Centinela Hospital's early adaptations yield results.

INGLEWOOD - Centinela Hospital didn't wait for the health care crisis to start making changes in the way it does business.

In the late 1970s, it started the National Health Institute, which helped the hospital gain international recognition as a center for sports medicine and physical fitness.

Then a decade before managed care started biting into hospital profits in the 1990s, and long before HMOs and health care corporations started assembling networks of hospitals, Centinela administrators began building a network of their own.

"They were ahead of their time," said Lois Friss, a retired USC professor and author of a study on hospital profitability. "They saw what was coming and responded quickly."

The hospital developed a system of nine regional clinics that now stretches from the South Bay to West Los Angeles - including six primary care centers, a woman's health center and a 24-hour emergency urgent center serving Los Angeles International Airport.

The National Health Institute evolved into the Fitness Institute which moved from the hospital campus to a Culver City facility in 1986 and conducts about 2,000 physicals a year.

The hospital itself, meanwhile, continues to be a center for sports medicine.

"We're the hospital of choice for the Lakers, Kings, Dodgers, the PGA Tour, the Senior PGA Tour and the Galaxy," notes Sherry Reese, director of marketing and public relations.

Those professional associations are a powerful marketing tool. "It's very important to our brand identity,"said Steve Balalian, chief operating officer. "These teams send us their franchise players for treatment. They're not going to endorse us unless they think we're good at what we do."

That marketing edge has helped earn Centinela a tidy profit - quite an accomplishment, experts say, given that the hospital serves lower income communities and that about 40 percent of L.A. hospitals operate in the red.

"Centinela's in a very difficult location in a very competitive market," said Dr. Paul Torrens of the UCLA School of Public Health. "They've made it on their own with some very aggressive management."

For the last three years, Centinela has seen steady increases in gross revenues - from $240 million in 1994 to an estimated $290 million this year. At the same time net profits have remained relatively stable - an estimated $2.6 million in 1996 and $2.8 million in 1995.

And through the end of 1997, Centinela has been accredited "with commendation" by the Joint Commission on Accreditation of Healthcare Organizations, based in Oakbrook Terrace, Ill. The designation is awarded to only five percent of U.S. hospitals.

That made Centinela an attractive takeover target.

In August, the hospital and its network of regional clinics were purchased by Tennessee-based OrNda Health Corp. the third largest investor-owned hospital management company in the United States.

Then in late October, OrNda itself. which owns and operates 50 hospitals in Southern California, Florida and Arizona, merged with Santa Barbara-based Tenet HealthCare Corp. Despite the change of ownership, company officials say they're not going to meddle with Centinela's successful formula.

"We're going to expand what Centinela's already been doing," said Ken Westbrook, senior vice president of operations for OrNda's California operations and the hospital's acting CEO, "but the fundamentals will remain the same."

With managed care becoming more of a numbers game, the key to positive bottom line is attracting a large enough number of patients.

"Health care has an element of Las Vegas in it now," said Steve Levine, Centinela's chief financial officer of 13 years. "You need a lot of members to get a good bell curve."

Centinela's new managers said being part of a larger organization is also helping contain costs.

"We're very aggressive with vendors," Balalian said. "The payors aren't paying us as much as they used to do, so we're saying to our suppliers 'Our rates are being ratcheted down so you're going to have to work with us.'"

On the patient care side of business, Centinela's mantra has become "case management." Also known as preventative care, Centinela is putting its emphasis on scheduled patient check-ups, including, in the case of women's health, regular mammograms.

"This is where most of the efficiency comes from on the practice side," noted Balalian. "A lot of the risk has been shifted from the insurance companies to us, so we have a great incentive to keep our patients healthy."

At A Glance

Centinela Hospital Medical Center

Founded: 1924 No. of doctors on staff: 650 Net income 1995: $2.8 million Net income 1996 (est): $2.6 million DSH(*) funds 1996: 0

* Disproportionate Share Hospitals. DSH funds are federal and state monies given to hospitals that treat a disproportionate share of poor and uninsured patients.