In a blockbuster transaction destined to dramatically alter the commercial face of Downtown, the ambitious Jewish Home for the Aging, based in the San Fernando Valley, and Brotman Medical Center, battling to escape from bankruptcy, last night signed a two-fold agreements valued at $23 million.
Pending bankruptcy court approval on Thursday, July 24:
• The Jewish Home, a multi-level senior living community, will replace controversial Prime Healthcare of Victorville as Brotman’s primary lender, ending one of the shortest, unhappiest relationships in the hospital’s 84-year history, and
• Long anxious to establish a major presence on the Westside, the Jewish Home will have first call on acquiring half of Brotman’s present property, a 2.4-acre parcel known as Delmas West, the original grounds, for $16 million. The option-to-acquire is 2 years, and a decision is expected within 18 months. The Home would convert the grounds into an assisted living facility.
The remaining $7 million, called a real estate loan, would cover most of a disputed debt — pegged between $8 and $10 million —that lenders claim Brotman owes.
Jewish Home officials have said they regard Culver City, centrally positioned and accessible to north/south and east/west freeways and outlying communities, as “an ideal location.”
“In my opinion, this is a step forward in Brotman’s strategy to emerge from bankruptcy,” Stan Otake, the hospital’s Chief Executive Officer, told the newspaper this afternoon.
As happy as he is to enter a relationship with the reputable Jewish Home, Mr. Otake is at least that relieved, pending court rulings, “to escape the grasp of Prime Healthcare.” In the last several years, Prime, tiny and distant from urban centers, has evolved into a hugely hungry and matchingly aggressive purchaser and converter of established hospitals, while fraying feelings and fueling anger along the way.
90 Days and Done
Ironically, the property-seeking steering committee of the Jewish Home and Brotman leaders came together three months ago, just as Prime, to Brotman’s immediate displeasure, was establishing itself as the hospital’s new lender, supplanting Capital Source of Maryland.
One person described the meeting of the Home and Brotman as the commercial equivalent of love at first sight, Brotman with a need to unload, the Home with the opposite desire.
For Brotman, the logjam-breaker in overcoming bankruptcy was selling off Delmas West. “One strategy as part of our bankruptcy filing,” Mr. Otake said, “has been to monetize certain assets. The Delmas West property has been up for sale since early November,” and one of the bidders was the Home.
After years of rumors of gaping financial setbacks, Brotman filed Chapter 11 bankruptcy last October, which surprised few and disappointed a like number, if Downtown chatter is to be believed. Hospital officials hope their link to the Jewish Home finally will bring stability. Brotman frequently has changed owners in the last 40 years, and never has lacked for critics.
Next Year in Culver City
Mr. Otake, brought in last autumn to execute precisely this kind of bold, sweeping strategy, said that if plans proceed as intended, the to-be-downsized hospital will throw off the chains of bankruptcy by October, a bare 90 days away. He estimated that the widespread trend of downsizing at Brotman will begin in 3 to 5 years.
Large hospitals, in many settings, have become passe because of advances in the field.
“The hospital industry has changed dramatically, and it continues to change,” said Mr. Otake. “The advent of new technology and the sophistication of medicine have made less of a need for hospital beds, from an acuity standpoint. A gall bladder surgery 15 years ago would have meant a 6-day stay. Now it is done on an outpatient basis. Similarly, knee surgery was an in-patient procedure, requiring hospitalization. Now it is done on an outpatient basis. These developments have happened to the benefit of the community and to patients in general.
Cutting in Half
“The changes in medicine have improved care for Americans, and for Culver City residents in particular.”
Recalling a statement he made last spring, Mr. Otake said there no longer is a need for Brotman to be a 420-bed hospital. Such a need has not existed for a long time. “A brand new UCLA medical center opened up recently, a 500-bed academic medical center, that probably has been downsized by a quarter over the years. I could give other examples. Long Beach Memorial once had a thousand beds. Now they are close to 500.
“Bottom line is, our census never has tapped our bed capacity.The Delmas East property really is a roughly 250-bed facility for Culver City.
“Since I came here, I never have hit 250, on a census basis. We came close to 200 in January, 199 patients. That is all.”
The nearly 100-year-old Jewish Home for the Aging offers 3 separate services — assisted living, independent living and skilled nursing care — for 1,000 patients/residents on its 2 campuses, both in Reseda. Since opening in 1912, when it was known as the Hebrew Sheltering Home, it has tracked population centers across Los Angeles. The Jewish Home began in Boyle Heights when most Jews lived there. With the center of gravity shifting westward by mid-century, the trek to the San Fernando Valley began in the early 1960s.
A century along, the Jewish population is about equally divided between the Valley and the Westside, explaining why leaders of the Jewish Home have been eager to create a physical profile somewhere in West Los Angeles.
