Ojai Foundation to Buy Struggling Hospital From Chain

Moving to shore up finances at tiny Ojai Valley Community Hospital, a local foundation is buying the struggling medical center from a national chain and will convert it to a nonprofit facility, officials said Monday.

The change could ensure survival of the 110-bed hospital because property tax savings will generate extra money needed to meet stiff earthquake standards that begin to kick in next year.

The new owner, the Ojai Valley Community Hospital Foundation, will be eligible to receive charitable donations, which promise to boost the 40-year-old hospital’s meager bottom line.

“It’s wonderful for the community,” said Victoria Alexander, the hospital’s chief executive officer, because residents will be able to choose what services are important and support them. A donor might be found, for example, to revive the hospital’s costly but recently closed maternity unit.

As things are, the hospital makes just $300,000 to $400,000 a year on a budget of $15 million, records show.

If the hospital had shut down, the nearest emergency treatment for the Ojai Valley’s 35,000 residents would have been 30 minutes away in Ventura or Santa Paula.

“It absolutely is the difference between life and death,” said Alexander. She will run the hospital for the foundation, a group of doctors and community leaders headed by department store owner Alan Rains.

“If somebody on the east end has a heart attack, there’s no way they’re going to get to Ventura alive,” Alexander said. “If a kid gets a hot dog caught in his throat, he wouldn’t live.”

The purchase--in the works for months--has not closed escrow, so Alexander said she could not discuss any financial aspects of the deal, except to confirm that it is taking place.

But she recently posted a sign in the hospital’s lobby announcing the sale by Province Healthcare Inc. The Tennessee-based firm, the fourth owner since 1987, had shopped the hospital around before finally negotiating the local deal. A spokesman for the firm declined comment Monday.

“This is good for the people of Ojai,” said Dr. Frederick J. Menninger III, an Ojai surgeon and past president of the Ventura County Medical Society.

Menninger, who has practiced at the hospital for 13 years, said he thinks that the foundation will upgrade it by making repairs and improvements neglected for years--a new roof and air-conditioning, and a new X-ray and radiology lab.

A decade of staggering changes in the health care industry has created a harsh new reality for community hospitals.

Dozens have closed statewide as large regional hospitals have siphoned off patients by reshaping themselves as specialty centers and cutting rates to the bone to grab health maintenance organization contracts.

Ojai Valley has stayed open by dedicating 66 of its 110 beds to skilled nursing care and by ending obstetric care this year. Built in 1960, the hospital sees 500 to 600 patients a month at a 24-hour emergency room, uses 23 doctors and is the third-largest employer in the valley with 280 workers.

But another financial challenge looms.

Like 450 hospitals statewide, Ojai Valley faces a January deadline to submit plans to meet a 2008 deadline for structural improvements so it could survive a large earthquake.

A Province executive said 18 months ago that the hospital might have to close, because the chain had not figured how it could afford $3.3 million for retrofitting.

Elimination of the hospital’s small second floor of administrative offices could cut that cost. And Alexander said the reconstruction--the anchoring of the hospital’s flexible wood frame to its foundation--is no longer considered daunting.

Officials for the Healthcare Assn. of Southern California estimate that seismic requirements will close 20 to 25 of the region’s 200-plus hospitals in the next decade.

Even without the cost of earthquake retrofitting, more than 115 California hospitals have closed or consolidated over the last decade.