Hospitals' total profit margin dropped to 5.5% through the first six months of this year from 6% during the same period last year, the American Hospital Association reported last week in its quarterly economic report on the hospital industry. The report is based on a survey of about 2,000 hospitals. Hospitals' patient margin, which measures patient-care revenues and expenses, dropped to -0.2% through June of this year, compared with 0.7% during the same year-ago period.
In a transaction that reflects the struggle Los Angeles-area hospitals have had with low occupancy, Kaiser Permanente's Pasadena-based Southern California region has signed a letter of intent with San Francisco-based Catholic Healthcare West to share facilities. Kaiser would begin moving Los Angeles Medical Center inpatient services to CHW's 380-bed St. Vincent Medical Center beginning next year. It would phase out inpatient care at Los Angeles Medical Center entirely within three years. In 1998, CHW would take over management of Kaiser's new hospital in Baldwin Park. The state-of-the-art facility offers outpatient care but has yet to open to inpatients because of low demand. The 617-bed Los Angeles Medical Center, built in the early 1950s, is one of Kaiser's oldest and largest facilities. Kaiser officials indicated they were reluctant to spend money to upgrade the aging hospital for inpatient services.
Summit Medical Center, the largest hospital in Oakland, Calif., entered discussions last week with Catholic Healthcare West to explore a possible affiliation. Licensed for 517 beds, Summit is a not-for-profit community hospital that usually runs a census of about 320. After losing $32 million in fiscal 1993, Summit earned $8 million on revenues of $205 million in the past fiscal year, spokeswoman Nancy Happel said. Summit was created by the merger of three adjacent hospitals in north Oakland. Merritt Hospital merged in 1982 with Peralta Hospital. In 1992, Merritt Peralta Medical Center in turn merged with Providence Hospital, sponsored by the Sisters of Providence system in Seattle.
In what appears to end a controversial bidding process, board members of 331-bed Boca Raton (Fla.) Community Hospital last week agreed to be acquired by a group of not-for-profit hospitals. The selling price is $190 million plus retirement of an undisclosed amount of debt. The hospital signed a letter of intent with Allegany Health System, Tampa, Fla., Intracoastal Health Systems, West Palm Beach, Fla., and Eastern Mercy Health System, Radnor, Pa., a sponsor of nearby Holy Cross Hospital in Fort Lauderdale. The Florida attorney general's office became involved in the bidding process in recent months after questions about the fairness of the deal were raised. The attorney general couldn't be reached late last week for comment, although hospital executives said they expect the deal will continue to be monitored until a definitive agreement is signed within the next two months.