The Long Beach City Council unanimously voted Tuesday, October 15, to approve a permanent lease and cost-sharing agreement between the City of Long Beach and the selected operator for Community Hospital Long Beach – Molina, Wu, Network, LLC (MWN).
The time period for the lease agreement is 45 years, in addition to two optional 10-year extensions, Long Beach Economic Development Director John Keisler explained during a presentation to the city council. The rent is $1 per year, but MWN will pay the city additional rent equal to 20% of the hospital’s net profits during the first five years of the agreement, Keisler said.
The City of Long Beach is the landlord of the Community Hospital property, which includes the hospital facility at 1720 Termino Ave., a physician medical building at 1760 Termino Ave. and a magnetic resonance imaging center at 4111 E. Wilton St.
Per the agreement, MWN must operate an acute-care hospital and other health care facilities, including a medical office building and emergency services, at the site. Keisler said MWN will sublease a portion of the facility to the Long Beach Police Department’s Sexual Assault Response Team (SART), a public safety group of medical experts that address crimes related to sexual assault.
MWN is responsible for all construction work to bring the hospital up to state seismic standards, as well as for state permitting and medical licensing to operate the facility through the tenure of the lease agreement. The city has no responsibility to perform any improvements, repairs or maintenance to the property, according to the lease.
The City of Long Beach will reimburse MWN for 50% of the seismic-retrofitting costs, up to $25 million annually, over a 15-year period. The city may withhold these payments on a “dollar for dollar basis” in the event of that MWN defaults on the agreement, Keisler said. MWN may also voluntarily terminate the lease if it determines that the hospital is not economically feasible to operate. If MWN does choose to terminate the lease, the city would be responsible for reimbursing any of the operator’s costs associated with the hospital.
Keisler said the city will look at using any budget reductions in its General Fund or other revenues, such as Measure A dollars, to pay for the city’s share of the seismic retrofit costs and administration of the lease – which is an estimated $100,000 to $150,000. The Long Beach City Council recently approved placing a permanent extension of Measure A, a temporary 1% sales tax for infrastructure and public safety, on the March 2020 ballot. Paying for the hospital’s seismic retrofit costs was one of the reasons for placing the extension on the ballot.
The lease, which became effective October 15, is a finalized version of a short-term agreement approved by the city council in March.
Community Hospital’s pending transformation into a fully operational acute-care facility could generate at least 250 new nursing, maintenance, administrative and other jobs, according to economic projections in Keisler’s presentation. Estimates for medical office and non-acute medical staffing were not available.
Fourth District Councilmember Daryl Supernaw has been championing the reopening of the Eastside medical facility, in particular its emergency room (ER), for some time. At the October 15 council meeting, he acknowledged the challenges of establishing such an agreement between MWN and the city. “I don’t know of any real estate transaction that occurs without an element of risk,” Supernaw said. “What I will say about the risk in this deal is that whatever it ends up being, it pales in comparison to the risk [to] our residents . . . not having an ER.”
During his presentation to the Long Beach City Council, Tom Modica, the acting city manager, said Community Hospital had a total of 27,205 emergency visits in 2016. Since the hospital’s closure in 2018, the Long Beach Fire Department’s average rescue transport times have increased by at least 10%, according to Modica’s presentation.
The public impacts of not having an Eastside hospital is something that hits close to home with 3rd District Councilmember Suzie Price. The councilmember said her mother, who is battling metastasized breast cancer, recently needed emergency transportation to the closest medical facility. Without an accessible emergency room in Long Beach, the nearest facility was Los Alamitos Hospital, about six miles from her mother’s location. Price said a trip to Community Hospital would have been “at least half that distance.”
“Minutes matter,” she said. “That’s just my personal story. I’m sure there are hundreds of stories, if not thousands, just like that. The option is just not there for Eastside residents. . . . Personally, I’m grateful that we have a partner [in MWN] who has such a heart for the community that they’re willing to invest to make this 90-year offering for the City of Long Beach continue to exist.”
With an established lease agreement, MWN can take steps to begin hiring staff and purchase the necessary equipment that will be required for a pending California Department of Public Health inspection, which is scheduled for some time at the end of October, according to John Molina, a partner in MWN and founder of Pacific6 Enterprises. Completion of the inspection will result in the approval of a medical license for Community Hospital.
MWN will then take measures to submit a seismic compliance plan to the Office of Statewide Health Planning and Development (OSHPD) by June 2020 and complete related construction by January 1, 2025.
“I think this hospital is very aptly named – it is a community,” Molina said. “The success of this hospital, and I have no doubt that it will successful, is going to be due to the commitment of everyone in the community to band together to revitalize an asset that is here for everyone’s benefit.”