Pacific Health Corp.
Some 40 hospitals have closed in Southern California in the past decade. Jim Young thinks it’s a good time to reopen some of them.
Young is chief executive of Long Beach-based Pacific Health Corp., a subsidiary of German hospital chain Asklepios. Pacific operates six small acute-care hospitals in the region. The most recent addition to its network, 77-bed Tustin Medical Center in Orange, was reopened last month after being closed for nearly two years.
Tustin’s previous owners lost $23 million in its last three years of operation; Young is certain he can squeeze out double-digit profit margins.
Pacific Chairman Tom Testman described Young as a “calculated risk taker” who took a business near collapse and devised innovative ways of using the facilities and new programs.
“I’ve watched him mature over the years. He’s a real astute business person with good entrepreneurial skills and good business judgment and common sense,” Testman said. “If he leaves this company, he’ll undoubtedly have an opportunity to build or operate another company.”
Pacific is also part of a coalition with a group of physicians bidding to take over management of South Bay Medical Center in Redondo Beach, a public district hospital that lessee Tenet Healthcare Corp. plans to close at the end of May because of low occupancy.
“We don’t view ourselves as a Tenet or a Columbia/HCA, but where we can do well is the segment of under-200-bed acute-care facilities. No one else wants to touch them,” said Young. An accountant by training, Young spent several years working for an accounting firm before joining Pacific in 1986, working his way up to chief executive in 1995.
Certainly, Young’s accounting background is a key to Pacific’s success, which is vested in a low-cost formula. Pacific’s hospitals include Hawthorne Medical Center, Los Angeles Metropolitan Medical Center, Bellflower Hospital and Buena Park Medical Center. Patient costs average about $400 per day, about half of the typical Los Angeles hospital. Some frown on Pacific’s formula: “All of their facilities are third-tier hospitals,” observed Steve Valentine, president of the Camden Group, an El Segundo-based consulting firm. Valentine also questioned the ease with which a hospital can be reopened.
But Young is undaunted. He envisions making Pacific more than just a local chain: “We’d like to operate throughout California and the Southwest.”