Price-Cutting Policies Fail to Stem Flow of Red Ink for Westworld Inc.

Westworld Community Healthcare Inc. continued hemorrhaging through the first quarter, posting a net loss of $9.4 million for the period, contrasted with net income of $1.2 million a year earlier.

The Lake Forest-based operator of rural clinics and hospitals said a January restructuring of pricing policies, including lower prices for health care in many instances, failed to attract as many patients as hoped for at the company’s remaining facilities. That caused revenues in the quarter to fall more than 50% to $22.3 million from the year-earlier $51.7 million.

The company, plagued by the high costs of an earlier expansion program and high prices that have driven patients away from its clinics, has cut the number of facilities it operates to 14 from 40 and expects to close three more. Its staff of 3,500 has been cut to 1,200 since November.

The massive divestiture program resulted in a $126.4-million loss in 1986.

Glenn Caster, a Westworld vice president, said Friday that the $9.4-million first-quarter loss was more than expected. The company was acting on the belief that its new pricing structure could quickly bring patients back to its clinics.

And, for the fifth time since February, Westworld has extended the deadline for holders of $65 million in past-due bond debt to exchange their bonds for new securities. Caster repeated the company’s position that if its major institutional bondholders do not exchange their debt, “it would force (the) company into bankruptcy.”

Simultaneously, Westworld is renegotiating the terms of its $70-million bank credit agreement, which expires in June, 1987. The company has used most of the line of credit, Caster said.