Modern Health Care. -- 07/15/2002

Case closed?: Tenet thinks so with Calif. hospital
By: Vince Galloro
Section: The Week in Healthcare

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When it comes to closing 153-bed Daniel Freeman Marina Hospital, Marina del Rey, Calif., Tenet Healthcare Corp. thinks it has an open-and-shut case, so to speak.
To California Attorney General Bill Lockyer, however, it's still an open question. Lockyer contends that Tenet, Santa Barbara, Calif., can't shut Marina, or even its emergency room, as Tenet plans to do July 22, because Tenet hasn't complied with the conditions that Lockyer imposed on Tenet's purchase of the hospital in December 2001. Tenet bought Marina and 345-bed Daniel Freeman Memorial Hospital, Inglewood, Calif., for $55 million from Carondelet Health System, St. Louis.

At the same time it was trying to close a money-losing hospital, Tenet, the nation's second-largest investor-owned hospital chain, last week reported net income of $785 million, or $1.56 per share, in fiscal 2002, compared with $643 million, or $1.31 per share, in the previous year. Revenue rose 14.9%, to $13.9 billion. Tenet owns and operates 115 hospitals.

Tenet spokesman Harry Anderson said the case for closing the hospital is simple-it's been losing money for at least two decades because nearly 90% of patients living near the Marina hospital go to other hospitals on the west side of Los Angeles.

When asked if Tenet expects the closing will go ahead as scheduled, Anderson responded, ``We have no reason to think otherwise.'' He added that, under California law, the attorney general doesn't have as much power to interfere with a closing as he does with a hospital purchase. Any hospital sale in California requires the attorney general's approval.

``There obviously are some serious concerns, and those have been communicated to Tenet,'' said Sandra Michioku, a spokeswoman for Lockyer.

In a letter to Tenet dated July 3, Deputy Attorney General Mark Urban wrote, ``Tenet cannot close either Marina or its emergency room, because it has not complied'' with three provisions contained in conditions the attorney general imposed on the sale. For example, Tenet provided little proof that it consulted with hospital employees, local healthcare groups, business leaders or elected officials before deciding to close the hospital, Urban wrote.

Tenet agreed that if it closed Marina's emergency room, it would either open an urgent-care clinic within two miles of the hospital or provide transportation for low-income residents. Urban wrote that Tenet indicated it is still determining which option to pursue. The company also agreed to publicize the availability of urgent-care services and transportation for beneficiaries of Medicare and Medi-Cal, California's Medicaid program.

Tenet provided the attorney general with more than 50 pages of documentation of its compliance efforts last month, Anderson said. When the Marina emergency room closes, Tenet is committed to starting the transportation service to Tenet's beefed-up urgent-care clinic near Los Angeles International Airport, he said.