Long Beach is one step closer to reopening Community Hospital.
The City Council voted unanimously at its Tuesday, Oct. 15 meeting to approve a long-term lease with the hospital’s operator, Molina, Wu, Network. The lease became effective the day of the vote.
With the lease approved, Long Beach’s Economic Development Director John Keisler said the hospital could resume operations as soon as next month.
Although MWN has missed several self-imposed deadlines for reopening the facility in the past, most of the major hurdles in the process have now been cleared. The final step will be the state’s inspection of the hospital, which should take place at the end of October or in early November.
Details of the long-term lease that the City Council approved Tuesday include:
• The lease will last 45 years, with the option for two 10-year extensions;
• Rent will cost MWN $1 per year, and for the first five years of the hospital’s operation, MWN would pay the city 20% of the facility’s net revenue;
• MWN is responsible for all maintenance costs;
• Long Beach will reimburse MWN for 50% of the costs for required seismic work, up to $25 million;
• And MWN could terminate the lease if the company finds “it is no longer economically feasible to operate at” Community Hospital. MWN could be fully reimbursed for the cost of the seismic work if it chooses to terminate the lease.
That last provision, which officials estimated could cost the city up to $91 million, raised some concern during the council meeting.
If that happened, Keisler said, the city would recover the cost by selling the property.
“The overall terms of the lease make it financially beneficial for the tenant to terminate the lease at some point, regardless of whether or not the hospital is viable,” Long Beach resident Corliss Lee said. “We’re going to eventually lose this property; that will be the outcome of this deal.”
But council members said the risk the city took on with the lease was still less than the amount of risk that the city bears without a functioning hospital on Long Beach’s east side.
“I don’t know of any real estate transaction that occurs without an element of risk,” Councilman Daryl Supernaw, whose Fourth District encompasses the hospital, said. “Whatever (the risk) ends up being, it pales in comparison to the risk our residents are at for not having an emergency room.”
The hospital, on Termino Avenue, closed its doors last summer, after its former operator, MemorialCare, determined a state-required seismic retrofit would be too costly for the facility to remain financially viable.
Long Beach owns the property, so leaders quickly sought to find a new operator that would commit to reopening the hospital, which had the only emergency room serving East Long Beach. It found that operator in the newly formed MWN, and the two sides have been in lease negotiations ever since.
During Tuesday’s meeting, MWN co-founder John Molina said he heard the concerns about the risk Long Beach is taking on with the lease, and he doesn’t take those worries lightly.
“What you are doing tonight is entrusting us to manage a city asset,” Molina told the council, “and I take that trust very, very seriously.
“It is a big obligation on our parts,” he added, “and we will not let you down.”