"It was a very bad experience," Sanchez said.

St. Francis officials said the average wait time for an emergency patient to be placed in a room last month grew to 11 1/2 hours. But they said the hospital had added more emergency room beds and nurses and had adopted a new system for treating emergency patients more efficiently.

The financial crisis coincides with a widening split between the "haves" and the "have nots" in the California hospital industry, experts say.

Although large, well-known facilities, such as Cedars-Sinai Medical Center in Los Angeles and Hoag Memorial Hospital Presbyterian in Newport Beach have seen their profits rise steadily in recent years and are adding beds, smaller hospitals, which are often in less affluent areas, are losing as much as tens of millions of dollars apiece each year.

In addition, because conglomerates such as Tenet Corp. have dramatically scaled back their presence in the area, many local hospitals are now independently owned and don't have deep pockets to fall back on.

Since 1996, more than 70 community hospitals have closed across the state, with a disproportionate share -- more than 50 -- in Southern California. Regionally, 14 emergency rooms have closed in the last five years, including 10 in Los Angeles County.

That's why experts say a new wave of closures would be so destabilizing.

"In many areas, you have had enormous consolidation, and there's very little breathing room left," said Kirby Bosley, director of California healthcare consulting for Watson Wyatt, a company that advises employers on health plans. At some point, she added, "we have to ask if we think it's fair for people to live 15 miles from their nearest hospital. Twenty miles? Thirty?"

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