Physicians, Investors Make First Payment on Hospital in Chinatown

A group of physicians and other investors took the first step Tuesday toward purchasing Chinatown’s financially troubled French Hospital, which they plan to operate as a for-profit facility.

In a step that hospital President Don Carrico described as the first transaction in a phased four-month escrow, a limited partnership called P.A.M.C. Ltd. made a $750,000 payment Tuesday toward a $4.2-million purchase of the 155-bed facility, the oldest hospital in Los Angeles.

“If that didn’t happen, we were in a close-down mode,” Carrico said.

Lost $3 Million in 1988

The hospital lost $3 million last year, was operating at an estimated $1.4-million deficit this year and was scheduled to close this month if other financial resources or a buyer was not found.

With the new agreement, Carrico said, “The hospital will remain open.”

The news was greeted by mixed reactions around Chinatown, with some concerned whether the physicians group--most of them Chinese-Americans--will be financially able to complete the purchase. Others wondered what effect the hospital’s switch from its present nonprofit status to its new for-profit management will have on relations with the Chinatown community.

Banker Wilbur Woo, who as an executive with Cathay Bank has been involved in many community projects, said he and others were interested in seeing French Hospital become “a community-owned hospital, run by the community. It is now for-profit. So that’s that.”

Throughout its 129-year history, the hospital has been controlled by the French Society, a group formed to serve the medical needs of French immigrants. As Chinatown grew up around the facility at College and Hill streets, the society’s ability and willingness to cater to the local Chinese population was a continuing sensitive issue.

Half of Staff Is Asian

About half the hospital staff and 55% of the patients are Asian. But the hospital has been criticized for not having enough Chinese-speaking personnel and for not serving a selection of Chinese food.

Four of the five directors of the newly formed corporate partnership are Chinese doctors. One of these, Chinatown obstetrician-gynecologist Carl Moy, said the interests of the community are paramount. “This community needs this hospital,” he said.

However, the hospital has been in a precarious financial situation for about three years, which officials attributed to a declining number of patients, a high proportion--close to 90%--of Medicare and Medi-Cal patients and a corresponding drop in revenues because of a drop in government reimbursement rates.

Given the hospital’s problems, Chinatown leaders like accountant Saykin Foo, vice president of the Chinese-American Citizens Alliance, hope that with a for-profit management, “there’ll be an incentive to make it a better hospital.”

The new group is “likely to be more aggressive,” said Bassett Brown, a South-Central Los Angeles physician who is on the new board of directors. The new owners will also bring in “other physicians from the immediate surrounding area,” he said.

The partnership includes 47 investors, 32 of them doctors, according to Christopher Wheeler, an Irvine-based consultant assisting the group. He said he hopes the number will grow to 70, with each investor contributing $50,000 toward the purchase price of the hospital.

Option on Land

In addition to the hospital facility, the group also has an option over the next six years to purchase the two-acre property on which the hospital sits. The site is owned by the French Society and will cost another $10 million--with the price rising $500,000 each year that the option is not exercised.

“I hope we can come up with the money,” said S. Y. Wong, the hospital’s chief of staff and head of the buyer group’s board of directors.

“The deal isn’t done-done,” Wheeler added. “It’s just beginning.”