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A master plan that puts community first

Our view: Henry Mayo Newhall Memorial Hospital

Posted: November 15, 2008 10:48 p.m.
Updated: November 16, 2008 4:55 a.m.
In a state where so many community hospitals are going the way of the dodo bird, we are lucky to have Henry Mayo Newhall Memorial Hospital.

Actually, we are luckier than you might know. State-mandated retrofitting in the wake of the 1994 earthquake, coupled with lagging government reimbursements for indigent care, sent Newhall Memorial into a financial tailspin.

Creditors, including competitor Providence, demanded the money owed to them by Newhall Memorial, and understandably so. The hospital had no choice but to file for bankruptcy protection.

It was a heck of a way to start the new millennium. The hospital's executive officers and board of directors - upstanding members of our local community - had to put their noses to the grindstone to fend off attackers.

It seemed every for-profit hospital group in the West wanted to swoop in and take over our community's nonprofit hospital.

How bad would that have been? Well, think of a fast-food or department store chain with an outlet in Santa Clarita. A big, for-profit conglomerate would have taken money out of Santa Clarita and pocketed the profits.

Forget about services for uninsured and underinsured residents - services a community-run nonprofit hospital is expected to, and does, provide.

Newhall Memorial would have to remain a community-owned nonprofit venture if all revenues were going to be reinvested right here at home. In the end, that's what our cash-strapped hospital convinced the bankruptcy court to do.

How? For one thing, the hospital raised needed cash by selling nine of its original 30 acres of land to the company that already owned its existing medical office buildings - a company called G&L Realty.

It's not an unorthodox arrangement. Far from it. Many hospitals have campuses with medical offices owned by others.

After all, hospitals aren't in the property-management business. Their expertise is in providing health care.
G&L owns medical office buildings throughout Southern California, including the main medical plaza at Holy Cross.

Within a year, Newhall Memorial's book value was $50 million more than it was when it exited bankruptcy on May 31, 2003.

To come out of bankruptcy, the hospital agreed to put all facilities to their highest and best use. One recent, high-profile manifestation of this agreement was the "transition" of 27 transitional care beds - which receive little government compensation - to acute care beds.

With tremendous community support, the Santa Clarita Valley's only remaining hospital has added to its palette of services.

Charitable giving contributed to the ongoing expansion of its emergency room. Community generosity is helping to improve intensive care services.

And residents' support enabled the hospital to open a breast-imaging center inside one of G&L's medical office buildings.

On Wednesday, Newhall Memorial and G&L will ask the Santa Clarita City Council to approve a master plan that will serve as a 15-year blueprint for future expansion of the Valencia campus, together with a development agreement setting forth a construction timeline.

We've heard much discussion in recent months about "hospital" buildings versus "medical office" buildings, as if they are two different and unrelated things.

In truth, they work in tandem to enable Newhall Memorial and its partners to provide the health care services our residents need, and will need in the near future.

Henry Mayo and G&L have studied the demographics. They've seen the population projections that predict a near-doubling in 20 years.

The hospital has determined that we need expanded cardiac care, orthopedic services and specialized women's services. It has also determined that we need 120 additional acute-care hospital beds.

Where should it build the facilities and provide the services? Remember the mandate to use facilities to their highest and best use.

It costs about $1,000 per square foot to build an inpatient facility with acute care beds because the state requires inpatient ("hospital") buildings to be engineered to withstand - and operate during - an 8.0-magnitude earthquake.

Medical office buildings have no such requirement and thus cost about $345 per square foot to build, hospital officials say.

Does it make sense to put specialized services such as the Sheila R. Veloz Breast Imaging Center inside a $1,000-per-foot hospital building when you don't have to?

Of course not. It would be imprudent and wasteful. You put these specialized service facilities, or "centers of excellence," in the cheaper medical office buildings.

Could Newhall Memorial continue to grow without the master plan and development agreement being sought now? Yes.

It is growing now in piecemeal fashion. This could conceivably continue.

But it would be more expensive and risky. Developers want to know they won't run afoul with the local bureaucracy before they spend the time and money on plans for buildings to house the medical services we will need.

Master plans and development agreements provide assurances for the community, as well. We've heard much talk about "guarantees" - specifically, that there is no guarantee in the master plan that Newhall Memorial will build the "hospital" part.

There are no guarantees in life, but thanks to critics of the hospital's growth, there is a greater guarantee of a new hospital wing in the current version of the development agreement than there ever was before.

Under the development agreement, Newhall Memorial and G&L can't pull a building permit for their third new medical office building before there is "steel in the air" on the new inpatient wing.

There is absolutely no guarantee of a new hospital wing without a master plan and development agreement.

Critics have obtained other concessions, as well. Instead of 100 feet tall, the inpatient building will be 85 feet, preserving neighbors' views.

New parking spaces will exceed normal city requirements and will even make up for the current deficiency. And the development agreement specifically precludes the taking of anybody's private property by eminent domain.

It has been nearly five years since Newhall Memorial and G&L submitted their master plan to the city for approval - not long after the hospital emerged from bankruptcy.

It was almost two years ago that the Santa Clarita Planning Commission approved the grander 25-year master plan but balked at the development agreement because of the inability to predict what the traffic impacts might be two decades from now.

It has been a rancorous process, but we commend the city staff, the hospital and the critics for making the effort, in their own separate ways, to improve a master plan and development agreement that will benefit us all.


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