The owner of PHC Regional Hospital and Medical Center will close the doors of the South Salt Lake facility in 30 days and redirect patients to four other Salt Lake-area hospitals.
Hospital patients will be transferred to Paracelsus' four other area hospitals - Jordan Valley, Pioneer Valley, Salt Lake Regional (formerly Holy Cross) and Davis Medical Center in Layton, said Dave Jones, Paracelsus regional vice president.The move comes after "significant financial losses" at the hospital resulting from an unprofitable contract with the health maintenance organization FHP.
A meeting was scheduled Thursday at noon with hospital employees to announce the closure of the 117-bed facility. Some 500 people are employed at the hospital. Jones said that jobs for employees will be sought at the other Paracelsus hospitals and with Paracelsus' 12 Select Home Care branches.
Jones said Paracelsus will not sell the building and hopes to use it again in the future.
"No plans have been made," Jones said. "All other Paracelsus facilities are financially sound and are operating successfully."
Jones said patient care will remain a top priority.
Thursday's announcement followed one in April in which Houston-based Paracelsus Healthcare outlined three possible options for the 4-year-old hospital. Along with closure, hospital officials said they would attempt to renegotiate a contract with FHP or contract with University Hospital in an effort to bring more patients to the hospital.
Paracelsus, which purchased PHC Regional from FHP, has a 15-year contract to provide services for the HMO. FHP enrollees make up 95 percent of the hospital's clientele, but the hospital isn't making profit from the services it provides to FHP enrollees.
Paracelsus and FHP had discussed the unprofitable contract, which investors were told was flawed because of a larger than anticipated number of referrals going outside the company's network and slower than expected growth from non-contract business. Paracelsus has hired an outside firm to perform an audit of out-of-network referrals by FHP.
Paracelsus purchased the hospital, 2500 S. State, from FHP in May 1996 and renamed it. The hospital joined Paracelsus' holdings of 30 hospitals in 11 states. At the same time it negotiated the contract to continue to provide services to FHP enrollees.
The 200,000-square-foot hospital first opened in 1993 as the centerpiece of redevelopment efforts in South Salt Lake.
One New York-based industry analyst said any move to close the hospital would be a "double-edged sword" for investors but was not a surprise. Information provided to investors in April hinted more strongly at a hospital closure than comments made to local media and hospital personnel.
In its April financial report, the company wrote off $59 million for the possible sale and closure of PHC Regional and another hospital in Mississippi and $38.1 million in future losses at the Utah hospital.
"Over the long run we believe consolidation is an approach that better accomplishes our strategy of being the low-cost network provider of accessible and high-quality services in a growing and demographically attractive market," a company release said about the future of the hospital.
Investors had been stinging over reports of the company's poor performance and had welcomed the news that the company was trying to become more profitable.
Any change at the hospital could affect about 30 percent or 60,000 of FHP's 200,000 Utah enrollees. That's the number of FHP members who use doctors who refer patients to PHC Regional, said Dee Brewer, director of FHP public affairs. He said that there should be no disruption of service for FHP members. Contingency plans have been prepared for FHP enrollees. Hospitalization will still be coordinated through a patient's physician. As always, affected patients can obtain emergency care, Brewer said.
"The biggest impact will be on expectant mothers," he said.
Jones said the patients who have services scheduled at the hospital will be notified by their physician if the location of those services will change. The hospital will stop in-patient admissions on Friday. Patients should contact their physicians or FHP if they have questions.
A financial report required by the end of business at the Securities and Exchange Commission on Thursday may have been associated with the announcement, an analyst speculated.