Troubled Lake View Medical Center to Close

Financially troubled Lake View Medical Center in Pacoima will be closed as soon as its 56 patients can be moved to other acute-care hospitals, it was announced Monday.

The 145-bed hospital, which filed for reorganization under Chapter 11 of the U. S. Bankruptcy Code in October, 1984, “will cease operations over the next three to five days as arrangements are made to transfer the patients,” said Alan Pedlar, the hospital’s attorney.

The plant and all equipment will be sold to pay off creditors under the supervision of the federal bankruptcy court, Pedlar said.

The small hospital serves a largely low-income clientele in Lake View Terrace and Pacoima. More than 80% of its clients are Medi-Cal patients, hospital officials said.

A spokeswoman for the hospital’s board of directors said the vote to close was taken Monday and was based on “financial data very recently provided” by Republic Health Care Corp., a Dallas-based firm hired to manage the facility 16 months ago.

The spokeswoman declined to provide financial details or say how many employees will be affected by the closure. Other hospital officials could not be reached for comment.

In recent months, hospital officials had concluded that it “simply was no longer possible to return to profitability,” Pedlar said.

Problem of Competition

In interviews a year ago, hospital officials said the 25-year-old institution’s financial problems stemmed partly from fierce competition from the San Fernando Valley’s 27 other hospitals. In recent times, Lake View had as few as 30 patients.

The officials also blamed reduced federal and state payments for medical treatments and a burdensome debt that was estimated to have reached $15 million by April, 1985.

When it filed for reorganization in 1984, the hospital said $9.6 million of its debt consisted of bonds issued to rebuild the center after it was destroyed by the 1971 earthquake.

The hiring of Republic Health Corp. to manage the hospital was part of the hospital’s reorganization plan.

The for-profit health management firm was paid $15,000 a month and given the goal of generating enough revenue to cover the hospital’s $150,000 monthly fixed expenses.

To cut costs, Republic managers laid off 50 employees shortly after taking over.

Republic officials said they had hoped to increase the number of patients by drawing from new housing tracts and condominium developments in the Northeast Valley.

Pedlar said it was “too early to tell” how much creditors would be paid in the liquidation.

“One unknown is whether someone will want to buy the physical plant and use it as a hospital,” he said. “If so, I don’t know what kind of price they would be willing to pay.”