National Medical Enterprises Will Cut, Relocate Workers

National Medical Enterprises will significantly reduce its 700-employee corporate headquarters staff in Southern California and move many of those jobs to Dallas as part of its $3.3-billion acquisition of American Medical Holdings.

The moves will cut expenses by $20 million, part of $60 million in projected cost savings in the first year after the merger is completed in March, National Medical officials said.

National Medical announced in October that it was acquiring American Medical in a merger that would create the nation’s second-largest hospital chain.

The hospital company will keep its headquarters in Southern California, but the staff will include only senior management and support staff. The company is selling its headquarters building in Santa Monica and is looking at other sites in Southern California for its corporate offices, said Diana Takvim, a company spokeswoman.

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National Medical will establish a service center in Dallas that will oversee operations for the company’s 71 hospitals after the merger.

Michael H. Focht Sr., president and chief operating officer, told employees in a company publication that the decision to keep a Southern California headquarters was made because, “quite frankly, (senior management) wants to remain in Southern California.”

Jeffrey Barbakow, National Medical’s chairman and chief executive, is a resident of Santa Barbara. Twenty-three of the companies’ hospitals are in California.

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Takvim said there will be an unspecified number of layoffs in Santa Monica and the Dallas headquarters of American Medical. Employees who are laid off will receive severance pay based on their length of employment.

Focht said an unspecified number of National Medical employees in Santa Monica will be offered transfers to Dallas. Those who decline will, “in effect, be voluntarily resigning from the company, and no severance package will be provided,” he said.

Takvim noted that American Medical, with 275 corporate employees, operates a “leaner” administrative structure than National Medical. American Medical runs 37 U.S. hospitals, compared to the 34 hospitals of National Medical.

The company said the other $40 million in cost reductions is expected to come primarily from savings on purchasing costs, computer services and improvements in bad-debt collections.