Hospital Makes Good

Mission Hospital Laguna Beach announced $2 million in capital improvements, thus making good on its commitment to invest in upgrades for the hospital, which were requirements of the purchase from Adventist Health System on July 1.

After the 50 year old hospital's labor and delivery center was closed a year ago, followed by the subacute unit last May due to financial shortcomings, concern was raised about further cuts in services. In the run up to the sale there was much negotiation and public comment, including a hearing at Top of the World Elementary School last April 29. The deal was finally approved by Deputy Attorney General, Wendi Horowitz, but with 18 stipulations, including $1.8 million in mandated capital improvements this year, and a total of $5 million by 2011.

Mission Hospital VP of Operations Michael Beck said, "Whether the state AG office required it or not, we would have been doing that. In the first two months in ownership, we have invested over $2 million. We expect to spend $2 or $3 million more. That's in the first year."

St. Joseph has not completed accounting for the time period so amounts of expenditures and categories could not be verified.

Plans include upgrading the MRI unit from a temporary to a permanent internal unit. The MRI was among items being considered for cancellation before the sale, but the new owners changed plans.

Beck said, "Prior to (the hospital becoming) Mission, the number per week was very low, which was an indication the community didn't need (an MRI unit)...As soon as Mission was present, the volume went up right away. The physicians wanted it...pretty much from day one we saw a change in referrals. From a care standpoint and business standpoint there is a need for it and a desire for it."

David Ashkenaze, an orthopedic surgeon on staff with the hospital since 1992, said, "I think (St. Joseph was) coming into a situation where the previous owners were losing upwards of a million a month. You can't sustain that," adding, "The lease (of the MRI) was not well thought out. It was very expensive…it was not being utilized as well as it could be. The new radiology group here is excellent…And they've renegotiated the lease…. Adventist had a contract at $50,000 per month (for the rental MRI). St. Josephs's came in and within a month had it down to something like $20,000 per month….and it's easier to book an MRI…Instead of being told, 'we can do it next week,' now we are being told 'we can do it at 2pm.'"

The timing of this change remains to be seen; the current MRI unit was never properly submitted to the city for permitting, according to Beck, and the internal unit will have to get approved by the Office of Statewide Health Planning and Development, which can take years.

Another planned enhancement is a new central plant, which controls water, heating, air conditioning, and other utilities, which will likely cost $4-8 million according to Beck.

"This facility has not received the attention it needs on an ongoing basis," adding that he was recently notified that, "the heat in the operating rooms was not safe. We had to shut down the operating rooms for that day, which is a big deal for us. We had to bring down the chiller to bring down the temperature and humidity. These things shouldn't be happening as surprises but because the building is 50 years old, and the investment was not made, we are discovering the real solution is to replace the central plant. That also has to go through (the state office). We are looking at a couple of years for that to happen."

Already completed are upgrades to the hospital's IT systems totaling $1 million, with an additional $1.5 million planned for that category next year.

Additional looming expenses are state-mandated earthquake improvements for all hospitals by 2013, which would require significant additional investment by St. Joseph, but the hospital is trying to acquire an extension.

Beck said, "The state had put opportunities in place…to not have to meet (the deadline) or push the date out some. The previous owners hadn't done that and the deadlines had come and gone prior to Mission Hospitals' ownership. We are appealing to the state to come under those deadlines to make our case."

Administrators have shown an effort to be a good neighbor, issuing a letter to nearby residents announcing more considerate procedures for truck deliveries, waste management, landscaping, lighting and storage containers.