Adventist hopeful for buyer

Adventist Health is optimistic about finding a buyer for South Coast Medical Center — despite the huge financial losses cited as a reason to sell the South Laguna property.

The Roseville-headquartered, nonprofit health care system’s officials have announced losses of $44 million since taking over the medical center in 1998, specifically chalked up to operating losses. Adventist officials apparently think somebody else could do a better job.

“Adventist Health is using an open bidding process to help identify a new owner that would bring new resources and different assets to the hospital,” spokeswoman Alicia Gonzalez said, responding to a question posed by the Coastline Pilot. “We are committed to seeking a qualified successor who can best provide the quality healthcare services this community wants and needs.”

The Laguna Beach City Council has held five closed sessions since August to discuss Adventist — the most recent on Wednesday to discuss whether to initiate litigation — with no subsequent announcements to the public.

Gonzalez also provided answers to additional questions from the Coastline Pilot.

Q: What has changed since a previous sale was called off in 2006?

A: Despite our best efforts, continuing to operate the hospital is no longer economically viable. We believe it is in the community’s best interest for Adventist Health to identify a new owner with the resource and commitment to maintain a quality community hospital in Laguna Beach.

Q: To what does Adventist attribute the huge financial losses?

A: In the first eight months of this year alone, SCMC lost nearly $6 million. This hospital is not alone. This is a national issue. It’s the state of health care in the U.S. and the economy in general. Hospital sales and closures have become an unfortunate but common phenomenon. In fact, the Hospital Assn. of Southern California reports that in the last decade, 40 hospitals have closed in the five-county region of Southern California alone.

Q: Does Adventist Health have any suggestions on how to reverse the losses?

A: In the past year the hospital has initiated several niche, specialty services and innovative tactics (such as renting space to other providers) to generate revenue to sustain other operations. Despite our best efforts, SCMC is losing significant sums each month. The hospital simply can’t continue operating this way indefinitely.

Q: How much has Adventist invested in the facility since 1998?

A: Since 1998, Adventist Health has invested significant capital, financial expertise, clinical consulting, and quality benchmarking in South Coast Medical Center. By virtue of being a member of a larger system, SCMC has had the benefit of many pooled business services such as risk management, group purchasing as well as other resources related to operating the hospital. However, Adventist Health can no longer subsidize the operating deficits.

Q: How are the other Adventist Health hospitals in Southern California doing financially?

A: Many hospitals — not only in California but across the country — are facing increasingly difficult financial challenges. According to the California Hospital Assn., more than half the state’s hospitals are operating in the red.

Adventist Health is consolidating its efforts where its market position is stronger but is always evaluating all aspects of its operations in order to make adjustments to services where necessary and feasible. Sometimes that means adding services and in other instances, curtailing them but always in the context of a given community and market.

We continually strive to improve our efficiencies and effectiveness without sacrificing quality health care services.

[Editor’s note: South Coast Medical Center is the only Adventist-owned hospital in Orange County.]

Q: What happens if there are no bidders?

A: We fully expect that there will be bidders. Adventist Health anticipates that the sale of the hospital should be completed within the first quarter of 2009. The State Atty. General’s office must approve the sale of the facility and has its own protocols and timeline to follow.

First hospital in area

The hospital, built in the 1950s, was the first in South Orange County. The Irvine Foundation donated the land. Contributions from the residents in nearby communities, principally Laguna Beach, built it. Their names are memorialized on a wall at the hospital.

Financial difficulties led to the sale of the center to Adventist Health in the late 1990s.

This is the second time since taking over the four-parcel property in South Laguna that Adventist has put hospital on the market. The campus property includes a parking garage, an office building and parking lot and a vacant lot on which hospital and fundraising foundation proposed to build a senior assisted living project to generate revenue.

Asked why Adventist called off the sale of the hospital in May 2006, Gonzalez replied: “The Adventist Health board of directors determined after protracted negotiations with the prospective buyers that the terms of the proposed sale were not in the best interest of the community, hospital and its employees at that time.

“So discussions were discontinued and new management brought in to explore all possible options.”

City officials applauded the announcement that the Adventist Health Board of Directors had voted to cut off negotiations with a prospective out-of-state buyer and continue to operate the hospital on a not-for-profit basis.

The 2005 attempt to sell the hospital came after plans to relocate were abandoned.

BARBARA DIAMOND can be reached at (949) 494-4321 or coastlinepilot@latimes.com.