Santa Ana's Western Medical Center has been losing money for years, and that's bad news if you have a heart attack while smoking and fall into a pile of oily rags without your insurance card. We jest. But Western Med boasts the only free trauma ward, burn unit or cardiac center for thousands of poor Santa Ana residents. To save hemorrhaging—its own—the hospital's new owner, Integrated Healthcare Holdings Inc. (IHHI), is threatening to stop treating CalOptima patients. The financial situation is so dire that hospital officials admit they can't even afford to fully stock surgical supplies.
But when Dr. Michael Fitzgibbons, Western Medical Center's then-chief of medical staff, spoke out about the hospital's bleak finances, IHHI sued him for slander and interfering with the company's business. The lawsuit, filed in June, cited a May 2005 e-mail Fitzgibbons sent to other doctors describing the hospital's business situation as “ominous”—10 days after IHHI received a notice of default on a $50 million loan.
Fitzgibbons says the suit is retaliation for his professional obligation to speak out where patient care is concerned—that the suit is aimed at silencing him and others. Although lawyers for IHHI did not respond to a request for comment for this story, the company has denied that charge.
One thing is clear: IHHI's suit has the potential to bankrupt Fitzgibbons for saying in public what, nearly a year later, company officials openly acknowledge is true: the hospital really is bleeding cash.
“Yes, we are still losing money,” said Dr. Anil Shah, president of Orange County Physicians Investment Network, IHHI's primary investor in Western Medical Center. “The financial state of the hospital is guarded. But we're constantly depleting our losses. We expect to be, probably in the next couple of months, turning around the corner.”
And the suit really has served to silence IHHI's critics. Other doctors who have contacted the Weekly to support Fitzgibbons' claims did so on the condition they never be named—out of fear they, too, will become the target of lawsuits.
One Western Med doctor said IHHI went on an “orgy of cleaning” immediately after the Weekly published a Feb. 16 article about the hospital's shortage of surgical supplies and general uncleanliness.
“Things were not improved when a sewage line blew out in the supply area last month,” he said. “One elevator has been out of service for six months, the backup CAT scanner is now out of service for an indefinite amount of time since it burst into flame a couple of weeks ago with a patient in it . . . The management have admitted to their employees that they are months behind in paying their bills, the patient census is down, attrition of longtime employees continues and supplies are frequently out of stock.”
(Reading from an e-mail from IHHI CEO Bruce Mogel, Shah said the backup CAT scanner merely sparked. “We got it repaired and have ordered a new tube for it,” he said.)
The doctor added that IHHI's lawsuit against Dr. Fitzgibbons is keeping most of Western Medical Center's doctors quiet. “It's a campaign to intimidate the medical staff, and clearly it's working,” he said. “How long before Orange County awakens to find the doors locked at the emergency room? Somehow, the owners have plenty of money for litigation . . . but no ready cash for maintenance or supplies.”
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That apocalyptic scenario is what IHHI's critics predicted when the company proposed buying four Tenet Healthcare hospitals, including Western Med, in the fall of 2004. Their concerns drew the attention of state Senator Joe Dunn (D-Santa Ana). His public hearings featured doctors warning that IHHI's principal investor, Dr. Kali Chaudhuri, had a disastrous record where health care is concerned; he was behind the infamous November 2000 collapse of several California hospitals owned by Chaudhuri. Dunn said Chaudhuri's participation in the hospital sale was a deal killer. When IHHI responded by replacing Chaudhuri with Shah, the transaction won state approval.
That was apparently the easy part: then came Fitzgibbons' e-mail, IHHI's lawsuit and a seemingly intractable battle over one of the county's three trauma centers. Shah's willingness to speak out now about the deal represents a departure for the company, which has maintained an Easter Island-like silence since the January 2005 takeover.
Shah is an exceptionally bright, soft-spoken man. A cardiologist with 25 years of experience who practices at several Orange County hospitals, including Western Med, he says his only goal is to save the hospital. After all, he says, if Western Med goes bankrupt, nobody stands to lose more money—$35 million, to be exact—than Shah himself.
To keep the hospital afloat, Shah explained, he has to cut costs. He says he's asking the state for more cash to treat CalOptima patients. He blamed “lousy contracts” the company inherited from Tenet. “If I'm losing $10 million by serving the poor in Orange County and the county can't pay me, I don't have an obligation to serve them,” he said. “We would rather downsize than lose money.”
Shah doesn't question Fitzgibbons' commitment to improving the quality of care at Western Medical Center and says he still considers Fitzgibbons a “friend.” Company documents show he asked IHHI to drop its lawsuit against Fitzgibbons, a request the company accepted last December—so long as Fitzgibbons agreed to pay his own legal bills.
Fitzgibbons refused the offer, saying his legal costs are already so high that he's had to ask other doctors to contribute to his defense fund.
Though he concedes many of Fitzgibbons' complaints are true, Shah insists the doctor has “slandered” IHHI. “He is on a crusade to malign us for no reason,” Shah said. He denied that recent cleaning efforts at the hospital were a response to last month's Weekly article. “Six months prior to the article . . . we negotiated a contract with a new company because we wanted to improve the cleanliness at the hospital,” Shah said. “The timing of the change occurred a few weeks prior to the article.”
While Shah denied that Western Medical Center is losing patients or doctors at a higher rate than in the past, he did acknowledge the recent sewer break. That problem, he said, was immediately fixed, but the broken elevator and CAT scanner are still undergoing repairs.
“As to supplies and paying our bills, we manage our cash much more carefully than the previous owners,” said Shah, reading from Mogel's e-mail. “We do keep supplies at lower levels but have never run out of supplies or failed to meet the needs of our patients, and we never will . . . Had Dr. Fitzgibbons decided not to slander and damage our company, we never would have sued him.”
Speaking of that lawsuit: contacted by the Weekly for a response, Fitzgibbons referred us to his lawyer.
Award-winning investigative journalist Nick Schou is Editor of OC Weekly. He is the author of Kill the Messenger: How the CIA’s Crack Cocaine Controversy Destroyed Journalist Gary Webb (Nation Books 2006), which provided the basis for the 2014 Focus Features release starring Jeremy Renner and the L.A. Times-bestseller Orange Sunshine: The Brotherhood of Eternal Love’s Quest to bring Peace, Love and Acid to the World, (Thomas Dunne 2009). He is also the author of The Weed Runners (2013) and Spooked: How the CIA Manipulates the Media and Hoodwinks Hollywood (2016).