Tenet Sells Four Orange County Hospitals for $70 Million

Santa Barbara-based Tenet Healthcare on Thursday announced that it will sell four of its nine Orange County hospitals for $70 million to Integrated Healthcare Holdings, the Orange County Register reports. Integrated will acquire a total of 760 beds and more than 2,000 employees from Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Chapman Medical Center in Orange and Coastal Communities Hospital.

IHH officials said they plan to keep all four hospitals open and hire "substantially all" of the current employees (Wolfson et al., Orange County Register, 10/1).

Santa Barbara-based Tenet announced plans in January to divest 27 of its hospitals, according to the Los Angeles Times (Girion, Los Angeles Times, 10/1).

Dr. Kali Chaudhuri will provide $20.5 million in cash, loans and guarantees to IHH in exchange for an 88.8% stake in the company. Some have attributed the November 2000 "collapse" of KPC Medical Management -- then the largest physician management group in the county, which Chaudhuri owned -- to his mismanagement, according to the Register.

KPC incurred more than $50 million in debt and filed for bankruptcy, initially leaving 2,000 health care professionals unemployed and affecting access to care for 300,000 people, the Register reports.

W. Randolph Smith, the Tenet official overseeing the divestiture effort, said, "We are pleased to have reached an agreement to sell these four excellent community hospitals to a well-qualified buyer with significant experience in hospital operations."

However, some members of the Southern California medical community criticized the deal because of Chaudhuri's reputation.

Dr. Jack Weber -- a former partner in Friendly Hills Clinic in La Habra, which was under KPC's management at the time of the bankruptcy -- said, "I would say this doesn't bode well for the future of health care in Orange County" (Orange County Register, 10/1).

The deal is expected to close Nov. 30, the AP/Fort Worth Star-Telegram reports (AP/Fort Worth Star-Telegram, 10/1).