COVER STORY : Operating Anew : The Earthquake Put Plans for Restructuring at St. John’s Hospital on Fast Forward, but Workers Who Lost Their Jobs Question the Cost

It had become one of the Los Angeles area’s best-known hospitals: home to the John Wayne Cancer Institute, the Joyce Eisenberg Keefer Breast Center and--yes, on occasion--to such celebrity patients as Liz Taylor and Michael Jackson.

Then came the Jan. 17 earthquake. Because of what happened in those fateful 31 seconds, St. John’s Hospital--Santa Monica’s biggest employer and arguably among the country’s highest-profile health centers--must suddenly reinvent itself. The temblor opened severe structural cracks along the length of the hospital’s main building and devastated the north wing, prompting the closure of all inpatient services and the furlough of 1,750 of St. John’s 2,050 employees.

Simply replacing broken buildings isn’t enough, St. John’s officials say. With U.S. medicine moving toward a more cost-conscious system of managed care, the hospital has decided it must fundamentally restructure itself, making adjustments immediately that it had planned to phase in over a decade or more.

In some ways, the earthquake has helped St. John’s administrators in that task, giving them a freer hand, for instance, to make two such changes--paring the payroll and emphasizing outpatient care. Largely due to the quake, hospital officials also may consider consolidating certain services--and perhaps even a merger--with Santa Monica Hospital Medical Center.

“Aside from the people-pain that is very real and tragic, St. John’s has been dealt a hand of four aces to better serve the community,” said Bruce Lamoureux, the hospital’s chief operating officer.

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But that’s small consolation to employees whose jobs have been lost. Because St. John’s appears likely to rebuild itself in a dramatically different image, many of these workers fear they may never be part of the hospital’s new health care plans.

Indeed, some employees accuse the hospital of being overzealous in its post-earthquake cost-cutting plans. They question the assurances by administrators that the hospital will rehire as many former employees as possible to re-create the family spirit and nurturing care that have won St. John’s a reputation for outstanding inpatient services.

“They used this to get rid of expensive labor,” said a nurse with more than 10 years at St. John’s, who asked to remain anonymous. “I am really upset and angry. Why the hell would they hire me with 10 years’ experience and five weeks of vacation a year over someone at entry-level pay?”

St. John’s has long been considered a leading hospital, and not just because it has cared for celebrity patients. Besides serving as home to the John Wayne Cancer Institute and the Joyce Eisenberg Keefer Breast Center, it has highly respected orthopedics, cardiology and obstetrics and gynecological units, among other services.

“It is one of the best hospitals in L.A. County and, in fact, in the world, because people come from all over for treatment,” said David Langness, vice president of the Hospital Council of Southern California.

Still, St. John’s--which is operated by the Sisters of Charity of Leavenworth, a Kansas-based Roman Catholic order--had already begun reshaping itself before the Jan. 17 quake.

Hospital occupancy rates have dropped steadily in California since the 1950s, and St. John’s 501-bed facility had been operating at 50% capacity for some time. That trend has accelerated over the years with the increased use of outpatient surgery. And it is expected to continue under the health reform initiatives proposed by the Clinton Administration.

Not long before the earthquake, administrators offered a buyout program through which employees could retire early and receive a severance benefit. Seventy-nine employees signed up for the program, called the Very Special Person’s Package. In another cost-cutting move, the hospital had begun “labor pooling” both licensed and unlicensed staff so they could perform a variety of tasks. Respiratory care therapists were cross-trained in non-licensed nursing functions such as electrocardiograms and phlebotomy. Laundry and patient transport staff were also cross-trained, with resulting wage increases.

And St. John’s has been at the forefront of efforts to offer outpatient--rather than more expensive inpatient--care.

As long ago as the late ‘70s, it opened an ambulatory care center--the first in Los Angeles County--prompting industry specialists to dub Sister Marie Madeleine Shonka, president and chief executive officer of St. John’s, a health care “visionary.”

To expand such services, the hospital last year proposed building a 1,100-square-foot ambulatory care center just across Santa Monica Boulevard that would have featured a surgery center, magnetic resonance imaging, radiation oncology, CAT scans and other imaging.

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“We, like all other providers, were looking at how the health care reform package, the market and the ultimate government-involved product was going to affect St. John’s for the future,” Lamoureux said. “We were doing a number of substantial reconfigurations of the way things were being done at the hospital.”

The hospital had hoped to make such changes seamlessly over seven to 10 years, but the earthquake has forced an immediate restructuring.

The temblor caused an estimated $20 million in damage to the hospital, which includes a main building and four wings. The north wing, which housed neonatal intensive care, obstetrics, a nursery, a chemical dependency center, transitional care and medical-surgical beds, has been condemned. The main building, site of administrative offices and the maternity ward, was severely damaged and must be repaired, although the offices remain in use. The South Wing was damaged but is scheduled to reopen in August, after repairs are complete, with about 150 inpatient beds.

The quake forced the evacuation of about 300 patients. About 200 were checked into nearby hospitals and 100 were sent home.

But the harshest effect of St. John’s closing, all agree, has been on employees.

On Feb. 7, some 1,750 employees lost their jobs--the vast majority of them nurses, physical therapists, lab technicians and such support staffers as registry clerks, custodians, food-, laundry- and patient-transport employees and security guards.

The employees were given a graduated severance package, with health benefits through April and wages through Feb. 5, even though the hospital closed Jan. 20. A $300 cash bonus was paid to those who worked during the earthquake and evacuation. About 250 employees were retained to run the hospital’s outpatient services in the still-functioning west and east wings.

Initially, administrators told employees they would not be given priority over other applicants for future jobs and that, if rehired, they would not retain their seniority. After weeks of employee complaints, however, the administrators backed down on both counts.

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Some of the severed employees have landed on their feet, finding work at surrounding hospitals including Santa Monica Hospital, UCLA Medical Center, Cedars-Sinai Medical Center, Brotman Medical Center in Culver City and Century City Hospital.

Most of those jobs are temporary, however.

Intensive-care nurse Mary Tomassini, a 34-year veteran of St. John’s nicknamed “Big Red,” found temporary work at Daniel Freeman Marina Hospital in Marina del Rey.

“I lost my complete family,” said Tomassini, who has already reapplied for a job at St. John’s. “It’s been my whole life. It’s like a marriage. You go back to patch things up.”

Tomassini now earns $1,224 for a 50-hour week, just a shade less than her St. John’s pay of $1,228.80 for the same hours. But like the other 15 nurses who took temporary jobs at Daniel Freeman Marina, she no longer has benefits such as a health plan or vacation pay.

Some nurses have fared worse.

A nursing supervisor, who asked not to be identified, said she now finds herself applying for jobs that pay $23 an hour, compared to the $30 an hour she received at St. John’s.

“Many hospitals are cutting back on nurses because of health care reform. And because of the increase in outpatient services, they are using vocational nurses and nurses’ aides,” she said. “That is what they were doing at St. John’s. They were using vocational nurses and aides after the buyout. . . . I’ve been looking for a job since the earthquake, collecting unemployment and worrying about my mortgage.”

About a third of the terminated jobs at St. John’s belonged to non-professional staffers. Lamoureux said these workers will probably have the hardest time finding employment because their jobs revolve largely around inpatient care, which is being reduced as hospitals move to boost outpatient services.

After a recent St. John’s employee meeting in the courtyard, Elia Martinez, a 34-year employee in the hospital’s laundry, was not heartened by what she had heard.

“I am afraid they are going to hire new employees with no insurance (and) no benefits because it is cheaper,” she said. “All of my life I have had only this job. It’s hard (for me) to look for work someplace else.”

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Doctors with privileges at St. John’s have also been affected.

Dr. Michael Lieber, a pulmonary disease and critical-care specialist who is called in as a consultant by physicians, is part of a group practice whose medical offices are next to St. John’s.

“We used to use four hospitals,” Lieber said. “Now we are operating out of eight. It’s a lot of driving time and it gets tiring, especially with the freeways still down. St. John’s is a preferred hospital with good critical-care specialists. I hope it’s up and running a soon as possible.”

Dr. Jon Matsunaga, an obstetrician whose physicians group has a medical office next door to St. John’s, said he is concerned that the hospital’s entire obstetrics and gynecological ward might be eliminated.

Even if the ward is rebuilt, Matsunaga worries that future cost-cutting might hurt the hospital’s much-admired nursing care.

“We prefer St. John’s,” said Matsunaga, a member of the St. John’s obstetrics and gynecological executive committee. “And one of the reasons, we explain to our patients, is that the nursing care is exceptional.”

Matsunaga also fears a scaled-down St. John’s could limit local residents’ health care options. The quake, he said, has underscored the potential for such a problem by interrupting hospital service both at St. John’s and at nearby Santa Monica Hospital Medical Center, which is functioning at less than half its capacity.

“St. John’s closing is having a major impact on the community,” he said. “To lose one-and-a-half hospitals is leaving (the community) without medical care.”

Sister Marie Madeleine said St. John’s will never again employ the 2,050 staff it once had. She said it is unlikely the staff will ever exceed 1,000, but said the downsizing will not compromise care.

“This is the challenge of a new life,” she said. “To build the hospital of the future, to meet the community needs and have the flexibility to do it. It may be smaller. But it will be better.”

Although plans for the ambulatory care center have been dashed with the earthquake, administrators have fast-forwarded their once-distant plans to convert some of the hospital’s towers to outpatient facilities. Also being discussed is construction of a cluster of free-standing outpatient clinics that would offer dentistry, outpatient surgery and radiation oncology, among other services.

Whatever the final plan, it will likely be shaped with help from Santa Monica Hospital Medical Center, once a fierce competitor of St. John’s. Administrators from the two hospitals have already begun brainstorming about the possibility of joining forces, among other proposals.

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Santa Monica Hospital suffered an estimated $15 million in quake damage, losing more than half of its 365 inpatient beds. Repairs are expected to be complete in October.

“This is a little touchy in the sense that these two hospitals have had a very long history of being competitive,” said William D. Parente, president and chief executive officer of Santa Monica Hospital. “Maybe there can be one grand hospital in the community. I hope we don’t just rebuild these hospitals to mirror each other. We’re willing to say, ‘OK, we’ll hold off doing anything until we see what should be done overall for the community.’ ”

That process could bring major changes if local hospitals heed Leland Kaiser, a professor of hospital administration at the University of Colorado at Denver and a well-known futurist.

“Expect your patient census to drop another 30%,” Kaiser said in a recent talk to the St. John’s and Santa Monica Hospital staffs. “Our challenge now is to move into health education, ambulatory care, prevention and into the neighborhoods to get to know your community.

“Now is the time to think about a hospital without walls. The Lord just brought the roof down. And a few years from now, I think you will be saying it was the best thing that happened to you.”