Alhambra to Sell Hospital to Doctors If Voters OK It

City officials have agreed to sell the financially plagued Alhambra Community Hospital to a group of doctors if voters approve the idea in a special election.

On Tuesday, the City Council and the city Redevelopment Agency board decided to sell the 157-bed hospital at 100 S. Raymond Ave. to Alhambra Health Partners, composed of 81 doctors who work at the hospital.

Although the agency owns the hospital, the council’s approval was also needed, said City Manager Kevin Murphy. If the hospital board approves the agreement, it is to be signed by the mayor and hospital authorities by Friday, he said.

If approved by voters, the $13.6-million sale would transform the nonprofit facility into a private, for-profit hospital, said Ron Dahlgren, the hospital’s administrator and chief executive officer of the doctors’ group.

Except for tentative plans to save money by closing a pharmacy and medical supply store near the hospital, there are no plans to reduce patient services and none to increase patient fees, Dahlgren said.

City to Be Reimbursed

The doctors’ group will reimburse the city $30,000 for the special election, which is proposed for the first week in August, Dahlgren said.

The sale is crucial to the survival of the hospital, said Euphemia Rybicki, a hospital board member. “I would feel dreadful if that hospital were to close,” she said.

A group of doctors opened the hospital in the 1920s at 206 S. Garfield Ave., near downtown. A new hospital was built on the Raymond Avenue site in 1974 as part of a $11.2-million redevelopment project.

The Redevelopment Agency then became the owner of the hospital. The agency leases the building to the city, which subleases it to the Alhambra Hospital Corp.

In 1981 the hospital, facing debts of $4.3 million, declared bankruptcy. Two years later it made arrangements to begin paying back rent to the city.

Since 1986, when the corporation hired Alhambra Health Partners to manage the hospital, the facility has been operating at a break-even point except for the last few months, Dahlgren said.

Cutbacks in Medicare and Medi-Cal payments, coupled with the cost of providing uncompensated care to patients with no health insurance, have recently resulted in cash-flow problems and financial losses, Dahlgren said.

Since February, the hospital has been unable to pay its monthly rent of $103,000 to the city, Dahlgren said.

Its experience is typical of the dilemma facing hospitals nationwide, he said.

In California, for example, Medicare payments now cover 96.3% of the cost of providing care, and Medi-Cal payments cover 66.7%, said Lori Aldrete, a spokeswoman for the California Assn. of Hospitals and Health Systems, a Sacramento-based lobbying organization.

‘Hospitals Are Losing’

“When the government is paying less than cost, then all of a sudden hospitals are losing money,” Aldrete said.

Alhambra Community has been especially hard hit by the cutbacks because 70% of the hospital’s patients are under Medicare, said the Rev. George Cummings, treasurer of the hospital board.

The hospital’s occupancy rate has been running at 35%. City officials estimate that a 65% to 70% occupancy rate is needed to break even.

To save the hospital from default, the board decided to sell to the doctors’ group, which represents 27% of the 300 doctors who are affiliated with the facility.

“We felt the ownership would commit them more to using this hospital,” Dahlgren said. He said the doctors, most of whom live within five miles of the hospital, want to buy it so they will have a suitable place to practice.

The possible sale is welcomed by city officials.

“It’s my understanding that the group of doctors would keep it as a community hospital,” said Councilman Boyd Condie. “I don’t think we’re losing anything.”

Benefit to City

City Manager Murphy said the sale would help strengthen city finances by allowing the Redevelopment Agency to retire a 30-year bond issue that financed the construction.

In the past, the bond obligation has complicated financing proposals for other redevelopment projects, he said.

The hospital corporation plans to buy the facility from the Redevelopment Agency for $10.6 million and would sell it to the doctors’ group for $13.6 million, said board member Cummings. The corporation would use the $3-million difference to start a foundation that would support health programs for the community, he said.

“I think it’s a great step forward,” Cummings said. “Everybody is a winner in this.”