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Sunday, Jun 4, 2023

Hospital Officials Expecting Sale of Encino-Tarzana

On the market for over a year, Encino-Tarzana Regional Medical Center remains one of the last California hospitals out of the 19 that Tenet Healthcare Corp. put up for sale in 2004 not to have been acquired. But hospital CEO Dale Surowitz says he hopes to be able to name a new owner before summer. “Tenet is keeping that very confidential, but they are having numerous discussions with various players out there, they’re talking to a lot of people,” Surowitz said. “It looks like it’s moving forward and I would think we would have some sort of announcement in the next couple of months.” The two campuses, Surowitz said, have been on the market for 14 months. All but five of the hospitals Tenet decided to sell in 2004 have sold. Tenet spokesman Steve Campanini said the company remains confident they will eventually sell, however. “Every hospital we decided to sell had either financial performance issues or a number of seismic retrofit related issues,” Campanini said. “There were 19 hospitals in California we decided to divest, and when we looked at the internal and external challenges of each of those hospitals it became difficult to keep them open.” The hospitals that Tenet is keeping in California can be upgraded to meet seismic standards for less than $300 million, he said. The 19 hospitals put on the market required about $1.6 billion in renovations. Campanini said the company would not disclose the financial obligations that Encino-Tarzana carries while discussions with potential buyers are ongoing, but said Tenet is committed to selling to a company that could keep the hospital operating at a high level. Hospital Corporation of America owns 25 percent of Encino-Tarzana and would have an option to purchase the hospital under some circumstances, but Campanini declined to state whether HCA was considering the offer. The land the hospital sits on is owned separately by a real estate investment trust. Surowitz said the hospital and its employers will be better off once a new owner takes over the operations. “This is an outstanding hospital. We’ve won national quality awards and receive recognition for many of our divisions OBGYN, cardiology, neonatal intensive care,” said Surowitz. “The only thing we’ve lacked here is space, that’s been our biggest limitation. Once we have a new owner who could contribute additional capital, we’ll have the opportunity to grow our services.” Surowitz said he hopes a potential buyer would understand the need for the hospital to expand. The cost of seismic upgrades may mean that a new buyer will have to completely rebuild the hospital. “When we look at Tarzana, we have 245 licensed beds and we have an average daily census of over 195. We also have quite a few outpatients using inpatient beds,” he said. “We offer a very wide range of services pediatric ICU, obstetrics, an open heart surgery center, and we’re busy in each one. We just need more space to be able to accommodate future use.” Surowitz said staff turnover rates in the hospital have not risen while the hospital has been on the market. In fact, 2004 saw the lowest turnover rate in the hospital’s history. “We’ve always experienced a lower turnover rate,” said Surowitz. “The average turnover in California is about 20 percent, but here we’re usually about 10 percent. Our average nurse stays here from anywhere between 15 or 16 years.” In January of 2004, Tenet officials set a goal of selling the hospital by December. In November, Tenet reached an agreement to sell Hollywood Presbyterian Medical Center to CHA Medical Group and in October the company completed the sale of four Los Angeles-area hospitals to AHMC Inc.

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