Debate on Hospital Takeover Escalates

Controversy is nothing new in the world of hospital takeovers, but the debate at Catholic-run Queen of Angels-Hollywood Presbyterian Medical Center--stoked by allegations of death threats, a blistering lawsuit and formal intervention by the cardinal himself--is remarkably fierce.

The battle ignited after directors signaled their intention to sell the nonprofit hospital, dedicated largely to care of the poor, to Tenet Healthcare Corp., the nation’s second-largest commercial hospital chain.

The medical staff and the hospital workers’ union strongly opposed commercial ownership and argue that the terms of the potential deal are being improperly kept secret. Even Cardinal Roger Mahony weighed in last month, announcing that he cannot condone the proposed deal.

Such objections have been lodged in other cases across the country as large corporate chains have swallowed nonprofit stand-alone hospitals, but seldom with such force.

With the medical staff’s announcement Thursday of a lawsuit seeking to have the hospital board of directors removed and replaced with court-appointed receivers, tensions flared to new levels. The suit--which does not target Tenet--hints at a long history of animosity between the medical staff and the board, alleging, among other things, that one of the directors once pointed a gun at the medical staff president and another threatened his life.

“These guys, we want them out. Period! They are not fit to govern,” staff President Dr. Moneim Fadali said of his colleagues on the board. He is one of two physician dissidents on the 15-member panel.

“The lawsuit . . . is totally without merit,” Robert Steward, a spokesman for Queen of Angels, said in a prepared statement after a news conference called by the plaintiffs.

“The board of directors and management of the hospital have adhered to the law and to their fiduciary and ethical responsibilities in operating this corporation,” he said. “Instead of working constructively to help assure that this hospital continues to serve the needs of the greater Hollywood community, certain members of the medical staff, regrettably, have chosen to play the role of obstructionists.”

At stake, Steward says, is the hospital’s long-term survival. Although it now has healthy reserves, Queen of Angels, like many independent nonprofits throughout the country, has seen its patient count drop and is attracted to the financial security of a chain. Earlier this year, Tenet was chosen from among seven candidates as the preferred buyer.

The proposed acquisition still must be reviewed and approved by the state attorney general’s office, and at least one public hearing must be held on the matter. But Fadali fears it is a done deal.

Fadali says he is prohibited from disclosing the terms of the deal because of a gag order he was compelled to sign. “There is no disclosure until they finalize everything,” Fadali said. “The community and the physicians will have no time” to intervene.

Tenet officials note that the terms will be public soon, and that Fadali and staff President elect-Dr. Santos Uy Jr., as board members, have been included in the deliberations.

Fadali, Cardinal Mahony and union representatives question whether pursuit of profit is consistent with a mission of charity.

“As health care becomes viewed more as a commodity to be sold for profit rather than as a public good, the basic values and principles which have maintained the integrity of health care delivery have become compromised,” Mahony wrote in a formal statement last month explaining his opposition to the sale to Tenet.

Tenet officials stressed Thursday that the hospital would remain a Catholic facility and provide the same level of charitable services it does today. (In addition, sale proceeds would, by law, be reserved for charitable care.)

“The fact is that Tenet already operates a number of hospitals in low-income neighborhoods. In each and every case, we continue to provide charity care and community benefit and function as responsible health care providers,” said Tenet spokesman Harry Anderson.

Anderson said Tenet operates four other Catholic hospitals, in Omaha, Memphis, Worcester, Mass., and New Orleans. There was controversy in some of these acquisitions, he said, “but nothing to this level [in Hollywood].”

What’s fueling the debate in a larger sense is the need for stand-alone hospitals to find partners, and the struggle of the Catholic Church to define its role in the competitive health care marketplace, he said. “They are forced to be governed more as a business. The old image of nuns running the hospital is outdated.”

At Queen of Angels, however, there are other factors at work. The lawsuit announced Thursday--filed Nov. 14 in Los Angeles County Superior Court--suggests long-simmering animosity between the hospital’s medical staff and the board. In particular, the suit contends that the board has meddled with the medical staff matters, violating its right to “self-governance.”

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The suit accuses nonphysician directors of interfering in peer review procedures--in one case, of allegedly overturning a suspension of a doctor who had improperly removed a patient’s breast.

Perhaps the most dramatic portions of the lawsuit involve descriptions of three incidents in which Fadali alleges he was threatened. The first allegedly occurred during a contentious 1992 meeting, when, according to the suit, one director “drew a concealed pistol and pointed the gun” at Fadali. The two other alleged incidents both occurred this year, when, according to the suit, a second director threatened Fadali’s life and a third pointed his finger at Fadali and said: “I wish I had a gun in my hand.”

“I categorically deny that,” said Dwight Lindholm, the director accused of pulling out the pistol. “That is a figment of his imagination.”

The attorney representing Fadali and the medical staff said Thursday that there has been “friction, on and off, for eight years [between the staff and the directors] but at this point it is as high as it’s ever been.”

The attorney, Daniel H. Willick, said the hospital’s impending sale is the paramount issue. “In my view, the medical staff would have taken this action [based on opposition to the sale alone] whether or not there was a history of conflict,” he said.