St. Jude Hospital Yorba Linda Ponders Closing or Role Change

Beset with mounting losses and a shrinking clientele, the Roman Catholic order that owns St. Jude Hospital Yorba Linda is weighing whether to close the community hospital or convert it to another use, administrators said Thursday.

Among the possibilities being explored are closing, selling or converting the 106-bed hospital to a psychiatric facility, or dedicating it to “elder care,” said Thomas J. Porath, vice president of St. Joseph Health System, the holding company for the eight hospitals owned by the Sisters of St. Joseph of Orange.

“I think probably a decision will be made in the next couple of months,” said hospital administrator Sister Diane Hejna. “We’ve been evaluating this over the last year.”

Rumors of an impending shutdown at St. Jude Yorba Linda have raced through the medical community in recent weeks, prompting at least six doctors to stop delivering babies there and some nurses to sign on with other hospitals.

Three of the hospital’s top four executives, including the president, chief financial officer and head of marketing, have also departed within the last several months and have not been replaced, Porath confirmed.

Local physicians interpret these moves to mean that the hospital is up for sale, according to Dr. Donald Henderson, whose Yorba Linda office of six obstetricians decided six weeks ago to stop delivering at the hospital because of the uncertainty.

“People are leaving all over the place . . . because the rumors (of a shutdown) are not being denied,” Henderson said. “They’re not saying, ‘Of course we’re not closing.’ They’re not trying to get people to stay.”

Hejna denied that the hospital has lost staff or nurses. She said the 232 employees, including nurses, technicians and clerical staff, have been told of the discussions over the hospital’s future.

“I’ve just tried to be open, to say we are looking at all the alternatives,” she said. “Since no decision has been made, there’s nothing else to say.”

The hospital began life as Esperanza Intercommunity Hospital in 1972--the same year that its closest competitor, Placentia-Linda Community Hospital, opened its doors just three-quarters of a mile away.

In 1981, Esperanza was purchased by the Sisters of St. Joseph of Orange for a price estimated at between $15 million and $20 million. The sisters, who also own St. Jude Hospital and Rehabilitation Center in Fullerton and St. Joseph Hospital in Orange, rechristened it St. Jude Hospital Yorba Linda.

The hospital has a bustling maternity ward, where about 90 babies are born each month; a chemical dependency treatment unit; surgical care, and an emergency room that handles 800 to 900 patients per month, Hejna said.

But the not-for-profit hospital has been losing money ever since 1981, Porath confirmed. He would not say how much the hospital has cost the order but called the losses “significant.”

In addition, the patient count has decreased by about 30% since 1988.

Hejna and Porath were reluctant to discuss the hospital’s plight in detail. They attributed the financial problems to stiff competition among Orange County hospitals, and systemic problems that have plagued hospitals across the country--the growing trend toward more outpatient treatment, shorter hospital stays and low levels of reimbursement for patient care.

Roughly half of the hospitals in California are losing money, and so are roughly half of the hospitals in Orange County, said S. Russell Inglish, regional director for the Southern California Hospital Council. He could not say which other local hospitals might also be financially troubled.

Gayle Bullock, who resigned as president of St. Jude Yorba Linda in July and is now a senior vice president at Long Beach Memorial Hospital, said that when she left, the hospital was trying to find a way to keep going.

She explained that hospitals of 150 beds or less are most vulnerable to financial losses from charity cases, uncompensated care and lower insurance reimbursements.

“There’s less margin to take a major hit from an uncompensated care case, particularly for those of us in Catholic hospitals and nonprofit hospitals that don’t deny access to care based on financial status,” Bullock said, adding:

“If someone comes to the emergency room and needs care and can’t pay, we don’t deny them.”

Dr. Gregg DeNicola, a family physician in Yorba Linda who admits 10 or more patients a month to the hospital, said he was saddened when administrators told him that there is a possibility that the hospital might close, perhaps at the end of this year.

“They have a very outstanding nursing staff, and, although some people think it shouldn’t matter, they have a nice ambience,” DeNicola said. “They treated patients with dignity and they did a lot for the community.”

Lin Baker, the chief executive officer at Placentia-Linda Community Hospital, said his hospital is planning for a possible surge in patients--including more emergency room visits--if the shutdown rumors prove true.

He said Placentia-Linda could absorb St. Jude Yorba Linda’s patients “very capably,” adding that his hospital recently has spent $250,000 to $300,000 to modernize, upgrade and redecorate its maternity unit, he said.

In the last three weeks, Baker said, the hospital has hired between five and 10 nurses from St. Jude Yorba Linda.

“If the rumors prove out, we’d be the only hospital in the Placentia-Yorba Linda area,” he said. The two cities have a combined population of 87,200.

“We have a real young, family marketplace out here, and they’re healthy,” Baker explained. “And the demand for hospitalization has not been (enough) to support two hospitals within a mile distance of each other.”