Hollywood Presbyterian, Queen of Angels to Merge : Freeway Hospital to Shut Down

Financially troubled Hollywood Presbyterian Medical Center intends to merge with Queen of Angels Medical Center in an attempt to ensure the two hospitals’ ability to continue providing care for tens of thousands of Central City residents.

Under the tentative agreement announced today, Queen of Angels would close its aging 404-bed facility overlooking the Hollywood Freeway and would move its patients into Hollywood Presbyterian’s relatively new 395-bed plant on Vermont Avenue.

“We haven’t had the luxury of time to think about what we’ll do with the old building other than turn out the lights,” Richard Smith, chief operating officer at Queen of Angels, said at a press conference announcing the plan, expected to be completed within 30 days.

Letter of Intent

According to officials at both hospitals, they intend immediately to sign a letter of intent securing the plan to merge. Milton Brock, chairman of the Olmsted Memorial Trust that owns Hollywood Presbyterian, said, “Money will be put down this coming Monday.”

The Franciscan Sisters of the Sacred Heart, the Catholic order that owns Queen of Angels, will take over Hollywood Presbyterian’s debt responsibilities. Eventually, the Olmsted Trust and the Franciscan Sisters will jointly own the newly formed Queen of Angels/Hollywood Presbyterian Medical Center.

“We’re both Christian groups,” Brock said of the planned merger of the Presbyterian and Catholic institutions. “We both serve mankind and the community.”

Both hospitals had been operating at less than half their capacity.

Makes More Sense

“They’re 40% occupied and we’re 45% occupied,” Brock said. “It makes sense to bring us together.” He described the planned merger as “a sign of the times. We’re just the first. Los Angeles is overbuilt in hospital beds.”

Hollywood Presbyterian officials have blamed in part the hospital’s shifting patient base for its financial difficulties: As numbers of uninsured and under-insured patients have increased, wealthier patients with private health insurance have gone elsewhere.

In July, the hospital failed to make a $2.75-million debt payment and fell into technical default on $56 million in state-guaranteed bonds, state officials said. The state has been working with the hospital to try to restore its financial health.

Got Three Proposals

As a result of recent merger discussions, the Hollywood Presbyterian board of trustees on Monday received three formal proposals. Childrens Hospital of Los Angeles and a group of Hollywood Presbyterian physicians made offers, in addition to Queen of Angels.

The board decided to “focus merger efforts” on Queen of Angels, officials said. They described that hospital’s proposal as “the most comprehensive in terms of meeting the needs of our patients, our doctors, our staff and our other financial requirements.”

Founded in 1920s

Both hospitals were founded in the mid-1920s and catered for many years to famous members of the Hollywood community. In recent years, however, both have fallen on hard times.

For the fiscal year ending in June, Hollywood Presbyterian experienced a net loss of $11.1 million on net operating revenues of $66.1 million, according to unaudited figures released by the state health planning office.

For the two previous fiscal years, the hospital had an additional total loss of $11.6 million, according to audited figures released by the state.