Hospital Considers Ties to Ease Financial Woes

Financially troubled Hollywood Presbyterian Medical Center is exploring the possibility of an “expanded relationship” with nearby Childrens Hospital of Los Angeles as well as other area institutions as a means of reversing its mounting fiscal woes.

“Absolutely no decisions have been made,” said Allene Nungesser, the medical center’s chief executive officer, of the “preliminary” discussions. “The institution is looking at ways to strengthen itself. We are not going to do anything precipitous.”

Hollywood Presbyterian failed to make a $2.75-million debt payment due July 1 and is now in technical default on $56 million in state guaranteed bonds, according to the Office of Statewide Health Planning and Development .

Officials of the state agency have been working with Hollywood Presbyterian for six months to try to restore its financial health and avert further failed payments.

Hollywood Presbyterian staff members were told last week of the 395-bed nonprofit facility’s “effort to seek stronger financial linkages,” according to a letter to hospital physicians from Trustee Ray Wilson. A copy of the letter was made available to The Times.

Plans Not Clear

The letter did not explain what was meant by “an expanded relationship.” Nungesser said such a relationship might involve a merger or a leasing of space at Hollywood Presbyterian by another hospital, depending on the institutions involved.

Childrens Hospital, whose campus is across De Longpre Avenue from Hollywood Presbyterian, was asked to indicate by the end of October if it wished to pursue the discussions. Other institutions that have been approached were not named; Nungesser said they were fewer than 10.

“We are presently very seriously looking at (the matter),” said James Yoshioka chief executive officer at Childrens Hospital. “It would obviously be a very big undertaking for us. . . . We have to decide if it would be a good marriage.”

Yoshioka said Childrens Hospital, at 4650 Sunset Blvd., is “doing OK” financially. In 1987, for example, the occupancy rate of the 331-bed nonprofit facility was 71.6%, compared to an occupancy rate of 59.5% at Hollywood Presbyterian, according to reports filed with the Office of Statewide Health Planning and Development.

Discussions Halted

This spring, Childrens Hospital and Orthopaedic Hospital, at 2400 South Flower St., discussed a possible merger but nothing came of the discussions, according to Childrens officials.

For the fiscal year ending in June, Hollywood Presbyterian, at 1300 N. Vermont Ave., suffered a net loss of $11.1 million on net operating revenues of $66.1 million, according to unaudited figures released by the Office of Statewide Health Planning and Development. Hospital officials blame their financial difficulties on changing demographics that have caused patients with private health insurance to go elsewhere and an expensive building program, which has saddled the institution with a large debt.

Hollywood Presbyterian is owned by a group of seven Presbyterian trustees known as the Olmsted Memorial Trust, chaired by Milton J. Brock Jr., a retired builder. It is operated by a 35-member Board of Governors, chaired by Ray Wilson, a retired construction executive.