The city of Long Beach will pitch in up to $25 million for retrofitting costs in a tentative deal that would enable operators to reopen Community Hospital later this year, officials announced Friday.
The plan with the new operator Molina, Wu, Network comes after months of negotiations on a lease agreement for the 94-year-old East Long Beach facility, which closed last summer due to seismic compliance issues, shuttering the area’s only emergency room.
The City Council will vote on the interim lease at its regular meeting on Tuesday. The council will also consider the terms and provisions for a long-term agreement to address seismic compliance.
“We’ve made reopening Community Hospital a priority, and are committed to an accessible and safe emergency room in East Long Beach,” Mayor Robert Garcia said in a statement Friday. “I’m confident that our new partners at MWN will operate a model facility that will provide outstanding medical care and health services.”
Former operator MemorialCare Health System closed Community last year after determining that the facility, which sits on top of a fault line, would be too costly to retrofit to meet seismic standards.
In an effort to keep Community open, the city, which owns the land, selected Molina, Wu, Network as the new operator under a plan to run the facility as a for-profit hospital.
Community was initially expected to reopen in January, but operators were still working out how to finance the more $45 million needed for the seismic retrofitting.
Under the proposed public-private partnership, the city would be responsible for half of the retrofit costs for up to $50 million, while Molina, Wu would be responsible for any additional costs. The city would be responsible for no more than $25 million in the deal.
It was not clear where the city funding will come from. Officials did not elaborate in Friday’s statement.
Long Beach previously leased the property to MemorialCare for $1 per year. Under the new proposal, the city would lease the property to Molina, Wu for $1 a year for 45 years, with the option of two 10-year extensions.
The hospital will include an acute care facility, office building and other ancillary medical services, as well as possible sobering center beds, medical detox beds, recuperative care and psychiatric beds to address community needs.
“It’s been our goal since day one to return this hospital back to the community,” John Molina, of Molina, Wu said in a statement. “We look forward to our partnership with the city to ensure Community Hospital can continue to provide meaningful, quality care services.”
(John Molina of the Molina, Wu, Network is a founding partner in Pacific6, the parent company of the Long Beach Post.)
Molina, Wu still faces several hurdles.
First, there is the challenge of an April 28 deadline to reopen the hospital before its state license expires.
But if that can’t happen, Assemblyman Patrick O’Donnell, D-Long Beach, said he will work to pass legislation to extend the deadline and give the operators more time to retrofit the campus. O’Donnell said he already has a placeholder, known as a spot bill.
“I’m prepared to do whatever I can to help,” he said Thursday.
If the license were to expire, operators would face new challenges and regulations when applying for a new license.
The group also will have to work with city architects to draw up a plan to present to the state.
When it reopens, the hospital likely won’t make money for the first six months, so operators also will have to work out how to pay staff during that time. When Community was open under MemorialCare Health System, it generated about $2 million annually, operators have said.
“Community Hospital provides important services for our residents across Long Beach,” 4th District Council member Daryl Supernaw said in a statement. “I look forward to joining my colleagues next week in reviewing the proposed major terms and provisions and making a decision based on the public’s best interest.”
This isn’t the first time the city has funded millions for a major project under a lease agreement. In 2016, the city, which owns the Queen Mary, approved a 66-year contract with Urban Commons LLC to run the historic ship.
Under the agreement, the city invested $23 million up front so Urban Commons could make urgent structural repairs. The funding came from $17.2 million in bonds and $5.8 million in Queen Mary reserves.
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