County Memo Urges Purchase of Hospital in Hollywood : Health care: Buying Queen of Angels/Hollywood Presbyterian would be cheaper than upgrading County-USC Medical Center, some officials say.

Los Angeles County officials are exploring the purchase of Queen of Angels/Hollywood Presbyterian Medical Center to replace aging County-USC Medical Center, according to a confidential memo sent to the Board of Supervisors last month.

Chief Administrative Officer Richard B. Dixon said in the memo, “It appears the county may be in a position to take over the facility at a reasonable cost” if the hospital is unable to become fiscally viable in the next few months. No price was mentioned in the memo.

Hospital President Ron Dahlgren said this week, “We’re not interested in selling,” adding that the hospital’s financial condition has improved since the merger of Queen of Angels and Hollywood Presbyterian last year.

But county Health Director Robert Gates told The Times on Wednesday that the county could take over the hospital from the state, which could foreclose on the facility if the hospital is unable to pay off $76 million in bonds owned by private investors. The bond payments are guaranteed by the state, which assumes the debt if the hospital cannot pay it.

“The state could intervene, even though the management of the hospital does not presently have an interest” in selling, Gates said.

Dahlgren said that county officials have toured the newly modernized hospital at Sunset Boulevard and Vermont Avenue, but that the hospital is interested only in contracting for some services or leasing part of the 433-bed facility.

Supervisors are considering placing a billion-dollar bond issue on the November ballot to raise money for hospital projects.

Dixon said in his April 20 memo that he and Gates believe the purchase would go a long way toward implementing a plan to replace the giant County-USC Medical Center east of downtown Los Angeles.

County officials have said it would probably be cheaper to build a new hospital or buy an existing facility than to bring County-USC up to earthquake and fire standards. Federal officials have ordered the county to install fire alarms and a sprinkler system throughout the complex, which could cost up to $100 million.

In his memo to supervisors, Dixon wrote, “We will be proceeding to negotiate the terms of . . . a transfer unless I hear otherwise from you.”

Supervisor Pete Schabarum made a veiled reference to the county’s interest in the hospital during Tuesday’s board meeting.

Without actually disclosing the topic, Schabarum told Dixon, “I am real concerned about pursuing a subject that is couched in the fashion of ‘unless I hear from you, we’ll go ahead.’ ”

“The concept hasn’t even come close to being discussed on any kind of policy basis with this board,” he said.

Dixon told Schabarum he would talk to him privately about the matter. Dixon did not return calls from The Times.

A spokesman for Schabarum said the supervisor is concerned that purchase of the hospital would make it more difficult to obtain money to build a county hospital in his San Gabriel Valley district. A draft plan submitted to supervisors last year proposed replacing County-USC with a smaller hospital at the same location and a new hospital at an unspecified site in the San Gabriel Valley.

Supervisor Ed Edelman, whose district includes County-USC and Queen of Angels/Hollywood Presbyterian, said he wants the county to study the purchase. “The cost to replace County-USC is close to a billion dollars,” he said, “so alternatives . . . have got to be looked at.”

Dahlgren said, “We have strong feelings from homeowners from this area. . . . They are very committed to seeing the hospital stay as a nonprofit community private hospital. They would be disappointed to see it lost as a health resource for this community.”