The two local Daniel Freeman hospitals quickly sinking in red ink are being targeted for a sale, merger or new affiliation that would keep their doors open.
Closure of the 360-bed Inglewood facility and the 138-bed Marina del Rey facility would be a severe blow to the local emergency care system, according to L.A. County health officials. That area is currently only served by the two Freeman facilities, Centinela Hospital Medical Center in Inglewood and Robert F. Kennedy Medical Center in Hawthorne.
“It’s a very delicately balanced volume right now, and Daniel Freeman is the linchpin of that,” said Virginia Hastings, director of the county’s Emergency Medical Services Agency. “The danger is, if any one of those facilities close their emergency departments, the next closest one would be forced to close. You would have a classic domino effect.”
To prevent such a scenario, Carondelet Health System of St. Louis, which operates the Freeman hospitals, has hired turnaround firm Cambio Health Solutions to develop a plan for bringing both the facilities back to solvency, including their possible sale.
Catholic Healthcare West the large San Francisco-based system with 48 facilities in California, Arizona and Nevada is reportedly interested in acquiring the two Freeman hospitals.
CHW officials declined to comment on the matter, but a top hospital industry official in Southern California said CHW’s interest would make sense since it is also a Catholic health care provider. It already owns the Robert F. Kennedy hospital.
“There are only a few major players in town, and Catholic Healthcare West is one of them,” said Jim Lott, executive vice president of the Healthcare Association of Southern California, a hospital trade group. “And of the major players, they are the one that would have the greatest affinity.”
But turning around the Freeman hospitals could be a tough task.
The two hospitals posted a combined net loss of $12 million for the fiscal year ended June 30, 2000, worsening from the $9.8 million net loss sustained in the prior fiscal year, reported Patrick Cacchione, a Carondelet spokesman. And losses accelerated significantly in the fiscal first quarter ended Sept. 30, jumping to $9 million. Financial results from the year-earlier quarter were not immediately available from Carondelet officials, and the Daniel Freeman facilities are not legally required to publicly disclose their quarterly results.
“We are looking at all options. It’s a function of the reality of health care in the year 2001,” Cacchione said. “But anything we are doing is not at the bedside. The doors are open and those that come through the door will get quality care.”
Local hospital officials declined comment, but in a prepared statement, administrators blamed Daniel Freeman’s troubles on a growing number of uninsured patients, cuts in Medicare and Medi-Cal reimbursements and low HMO capitation rates.