Prognosis for Irvine’s First Hospital Is Guarded

Nothing about the two-decade effort to build Irvine’s first hospital has been easy or uncomplicated.

Even as earthmovers last week graded the proposed site for the Irvine Medical Center (IMC), at Alton Parkway and Sand Canyon Avenue, and construction workers laid water pipes for the $93-million, privately operated hospital, there was considerable debate over whether the structure will ever get off the ground.

John C. Gaffney, American Medical International’s project director for the hospital, said plans are going forward for an October, 1988, opening for the 177-bed facility, owned by AMI of Beverly Hills.

Construction bids from general contractors are due May 13, he said, and the structural steel has been cast.

The walls of IMC’s temporary headquarters on Barranca Parkway are lined with fabric samples, room layouts and photographs of furnishings, giving the impression that completion of the facility on the 15-acre site is a foregone conclusion.

Plans for the medical center are striking:

- A three-level medical mall, bright and sunlit.

- Two entrances, one for in-patient arrivals and another for out-patients.

- Valet parking.

- All decorated private rooms, plus many suites.

- Color-coded tile and carpeting, to keep visitors from getting lost.

More than 40 doctors have been approved for staff affiliation, according to Dr. Gerald Sinykin, interim chief of staff, with a goal of 200 to 250 physicians.

But repeated delays and redesigns of the facility, coupled with uncertainty about the corporate health of AMI and serious takeover attempts (related story, Page 8), have raised doubts about whether IMC will be built. The major issue is whether AMI will have the financial wherewithal to honor its commitment to complete the project, whose cost may exceed $100 million, including the nearly $20 million AMI has already invested.

“We’ve been raising the question for the past six months,” said Dr. Gerald D. Weinstein, acting dean of the College of Medicine at UC Irvine and an IMC board member.

“It’s not going to get built,” said Dr. Stanley van den Noort, professor of neurology and former dean of the medical school, who long opposed construction of a community hospital.

The takeover attempts have had “absolutely no impact” on IMC’s schedule, according to Gaffney. AMI has “the full intention to proceed” with the project on schedule, he said.

David Baker, chairman of the hospital’s board and a member of the Irvine City Council, said he was confident that the project will go forward but acknowledged the persistent rumors and his own “chagrin” over the delays.

“I think a lot of this will end when the steel starts going up,” he said. “Come June, it will be a moot issue,” Baker predicted.

For nearly 20 years, the issue of where to put a hospital in Irvine, the largest city in California without such a facility, divided the master-planned community. The dispute pitted local doctors, a vocal residents’ group and major economic interests, all of which wanted a community hospital located north of the San Diego Freeway, against UC Irvine, which wanted a major, on-campus medical center as part of the university’s medical school, south of the freeway. Ultimately, the university capitulated and shelved plans for a medical center.

Quite Different

“The medical school has accepted with regret that there will not be a medical center on the university campus,” Weinstein said Friday.

The hospital that may soon rise near the intersection of the San Diego and Santa Ana freeways, while clearly not a campus medical center, is also quite different from the one urged by the group called People for an Irvine Community Hospital (PICH).

This facility is a private, for-profit institution, owned by AMI, although governed by a local board. Despite the imminent completion of Alton Parkway, Sand Canyon Avenue and access ramps to the San Diego Freeway, the site is not considered centrally located. In the event of an emergency, its location will make for a shorter drive for many Irvine residents than would have been required for a campus hospital, but it will not be “the hospital on the corner.”

“It’s not what we envisioned,” said Sharon Ellis, a PICH board member and IMC’s director of community relations. The original goal of a free-standing, nonprofit, community hospital was “not something that was realistic,” she said. “The institution became more than a building down the street,” she said.

“It’s not that different,” said Baker, whose political career has been closely linked to PICH and the hospital issue. “I’ve really tried to grapple with that issue. . . . It is going to be pretty much what I dreamed.”

‘Hospital War’

There have been more split decisions than clear victories as a result of the settlement of what was once called the “Irvine Hospital War.”

Hoag Hospital Presbyterian in Newport Beach, a one-time sponsor and partner with IMC, later withdrew from the project after successfully blocking construction of a competing, prestigious university facility virtually on its doorstep, which would have cut it off from the Irvine market.

After the university gave up plans for a campus medical center, relations among the various factions improved considerably. Tens of millions of dollars in gifts and grants subsequently poured into the university, including a commitment from AMI to provide $1 million a year to the UCI Medical Center in Orange for indigent care.

However, IMC’s relationship with the UCI Medical School has not developed at the same pace as once predicted. Fewer faculty members see IMC as an eventual successor to UCI Medical Center as the medical school’s main teaching, clinical and research facility.

“They see (the UCI Medical Center) as their primary focus of interest,” said Leon M. Schwartz, administrator of the sprawling Orange facility.

No Significant Factor

“Relations between UCI and AMI are the worst they have ever been,” said one medical school faculty member who asked that his name not be used.

And while IMC is included in merchandising literature for the Irvine Co.’s Spectrum IV development, it has not been a significant factor in attracting biomedical industries to the area.

“We mention it,” said Richard Sim, president of Irvine Office and Industrial Co., a division of the Irvine Co. “We’re delighted it’s there,” Sims said, “but it doesn’t get that much notice.”

The Irvine Co., which donated the site for the hospital to PICH, owns 10 acres adjoining the grounds, which it intends to develop as a 120,000 square-foot medical office building.

Even if IMC opens on schedule, the economic cost of the delays may be telling, although both Gaffney and Baker say they expect the hospital to operate in the black within four years of opening.

Hospitals Abound

“The marketplace looks differently to AMI today than 18 months ago,” Schwartz said. When AMI took over IMC, he said, it was still marketing its own group health maintenance organization, called AMICare, a service it no longer offers.

“While the well-meaning People for an Irvine Community Hospital, spurred at the time by the Irvine Co., claimed Irvine to be the largest city in the state without a hospital,” wrote economic analyst Martin Brower in his newsletter, Orange County Report, “hospitals abound all around the city.”

Occupancy rates at hospitals ringing Irvine have increased dramatically in the last year. Even the UCI Medical Center, which once operated as a drain on the university’s balance sheet, is courting private patients and operating at or near capacity. Saddleback, Mission Community and Tustin Community hospitals have announced major expansion programs, and Kaiser is planning a 500-bed regional facility in Garden Grove that is to be completed within the next five years.

As a result, observers of the county’s medical industry say, much of IMC’s potential market is being nibbled away at the edges every day the facility remains unopened.

Several of these hospitals are planning ambulatory care facilities in Irvine, which will refer patients to facilities outside the city. UCI has an out-patient clinic to be staffed by medical school faculty now under construction on the campus, a facility which is expected to refer most patients to the UCI Medical Center.

Market Too Young

“You need to establish patient referral systems,” said one health planner who asked that his name not be used. “Once referral lines are established, they are very difficult to change,” he said.

There is also concern that Irvine, as a core market for IMC, is too young and too healthy to support a hospital.

“The economics are terrible in that area,” said van den Noort, who led the fight for a campus medical center. “The probability of a successful community hospital in that area is very poor. Anybody would be stupid to build a hospital there now.”

Gaffney disagrees, citing the relative affluence and growth prospects in the areas of obstetrics and pediatrics of the city of nearly 90,000.

“There is probably no area with a better potential from a demographic point of view for starting a new hospital project,” he said. “We see the demographics as being extremely positive from a profitability point of view.”

Focus on ‘Wellness’

Baker sees the increased occupancy rates and expansion of area hospitals as vindication of the economic viability of IMC. The relative youth and fitness of the Irvine population means only that the facility will have to focus on “wellness” and preventive programs, as well as out-patient treatment, like most hospitals in the public and private sector, Baker said.

What happens if AMI withdraws from the IMC project?

Community supporters say they would pick up the project, since the local board has the right of first refusal on the land and approximately $17 million from AMI in the bank. Baker pointed out that the project proceeded once before under similar circumstances, when Hoag withdrew as a partner 18 months ago.

One health care analyst, who asked not to be identified, scoffed at the idea that such a major project could be built by local interests.

While plans for a campus medical center have been killed several times over the past two decades, some dreams die hard, and the one held by van den Noort and others at UCI for such a facility has yet to have a stake driven through its heart.

The former dean of the medical school believes that when the IMC project collapses, the campus medical center could be resuscitated over time in piecemeal fashion--beginning with the faculty clinic--if not instantly resurrected.

“If the IMC project were to stop, I would say that people will start raising that issue,” said Weinstein, the acting dean.

“The enthusiasts for the IMC project are a little embarrassed,” van den Noort said. “I, of course, am delighted. It keeps the field open for the future.”