Hospital Split Brings Uncertainty

Now that Prime Healthcare has purchased the Encino half of Encino-Tarzana Regional Medical Center from Tenet Corp., concerns about the future of Tarzana Hospital have intensified. “Tarzana has been for sale for over four years, and we would like Tarzana Hospital to be sold so that the community can continue to rely on services it offers,” said Judith Serlin, spokeswoman for SEIU 121RN, the union that represents nurses at both Encino and Tarzana hospitals. Tenet said that it is now in the final stages of forming a binding agreement with HCP Inc. the real estate investment trust that owns the Tarzana building and campus,and a potential buyer. An announcement of the hospital’s sale could happen in a matter of days, according to hospital insiders, but such murmurings have circulated for years. Meanwhile, news of Encino’s sale, now known as Encino Hospital Medical Center, has not been well received by those who worry that the jobs and services it shared with Tarzana could be reduced. The reputation of Prime Healthcare, which now operates 10 hospitals and has more than 6,000 employees in Southern California, has also been raised, as it is known in some circles for cutting back insurance contracts. Lex Reddy, CEO of Victorville-based Prime Healthcare, tried to allay the public’s fears about such matters. “We’ll continue to operate as an acute care hospital with access to emergency services 24/7, 365, and we will make sure that it (the hospital) stands for the community,” he said. As for job cuts, Reddy said that the medical staff of the hospitals will be wholly unaffected by the sale and that members of upper management have moved over to Tarzana. Lee Alpert, former chair of Encino-Tarzana Regional Medical Center’s governing board and now chair of Tarzana Hospital’s governing board, agreed. “Nothing is changing at Tarzana at all,” Alpert said. “We continue to hope that it will be a viable facility, and we have no reason to believe that it will not be. We provide some of the best quality medical care in our region, and we intend to make no changes whatsoever.” Reddy said that Encino will slowly transition out if its partnership with Tarzana. In the meantime, the hospitals will continue to share resources such as human resources, finance, nursing and management. The hospitals will continue to share some medical services as well, such as cardiac surgery. But, in the next 60 to 90 days, “We will have our own internal management team in day-to-day operations,” he said. “We also have an arrangement for transitioning information systems, and we have nine months for the transition, so there will be no disruption to the quality of patient care.” In a shorter timeframe, expect Prime Healthcare to announce its new hospital administrator, Reddy said. As it transitions out of its pairing with Tarzana, Encino will begin sharing services with Sherman Oaks Hospital, also owned by Prime. Encino’s nearness to Sherman Oaks was one reason, among others, that drew Prime to the hospital. “It’s in a good community, and we are into managing hospitals in communities where there’s need for emergency services and also medical surgical services, and it’s in close proximity to Sherman Oaks, so, instead of the hospital being shut down, we thought we’d operate it,” Reddy said. Prime Healthcare, which is finalizing purchases of two of Tenet’s other regional hospitals, may have been drawn to Encino, but the hospital and its former partner, Tarzana, have been difficult for Tenet to unload. In early 2004, Encino-Tarzana Regional Medical Center was one of 19 hospitals Tenet Corp. put up for sale, in part, because it couldn’t afford to make state-mandated seismic upgrades to the hospital, a requirement that arose after Valley hospitals were damaged in the 1994 Northridge Earthquake. Because neither the Encino facility, built in 1954, nor the Tarzana facility, built in 1973, was harmed during the quake, Tenet wasn’t eligible to receive Federal Emergency Management Agency assistance. Reddy said that reports that it would be easier to build a new Encino Hospital than upgrade it aren’t true. But, because Prime is still evaluating the extent of seismic upgrades it will have to make, Reddy doesn’t know just how much Prime will have to pay to bring Encino up to par. The good news for all hospitals is that the state has developed new technology for assessing the likelihood that hospitals will collapse in an earthquake, which means that hospitals will probably not have to make repairs as extensive as once thought. Also, hospitals may have up until 2030, instead of 2013, to make upgrades. “The state is coming up with a revised guideline to continuously work on seismic retrofit issues, and we’re keeping a close eye on the changes the state is recommending,” Reddy said. While retrofitting was the issue that made Encino difficult for Tenet to sell, Tarzana has another obstacle: an ongoing dispute between Tenet and HCP Inc. about which entity bears certain responsibilities for the hospital and how best to unload it. In light of the fact that Tarzana’s lease will be up in February 2009 and amid rumors that HCP wants to turn the hospital into a more profitable entity, such as a residential complex, legislators have introduced a series of bills in recent months that would force a resolution between Tenet and HCP and prevent HCP from converting the hospital into something else. “I think it’s a critical situation when there’s a possibility that the real estate investment trust could turn the facility over to a non-hospital operator, and so that’s what got me to do the legislation,” Sen. Sheila Kuehl told the Business Journal about SB 1734 in March. “If there’s going to be a sale or lease it has to be approved by the Department of Public Health. And that approval would be impossible, if they were turning it to anything other than a health facility.” While Alpert said that he wasn’t privy to the conversations that are occurring between Tenet, HCP and potential buyers, he does believe that such discussions are indeed taking place. He said that he’s now ready to move forward, as is Serlin. “We would like to have a positive working relationship with Prime Healthcare ,” Serlin said. “We now have a collective bargaining relationship with Prime Healthcare, and we’ll continue to represent the Tarzana RNs, which is still owned by Tenet.”