South Bay Board to Close Hospital, Lease Facility as Clinic

Charting a controversial new course for a beleaguered hospital built by taxpayers nearly four decades ago, Beach Cities Health District officials Monday night decided to lease the South Bay Medical Center to a competitor for conversion to an outpatient-only satellite.

The district’s elected board of directors voted 5 to 0 to accept an offer by Little Company of Mary Hospital in Torrance to take over part of South Bay’s building when its private operator leaves May 31.

During the 10-year lease, the Torrance hospital will pay $325,000 annually. It will open an urgent care center when the hospital and its emergency room close in two months.

In choosing Little Company of Mary’s offer, the board turned aside a proposal by a coalition of local physicians and other health care providers. They wanted a chance to prove that the 203-bed hospital could become economically viable and was wanted and needed by the communities that built it--Hermosa Beach, Manhattan Beach and Redondo Beach.

The board, however, decided to go with a proven provider in the area, even at the price of closing the hospital.

“I went into this trying to keep the hospital open,” said board member Kenneth Johnson. “But the [competing offer] just doesn’t make it.”

The vote came during a standing-room only session. Many in the audience, including some long-time hospital employees and physicians who were part of the group that wanted to run it, urged that the hospital be kept open.

“I walked precincts to see that this hospital got built,” said South Bay resident Jack Belasco, a former Hermosa Beach Council member. “That’s what we voted for. That’s what we’re still paying for.”

Redondo Beach resident Robin Shaw, her voice breaking with emotion, said the board had “failed the community” by not working harder to make the hospital a success.

Monday’s vote was the culmination of crisis touched off several months ago when the private operator that now leases the hospital, Tenet Healthcare Corp., announced that it was leaving the hospital, even though its lease is not up until 2014.

Although Tenet had pumped $16 million into the hospital, it could not attract enough patients and had lost many lucrative managed care health insurance contracts to Little Company of Mary and Torrance Memorial Hospital.

In addition, the district had commissioned a seismic report, which put the costs of mandatory earthquake safety improvements as high as $39 million--if the facility remains an acute care hospital.

The hospital’s poor track record in attracting patients and its high seismic price tag apparently discouraged most would-be new operators. A firm hired by the district to seek new tenants for the hospital yielded only four proposals--the one from Little Company of Mary and two others from companies that wanted to tear down the facility and build assisted-living complexes for the elderly. No one, except the physicians coalition, offered to keep the place running as a full-service hospital.

The district, which had changed its name from South Bay Hospital District in 1984, when it turned over the struggling hospital to private operators, has focused increasingly on funding community health and prevention programs over the years.

As the district began holding a series of public hearings in the three beach cities, the debate over the hospital’s fate escalated. The physicians coalition, which took out full-page ads in the two weekly local newspapers, drew support from residents concerned about losing the emergency room. Others voiced support for preserving a choice in health care providers. Women’s and civil rights groups decried the loss of family planning and fertility services if the decision went to Little Company of Mary.