Money Woes Force Closure of Pacifica Hospital

Unable to make money, owners of the 98-bed Pacifica Hospital in Huntington Beach abruptly shut its emergency room at noon Tuesday and said they would close the hospital completely on Monday.

About 325 full-time and part-time employees will lose their jobs, and about 40 patients will be transferred to other hospitals, Pacifica officials said. Neither employees nor patients had warning of the closing.

Many workers were shocked and embittered. One employee dressed in operating-room greens left the building and spit in apparent disgust on the sidewalk near twin flagpoles displaying the American flag and the blue-and-white corporate flag of the hospital’s holding company, delmapacifica.

Corporate officials acknowledged the decision would hurt workers, but said the company is trying to find them other jobs.

“This is devastating for employees,” said Gordon MacKenzie, delmapacifica’s president. “The hospital’s financial failure is not their fault.”

Pacifica is among a string of care facilities and homes for the elderly owned by developer Robert J. Zinngrabe, who filed for bankruptcy protection in July for himself and most of his holdings.

Since the filing, Zinngrabe has sold some of his assets in an effort to reorganize his debts under Chapter 11 of federal bankruptcy laws. His personal bankruptcy petition lists assets of about $95 million and debts of $57 million.

He bought Pacifica six years ago, and it has never turned a profit, losing $13 million, said President Michael H. Sussman at a news conference to explain the decision to close the community hospital.

Hospital officials blamed the mounting losses on declining patient census and a cutback in certain Medicare reimbursements under a 1997 federal law. The hospital was unusually dependent on Medicare business, health care experts said.

About 62% of its $79-million revenue in 1997 came from the federal health program for the elderly, according to data compiled by the state. Medicare makes up an average of 30% of revenue for all Orange County hospitals.

Hospital officials said the losses at Pacifica were subsidized by profits from other health care ventures run by delmapacifica, which also acts as the holding company for many of Zinngrabe’s other assets.

A spokesman said Tuesday’s events would help settle bankruptcy debts.

“It is going very well and should be wrapped up by the end of the year,” delmapacifica spokesman Jay Vogelsang said of the bankruptcy proceedings. The hospital’s closing and the pending sale of an adjacent assisted living center, he said, “helps resolve the problem.”

Nearly all employees learned Tuesday that they will be out of jobs in less than a week. Several who left at the end of the 3:30 p.m. shift said they were offered no severance pay but will receive accrued vacation time. Three security officers stood near the entrance.

A dozen employees, most expressing concern about job prospects, declined comment or refused to give their names when they did discuss the abrupt shutdown.

“We are really all in shock,” said an employee of five years. She said she had spent the day letting patients and others know that the hospital was closing.

Officials said they would hold a job fair for employees this week, adding that they have already contacted 10 area hospitals to help place employees.

The closure also caught patients and their families by surprise.

Tony Tran of Orange, whose father is a patient, learned about it in the parking lot as he came for his daily visit.

“I didn’t have any word. I just heard,” he said. “What is going to happen to my father?”

Hospital executives said all patient transfers have been arranged with area hospitals. Among those closest to Pacifica are Huntington Beach Hospital, Fountain Valley Regional Hospital and Medical Center, and Orange Coast Memorial Medical Center in Fountain Valley.

Pacifica is the second Orange County hospital to close this year. The other was Friendly Hills Medical Center in La Habra.

Jon Gilwee, vice president of the Health Care Assn. of Southern California, a trade group, said Pacifica was one of the few remaining independently owned hospitals in the county and had to compete against huge hospital networks for contracts with managed care companies.

“That’s a very difficult environment to survive in,” he said.

Pacifica had contracts with only one managed care network, hospital officials said.

The hospital, which occupies one floor of a 10-story tower owned by delmapacifica, will be maintained while Zinngrabe seeks a buyer for it. The building houses doctors offices and six clinics that specialize in treating the elderly, including diabetes care, a cardiopulmonary clinic and a physical rehabilitation center.

Times staff writer Barbara Marsh contributed to this report.