Several not-for-profit hospital systems in California, imitating behavior for which for-profits are often criticized, have been playing hot potato with a small Orange County hospital.
After passing through the hands of three not-for-profit systems within the past year, the hospital is landing in the lap of a Nashville-based for-profit system.
Eager to continue its growth spurt, Nashville-based Vanguard Health Systems last week signed a letter of intent to purchase 139-bed La Palma (Calif.) Intercommunity Hospital from Memorial Health Services of Long Beach, Calif.
Memorial had bought the hospital from San Francisco-based Catholic Healthcare West only last month. And CHW itself bought the hospital in December 1998 from UniHealth, Burbank, Calif.
La Palma would be Vanguard's third hospital in Orange County, Calif.
CHW had put La Palma up for sale along with 205-bed Martin Luther Hospital, Anaheim, Calif., earlier this year. Vanguard had expressed an interest in both last May but was beat out by Memorial Health Services (June 28, p. 21).
La Palma is less than three miles from 219-bed West Anaheim Medical Center, which Vanguard bought from Dallas-based Triad Hospitals last month.
"We're going to look to see how they can fit together in that market," said Robert Galloway, senior vice president for development at Vanguard.
Memorial Chief Executive Officer Thomas Collins said his company was upfront about La Palma's uncertain future within his system when it bought the hospital, primarily to acquire Martin Luther. Outside consultants subsequently recommended selling it.
The hospital lost $4.5 million on net patient revenues of $36.1 million in fiscal 1998, according to state figures.
Memorial has since converted Martin Luther into an outpatient facility and merged it with its own Anaheim Memorial Medical Center.
Two-year-old for-profit Vanguard, which currently owns three hospitals, also recently announced plans to buy 333-bed MacNeal Hospital in Berwyn, Ill. (Oct. 11, p. 24).