Beach Cities Health District in Redondo Beach, Calif., will determine next week the fate of its 149-bed South Bay Medical Center, located just south of Los Angeles.
After running the hospital under lease for 14 years, Tenet Healthcare Corp. is pulling out.
District Executive Director Robert Riley said Beach Cities' board of trustees is expected to vote Feb. 26 to accept one of four proposals from private parties:
A subsidiary of nearby Little Company of Mary Hospital in Torrance, Calif., wants to convert the hospital to outpatient and diagnostic services.
A coalition of providers, including South Bay IPA medical group in Torrance and Long Beach, Calif.-based hospital operator Pacific Health Corp., wants to continue operating the facility as an acute-care hospital.
Two other firms, Manhattan Beach, Calif.-based Comstock Crosser & Associates/Parsons Home and Irvine, Calif.-based Lincoln Properties, have submitted separate proposals to replace the hospital with an assisted-living facility.
A series of public hearings has been held on the hospital's future, leading up to the vote this week.
A number of private companies have operated South Bay Medical under a lease agreement with the district over the years.
Santa Barbara, Calif.-based Tenet has leased the hospital since 1984. American Medical International held the lease until it was acquired by National Medical Enterprises in 1994, forming Tenet.
However, larger hospitals in the area have taken away much of South Bay's managed-care business, cutting occupancy to about 20% from 50% a decade ago.
Tenet intends to cease operating the hospital at the end of May, even though it is obligated to pay the district annual lease payments of about $3 million until 2014. A Tenet spokesman said there are no plans to renegotiate the lease.
"South Bay needs many more managed-care contracts to increase its census, but with several other large acute-care facilities in the area, Tenet is not in the position to do that," said Tenet spokesman Lance Ignon.
According to the American Hospital Directory, a Louisville, Ky.-based healthcare information company, South Bay posted net income of $1.8 million on net patient revenues of $19.3 million for the fiscal year ended June 30, 1996, the latest information available. The hospital had lost a combined $26.9 million in the previous two years.