ELECTIONS : Finances Create Strong Interest in Usually Dull Hospital Race : Campaign: Nine candidates are running for three board seats. The key issue is a proposed multimillion-dollar modernization.

At first glance, the campaign for the South Bay Hospital District board seems to lack the potential for high drama. The board usually attracts little attention, and many voters are uncertain about exactly what it does.

But this year nine candidates are vying for three seats on the board, and the contest is whipping up unusually strong emotions. Candidates say the race could help shape the future of the 208-bed, district-owned South Bay Hospital near the ocean in Redondo Beach.

At the center of the debate is a proposal that the district channel millions of dollars into modernizing the hospital building. That proposal, made by the national hospital chain that leases the building, has been under scrutiny by the five-member district board and has triggered strong reactions.

Ballots will be cast only by voters in the three cities--Redondo Beach, Hermosa Beach and Manhattan Beach--that compose the district.

But the debate points up some of the dilemmas faced by many small community hospitals nationwide in the 1990s as they are buffeted by an array of forces: intense competition, pressures to upgrade equipment, a large uninsured population and the uncertain direction of U.S. health care.

South Bay Hospital is operated by Dallas-based American Medical International (AMI), a for-profit corporation with 35 hospitals in 12 states, primarily California, Texas and Florida. In the last two years, the chain has sold about 40 hospitals in the United States and overseas but is not contemplating more sales, an AMI spokesman said Friday.

Although AMI runs South Bay Hospital, the building on Prospect Avenue belongs to the hospital district, a public agency that leases it to AMI for $3 million a year. Interest from the rent funds health-care programs in the beach cities, such as one that helps fund school nurses, aides and health education in public and private schools.

The mechanics of this pairing of a public board with a medical corporation has taken center stage this year, particularly in light of AMI’s request for as much as $15 million in financial support to help upgrade the hospital.

Some of the board candidates favor some form of aid to AMI, while others remain skeptical.

Three of those running--Dick Fruin, Aviva Kamin and Dr. Gerald L. Looney--have banded together as a slate that has raised some questions about the merits of the AMI proposal.

Three other candidates--Harlan J. Curwick, incumbent James M. Riewer and Archie Snow--have stressed a need to support AMI to make South Bay Hospital more competitive. The three remaining candidates--Mark Bourgeois, Lori Herold and Ray E. Thomas--have expressed varying views on the AMI issue.

Adding to the debate, the board on Sept. 29 fired Philip Valera, the district’s executive director for 6 1/2 years. Neither Valera nor board President Ken Johnson would comment on reasons for the firing.

Johnson, who has endorsed Curwick, Riewer and Snow, said AMI is losing money at South Bay Hospital and therefore needs help to stay competitive.

“The board feels that more attention has to be paid to the hospital itself,” he said. “Something has to be done to keep the hospital solvent, to keep the operator operating.”

Curwick, Riewer and Snow also have the support of a committee that includes some members of the South Bay Hospital Board of Directors.

Meanwhile, Virginia Fischer, who is stepping down from the board this year after serving 21 years, and Jean McMillan, a member in the 1980s, have endorsed the Fruin-Kamin-Looney slate.

Fischer said this week she thinks that the current board is too closely aligned to AMI.

“My reasoning for supporting specific candidates is, I would like to see a balanced viewpoint,” she said.

Another board member who is stepping down is Eva Snow, wife of candidate Archie Snow. Eva Snow has been on the board eight years.

A key issue in the campaign is how South Bay Hospital should compete with two larger hospitals in nearby Torrance--Little Company of Mary Hospital, a nonprofit Catholic hospital with 396 beds, and Torrance Memorial Medical Center, a nonprofit 340-bed hospital.

South Bay Hospital has been lagging behind the two larger hospitals in numbers of patients served. It had a bed occupancy rate of 25.6% in 1990, compared to 65.4% at Little Company of Mary and 67.5% at Torrance Memorial, according to state figures.

Earlier this year, AMI made a proposal in which it offered to extend its lease for five years beyond the current 2014 expiration date and to spend at least $3.75 million for improvements at the hospital over the next five years.

In return, AMI asked the district to channel $3 million a year into the hospital over the same period.

As much as half of that money would be used to pay the hospital on a monthly basis “for uncompensated health care provided to low-income residents and employees who work in the district,” the proposal stated.

The remaining money could go to a variety of improvements, including building and developing a magnetic resonance imaging (MRI) unit, modernizing the emergency area and renovating parts of the building’s interior, such as the lobby and cafeteria.

“What we’re trying to do is begin a dialogue with the hospital district to get them to infuse capital into the facility so that we can compete with our competitors,” said Dennis Bruns, the hospital’s executive director. “The idea here is to create a partnership with the hospital district and AMI.”

The district board is preparing a counterproposal to AMI’s offer, officials said.

None of the candidates appear to have embraced the AMI proposal in total, although a number say they think that the district should help the hospital.

“It seems to me, the board wasn’t that close to the operator in trying to make that a successful business operation,” said Curwick, who wants to make the hospital more competitive.

Some candidates argue that the current board has been so close-lipped about negotiations with AMI that they lack the information to know if the aid is truly needed.

“Why isn’t that being made public before the election so that people can consider it?” Fruin asked. “I think they’re keeping the public in the dark.”

Johnson said that a district consultant’s recommendations on the AMI proposal have not been made public because they are based on confidential AMI information and that negotiations are ongoing. He said a public hearing would be held on the board’s counterproposal.

Candidates for South Bay Hospital District Board

Nine candidates are vying for three seats.

Mark Bourgeois

Age: 25

Residence: Hermosa Beach

Occupation: Medical case manager, Cigna Insurance

Major issues: Improving hospital services; cutting district “waste and overhead” and putting savings into programs; better publicity of board meetings and district programs.

On aid to AMI: Favors putting some money toward capital improvements at the hospital to make it more competitive; says too many residents feel they have to go to Torrance for good medical care.

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Harlan J. Curwick

Age: 62

Residence: Redondo Beach

Occupation: Retired community development director and planning director, City of Redondo Beach.

Major issues: Re-evaluate and expand funding for senior-citizen programs; more publicity about board activities and district programs.

On aid to AMI: Supports financial support to AMI for hospital capital improvements and medical programs, but needs more information about specific proposals.

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Dick Fruin

Age: 53

Residence: Manhattan Beach

Occupation: Business lawyer with Arter, Hadden, Lawler, Felix & Hall; district board member, 1980-84.

Major issues: Wants to study whether district can provide subsidies for basic care such as well-baby checkups or inoculations; involving more people in district activities; promoting wellness programs.

On aid to AMI: Opposes further financial help to AMI for capital investment. Instead supports spending money on community health-care programs that would benefit hospital.

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Lori Herold

Age: 39

Residence: Hermosa Beach

Occupation: Real estate agent, Guy Hocker Realtors

Major issues: Working together with AMI to improve the hospital; continue focus on programs aimed at youth; bringing “fresh new leadership” to the district.

On aid to AMI: Believes district should help fund capital improvements and state-of-the-art equipment.

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Aviva Kamin

Age: 59

Residence: Manhattan Beach

Occupation: Counseling psychologist; commissioner of Western State Conference, which oversees athletics for one region of California community colleges.

Major issues: Maintaining programs funded by district; creating blue-ribbon panel to help guide district and hospital; more open board activities and better publicity about grants program.

On aid to AMI: Opposes proposal to provide $15 million over five years. Needs more information before deciding whether AMI should get any financial aid from district.

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Gerald L. Looney

Age: 54

Residence: Redondo Beach

Occupation: Physician and medical director, Advantage Care, an industrial medicine clinic.

Major issues: Concerned why current board fired executive director shortly before election; criticizes board’s “secretive” dealings with AMI; believes district must keep abreast of changes in state and national approaches to financing health care.

On aid to AMI: Would be willing to listen to AMI but currently sees no need for the board to give or loan AMI $3 million annually.

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James M. Riewer

Age: 72

Residence: Redondo Beach

Occupation: Retired school administrator, South Bay Union High School District; hospital district board member in the 1970s; currently on the board as appointee.

Major issues: Hospital’s viability; careful management of growing district reserves; analyzing cost-effectiveness of programs funded by the district.

On aid to AMI: If no alternative can be found, would support financial support for specified construction or equipment purchases to keep hospital services competitive.

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Archie Snow

Age: 74

Residence: Redondo Beach

Occupation: Retired test engineer, Wyle Laboratories; Redondo Beach city councilman, 1981-89.

Major issues: Improving hospital by helping add items such as a magnetic resonance imaging (MRI) device; having the district spend less on lawyers and consultants; cable-casting board meetings.

On aid to AMI: Supports help through long-term, low-interest loan to upgrade facilities.

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Ray E. Thomas

Age: 43

Residence: Redondo Beach

Occupation: Purchasing agent and chemist, West Coast Button Manufacturing

Major issues: Resolving funding for hospital; reducing overhead of district operations and channeling savings into programs; paying more attention to programs to reduce drug use among youth.

On aid to AMI: Wants further study of whether aid is needed; would support a loan if mandatory to keep hospital operating.

South Bay Hospital District at a Glance

The hospital district is a government agency that owns the 208-bed South Bay Hospital in Redondo Beach. The district is made up of Redondo Beach, Hermosa Beach and Manhattan Beach.

History: The district was formed in 1955 to build and operate a community hospital. It leased the hospital in 1984 to the for-profit American Medical International (AMI) chain for 30 years. It receives $3 million annually in rent.

Programs: The district uses interest from a $27-million investment portfolio to help finance health-related programs and agencies in the beach cities. It distributed $1.8 million in grants in the last fiscal year.

District board: Five members elected from the three beach cities. Three seats will be filled in the Nov. 3 election.