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HEALTHCARE

Century City facility ailing financially

Doctors Hospital could face bankruptcy if a buyer isn't found soon, sources say.

August 04, 2008|Daniel Costello | Times Staff Writer

Century City Doctors Hospital, a small but key healthcare provider on Los Angeles' Westside, is coping with deteriorating finances and weighing options that include a sale of the struggling hospital.

The 176-bed facility, located in the Century City Medical Plaza, has tried for months to get in better financial shape but has struggled to pay its growing debt, which the hospital estimates is as much as $60 million.

In an interview, hospital Chief Executive John Reynolds said, "Like many hospitals in the Los Angeles marketplace and across the state, Century City Doctors Hospital has been faced with significant financial challenges for an extended period of time."

Reynolds said the hospital had been for sale for several months but was seeking to close a deal as soon as possible.

"After considering all of the options available for addressing the financial needs of the hospital, we have decided to pursue a qualified buyer to ensure the long-term financial stability of this important community asset."

If a sale isn't completed soon, the hospital could be forced to file for bankruptcy as early as this month, people familiar with the matter said.

The hospital opened in October 2005, featuring cutting-edge technology including an all-digital medical records system and top-flight amenities such as wireless Internet in each room, gourmet meals that patients could order any time and movies on demand.

But the hospital has struggled financially from the start. The largest problem has been a lack of patient volume, hospital administrators said. It has recently been averaging about 60 beds filled each day -- far fewer than what's needed financially, Reynolds said.

The hospital would not confirm or deny the possibility of an imminent bankruptcy petition, but officials indicate that it is not expected to close.

Until recently, Century City Doctors Hospital's prospects appeared to be good. The hospital, previously known as Century City Hospital, was closed in April 2004 by Dallas-based Tenet Healthcare Corp. But it was then acquired by Beverly Hills-based Salus Surgical Group, which invested about $100 million to renovate the facility.

Although many larger hospitals in affluent areas continue to thrive financially, many smaller hospitals around the state are severely struggling.

Since 1996, 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.

Some worry that the trend is worsening and increasingly afflicting crucial areas and facilities.

Four years ago, Robert F. Kennedy Medical Center in Hawthorne shut down. Martin Luther King Jr.-Harbor Hospital in Willowbrook was closed in August when the federal Medicare and Medicaid agency pulled half the hospital's funding. That closure followed nearly four years of failed attempts to reform the troubled institution formerly known as Martin Luther King Jr./Drew Medical Center. Brotman Medical Center in Culver City filed for bankruptcy protection last fall.

Hospital experts say that as many as two dozen other area hospitals are under severe financial strain.

Because of its relatively affluent location, where hospitals are not as likely to be overburdened with high numbers of uninsured and underinsured patients, the Century City hospital was thought to be in better shape. Its financial troubles are raising worries that an even broader shakeout in the regional hospital system than recently expected could be in the future.

One issue of concern to local health officials: Even if the hospital is sold, there is a risk that administrators could have to close its money-losing emergency room, officials said.

One option currently on the table, they said, is to turn the hospital into a specialty facility focused primarily on orthopedic care.

Such specialty hospitals, which typically don't have emergency rooms because most care is done through scheduled visits, are increasingly popular across the region and country.

The potential loss of another emergency room in Los Angeles, in particular, is a major concern to local health officials. Emergency rooms throughout the region are swamped with the sick, injured and uninsured -- and the loss of any ERs would exacerbate the problem, officials say.

"We have lost 10 ERs in the past five years and this is such a critical situation that we cannot afford to lose even one more," said Carol Meyer, director of governmental affairs at the Los Angeles County Department of Health Services. Meyer added that recent state cuts had made the situation even more precarious.

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daniel.costello@latimes.com

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