Coalition Tries to Save Hospital in Long Beach

The operating room where Dr. Guy Lemire saved so many lost causes was disappearing all around him. The heart-lung machine had been taken across town. The electronic instruments and body warming equipment had been stripped for use elsewhere. Now Long Beach Community Medical Center, the hospital to which he had devoted the last quarter of a century of his life, was closing.

Disgusted that day in June, he ripped from the wall a plaque dedicating the room to the man who had encouraged him to become a doctor--his late father. “I thought it was the end of the hospital,” said Lemire, 58, “and I didn’t think there was any way to stop it.”

Six weeks later, the surgeon’s act marks not a defeat but rather the beginning of a sophisticated if quixotic movement to save an old-fashioned hospital that has run out of cash and been stripped of its equipment.

The effort has forced the facility’s owner, the private, nonprofit chain Catholic Healthcare West, to submit to an unusual inquiry by the state attorney general and to assist local officials in their search for a buyer that will keep the hospital open.

Behind the fight to save Long Beach Community Medical Center is the story of a heart surgeon, a real estate agent, a storage magnate, a labor union, a Republican communications firm--and the public relations missteps of the country’s third-largest Catholic hospital chain and its hard-nosed sponsors: nine orders of nuns. Inadvertently, these players have turned the smallest of Long Beach’s three major hospitals into a statewide issue testing the limits of labor power, nonprofit health care financing and the attorney general’s regulation of charities.

“Hospital closings like this are a fairly new phenomenon,” said Deputy Atty. Gen. Mark Urban, who is handling the state inquiry. “You have a nonprofit hospital, with a charitable trust, and a combination of people who think it can be saved. The question of what is an appropriate solution in a situation like this has not been answered before.”

Postwar Years Fueled Growth

Long Beach Community was launched 76 years ago as an answer to the pleas of sick people who disliked the religion of St. Mary Hospital or the expense of Seaside Hospital. Funded with city bond money and $50,000 from the private account of then-Mayor Fillmore Condit, the facility narrowly survived the Depression and grew with the city during the postwar years, according to a hospital-authorized history, “Doctors, Dreamers and Doers.”

The hospital benefited from the relative stability of east Long Beach. It was staffed by young doctors like Lemire who came from the Midwest or Canada, loved the sea air and the bungalows, and vowed never to leave. Long Beach Community found ready volunteers among war brides such as Betty Keller, who moved to Long Beach in 1950, raised six children and became a real estate agent. And it found financial support for the area’s first CAT scan unit and cancer clinic from down-to-earth veterans turned businessmen, among them self-storage company owner Don Temple.

But the small, 278-bed hospital suffered as health care became big business. It cut staffing in both 1995 and 1997. Annual operating losses hit $10 million in fiscal 1998. In the fall of that year, debt-ridden Unihealth America, a nonprofit chain with which Long Beach Community had reluctantly affiliated, sold the Long Beach facility along with seven other hospitals to Catholic Healthcare West.

This buyer itself was struggling. Founded in 1986 by two orders of nuns in Northern California, Catholic Healthcare eventually would encompass the work of seven more religious orders and 48 hospitals in the West. But by 1998, some industry analysts, academics and labor unions were contending that the growth came at the expense of its Christian mission. Priests criticized Catholic Healthcare West for fiercely fighting union drives at its hospitals; whistle-blowers had alleged serious Medicare fraud. With reduced reimbursements from the government and insurance companies, spending on free care declined.

Keller, by then the chairwoman of Long Beach Community Medical Center’s board, was nervous. As part of a Southern California expansion, Catholic Healthcare West in 1996 had acquired Long Beach’s St. Mary Medical Center, four miles west of Community. She feared that Catholic Healthcare West would close Long Beach Community.

But the chain’s officials promised to upgrade the facility. “It is not anticipated that either Long Beach Community Medical Center or St. Mary Medical Center will close,” they said in a newspaper ad.

As the company made its pledge, however, Catholic Healthcare West’s operating losses jumped sharply, reaching $89 million for 1999. The chain’s bond rating was downgraded. Alarmed by losses and reports of financial difficulties at hospitals across the state, the chain’s board, backed strongly by the nuns, pushed out the longtime chief executive officer and demanded a tougher line on costs.

“From the standpoint of our healing ministry, our religious sponsors have been concerned with the viability of our hospitals,” said Lori Aldrete, a Catholic Healthcare vice president. Added Dr. Leo van der Reis of the Quincy Foundation for Medical Research, who closely tracks the company: “The religious orders have supported a stronger emphasis on the bottom line.”

In Long Beach, that meant consolidation. Prodded by consultants from Arthur Andersen, the administrations of St. Mary and Community were merged. In late 1999, Catholic Healthcare West finalized plans to relocate Long Beach Community’s heart center and neonatal clinic to the larger St. Mary, in a less prosperous section of town.

By January 2000, two of Long Beach Community Medical Center’s doctor groups--Harriman Jones Medical Group and the Independent Physicians Assn.--announced their intention to take their patients--more than one-third of admissions--elsewhere. “They gave us no choice--I think they wanted to force the closure of the hospital all along,” said Dr. Robert Pugach, a urologist in the Independent Physicians Assn. “Who wants to practice in a hospital that is being dismantled?”

Once again, Catholic Healthcare assured city officials that the hospital would remain open. But by May, regional Catholic Healthcare executives in Pasadena saw no other alternative. Operating losses had reached $13.8 million in 1999, for a total of $35.4 million over five years, according to government figures. About $23 million in cash had been transferred into Long Beach Community from other Catholic hospitals to cover deficits, executives say. In the next seven years, the hospital would require more than $20 million for earthquake retrofitting. An already diminished hospital did not warrant that investment.

Catholic Healthcare headquarters in San Francisco signed off on the decision. The hospital would be closed.

‘This Won’t Be Pretty’

At Catholic Healthcare’s request, longtime volunteer Keller had called an emergency meeting of Long Beach Community’s board for 8 a.m. on June 22 in the hospital auditorium. Catholic’s regional CEO Beth O’Brien arranged to meet with Keller and the chairwoman of the hospital’s foundation, a sometime puppeteer named Suzanne Nosworthy, at 7:30 a.m. O’Brien handed the two women wine-colored folders with her letter announcing the closure by the end of the year.

Keller glanced at the letter and left the room. Nosworthy fixed a teary-eyed glare on O’Brien and said: “This won’t be pretty.”

Catholic officials had expected anger and disappointment, but they were unprepared for the organized opposition to follow. “After all, they were not abandoning the Long Beach community,” said Jim Lott, executive vice president of the Healthcare Assn. of Southern California, a hospital trade group. “They were resetting the table at St. Mary.”

But they were slow to notify public officials (they say they heard from angry doctors hours before O’Brien’s official announcement arrived). Long Beach Mayor Beverly O’Neill, caught off guard by the news, was enraged.

“I don’t think this should have been a surprise to anyone--we had made clear before that this was a challenged hospital,” said O’Brien. “Of course, we regretted the city’s response.”

The next day, Keller invited the board, some doctors and a few key donors to a meeting at her single-story yellow home near Los Altos Plaza Park. It was clear that Catholic Healthcare West had miscalculated. The firm’s leaders did not appear to realize they had struck at an institution with close ties to the city’s political and financial elite.

As Keller served sandwich halves and coffee, a plan was formed. A conservative lot, the doctors didn’t want to be seen as telling a private company like Catholic how to stay in a financially difficult business. Instead, the group decided to find new investors and pressure Catholic to turn over its license to them.

Temple, the storage company owner whose name graced the hospital’s cancer clinic, put up a $5,000 check and board members contributed $1,000 apiece, beginning a campaign that has brought in $70,000.

With that money, the Save Our Neighborhood Hospital coalition hired a lawyer and an aggressive Republican-linked public relations firm, Stoorza Communications, best known for its work for former Insurance Commissioner Chuck Quackenbush.

In truth, with Community’s deep community ties, little public prompting was needed. A Catholic lay group had already sent a letter of protest to the pope. The hospital’s remaining doctors rebuffed the plan to consolidate at St. Mary, and instead took their patients to Long Beach Memorial. Only six hospital staff members quit, the rest choosing to stay and demand loudly that the facility remain open. (“No surrender and no retreat!” declared eight-year employee Jimmy Ojeda).

Patients weighed in too. One, a union organizer named Gloria Carter, worried that the closing would interrupt her cancer treatments and told her boss, Janet Wright, the president of the machinists union district in Long Beach. Within days, a labor coalition--including auto, food and communications workers--began organizing against the closing. Wright also placed a call to Catholic Healthcare West’s longtime union nemesis, Service Employees International Local 399, which had been fighting statewide organizing battles with the hospital chain and which immediately pledged its support.

On July 12, less than three weeks after Catholic Healthcare’s announcement, the unions and Keller’s coalition turned out more than 1,300 people for a public hearing called by the county. The mix of people--Republican and Democrat, management and labor, rich and working-class, doctors and lawyers--made Catholic Healthcare West’s accomplishment clear.

It had managed to alienate all of Long Beach.

The City Council jumped in. It seized on a 43-year-old deed restriction requiring that the Long Beach Community land must house an acute care hospital. City officials publicly resolved to sue Catholic if the chain closed the hospital without first giving the city the chance to find a new operator.

In the meantime, the unions persuaded the attorney general’s office to examine whether Catholic Healthcare’s transfer of Community Medical Center’s assets to St. Mary violated the nonprofit hospital’s 77-year-old articles of incorporation. A lawyer for Catholic sharply disputed that. But the attorney general has asked both the unions and Catholic Healthcare for documents and could launch a formal investigation.

With the industry predicting dozens of hospital closures in the next decade, “this will be closely watched,” said Maura Kealey of Service Employees International Union in Los Angeles. “There’s a cutting edge question of what is acceptable in the future when nonprofit hospitals shut down.”

Facing legal challenges and public anger, Catholic Healthcare blinked. It agreed to keep the license alive and turn the hospital over to Long Beach while the hospital’s supporters search for investors. It was now working to save a hospital that it had intended to close.

“While our experience convinces us that [Community] cannot be financially viable,” a lawyer for Catholic Healthcare said in a letter to the state, “we wish to provide the city with the opportunity to make that effort if they so choose.”

Privately, Catholic Healthcare West officials said that this opportunity may be providing Long Beach with false hopes. How much of Community is there left to save? Beyond its land and Mediterranean-style buildings, on paper the hospital has no net assets.

Much of the equipment--from a laboratory monitoring system to machines that recycle patients’ blood--already is at St. Mary. In the administrative offices, computers have been taken away and desks stand empty. The remaining gear has been tagged for transfer or sale. On a recent visit, only one of the eight operating rooms was running. Several main hallways are dark, their floors pockmarked by holes where equipment used to stand.

But Lemire, urologist Pugach and their fellow doctors believe that with a team of investors or a new owner, they can assume control of Community. They said they will need between $15 million and $20 million. Health care industry analysts said $30 million is a baseline figure--perhaps more, if Catholic Healthcare does not return the equipment.

Temple, the storage box company man, said he has a list of 125 potential investors. And the doctors said 15 potential financial partners have requested meetings. There are any number of possibilities under discussion, including sharing the hospital with a medical education program or trying to combine the hospital functions with a nearby Veterans Administration facility. Keller said a business plan should be complete by Sept. 1. “I am confident that we’re going to be able to do this,” Lemire said.

But serious obstacles remain. Health plans that left Community, in particular the Harriman Jones Medical Group, have yet to commit to return to a revamped hospital. Earthquake retrofitting costs may scare off investors. And Catholic Healthcare maintains that it owns the equipment in the hospital, and has thus far refused to return items transferred to St. Mary.

There is at least one piece of Community Medical Center that may reappear. Lemire said he held onto the plaque he tore off the operating room wall.

“That’s how you’ll know when we’ve saved this place for good,” he said. “I’ll put this plaque back up.”