Downey City Council approves sale of hospital property

The city has leased the property to Downey Regional and its predecessors since 1967, City Manager Gil Livas said.

The sale is part of the agreement between officials of the two hospitals, under way since last December, to merge with PIH becoming the sole corporate entity.

PIH will operate the 99-bed facility in Downey and its 548-bed hospital at 12401 Washington Blvd., in Whittier.

Established in 1959, PIH has more than 150 affiliated physicians and was recently honored as one of the nation’s top 100 hospitals by Truven Health Analytics.

Final approval for the merger must come from the California Attorney General’s Office, which conducted a public hearing on the plan July 15. A decision is expected this month, Livas said.

If the state approves the merger, escrow on the sale of the site is expected to close in September, he added.

Under the agreement, PIH must pay $150,000 up front to Downey and would lose the deposit if it defaults on the sale payment. On the other hand, PIH can demand its deposit back if it finds problems with the hospital or the site that Downey cannot or will not resolve, Livas said.

The contract requires that the current Downey Regional site be used for hospital purposes until at least 2030. Thereafter, the site is restricted to hospital or medical-related uses until 2063.

The medical facility has undergone several name changes over the years. The most recent lease was approved in 1983 with the Downey Community Hospital Foundation for $1 a year and expires in February, 2082.

Downey Regional Medical Center took over the lease. It filed for chapter 11 bankruptcy in 2009 and as part of its emergence from bankruptcy asked the city to enter into a deed of trust for security purposes. The City council approved the deed in February 2012.

At the end of last April, Downey Regional Medical Center filed an application with the state attorney general seeking permission to enter into an agreement to become part of PIH Health.

“Collaboration is an important element in the new era of health care reform, both locally and nationally,” said James Ball, chairman of the Downey Regional Medical Center Board of Directors, in announcing the plan last month.

“The expert support of PIH Health ensures the high standards of quality and safety that residents of the Downey community have counted on for more than 90 years,” Ball added.

“Under health care reform, those hospitals that collaborate are rewarded for their efforts to improve wellness and increase care efficiencies,” said Brian Smolskis, chief operating officer for Downey Regional Medical Center in the June announcement.

“As nonprofit organizations, both [hospitals] share a rich history of meeting the health care needs of their communities and establishing a ‘patients-first’ vision. This collaboration will further strengthen the services and the reach of each institution.”

John Lacy, the only person from the audience to comment Tuesday, said he thought there was a covenant that prevented the sale of the site. He also wondered why the guarantee of a hospital operation is only 17 years.

Livas responded that a longer hospital guarantee would have reduced the value of the property.

City Attorney Yvette Garcia said there was no covenant preventing the sale of the hospital. She noted that future councils would have control of operations there because it is zoned for hospital and medical care only.

“PIH would not have spent that kind of money if they did not plan hospital use there,” Councilman Marquez said. “Use as a hospital is important to the city. And how often is it that in slow economic times a city can receive almost $10 million.”

“We have worked diligently on all matters to cover all angles,” Saab said. “This is a good thing for the city. It will further the quality of life for our residents.”

“The Downey hospital has had financial problems and the city has had very little control. The requirement for health care to 2062 is an important safeguard,” he said.

“Downey Regional has been a constant concern to me the past five years,” Brossmer said. “It’s important to have a secure, viable hospital for emergency runs by our paramedics. If you dial 911, they will probably take you to Downey Regional.”

Besides Downey Regional, there are two other hospitals in the city: Kaiser Permanente Health at Imperial Highway and Bellflower Boulevard and the Los Angeles County-owned Rancho Los Amigos National Rehabilitation Center at 7601 Imperial Highway.