Updated 12:30 p.m. ET: Los Angeles-based Pacific Alliance Medical Center will shut its doors in December, citing the massive costs to retrofit its facilities to meet seismic requirements.
PAMC said its hospital building does not meet current California seismic standards and it is not "economically viable for us to invest nearly $100 million to build a hospital on land that we would not own," the company said in a statement. The company said that the physician-owned hospital's closing was "in no way related" to a $42 million settlement with the federal government regarding allegations that it provided kickbacks to referring physicians. PAMC has already paid that sum, according to company officials.
The center will close when its lease expires Dec. 11 and all 638 employees at its 531 and 711 W. College St. facilities will be out of jobs, according to a Worker Adjustment and Retraining Notification sent Monday.
"PAMC will remain appropriately staffed until it closes. We will assist any inpatients and their physicians in transitioning their care to another area hospital prior to closing," the company said.
The owners, PAMC Ltd. and Pacific Alliance Medical Center, allegedly made marketing arrangements that provided kickbacks to physicians' practices and paid above-market rates to rent space in physicians' offices, the U.S. Justice Department said in June. They agreed to pay $31.9 million to the federal government and $10 million to California for allegedly submitting false claims to Medicare and Medi-Cal, the state's Medicaid program.
The Justice Department confirmed that PAMC paid the settlement.
The company reported a $12.2 million net loss and a negative operating margin of 17.9% in the first quarter of 2017, according to public financial data.