L.A. psychiatric hospitals suffer fiscal breakdowns.

Clinton reforms could help some facilities to recover

Private psychiatric hospitals in Southern California have good reason to be depressed.

Seventy percent of them lost money in 1992, according to a recent report released by the Hospital Council of Southern California.

David Langness, a spokesman for the hospital council, said he was aware that private psychiatric hospitals were under enormous pressures but was "shocked" at how badly they are doing.

The situation is particularly bad news for Los Angeles County, where roughly half of Southern California's 44 private psychiatric hospitals are located.

One of the biggest pressures facing the psychiatric-care industry is the huge shift away from inpatient care.

The growth of managed care companies, which provide health care for a set monthly fee and strive to keep patients out of costly overnight hospital stays, and better medications to treat psychiatric illnesses, are having a big affect on the industry, said Langness.

Private psychiatric hospitals, which prolifetated in the 1980s, when insurance companies routinely paid for 30-day hospital stays, are seeing their average inpatient stays dramatically shrink to 15 days or less, said those in the industry.

Many private hospital administrators said they were hanging in, hoping that President Clinton's plans for the health care reform will fund coverage for mental health.

Forty percent of the residents in L.A. County don't have mental health coverage because they are either uninsured or underinsured, but that could change with Clinton's health care reform. That reform package is scheduled to be unveiled this week, bu legislation on the package is now expected until next year.

Dr. Don A. Rockwell, director of the 209-bed UCLA Neuropsychiatric Hospital, said he knows how tough it is for private psychiatric hospitals because his hospital "would either be long gone or very small" without the 27 percent of its funding that comes from the state. Further adding to the woes of private psychiatric hospitals is that managed care companies are choosing to contract with acute-care hospitals with psychiatric units, rather than private psychiatric hospitals, because betting a broader array of services from one institution makes billing and oversight easier, said Monty Clark, regional vice president of the hospital council.

As a sign of the times:

* CPC Westwood Hospital, a 116-bed private psychiatric facility, closed its doors Aug. 13 because it wasn't profitable, according to company officials. The hospital lost $714,000 in the first quarter of 1993, according to figures filed with Office of Statewide Health Planning and Development.

* National Medical Enterprises Inc., the Santa Monica-based hospital operator, has closed 25 psychiatric hospitals since May 1991, according to Dave Olsen, a spokesman for the company. NME now operates 62 psychiatric hospitals, down from a high of 86, said Olsen.

NME, the subject of an FBI raid Aug. 26, is being investigated for overbilling, false diagnoses and kickbacks to doctors at its psychiatric hospitals. The company also faces more than 100 civil suits alleging abuse and mistreatment of patients at company-owned hospitals.

* UniHealth America of Burbank, closed its 70-bed psychiatric facility, LifePLUS Coldwater Canyon Hospital in North Hollywood, earlier this year. Ross Goldberg, a spokesman for UniHealth, said company officials decided UniHealth could provide psychiatric services more efficiently at one of its four acute-care hospitals that have psychiatric units.

Industry observers said all psychiatric hospitals are in peril, not just the small independent hospitals, or the hospitals that are part of a chain.

Key to a private psychiatric hospital's continued survival are its location and how aggressive it has been at converting its services to outpatient care, said Clark of the hospital council.

Most private psychiatric hospitals contacted by the Business Journal now offer "partial hospitalizatons," meaning the patient stays in the hospital during the day and goes home at night. Others are branching out in more inventive ways.

Glenbrook Hospital and Mental Health Center, a 57-bed facility in Azusa operated by NME, is marketing itself to churches and various ethnic groups, said CEO Alan Chapman. The hospital offers Christian-based services, Hispanic programs and specialized women's programs, he said. The hospital also installed an 18-bed locked facility, so it can serve law enforcement agencies, he said.