Proposed Verdugo Hills Hospital merger creates a stir

The prospect that Verdugo Hills Hospital will soon merge with a larger healthcare provider has area business people concerned about the next chapter for the 40-year-old facility.

Verdugo Hills officials acknowledged Wednesday that changing economics have spurred them into talks with larger providers about a merger or strategic alliance for the hospital on the border of Glendale and La Cañada Flintridge.

Spokeswoman Celine Petrossian declined to name potential partners. But some Glendale business people believe that USC Health Sciences is a suitor. Meanwhile, Glendale Adventist Medical Center went so far as to place an ad in Thursday's Glendale News-Press, arguing it is the best fit to partner with Verdugo Hills.

Petrossian declined to say when Verdugo Hills would announce a decision.

USC Health Sciences spokeswoman Leslie Ridgeway said the organization, which operates more than a dozen clinics and medical centers in the region and plans to launch one in Pasadena next month, is open to expanding its services. She declined to comment on Verdugo Hills.

Helen McDonagh, a Glendale businesswoman and member of the Glendale Adventist Healthcare Foundation, said she is concerned that a provider without close community ties may turn Verdugo Hills into an outpatient center, shifting some services to other facilities.

“Adventist is a great partner to the Glendale community, and they give back to many nonprofits,” McDonagh said. “I'm not sure USC will be up for that in the Glendale community.”

Verdugo Hills is a 158-bed facility serving people from Tujunga to La Cañada.

It is independently owned, an increasingly rare circumstance among hospitals. It employs more than 750 people and has longstanding ties to local charities.

In her statement, Petrossian said an affiliation with a larger outfit would “improve our ability to meet the challenges of healthcare reform.”

Jan Emerson Shea, vice president of external affairs at the California Hospital Assn., said many hospitals see the Affordable Care Act, signed by President Obama two years ago, as a looming financial challenge.

Over the next eight years the law will slash federal reimbursements from Medicare and Medicaid to California hospitals by $17 billion, Shea said.

Cuts in the state-run Medi-Cal system will take a similar toll, she added.

The Affordable Care Act, Shea said, “is forcing hospitals across the state to look … at services that they can continue to provide, services they may have to discontinue, and in some cases, whether they can even continue to exist as an independent hospital.”

Shea said larger healthcare systems are better able to face the cuts because they have more revenue, and, in many cases, more favorable contracts with health plans and insurers.

Wes Seastrom, chairman of the board of the La Cañada Chamber of Commerce, said those advantages are one reason why he sees the bright side of a deal involving Verdugo Hills.

“I would think it could only help by bringing in more resources, more capital and more services that the bigger organizations can provide,” he said. “As long as these facilities weren't thinking about shutting down the facility, which would of course be disastrous.”

Petrossian's statement said a goal of the merger talks is to “preserve our future relevancy to the residents of the foothill communities we serve.”

Staff reporter Mark Kellam contributed to this article.

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