Kaiser Permanente and Catholic Healthcare West have terminated plans to treat Kaiser inpatients at St. Vincent Medical Center near downtown Los Angeles.
Kaiser spokesman Jim Anderson said the aging 617-bed Kaiser Foundation Hospital-Los Angeles, which would have been converted to outpatient care as part of the deal, would be rebuilt instead. No details on the project were released.
"Beyond the fact we have an intention to rebuild, almost no plans have been made," Anderson said.
When the original patient transfer deal was announced in November 1996, it was considered a bellwether for how Kaiser would begin conducting business outside its own network of hospitals. The HMO had been struggling with the fixed costs of its facilities for years and said it would explore other options to cut expenses. Its Los Angeles hospital, built in the early 1950s, was one of its largest and oldest facilities. It would have begun sending its inpatients to St. Vincent in 1999.
But higher-than-expected enrollment growth for Kaiser in the region led to disagreements over how many inpatients would be sent to 350-bed St. Vincent and who would pay for the millions of dollars of capital improvements to accommodate the traffic. Kaiser announced late last year that the plan had been shelved for up to six years (Dec. 1, 1997, p. 36). Anderson said both sides finally called off the agreement in early May.
Aside from the financial aspects of the deal, Wanda Jones, president of the New Century Healthcare Institute, a San Francisco-based consulting firm, believes a cultural clash also played a significant role: "There may have been stress and strain between Kaiser's need to have its own doctors at the hospital and the specialists on St. Vincent's staff, who dominate at the hospital to a major degree," she said.
Steve Valentine, president of the Camden Group, an El Segundo, Calif.-based consulting firm, believes pressure for Kaiser to unload its hospitals is diminishing. "They've added a lot of enrollment (in the downtown Los Angeles area), their premium increases are coming through, and they're turning themselves around," he said.