Coastal Catholic Healthcare is on the rocks.
The joint venture that would have linked three Los Angeles-area Catholic hospitals-Daniel Freeman Memorial and Daniel Freeman Marina hospitals, in Inglewood and Marina Del Rey, respectively, and Saint John's Health Center in Santa Monica-has collapsed after eight months of talks.
"We weren't able to come to an agreement regarding a structure," said Daniel Freeman spokeswoman Lori Brandt, "But we will be seeking other opportunities in the future." She declined further comment.
"It wasn't the right vehicle for us, in the sense that it didn't create benefits or add value with respect to our missions or the communities we serve," said David Gibb, a Saint John's spokesman.
The facilities, with a total of 774 staffed beds, serve a 15-mile stretch of urban beach communities near Los Angeles. In July 1997 they announced plans to form a joint operating company, but the hospitals would have remained autonomous. The specific goals of the system were not disclosed, but the three hospitals were expected to combine some services and integrate medical staff after operations began, which had been scheduled for early 1998.
But outsiders noted that the clout the hospitals enjoyed in their communities and the strong wills of the three hospitals' executive staffs would have made dealmaking among the three hospitals difficult.
The facilities are owned by powerful Roman Catholic chains: Saint John's is part of the Sisters of Charity of Leavenworth (Kan.) Health Services, while the Daniel Freeman hospitals are owned by St. Louis-based Carondelet Health System. With deep-pocketed parents, observers said the facilities were not under the gun to join up.
"The parties are all powers on their own, so it's not like splitting a loaf of bread," said an observer who asked not to be identified.
The Daniel Freeman hospitals jointly reported net income of $2.1 million on patient revenues of $172 million, for fiscal 1997 ended May 30.
For calendar 1997, Saint John's reported operating income of $8.1 million on revenues of $147.7 million.
The diversity of the communities served by the hospitals also would have made integration difficult.
Steve Valentine, president of the Camden Group, a Torrance, Calif.-based consulting firm, noted that Saint John's is in one of Southern California's most affluent communities; Daniel Freeman Marina is in an area of fitness-conscious residents who are low utilizers of healthcare; while Daniel Freeman Memorial serves middle- to low-income residents.
"They have very different demographic bases, so it would have been a tough fit," Valentine said.