Hoag Withdraws From Hospital Plan in Irvine

Plans to build a community hospital in Irvine received a setback Wednesday, when Hoag Memorial Hospital Presbyterian, of Newport Beach, withdrew as a partner in the project.

Hoag officials said in a prepared statement that “recent efforts to establish a larger affiliated hospital network to assure the financial resources necessary to complete the Irvine Medical Center project have not been successful.”

Network Identified

In an interview, Hoag president Michael Stephens identified that network as Memorial Health Services of Long Beach, operators of Long Beach Memorial Hospital and Saddleback Hospital, among others.

When Long Beach Memorial’s board recently declined affiliation with Hoag-IMC, Stephens said, there was “no question” that the expected source of revenue to build the new hospital had evaporated. “We could not go forward without a partner,” he said.

Irvine Medical Center said in a statement that Hoag’s withdrawal “had been anticipated,” and would not slow construction of the $67-million, 177-bed hospital at Alton Parkway and Sand Canyon Road, near the junction of the San Diego and Santa Ana freeways.

For nearly two decades, a furious battle has been waged in Irvine--now the largest city in California without its own hospital--over whether to build a major teaching and research facility on the campus of UC Irvine or a community hospital off campus. The dispute ultimately involved the Irvine City Council, the county Board of Supervisors, the county Health Planning Council, the UC Board of Regents, the state Legislature and two gubernatorial administrations. It was resolved only in 1983, when then-UCI Chancellor Daniel G. Aldrich Jr. withdrew support for an on-campus hospital and endorsed the idea of a community hospital off campus, to be affiliated with Hoag.

Wednesday’s statement said that architectural plans for the hospital are nearly complete, and the Beckman Foundation has pledged $5 million for construction on 15 acres pledged by the Irvine Co.

Expressing gratitude for Hoag’s assistance to the backers of Irvine Medical Center--then called People of Irvine for a Community Hospital--in obtaining the required state Certificate of Need for the new facility, the statement said, “the Irvine Medical Center vision is now assured of being realized,” and added, “the picture is very bright.”

David Baker, chairman of the IMC board, said in an interview that the Hoag withdrawal had been an amiable separation that offered “an exciting opportunity” for the future.

“I would hardly consider it a blow” to the new hospital, he said, pointing out that he had met with officials of AMI Inc., one of the largest proprietary (private, for-profit) chain of hospitals in the country, regarding AMI’s potential involvement.

Certificate Transfer Seen

Baker, an attorney and Irvine city councilman, said Hoag would have to “go through legal steps” to transfer the state certificate to IMC, but the lengthy process of obtaining state permission would not have to be repeated.

“We will do everything that we can to assist the transfer or designation” of the certification to IMC, Stephens said. He added, however, that he knew of no precedent for such a shift. On Jan. 1, 1987, the state requirement for such certification will lapse.

Baker, who once likened the battle over where and what kind of hospital to build in Irvine to “The Hundred Year’s War,” blamed Wednesday’s development on “changes in the health-care market.”

Because of cutbacks in the industry, including cost-containment measures such as increased outpatient surgery and reduced federal and state reimbursements for the treatment of indigents, nonprofit hospitals around the country have been having financial difficulties. In recent months, both the UCI Medical Center in Orange and St. Jude Hospital in Fullerton have laid off personnel.

Under the circumstances, Baker said, it was understandable that Hoag “wanted to protect what they’ve got.”

According to a health industry source in Orange County who asked not to be named, one reason Hoag became a partner in the IMC project was concern over the location of a new hospital.

Competitive Motive Denied

Hoag has had difficulty, over the years, maintaining its occupancy rate, but Stephens said the proximity of a competitor “didn’t enter at all” into Hoag’s investment of $3.5 million in the IMC project.

At the same time, a community hospital on the proposed site might compete with Saddleback Hospital, in Laguna Hills, which is part of Memorial Health Services of Long Beach. Saddleback, the source said, has “a mostly geriatric market” that will need to be replenished if it is to survive.

Stephens said potential competition between IMC and Saddleback “had nothing to do with” Long Beach Memorial’s decision not to affiliate with Hoag, and that the financial obligation to build IMC was only “one of the issues” the Long Beach organization took into consideration. The Saddleback and IMC markets, he said, would be “totally exclusive.”

Whether a proprietary medical chain might step into such an unsettled situation is unclear. Any new partner--providing most of the financial backing--might want to consider another site, although IMC’s Baker said “the site remains fixed.”

“The people who should be angry are the people of the City of Irvine, who wanted a community hospital and probably aren’t going to get one,” said Stanley van den Noort, outgoing dean of the UCI Medical School and long a proponent of a hospital on the UCI campus. Van den Noort, who backed a proposal for an on-campus hospital operated by Health-West, a proprietary chain based in Chatsworth that lost out to the Hoag-IMC effort, said he was “not terribly surprised” by Hoag’s action, “given the market conditions.”

The Irvine Co. site has its opponents, including the commander of the El Toro Marine Corps Air Station, who has warned that the hospital would be in the flight path of jet trainers.