Encino-Tarzana Regional Medical Center is a hospital in limbo.
It’s been four years since Tenet Healthcare Corp. put the hospital with two separate campuses on the block so long that workers are fearful the medical center could be converted into other uses.
Now, an unusual alliance of unionized hospital employees, the medical staff and the community governing board has mounted a campaign to pressure Tenet and its landlord to resolve a legal dispute that has slowed the hospital’s sale.
The campaign, which involved hiring a top Los Angeles public relations executive and lobbyist, seems already to have achieved some results: State legislators have weighed in with bills aimed at speeding the sale.
“This sale has been trapped in a protracted limbo that needs to be resolved, and we want to provide some incentive for the process to move along quickly,” said state Senator Sheila Kuhl (D-Los Angeles), who sponsored one of three bills last month targeting landlord HCP Inc.
Following a financial scandal five years ago, Tenet moved its operations from Santa Barbara to Dallas and shed most of its Los Angeles hospitals, which faced big costs to bring them up to tough state seismic standards enacted after the 1994 Northridge Earthquake.
Fourteen of the 19 California hospitals it put on the market in 2004 were located in Los Angeles County. And since then Tenet has been able to divest every other local hospital except Encino-Tarzana, which ironically suffered little damage in the earthquake.
But neither San Fernando Valley facility would meet the state standards and are likely to be rebuilt rather than retrofitted. A further complication: While Tenet owns the Encino campus, HCP, a Long Beach-based real estate investment trust, owns the Tarzana facility a few miles away.
Frozen litigation
Tenet had been negotiating with a potential buyer for Encino-Tarzana last year when it and HCP became bogged down in litigation over six other hospitals. In those cases HCP also owns the building where Tenet operates the hospital. Part of the disputes surrounds which party will pay for certain facility upgrades.
Even though Encino-Tarzana was already on the market, its potential sale became entangled in the conflict, though Tenet has continued to talk with several potential suitors for the hospital, said Tenet spokesman Steven Campanini.
Tenet and HCP agreed last month to freeze their litigation and focus on an out-of-court settlement that may be announced in mid-April and enable sale negotiations to become more serious, said Campanini.
However, Campanini did not credit the threat of legislation with speeding up resolution of the dispute, claiming just the opposite. “In fact, these bills constitute legislative interference during a very delicate time in the sale process,” he said.
HCP officials did not return calls for comment.
But hospital staff believe their efforts have been successful in getting Tenet and HCP to take action. Hospital doctors agreed to raise money among themselves in October to hire Cerrell Associates, a well-connected public relations firm, to approach legislators for assistance.
“We were tired of feeling powerless and want the uncertainty ended,” said Dr. Wayne Kleinsman, the hospital’s chief of staff, noting the current limbo makes it more difficult to recruit and retain staff. “If it gets to February 2009, when Tenet’s lease ends, we fear that physicians will start considering other places where they could practice.”
Kuhl, who is chairman of the Senate’s Health Committee, was a logical target for lobbying. Her bill would require the State Department of Public Health approval if a real estate investment trust tried to sell a hospital property, if the sale would cause a reduction in medical care in the community.
In addition, Assemblymember Lloyd Levine (D-Van Nuys) and Sen. Mark Ridley-Thomas were persuaded to introduce bills that would mandate for-profit acute care hospitals to maintain their levels of care by preventing drastic budget cuts without approval from state regulators.
In court documents, Tenet named not-for-profit Providence Health System, which operates hospitals in Burbank and Mission Hills, as a potential operator for Encino-Tarzana. Neither Tenet nor Providence will confirm they are in talks, but at the very least it would be in Providence’s interest if Tenet remains a hospital.
Dan Boyle, Providence regional spokesman, said patient loads at Burbank’s Providence St. Joseph Medical Center soared after three other Valley hospitals, two of them with emergency rooms, closed in the past five years.
“It’s been a domino effect,” he said. “Our main concern is to ensure that there’s access to health care throughout the Valley.”
Campanini said Tenet is open to considering several sale configurations that would enable both hospitals to continue as acute care facilities. While Encino-Tarzana today is managed as a single entity, a deal might even involve different property owners for each facility, as well as separate operators, if that can get a sale completed soon.
“Tenet has spent tens of millions of dollars to make this sale happen,” he said. “No one more than us expected it would take this long to complete a sale.”
