St. Luke to Have New Owners, Face Lift, Profit-Making Mission : Transfusion for a Hospital

St. Luke, a 167-bed hospital founded 52 years ago by the Sisters of St. Joseph of Orange, has long enjoyed a reputation for offering more personalized patient care than its larger counterparts, earning it a special niche in the western San Gabriel Valley.

More recently it had also developed a reputation as an antiquated and inefficient facility badly in need of renovations, according to the Catholic order.

In a move that surprised the health-care community and Catholics, St. Joseph Health System, which ran the Pasadena hospital for the order, announced Oct. 1 that the hospital would be sold, and that it was negotiating exclusively with Summit Health Ltd., a for-profit company. Diane Moeller, vice president and director of member services for the Catholic Health Assn. of the United States, said at the time that no Catholic hospital has been sold to a profit-making firm in the past five years.

Negotiations continued until Dec. 20, when the order signed a contract under which it sold the hospital to Summit for $13.5 million. Summit is expected to assume formal ownership sometime this week.

Summit officials say they hope to preserve the hospital’s longtime reputation and at the same time correct the ravages of age. The kindly old lady will get a much needed face and body lift, officials say, but they have declined to spell out many specifics pending Summit’s takeover.

For the past month, Summit’s activities at the hospital have primarily involved a series of meetings designed to reassure the 420 physicians, 630 employees and 170 volunteers that the spirit of St. Luke will not change, Summit officials said.

“We will keep the operation basically the same as it is,” said Michael Murray, regional vice president for Summit. Murray and Harry Adams, the new executive director of the hospital, are working together on the transition.

“We don’t expect a spate of resignations,” Murray said. “There is always a fear of changes but it hasn’t happened in other hospitals we have acquired. We hope the employees will give us the opportunity to prove we can provide effective leadership.”

Although Summit officials declined to elaborate on specifics because a financial and equipment assessment of the hospital and its organizational structure is still under way, they have announced a variety of short- and long-range plans for the

physical plant.

The name of the facility, which sits on 13 acres of land on East Washington Boulevard near Altadena Drive, has already been changed from St. Luke Hospital of Pasadena to St. Luke Medical Center. The new name, Murray said, will better reflect the broad range of services offered by St. Luke.

“We have no plans to incorporate Summit into the name,” Murray said.

As soon as Summit takes over, officials say, it plans to begin honoring its promise in the purchase contract to spend at least $4 million on capital improvements.

Additional Building Planned

The major physical change will involve construction of an additional building connected to the existing facility. The new building, which is expected to be completed in two years, will include new operating rooms and a maternity department.

The hospital had discontinued its maternity department 10 years ago, when birth rates declined. And when the new department opens, the hospital will offer abortions for the first time.

Although no statistical breakdown is available, a spokesman for the hospital said that many of the St. Luke doctors are not Catholic and most are also affiliated with others area hospitals that already offer abortions.

“Abortions will be up to the physicians,” Murray said. “We won’t restrict it but we don’t promote it.”

Other Changes Scheduled

Before the new building is completed, other changes in the physical plant will take place.

“We think we can capitalize on St. Luke being so old,” Adams said, “because in Pasadena some of the oldest buildings are the nicest. But we will change the landscaping, paint the building and do a lot of aesthetic things.

“Everything, from the minute a patient enters the building, will reflect the quality of care. But we don’t have to create the personalized care because it is here. That is the strength of this facility,” he said.

Murray formerly was executive director of Whittier Hospital Medical Center, which Summit acquired in 1981. He will work with Adams, who was executive director of Doctors Hospital of Santa Ana, another Summit-owned facility.

Quackenbush Resigned

Adams replaces James Quackenbush, one of two top St. Luke executives who resigned after the sale was announced.

Quackenbush, 48, who was named the first lay administrator of the hospital 15 years ago, said last week that he had not decided whether he would stay in hospital work. Quackenbush said he had been retained by the hospital to help during the transition.

“I will introduce the Summit people to leaders in the community so there is not a huge void in the transition,” he said.

Sally Sims, vice president of patient and professional services, is leaving after 20 years at the hospital.

Reassessing Goals

“I want to reassess my professional goals,” she said. “I have a background in nursing, teaching and hospital administration. I want to decide what field to be in and now is the right time to do it.”

Since the transition from nonprofit Catholic hospital to for-profit hospital is a major one, Summit is taking steps to convince the community that the spirit of the hospital will remain the same.

Adams and Murray said they will work to maintain St. Luke’s strong ties to the community and increase its community service programs, such as free public lectures on health-related topics, because such programs have been helpful in gaining community support for other hospitals Summit has bought.

“We will work closely with doctors, asking why they did or did not use this hospital in the past. We will develop new services that are attractive to the community and to physicians,” Murray said.

‘Will Talk to Pastors’

“And we will talk to local pastors because we don’t want to antagonize the Catholic community. We didn’t come after this hospital--the sisters approached us because they wanted to sell it.”

One of St. Luke’s strengths in community relations has been its advisory board, a group of 40 Pasadena-area businessmen and residents who worked to keep St. Luke in touch with the community. Summit hopes that many of them will continue to work with the hospital.

The president of the advisory board, Patrick Cabot, vice president of Cabot & Sons Funeral Directors, said, “I am willing to stay on as a member because I still have a lot of concern about the hospital. I don’t know what it will be like as a for-profit hospital but I have been closely involved with St. Luke for many years.

“In my personal opinion, most other members will not drop out just because of the sale. We want to see the hospital prosper.”

Strong Volunteer Program

Another strength, both in the hospital and in the community, has been St. Luke’s strong volunteer program, and Sue McInerney, the hospital’s paid director of volunteers, said that it appears that most of the volunteers will stay.

“Generally, in corporate changes such as this, hospitals have not lost volunteers,” she said.

The two volunteer groups, the St. Luke Auxiliary and the San Marino Guild of St. Luke Hospital, have already decided to incorporate into a single nonprofit organization, which will probably be named Volunteers of St. Luke Medical Center, she said.

The volunteer groups face some problems arising out of legalities connected with the transition from service for a nonprofit to a profit-making hospital.

Runs Thrift Shop

The 140-member auxiliary, formed two years before the hospital was built, has been running a thrift shop and providing most direct volunteer services to patients, such as visiting and providing reading materials. The 30-member guild was organized in 1979 as an invitation-only membership group. Members have been involved primarily in running the hospital’s gift shop rather than working directly with patients.

Volunteers legally can raise money for a for-profit hospital but are limited in disbursing funds. If they use the money to buy equipment for the hospital, patients cannot be charged for the use of that equipment. Generally, therefore, volunteers raise funds for scholarships or purchase teaching materials to show patients how to adapt to such surgeries as colostomies and mastectomies.

The guild has about $10,000 and will use it to buy educational material for cardiac and diabetic patients, McInerney said.

“These are items to improve the quality of patient care,” she said. “But the funds are not restricted to the hospital. Volunteers could support a rape hot line or scholarships but these programs would legally have to be open to the entire community.”

$25,000 Annually

Generally, the volunteers raise about $25,000 annually, she said.

Because Summit is a non-Catholic, profit-making company, it will lose the St. Luke Foundation and the $2.7 million it has raised for capital improvements since it was established in 1979.

The foundation, which has changed its name to the Patron Saints Foundation, is sorting out what it can and cannot legally do with the funds, said Fred Lyte, president.

Tom Collins, attorney for the foundation, said that because the money was raised in the community for health care, the funds must go to health care in the area servec by St. Luke.

“The foundation could give funds to other hospitals and groups in health care that are not in conflict with Catholic tradition,” he said. “For example, funds could not go to an abortion clinic.”

‘Not Close to Deciding’

Lyte said members could decide to distribute the income but not the principal. “But we are not close to deciding who will get what,” he said.

Despite the loss of St. Luke’s major fund-raising apparatus, Murray said the hospital will benefit financially because it is owned by a corporation.

“The corporation buys capital equipment and provides accounting systems and analysis of operations,” he said. “We have consultants that independent hospitals can’t afford.

“Summit provides for all its hospitals data processing, a construction coordinator and tax specialist. We can combine marketing efforts with our other hospitals so we can do it less expensively.”

Summit, which had gross revenues of $360 million in 1984, owns 13 hospitals, 53 nursing homes and seven retirement homes in California, Colorado, Arizona, Texas and Iowa. The four hospitals in Southern California are Doctors Hospital of Santa Ana, Midway Hospital Medical Center in Los Angeles, Santa Ana Hospital Medical Center and Whittier Hospital Medical Center.