October 22, 2002

Harris Koenig

Chief Executive Officer

Daniel Freeman Marina Hospital

4650 Lincoln Boulevard

Marina del Rey, CA  90292

Via facsimile:  (310) 574-7854 and (310) 419-8273

Dear Mr. Koenig:

Thank you for meeting with us on October 11, 2002.  We appreciate having the opportunity to discuss our concerns candidly with you regarding the community planning process and the three options you briefly outlined that are being considered by Tenet for the future of the Marina Hospital. We are particularly interested in the two scenarios you presented that maintain the facility as an acute care hospital. However, we are deeply concerned that if, as you suggested, it is your intent to present your final recommendations to the board within the next two months, you will circumvent a more thorough examination of the options in consultation with the community.  We once again ask that you consider the following approach:

1.      Complete a Comprehensive Assessment of the Two Options for Maintaining the Facility as an Acute Care Hospital: The study completed by Camden in July 2002 focused on the historical operation of the hospital in reaching its conclusion that continued operation was not viable.  The Camden assessment failed to examine the feasibility of maintaining the hospital under Tenet’s management and marketing strategies.  For example, Tenet’s 2002 Annual Report, p. 6, states that the baby boomers are key to Tenet’s growth strategy:  “…we continue to see our highest rates of admissions growth among the baby boom age groups.  In fiscal 2002, same-facility admissions rose 6 percent among those aged 40-to-50, and more than 5 percent for those aged 50-to-60.”  As you said, the Playa Vista development is expected to attract thousands of new residents aged 45-65 to the hospital’s immediate neighborhood.   Furthermore, when Tenet purchased the Daniel Freeman hospitals, it made representations to the Attorney General and the community about its ability to turn around troubled hospitals. [1]   Thus, in order to fulfill its commitment to conduct a comprehensive planning process that fully considers the impact of Tenet’s marketing and management expertise, a comprehensive assessment and evaluation of both options to maintain Daniel Freeman Marina Hospital as an acute care hospital must be undertaken and shared with the community and the Governing Board.

At a minimum, would ask that that assessment examine and address the following points for each scenario:

Scenario 1: Re-establish the hospital as a center with a specific regional specialization:

·        What area of specialization or service is underrepresented within the primary and secondary service area?

·        What would it take to establish a center of excellence or regional specialization?

·        Within what time frame could the center generate sufficient revenue to help support the financial viability of the hospital?

·        What is the probability of attracting the necessary talent/providers to the hospital?

Scenario 2: Aggressively market and recruit physicians to support the hospital as a general acute care facility

·        How many physicians have been actively admitting and utilizing the hospital over the last five years and what percentage of the existing physicians’ admissions are to the Marina hospital?

·        What has prevented a higher utilization rate among the current physicians?

·        What will it take to increase their utilization of the Marina facility?

·        What level of admissions is necessary to continue the hospital as a going concern?

·        Which of the previous services were profitable or cost effective and contributed to the financial viability of the hospital?

·        What is the level of demand in the primary and secondary service area for those historical services that were deemed cost effective?

·        At what level would they need to operate to be cost effective and provide quality care?

·        If 80% of the patient population in the primary and secondary area is utilizing other facilities, what is needed to increase the Marina’s market share?

·        How will the demographic changes projected for the Marina, especially the in-migration of large numbers of baby boomers, change demand for hospital services? 

We have always expressed concern for the fact that Tenet made the decision to close the hospital in less than six months of taking possession of the facility and without exploring the alternatives or attempting to apply the power of it marketing and management resources to turn the hospital around.  Given your statement that Tenet is reassessing its options, we would expect that you would use this period to test your assumptions and allocate resources to examine the feasibility and impact of needed marketing and management changes.  Our relentless pursuit of data regarding the status of the hospital and your efforts to restore critical services should be part of your reassessment and will assist us in making a meaningful contribution to the discussion.  In general, we would like to know:

·        What has been done to bring physicians and patients back to the hospital and what has been the response?

·        Have you restored the necessary resources and support services to invoke confidence among the patient and physician community?

·        With the increase in patient census, what has been the impact on the hospital’s financial profile?

2.      Complete the Community Planning Process:  While we are confident that the community hearings and individual meetings with key interests in the community have been helpful in your deliberations, the format did not provide a real opportunity for the community to engage in the planning process.  There was overwhelming testimony regarding the significance and value placed on the hospital by the community. You also heard, from community residents and physicians alike, a willingness and readiness to support Tenet in any effort to recapture the area market and maintain the hospital.   However, the format of the public hearings did not allow for a thorough discussion of the options you are now considering.  Your presentation of a laundry list of more than 15 questions in the absence of data and options for each area you sought to explore undermined the potential benefit of the public hearings.  We also found in our meeting with you that the lack of data made it impossible to provide any real input into the options you presented.  We would therefore ask:

·          When will Tenet respond to the information requests we made in our letter dated September 26, 2002 and again at our October 11th meeting?

·        What will Tenet do with the information that it has obtained in our meeting and in meetings with other groups?

·        Will the public have the opportunity to review and respond to the information Tenet has received, the research it is conducting and the different scenarios that are being considered?  When will that information be available?

·        Will the public have an opportunity to present information to the hospital’s Governing Board prior to any formal action?

·        What is the timeline and with whom does the final decision rest?

Again,  in our correspondence with you prior to our October 11th meeting we had asked about a number of issues including:  maintenance and repair projects; the number of non-emergency admissions; on-call panels; communications with staff; health insurance contracts; staffing ratios; information provided to the medical staff; capital expenditure estimates; and future utilization given Playa Vista.  We also requested that we be provided with information on a weekly basis concerning certain components of hospital utilization including daily staffing ratios by department, the active on-call physician’s specialties and number of elective admissions.  We are still very interested in the information requested and consider it imperative in making it possible to provide you with meaningful feedback on the alternatives being considered. 

Finally, we would appreciate it if you would provide us with a copy of the final transcript made of the September 23rd and October 8, 2002 public hearings, our meeting with you on October 11, 2002, as well as the transcripts of each individual meeting held outside of the public forum as soon as possible.

As we mentioned previously, we are interested in scheduling another time to speak with you and provide feedback on any additional data or information you are able to share on the various options you are exploring.   We also welcome the opportunity to meet with the board or members of the Tenet staff as part of what we believe would be an important step in the planning process.  We will contact you to arrange a convenient time.  Thank you for your assistance in this matter.  We look forward to continuing this dialogue.

Sincerely,

Lark Galloway-Gilliam

Executive Director

Community Health Councils, Inc.

And on behalf of

Leslie Bennett, Consumers Union

Julie Inouye, SOMH Coalition

Karla Zambro, Metropolitan Alliance

cc:        Bill Lockyer

            Tricia Wynne

            Dennis Eagan

            Wendi Horwitz

            Mark Urban

            Ted Schreck

            John Murdock

            Susan Berke Fogel

            Jim Moore 

            Patrick Burns

            Maura Kealey

            Lourdes Rivera

            Bethany Leal