OrNda HealthCorp's newly constructed network of five hospitals in Orange County, Calif., could be a test case for how well hospital chain mergers work.
"It's a classic example of solo facilities coming together to become partners of a larger alliance," said Howard Levine, 44, who was promoted this month to the new position of vice president of regional oper- ations for OrNda's five Orange County hospitals. Mr. Levine has been administrator of one of the hospitals, Chapman General Hospital in Orange, Calif., since 1992.
Mr. Levine's challenge is to mold the five hospitals-which had four different owners just a few months ago-into a coordinated network.
Mr. Levine's hospital, Chapman, previously was owned by American Healthcare Management; 54-bed Doctors Hospital of Santa Ana and 99-bed Santa Ana Hospital Medical Center were owned by Summit; 169-bed Coastal Communities Hospital, Santa Ana, was owned by OrNda; and 413-bed Fountain Valley Regional Hospital and Medical Center is owned by a physicians group.
Four of the hospitals came into Nashville, Tenn.-based OrNda's fold in April when the company completed a three-way merger with two other hospital chains, American Healthcare, King of Prussia, Pa., and Summit, Burbank, Calif. (See related story, p. 60).
The tertiary-care hub of the Orange County network will be Fountain Valley, which OrNda is purchasing for $145 million; this includes $20 million in working capital. The deal, which is set to be completed in July, will add $120 million in annual revenues and $22 million in earnings before interest, taxes, depreciation and amortization to OrNda, which posted 1993 revenues of $624.8 million.
The merging chains last year recorded combined total revenues of $1.4 billion.
Although a few of OrNda's hospitals are as large or larger than Fountain Valley in bed size, the hospital is expected to be the largest in revenues. The hospital is located on a 38-acre campus that includes a surgery center, imaging center and four medical office buildings.
Despite the need to work together, Mr. Levine said he wants the five hospitals to retain their own identities. He said he intends to "build on the strength of the hospitals and look at niche programs." For example, Santa Ana and Doctors serve a large Asian and Hispanic population. "We don't want to homogenize that" by making the facilities conform to others in the network, he said. He noted that each of the facilities will retain separate medical staffs.
Before joining Chapman in 1992, Mr. Levine was chief operating officer of Staten Island University Hospital and senior associate director of operations at Beth Israel Medical Center, both in New York.
Mr. Levine will report to Gale Gasho, who is heading OrNda's California operations. OrNda operates 18 hospitals in California, 14 of which are in the Los Angeles area.