Chain to Shift Headquarters to Las Vegas : Mental health: Community Psychiatric Centers of Laguna Hills will soften blow locally by moving 30 jobs here from L.A.
Community Psychiatric Centers said Monday that it hopes to save more than $2 million a year by relocating its headquarters to Las Vegas and consolidating some operations.
Besides moving its corporate offices from Laguna Hills, Community Psychiatric is consolidating three divisions now based in different parts of the nation, said Richard Conte, chief executive officer. Doing so in Las Vegas, rather than in Orange County, will be less expensive, Conte said.
The company owns eight acres in Las Vegas, where construction, labor and housing costs are all less expensive than here. “Every penny counts in the hospital business,” Conte said.
Within 18 months, the company said, it will move about 50 headquarters jobs out of Orange County. Transitional Hospitals Corp., an Atlanta division of about 70 people, will join the headquarters staff in Las Vegas. And a billing office of about 80 to 100 people will be created at the new site.
The blow to Orange County employment will be softened, however, because the company will transfer its managed care division--about 30 people--from Los Angeles to the Laguna Hills site.
Community Psychiatric, which is the nation’s third-largest chain of private psychiatric hospitals, has been restructuring itself since Conte took the helm two years ago from his father, James.
Of the top 20 managers, 18 are new. In February, two brokerages--Salomon Brothers and Oppenheimer & Co. Inc.--upgraded their recommendations of Community Psychiatric stock to a “buy.”
Reasons for the “buy” rating, according to analysts Lori Price and Kathleen Baxley, who prepared the Oppenheimer report, include the “firing of weak hospital administrators” and the launching of the Transitional Hospitals Corp. division.
The division, which was formed in late 1992, runs subacute hospitals, which house patients who may be moved from full-service hospitals but who are still very ill. The company has 12 subacute hospitals in 10 states, including one adjacent to the site of its new Las Vegas headquarters. This summer, Community Psychiatric said, it will finish converting its former psychiatric hospital in Brea to a subacute care unit.
Though Community Psychiatric posted profits for three of the four quarters in its 1993 fiscal year, it never overcame a $37.9-million loss for the first quarter, when it took a restructuring charge of nearly $55 million after the sale or closure of some psychiatric hospitals. For the year, the company reported a loss of $24.8 million on revenue of $335.6 million.
In addition to its financial woes, the company was plagued during the past two years by an insurance fraud probe in Texas and lawsuits by several former employees who said they were fired for reporting that some workers’ credentials were faked by their superiors.
Community Psychiatric was not fined in the Texas case, although three other hospital companies were. And it has settled the complaints by the former employees, spokeswoman Suzanne Hovdey said.
