LONG BEACH HOSPITAL: Owners Want To Stop Asset Removal By Management Firm
Nine physicians who own the recently closed Long Beach Doctors Hospital filed a complaint in Superior Court yesterday against Long Beach Health Management LLC to prevent the company from removing the hospital's assets. The owners said the management company, which closed the facility June 22, "failed to live up to its contractual obligations to the doctors and may have removed as much as $3.5 million worth of hospital assets -- largely its accounts receivable," the Long Beach Press-Telegram reports. A hearing on the complaint is slated for today. After the hospital closed its doors, Long Beach Health Management "distributed a memo to the former employees saying that the company had exercised its option to purchase the hospital's assets." In a contract with the owners signed in March, "the management company agreed to oversee the hospital's day-to-day operations and pay off about $720,000 in hospital debts." In exchange, the hospital owners agreed to pay "a monthly management fee and other financial considerations, including an option to buy the hospital and surrounding property."
The owners also alleged in their complaint that the management company did not repay two debts owed by the hospital, and that it charged a third $220,000 debt "against ongoing Medicare billings." The complaint also alleged that the management company "failed to safeguard the hospital's licenses and accreditation" by asking "the state to suspend the hospital's license" after the Joint Commission on Accreditation of Healthcare Organizations recommended that the facility be denied certification. The Press-Telegram reports that Long Beach Health Management officials Jerry Gillman and Robert Hawekotte could not be reached for comment (Heald, 7/8).