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Tenet

By JESSICA DREBEN

Staff Reporter

After almost a year of heated debate, during which community activists fumed and L.A.’s cardinal threatened to take the issue to the Vatican, the non-profit Queen of Angels-Hollywood Presbyterian Medical Center in East Hollywood was finally acquired last month by for-profit hospital chain Tenet Healthcare Corp.

Now the tough part starts: implementing all the promises that Tenet has been making to get the deal approved.

Political leaders, community groups and union activists still are expressing concern over whether Tenet will be able to maintain the hospital’s high volume of charity care.

The medical center spends $15 million a year on indigent patients. Fifty-three percent of Queen of Angels’ patients are covered by Medi-Cal and another 37 percent are on Medicare. The remainder either have private insurance or pay cash. The hospital also operates half a dozen community clinics and mobile health services at 30 churches.

“I am not real hopeful,” said L.A. City Councilwoman Jackie Goldberg, whose district includes the hospital. “For-profits have never shown a real interest in low-income neighborhoods. I don’t have a lot of faith in this deal.”

But officials at Santa Barbara-based Tenet say the concerns are unfounded. The company says it will continue to serve its new neighbors, and it plans to improve the quality of care its patients receive.

“People will start to notice some very notable changes,” said Harry Anderson, senior director of strategic communication for Tenet. “We will be able to offer managed care contracts and bring more patients to the hospital. At the same time, we will be able to maintain their historic levels of charity care.”

As part of the agreement, Tenet has promised that at least $15 million will be devoted to indigent patients. It also transferred $100 million in net proceeds from the sale into a charitable organization called QueensCare, which will oversee the clinics and community projects.

Tenet also pledged to sink $4 million into renovating the emergency room, has guaranteed emergency services and obstetric services for indigent patients for a minimum of six years, and vowed to continue the hospital’s ethical and religious directives.

“Tenet has a lot of well-proven management systems,” said Steve Valentine, a consultant for the Camden Group. “Tenet may also add programs and services that are not already at Hollywood Presbyterian. They will upgrade technology, staff and physicians. They are considered a good operator of facilities.”

In 1997, Queen of Angels had net patient revenues of $114 million, and the organization has been running in the black for the last five years. But officials at the hospital and at Tenet said it was not going to stay so profitable without major changes.

Tenet claims that its group buying power and well-established relationships with health maintenance organizations will bring needed revenue.

Community activists were outraged when they got word of the intended sale and vowed to fight it. Even Cardinal Roger M. Mahony threatened to take the matter to the Vatican unless the deal was halted. Tempers flared at public hearings called by the Attorney General’s Office, which has to approve all sales of non-profit hospitals to for-profit health care organizations.

In the end, the agreement was revised to appease some of the community needs and was approved by Attorney General Dan Lungren on May 15. The revised transaction increased the amount of money that would be allocated to QueensCare.

Union leaders are not convinced.

“We have a lot of concerns about Tenet as a corporation. They have a very dubious history,” said Charles Idelson, spokesman for the California Nurses Association, which represents 30,000 registered nurses. “They operate in a way that allows them to make as much profit as they can regardless of what impact it has on public health and community services.”

Idelson referred to a scandal at Tenet’s former psychiatric subsidiary, which involved widespread Medicare fraud. Allegations emerged that patients were being held against their will in several psychiatric hospitals. The company wound up paying $362 million in fines and has since withdrawn from the psychiatric hospital business.

Tenet spokesman Lance Ignon said the company has reorganized and put a new management team in place.

“We learned an enormous amount from that incident,” said Ignon. “We went on to implement the most comprehensive compliance of ethics in health care.”

Tom O’Connor, spokesman for Service Employees International Union, Local 399, which represents nurses, lab technicians and food service staff at Queen of Angels, said Tenet’s past is not the only problem.

“Their commitment is driven by the bottom line,” said O’Connor. “It all looks rosy right now, but if Tenet sells the hospital, the union contract is not binding.”

Tenet officials say they have no intention of selling off the hospital and plan to negotiate in good faith with the union.

Tenet is the second-largest for-profit hospital chain in the nation and largest in California, owning or operating 123 general hospitals in 22 states with annual revenues of more than $8.7 billion and 112,500 employees nationwide. It owns or operates 34 hospitals in Southern California, including USC University Hospital, Brotman Medical Center, Garfield Medical Center, Century City Hospital and Midway Hospital.

Queen of Angels-Hollywood Presbyterian Medical Center is an acute-care facility with 1,417 employees and a 700-member medical staff. It was formed in 1989 through the merger of two-long established area hospitals: Queen of Angels, founded in 1927, and Hollywood Presbyterian, founded in 1924.

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