Marina Hills Hospital Will Seek Bankruptcy Protection

In a blow to Los Angeles County’s already overburdened obstetrics system, officials at a South Bay hospital that contracts with the county to handle overflow deliveries announced plans Tuesday to file for Chapter 11 bankruptcy protection while it tries to work out a reorganization plan that would keep it operating.

Marina Hills Hospital in Ladera Heights, a 103-bed acute-care facility, had only one patient Tuesday after being filled to capacity early last week. Hospital officials told employees they will operate “on a day-to-day basis.”

At a hastily called staff meeting Tuesday, Administrator Greg DeFelice told about half of the hospital’s 250 employees they would be paid on a daily basis beginning immediately. Employees were stunned at a meeting last week when DeFelice informed them the hospital could not meet its payroll for the previous three weeks.

DeFelice said employees awaiting back pay would have to wait until bankruptcy proceedings had been approved. He said the hospital’s board of directors may file for bankruptcy as early as today , and he encouraged employees to continue coming to work.

“Your best bet to get paid is to keep working,” he said. “If you don’t work, you can’t get paid. And we can’t pay you unless we remain open.”

The hospital’s near-collapse comes at a time when the county is trying to expand the number of contract facilities for obstetric care. Officials at the county Department of Health Services expect more than 46,000 babies to be delivered at county hospitals this year, severely overtaxing a system designed to deliver 35,000 babies safely. Women’s Hospital at Los Angeles County-USC Medical Center, which has a capacity for about 14,000 deliveries, handled more than 18,000 births last year, more than any other hospital in the nation.

Marina Hills Hospital, which handles mostly Medi-Cal and Medicare patients, recently signed a contract with the county to deliver 50 babies a month. But after the announcement last week that the hospital could not meet its payroll, the county transferred all of its patients to other facilities, and private physicians moved their patients to other hospitals.

“It couldn’t come at a worse time,” said Audrey Bahr, chief of the county’s contracting program. “It’s really a blow to us.”

Under Chapter 11, a company and its subsidiaries may continue operating with protection from creditor demands. However, a lawsuit filed by Maxicare Health Plans Inc. against Marina Hills could complicate the bankruptcy proceedings. Maxicare is suing for approximately $100,000 in premiums owed them for health care coverage provided to hospital employees.

Maxicare sold the hospital operations to Ladera Heights Community Hospital Inc., headed by attorney Lloyd Ingber, in June, 1988, and still owns the building and the land.

Hospital staff members were angered at Tuesday’s announcement, saying that administrators had purposely kept them in the dark about the facility’s shaky financial status.

“It was done in a despicable manner,” said Peggy MacKenzie, an obstetrics nurse at the hospital for the past five years. “We feel a lot of loyalty to this hospital, but we’ve been betrayed. And we are still waiting to hear where all the money went.”

However, several nurses and clerical employees said they would continue to work at the facility until it is determined whether it will remain open. Employees have been working there even though there have been only a few patients to care for during the past few days. The 17 surgeries that were scheduled at the hospital Tuesday were canceled.

“They owe me an awful lot of money but even more, they owe us an explanation for why they kept this from us,” said nurse Barbara Glass. “And they owe this community an apology.”