200 Employees Laid Off by Comprehensive Care

Times Staff Writer

Saddled with a record number of empty hospital beds, Comprehensive Care Corp. said Thursday that it has laid off 200 workers--the first work-force reduction in the company’s 13-year history.

And the Irvine-based health care company, which operates drug and alcohol rehabilitation facilities in 33 states, said it also expects to post its first-ever annual earnings decline next month.

About 50 of the layoffs--which involve both administrative and treatment personnel--are in Orange County, said B. Lee Karns, chairman and chief executive of the company. Since the layoffs, which have mostly taken place over the last 30 days, Comprehensive Care now employs about 3,600 workers.


Karns said that after a dozen years of increased earnings, the company’s net income is expected to fall almost 10% for the 1986 fiscal year. In fiscal 1985, the company earned $17.2 million. Despite the decline in earnings, revenues are expected to rise about 20% to nearly $190 million from $158.5 million in fiscal 1985.

The company said it expects to report its fourth quarter and fiscal year financial results in late July.

“It hasn’t been easy,” Karns said. “But we’re very bullish about our business over the long term.”

The company said its recent drop in earnings was caused largely by an expansion program--a 30% increase in capacity over the past year--that outstripped demand. Use of Comprehensive Care’s own hospitals was down 5% in the fourth quarter, the company said, and there was a 10% gap between use and capacity at the facilities it operates under contract.

One analyst blamed Comprehensive Care’s financial woes on the expansion, saying it was too much, too soon.

Still, Comprehensive Care plans to spend nearly $45 million on expansion in fiscal 1987, Karns said. The company will open three new hospitals, begin construction on three others and contract its services to about 40 additional hospitals nationwide.

“There’s a growing need for alcohol and drug treatment centers in this country,” he said. But many insurance companies are putting patients “under pressure” to decrease their length of stay in these facilities, he said.

Some industry analysts, however, said they are baffled over the earnings decline. It comes at a time when most competitors are growing.

“Comprehensive Care is the exception, not the rule,” said Randy Huyser, health care service analyst at Montgomery Securities in San Francisco. “As far as I can tell, there’s no real solid explanation right now.”

But an analyst who asked not to be named said Comprehensive Care may be growing too fast. “It may be that these guys have overextended themselves,” the analyst said.

Comprehensive Care has grown from a $90-million company to a $190-million company in three years.