2 Hospital Firms on List of Possible UCI Partners

UCI Medical Center, struggling to shore up its shaky financial position, has narrowed its choice of possible affiliates to two nationwide private health-care chains, it was announced Wednesday.

Columbia/HCA Healthcare Corp. and Tenet Health Care Corp., both of which already run hospitals and clinics in Orange County, made the short list of possible partners for UCI, said Mark Laret, executive director of the nonprofit medical center.

A public-private partnership “represents the best option for UCI,” Laret said Wednesday after presenting the options to UC regents in San Francisco. “Both have networks right now in Orange County . . . and both are interested in academic programs, clinical programs, giving us more places for our physicians to see patients and more places to carry out our training of residents.”

As further evidence that privatization could come to dominate the UC medical system, the Board of Regents took a major step Wednesday toward privatizing its network of San Francisco teaching hospitals when its health services committee agreed to form a corporation to facilitate a liaison with Stanford University.

The public-private merger is considered the advance guard for what could become a trend in the UC system, as the state-owned medical centers falter under the burden of increased competition from the private managed-care industry and decreased payments from Medicare and MediCal.

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Protesters shouting, “Shame! Shame!” tried to shove their way to the front of the boardroom immediately after the unanimous committee vote, which is expected to receive routine approval by the full board on Friday.

Some of the protesters, held back by a phalanx of at least 20 UC police officers, who outnumbered them, staged an impromptu sit-down. Six of them were arrested and charged with misdemeanors.

The vote came after a contentious year of studying and considering the merger, which would fold the staff and resources of the two medical powerhouses under the umbrella of a private nonprofit corporation.

At UCI, the privatization strategy fits with Laret’s campaign to run UCI “first and foremost as a business.” Beset by some of the same stresses as other academic centers in the UC system and elsewhere, UCI is struggling to recover from an $8-million deficit last fiscal year. Next year, it hopes for a gain of $1 million.

Laret said Wednesday that operating a stand-alone hospital in the managed-care environment is no longer realistic. Cuts to government programs and a reconfigured Medi-Cal program have sapped its financial strength. Affiliations are needed to enhance the patient base and bring in enough revenue to support academic and research programs, officials said.

“We started with a clean slate,” UCI Chancellor Laurel L. Wilkening said. “I didn’t really expect that we would be here today with two investor-owned companies as our [possible] affiliates . . . but frankly, to work with two of the most progressive hospital chains in the country provides us with the most exciting opportunities.”

A final choice is expected to be submitted to the regents by April, she said.

Laret said the affiliation probably would involve leasing the hospital to the private partner, which would assume the risk of managing it. Both UCI officials and the potential partners said the affiliation would not affect the academic mission of the medical school. UCI Medical Center would remain the primary teaching hospital, they said.

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Columbia and Tenet, selected from among nine investor-owned and nonprofit organizations, already are positioned to link UCI into community health-care networks, UCI officials said. Columbia, the largest health-care chain in the United States, operates hospitals in Huntington Beach, Anaheim and San Clemente, as well as four surgery centers in Orange County. Tenet, which recently acquired another chain called OrNda Healthcorp, now owns at least a dozen facilities from Los Alamitos to Irvine.

“I think the expectation is that if we can bring our relationships into the fold, we will open doors for new managed-care contracts,” said Jeffrey P. Winter, Tennessee-based Columbia’s vice president for development.

By the same token, these organizations hope to benefit from UCI’s strong primary care base--its fund of family practitioners, for example.

“We’re very interested in what that would bring to our provider network,” said Tenet Vice President William Leyhe.

Other organizations that negotiated with UC Irvine, including Children’s Hospital of Orange County, Hoag Hospital Presbyterian in Newport Beach and Kaiser Permanente, are pursuing more limited affiliations with the medical center for specific services.

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Union representatives Wednesday were critical of the melding of public and private interests and said employees and patients would lose out.

“Why would [Columbia or Tenet] want to take on this institution that is supposedly falling apart at the seams?” asked Cliff Fried, vice president of University Professional and Technical Employees, which he said represents about 600 UCI Medical Center employees. “They are there to make a profit. They haven’t just become philanthropic organizations overnight.”

The medical center, with 2,400 employees overall, has laid off more than 200 workers over the last eight months because of a declining hospital patient population. And Fried said employees have been given no indication that their positions or salaries will be safeguarded in the privatization process.

In addition, Fried said, he is concerned that information about hospital finances will be more restricted under private management and that whatever board of directors is formed will be dominated by private interests.

Laret said Wednesday that both potential partners had agreed to address employee concerns about unions, employment and retirement and to continue to provide community service in the form of indigent care. A UCI spokeswoman said more specific terms of the affiliation, including board membership, remain to be worked out.

Also contributing to this report was Times staff writer Amy Pyle.