AMI Chain to Build, Run 177-Bed Hospital in Irvine

Times Staff Writer

American Medical International Inc. (AMI) of Beverly Hills, one of the largest hospital chains in the world, announced Friday that it will build, for an estimated $86 million, the long-proposed community hospital in Irvine.

AMI said it expects construction on the 177-bed acute-care hospital to begin next spring and that it will open in the summer of 1987. The new hospital--the first ever to be built in Irvine--will be owned by AMI but affiliated with the medical teaching programs of both UC Irvine and Saddleback Community College District.

The hospital will be built off-campus in Irvine on a site donated by the Irvine Co. at the corner of Alton Parkway and Sand Canyon Road.

AMI’s commitment, according to Irvine civic officials, finally ends the long search for a hospital for the city--the largest municipality in California without one. The hospital battle has been dominated in the past 10 years by a debate on whether it should be, or even could be, built on-campus or off-campus at UC Irvine.


UC Irvine still has a large role in the AMI hospital venture--with perhaps more developments to come in the next few weeks.

Royce Diener, chairman and chief executive officer of AMI, disclosed in an interview Friday afternoon that the agreement to build the new Irvine hospital brings the corporation closer to negotiating a possible arrangement with the University of California to lease and manage the deficit-plagued UCI Medical Center in Orange.

UCI Medical Center officials have, for several months, been quietly discussing with AMI the possibility that the company would assume management of the old hospital complex. Some university and state officials have said private management may be the best permanent solution for the medical center’s chronic money problems.

“I would say the crystalization of the deal with the Irvine Medical Center (new hospital) has brought our negotiations (with the University of California) into sharp focus,” said Diener. “I would say that within the next 30 days we will have proposals to offer (about taking over operation of UCI Medical Center in Orange).”


UCI officials, while confirming their discussions with AMI, have refused to disclose any details. On Friday, however, a high-ranking UCI official, speaking on condition that he not be identified, said a reason the university has not moved to appoint a permanent new director at its medical center “is because we’re still looking to these discussions and seeing what might happen . . . . If AMI took over, a new (university-appointed) director wouldn’t be necessary.”

AMI Owns 165 Hospitals

AMI owns and operates 165 hospitals throughout the world, including three in Orange County: Anaheim General Hospital, Medical Center of Garden Grove and Beach Community Hospital in Buena Park.

In agreeing to take over the building and financing of the Irvine hospital, AMI moved into the void created in April when Hoag Memorial Hospital Presbyterian of Newport Beach withdrew as the major financial partner.


AMI’s financial commitment is broader than was proposed by Hoag, according to C. David Baker, chairman of Irvine Medical Center (IMC), a community-based organization that has worked for several years to get a hospital for Irvine. Baker officially announced the AMI-IMC agreement at a press conference Friday afternoon.

“The relationship with AMI secures IMC’s promise to the Irvine community of a flagship medical center dedicated to excellence in community health, education and research,” Baker said. “AMI was selected because it shared our vision for a world-class community-teaching medical center.”

Original proposals for the new Irvine hospital called for a $67-million facility. Baker said that AMI’s commitment for nearly $20 million more than that allows for many “extras” in the medical center.

$86-Million Commitment


At Baker’s press conference in Irvine, the figure $80 million was announced as the construction cost and commitment of AMI. AMI officials, however, later said from Beverly Hills that the correct amount is $86 million.

AMI takes over the state certificate of need which had given the combined IMC-Hoag venture permission to build an off-campus hospital. Baker acknowledged that the license was contingent on Hoag’s giving up 50 of its existing bed authorizations. But he and other officials of IMC at the press conference said the 50-bed swap can easily be arranged. Gary Hunt, an Irvine Co. vice president and IMC board member, said that AMI can transfer bed slots to the new hospital from its existing Orange County hospitals, if necessary.

Baker said AMI’s agreement calls for the new Irvine hospital to have teaching affiliations with the UCI College of Medicine and Saddleback Community College District, which offers nursing training at Saddleback College in Mission Viejo and Irvine Valley College in Irvine.

“Our agreement (with AMI) not only provides for the construction and management of the medical center but provides for numerous benefits,” Baker said. He said that in addition to the 177-bed hospital, AMI has agreed to provide up to $1 million yearly to the UCI Medical College and $75,000 to the Saddleback community colleges’ nurses’ training programs.


Develop Four Buildings

Baker said AMI also has agreed to help develop four other separate buildings that will house elements of the new Irvine Medical Center. He said these buildings will house a diagnostic and imaging center, a psychiatric center, an oncological (cancer therapy) center, and an ambulatory (outpatient) care center, all of which will be linked to the UCI College of Medicine.

Baker said that the “presumption” is that all four of the allied buildings will be at the off-campus site, next to the new hospital. But he said it is possible that one or more of the new buildings could be built on campus.

Yet another commitment of AMI, said Baker, is that the hospital chain will provide $1 million yearly to the new hospital to help cover the cost of care for the poor.


The Irvine hospital issue has been dominated by years of bitter debate about whether it should be built on- or off-campus. In 1983, after years of university effort to get an on-campus hospital, state and local licensing officials agreed on an off-campus facility.

Dean Resisted Move

Stanley van den Noort, soon to step down as UCI Medical College’s dean, bitterly resisted the off-campus move, even when it became nominally “official.” After Hoag Hospital pulled out as the main financial partner in April, he said in an interview that he had doubts if the off-campus hospital would ever be built.

Van den Noort has contended that the university would be better served by an on-campus facility. He also argued that a small, profitable on-campus hospital would complement and help pay the debts of the old UCI Medical Center in Orange.


Jack Peltason, chancellor of UCI, announced earlier this year that van den Noort would not be appointed to a new term as medical college dean.

Peltason was not at the press conference where the new hospital agreement was announced, but in a prepared statement he said: “We are very pleased with the announcement that IMC has chosen American Medical International as a partner. Our relationship with AMI has been very positive, and we are excited about the opportunities this partnership creates for the community as well as the university.”

Saddleback Chancellor Pleased

Larry Stevens, chancellor of Saddleback Community College District, was at the press conference and similarly praised the new hospital arrangement. “I think it’s obvious to everyone how appropriate this will be to our teaching program,” he said. “We’re delighted to be part of it.”


Baker said AMI’s agreement on the hospital includes the following:

-Development of a woman’s and children’s program at the new hospital, including an intensive-care newborn nursery.

-Establishment of a $15-million foundation “to further Irvine Medical Center’s mission of community health, education and research in Irvine.”

-Construction, within the medical center complex, of a "$1.7-million conference center for community health education programs, child care, health science programs and offices for community volunteer programs.


-Development of an Occupational Medicine Center at the hospital site and a transportation system linking the new hospital with UCI, UCI Medical Center, and Saddleback Community College District’s two colleges.