As the Long Beach City Council on June 19 directed city staff to negotiate lease terms with a new operator selected for Community Hospital, they also urged MemorialCare Health System to keep the hospital open as the transition process occurred. But the hospital’s emergency room closed the subsequent week, and the hospital is expected to officially shut down today, July 3, due to insufficient staffing to keep it open, according to MemorialCare. Now, the designated new operator, the City of Long Beach, and the California Office of Statewide Health Planning and Development (OSHPD) are in ongoing talks about the facility’s future as an acute care hospital.
John Bishop, CEO of MemorialCare Long Beach Medical Center and Miller Children’s & Women’s Hospital Long Beach (as well as CEO of Community Hospital, until today), informed the city council last November that the hospital would have to close by June 30, 2019, due to noncompliance with state seismic regulations.
OSHPD confirmed with the Business Journal that Community Hospital will be out of compliance with seismic regulations next June. The government organization rates buildings that house acute care services in seismic performance categories (SPC) ranked one to five, with SPC 1-rated buildings being the least safe in an earthquake and SPC 5 being the safest.
According to Eric Reslock, OSHPD’s assistant director of legislative and public affairs, nine of the buildings on the Community Hospital site were rated SPC 1 in 2001. Only the historic, or so-called “heritage,” building on the site was given a seismically safe ranking of SPC 4. The city and the hospital’s future operator, Molina, Wu, Network, LLC, intend to create plans to consolidate the acute care services required to operate a hospital with an emergency room into this building. No formal plans have been submitted to OSHPD.
The expected closure date of the hospital was accelerated to July 3 in April, when Bishop announced that the hospital was losing employees at a rate that would make care unsustainable.
“Within the first few months of the Nov. 6, 2017 announcement, Community Medical Center’s staff dropped by significant numbers due to employees leaving to pursue longer-term opportunities,” Bishop said in a statement e-mailed to the Business Journal. “Of the 87 who had left by early March 2018, 89% were part of the Medical Center’s patient care team, including registered nurses, radiology techs, case managers, echo technicians, licensed therapists and others. About 150 positions were guaranteed and/or offered to Community Medical Center employees by MemorialCare thus far.” Bishop continued on to say that Community employees have been given “preferential interviewing opportunities” within MemorialCare Health System. He noted that many employees have secured positions with outside organizations.
The city and partners in Molina, Wu, Network (MWN) LLC had hoped MemorialCare would continue operating the hospital under a management agreement until MWN could obtain the required approvals, according to John Molina, founder of Long Beach-based investment firm Pacific6 and partner in MWN. Molina formerly served as CFO of Molina Heathcare, which his father founded. MWN is a partnership between Molina, his brother, former Molina Healthcare CEO and current president of Golden Shore Medical, Dr. J. Mario Molina, as well as hospital operator AHMC Healthcare and managed care organization Network Medical Management.
However, MemorialCare did file a request with the California Department of Public Health to place its license to operate the hospital in suspension, which would prevent MWN from having to go through a lengthier process to secure a brand-new license, according to Diana Tang, manager of government affairs for the City of Long Beach. “In essence, the facility remains licensed to provide services so that when the new provider completes the application process and gets all the requisite approvals that they need, they can come in and take over operations of a continuously licensed facility,” Tang told the Business Journal. While the city and MWN are still negotiating terms for the company to lease and operate the site, she said the city intends to continue leasing the site for $1 per year to the next operator.
During a June 28 interview with the Business Journal at the hospital’s historic courtyard, John Molina told the Business Journal that he and his brother began talking about taking over Community in January. “I called Mario and said, ‘Hey, they are looking to close the hospital. Is there anything we can do?’” he recalled. “And that’s when he got Dr. [Jonathan] Wu from AHMC and Dr. [Kenneth] Sim from Network Medical Management. He contacted them because he works with them, to see if we could get a group together to save the hospital.” Wu and Sim are the chairmen of their respective organizations.
Molina said his number one priority was to save the emergency room. To do so, he said services would have to be consolidated into the SPC 4-rated heritage building. “In order to do that, we’re going to have anywhere from 30 to 45 beds . . . split between medical surgical beds and ICU beds in the legacy hospital [structure], along with the other services that are necessary to keep a small but full service acute care hospital open,” he explained.
“We are right now in the assessment stage to figure out what it’s going to cost and how we’re going to finance it,” Molina said. “On the one hand, this is the city’s asset. We’re not buying it, we are leasing it. So, in some respects, as the owner of the asset, the city should put some money in. But we don’t expect them to do it by themselves and we don’t expect them to have to bear the ultimate burden, because we and the neighboring communities will benefit from that.”
MWN has been formed as a for-profit LLC. Asked if the partners were considering filing for nonprofit status to run the hospital, Molina responded, “We are looking at what is the benefit to forming a tax-exempt organization. Let me pause there for a minute because a lot of people ask us about this.” He continued, “This endeavor was not done with a profit motive behind it. This was done because this is an asset that contributes to the wellbeing of East Long Beach that needs to be open. Having said that, there is nothing wrong, in my opinion, with making sure that people who put their time and money at risk get a return. We’re not here to maximize profit, but the operations as a whole have to be financially self-sustaining.”
Molina pointed out that the last two operators of Community Hospital were nonprofits, and that both ultimately walked away from managing the site. “The Molinas don’t walk away,” he said, noting that he did not mean to disparage the former operators.
“Anybody who thinks that there is some magic in it being nonprofit and somehow it’s going to be run better or operated for longer term, that’s hogwash,” Molina said. “It’s not about the tax status; it’s about who you’ve got in charge.” Molina noted that he lives in Long Beach, and that both he and his brother, Mario, grew up in the area and have worked there for three decades.
MWN has selected a Long Beach resident, Virg Narbutas, as the hospital’s CEO. Narbutas previously served as CEO of La Palma Intercommunity Hospital, according to Molina. The company also intends to work with Pacific Gateway, the city’s workforce development organization, to hire back Community Hospital employees who have expressed interest, Molina noted.
Molina explained that, while AHMC and Network Medical Management are primarily focused in acute care hospital operations in the heritage building, he and his brother are looking at new uses for the surrounding site. These could include outpatient behavioral health, a nursing education partnership with Long Beach City College and California State University, Long Beach, and perhaps even senior programs, he said.
“I think we have an opportunity to create a new model for health care,” Molina said. “We have the opportunity keep the emergency room open, which is the number one priority. But then also [to] have a full-service health and wellness campus where there are ancillary programs that would provide programs that promote quality of life and wellbeing on one site.”
Reslock confirmed that the surrounding buildings could be used for such services, depending upon the licenses associated with those uses. “Non-acute care services, like skilled nursing . . . those buildings do not have to have the same seismic standard as an inpatient acute care facility,” he said. “That could be a possibility for those noncompliant buildings.”
Hussain Bhatia, supervisor of OSHPD’s seismic compliance unit, said that having different rules for such uses doesn’t mean that the state-run organization does not care about people utilizing those services. “That is something the city or the new operators need to evaluate – the risks of putting any other persons in those buildings,” he said.
Molina hopes to reopen the hospital and emergency room within the next four to six months. Bhatia said that the hospital’s new operator would be eligible to apply for a seismic compliance extension to January 1, 2020.
While relocating the acute care hospital services into the heritage building could be feasible to meet seismic compliance, Reslock pointed out that the building would be disconnected from its onsite power plant, which is located on the other side of an active fault. “The building itself is compliant, but part of its compliance is that it have access to central power, also in the event of a strong earthquake,” he explained. Molina said this was something MWN was looking into.
“At the end of the day, we are just really concerned about the safety of patients, staff and visitors,” Reslock said. “With acute care, there are a lot of folks who are incapable of self-preservation. So we see our mission as being very important. So other considerations that people apart from us might have, financial or whatever, those aren’t our considerations. For us, it’s just safety.”