General Hospital Succumbs to Money Woes


San Diego General Hospital’s last patients will be transferred to Coronado Hospital and various nursing homes today, marking the end of its long struggle to continue as Southeast San Diego’s only hospital.

The 24 chronically ill hospital patients and 68 nursing home patients will be moved from the hospital by 2 p.m. Saturday, said Sylvester Davis, a senior Medi-Cal administrator for Southern California. Most had been moved by Friday afternoon.

The transfers mark the end of a yearlong struggle to keep the hospital open, even as it piled up more than $15 million in unpaid bills to suppliers and taxing agencies.

It was greeted with sadness by community leaders who have tried for years to boost the hospital’s flagging fortunes.

“It’s painful and disappointing that the hospital is closing. The community and the indigents needed this facility,” said City Councilman Wes Pratt. “It’s a shame we can spend billions liberating Kuwait but we can’t find the funds to free our citizens from disease and inadequate health care right here in America.”


The closure could mark the beginning of other financial action against the hospital’s owners, who are behind in their mortgage payments to National Medical Enterprises. NME sold the hospital to them in August, 1989.

Donald Thayer, senior vice president for acquisition at NME, said the company “tried to give them every chance to make it.”

No action on past-due payments has been taken yet, Thayer said.

Officials of the beleaguered hospital asked the state Thursday to suspend its operating license because last-minute negotiations to sell it to a New York company had fallen through.

The license suspension can last up to one year, said Ernie Trujillo, the state’s chief of licensing and certification for San Diego.

San Diego General’s 400 employees went unpaid Friday and will remain without paychecks at least until early next week, said Norm Martin, a consultant who has been serving as hospital spokesman.

Meanwhile, Trujillo’s office and state Medi-Cal officials are supervising the patient transfers to assure proper care as the hospital shuts down.

On Friday, Trujillo’s office quickly approved licensing changes allowing Coronado Hospital to move patients in its nursing-home wing to a new nursing home across the street, 2 1/2 weeks ahead of schedule, said Katie Aaron, director of community services.

Vacated nursing-home beds are being converted to regular hospital beds to accommodate the San Diego General patients, Aaron said.

State licensing officials put the number of these chronically ill patients, some of whom are on respirators, at 23. Medi-Cal officials said the number is 24. San Diego General officials could not be reached to resolve the discrepancy.

Martin said San Diego General’s employees are being furloughed while the owners continue to try to find a way to reopen the hospital.

“We estimate there will be money coming in next week to meet the payroll,” Martin said. The hospital expects to have $2 million to $3 million in accounts receivable collected soon, he said.

But the situation continues to look insoluble for the small, privately held health-care firm that bought the hospital 18 months ago. Principals in the firm are Benjamin Davis Jr. of Coronado and John Motte of Riverside County.

When health conglomerate NME sold the hospital to them, there was widespread skepticism that such a small company could make a going concern of the hospital when mammoth NME couldn’t.

But hope--buoyed by the hospital’s sustenance through numerous financial crises since its founding in 1972--eventually led to public and private endorsements of the sale.

By last summer, there already were indications that it wasn’t working out.

Employees, doctors and community leaders were complaining that the new owners’ spending policies, particularly compensation for corporate officers, were further undermining the hospital’s financial footing.

For the second quarters of both 1989 and 1990, the hospital failed to pay nearly $1.4 million in withheld taxes to the Internal Revenue Service, according to IRS liens filed against the owners in November.

Another $555,000 was unpaid for the third quarter of 1990, bringing the total IRS liens filed to more than $1.9 million.

The liens were filed against Christian Hospital of San Diego, the corporate name that never was used for the hospital after the new owners took it over.

Then, the hospital closed its emergency room in early February, effectively ending its source for admissions.

As financial troubles mounted, administrators of other hospitals declined to help save San Diego General as long as it remained a for-profit facility, said James Lott, executive director of the Hospital Council of San Diego and Imperial Counties, a trade group.

“They have not been able to understand why (the owners) didn’t move the facility to a nonprofit status sooner,” Lott said. “If they had done that, they would have been eligible for certain government bailout funding, and it would have made it a lot easier for the community hospitals to help support the facility.”

Lott had called publicly for conversion to nonprofit status last summer, and San Diego General administrators agreed to that in principle, but the conversion never occurred.

County Supervisor Leon Williams, a strong advocate for the hospital in the past, said the county and city have exhausted their ideas and resources for trying to save the hospital.

“We’ve done everything we know how to do,” Williams said. “There’s nothing else we can do.”

The hospital was built with city assistance in 1972 as Community Hospital of San Diego.

It quickly got into money troubles, though, because its patient population was largely uninsured or under-insured. After it closed briefly, the hospital was leased and operated by NME through the 1980s as San Diego Physicians & Surgeons Hospital.

Through complicated transactions approved by the city, NME acquired control of the hospital and property in 1989, then financed the purchase by the existing owners the same year.