Frawley Corp. Closes Santa Barbara Hospital

Encino-based Frawley Corp. permanently closed its Schick Shadel Hospital in Santa Barbara on June 13, according to documents filed with the Securities and Exchange Commission. The company attributed the closure to a shrinking patient base in a rapidly changing health-care environment.

According to the documents, the hospital lost $412,000 in 1993, and sustained further losses of $200,000 during the first four months of 1994. The hospital specialized in treating chemical dependencies from August, 1978, until June, 1993, when it was converted to a psychiatric care facility. The single-service orientation made it difficult to survive in a managed health-care environment, the company said.

“Insurance carriers’ increasing restriction on health insurance coverage for chemical dependency and mental health treatment produced increasing difficulties in attracting patients,” the company said in the SEC filing.

The company also said it had been hurt by an increased emphasis on outpatient care.

Frawley said it plans to sell the free-standing hospital, and two others it owns in Seattle and Dallas, while continuing to open operations in large acute-care hospitals “where cost savings will result from shared expenses plus greater access to patient flow.” The company recently opened a unit at St. Mary Medical Center in Long Beach, said Betty R. Hurn, chief financial officer of Frawley.