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LEASE
27.40
THIS LEASE is made and entered, in duplicate, as of February 1, 2001 for
reference purposes only, pursuantto a minute orderadopted bythe City Council of the City
of Long Beach at its meeting on January 23, 2001, by and between COMMUNITY
HOSPITAL OF LONG BEACH, INC., a California public benefit corporation, whose address
is 1720 Termino Avenue, Long Beach, CA 90804 ("Tenant") and the CITY OF LONG
BEACH, a municipal corporation ("Landlord").
In consideration of the faithful performance of the terms, covenants and
conditions herein, the parties agree as follows:
1. Leased Premises. Landlord hereby leases to Tenant and Tenant hereby
accepts "as is" and leases from Landlord the premises described in Exhibit "A" attached
hereto and incorporated herein by this reference, commonly known as 1720 Termino
Avenue, Long Beach, CA 90804 ("Premises").
Tenant acknowledges that it has not received and Landlord has not made
any warranty, express or implied, or representation as to the condition of the Premises.
Landlord shall have no responsibility to bring the Premises into compliance with any laws,
rules or regulations (including but not limited any building or occupancy codes, or
certification/accreditation requirements) or to bring the Premises into "move in" condition.
Landlord shall have no liability to Tenant and Tenant shall have and make no claim against
Landlord for any damage, injury, loss of use, or loss of business -caused by the condition
of the Premises.
Subject to the conditions described below, Tenant hereby leases the
additional property described in Exhibit "B" attached hereto and incorporated herein by this
reference ("Additional Premises"). Landlord hereby discloses that the chain of title to the
Additional Premises may contain a gap and, therefore, Landlord shall have the opportunity
to file a quiet title action with respect to title to the Additional Premises. If Landlord fails to
quiet title, for whatever reason, then Tenant agrees to and shall accept the Additional
Premises with knowledge of the cloud on Landlord's title and Tenant waives all claims
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Tenant may have against Landlord with respect to such cloud on title.
2. Term. A. The term of this Lease shall begin at 12:01 a.m. on February
1, 2001, and shall end at midnight on January 31, 2020, unless sooner terminated as
provided herein. February 1 each year shall be the "Anniversary Date" and February 1,
2001 shall be the first Anniversary Date. The date on which Tenant opens the Premises
as an acute care facility shall be the "Commencement Date", which shall be no later than
July 1, 2001. The terms, covenants and conditions of this Lease shall become effective
on the first Anniversary Date, unless otherwise indicated herein.
B. Tenant shall have an option to extend the term of this Lease for two (2)
separate, consecutive periods of ten (10) years each. Tenant shall give notice to Landlord
that Tenant is exercising an option at least one hundred twenty (120) days prior to the
expiration of the original term or any extension term. If the Tenant is in default hereunder
on the date of its notice, or if the Tenant defaults between the date of the notice to extend
and the expiration of the original term or any extension term and has not cured that default
prior to said expiration so that Tenant is in default on the date any extension term is to
begin, then the notice regarding the exercise of the option to extend shall be void and
ineffective and no extension term shall begin.
The option to extend the term shall be personal to Tenant and may be
I exercised only by the originally named Tenant and not by any assignee, subtenant, or
other transferee of Tenant.
C. If Landlord is unable to deliver possession of the Premises to Tenant on
or before the projected Commencement Date, Landlord shall not be liable for its failure to
do so. This failure shall not affect the validity of this Lease or the obligations of Tenant
under this Lease, but this Lease shall be amended to reflect the true Commencement
Date. And, Tenant shall have the right to terminate this Lease if Landlord fails to deliver
possession of the Premises by July 1, 2001, and neither party shall be liable to the other
in the event of such termination by Tenant.
D. If during the term of this Lease, any law, rule, or regulation becomes
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effective the provisions of which so restrict the uses to which the Premises can be put that
Tenant is unable to use or successfully operate the Premises in the manner contemplated
herein, then Tenant may terminate this Lease with sixty (60) days prior notice to Landlord
If Tenant exercises this right to terminate, then Tenant shall immediately repay all sums
yet unpaid as described in Section 4 below.
3. Use. A. As of the Commencement Date, Tenant shall use the Premises
solely for an acute care hospital and other health care services normally provided by a
community hospital, for a medical office building, and for other uses which are approved
in advance in writing by the City Manager or designee, which approval may be granted or
withheld in the City's sole discretion. In considering whether or not to grant approval,
Landlord may consider any factors it deems relevant, including but not limited to
environmental risks, financial risks, and compatibility with approved uses. Landlord may
impose reasonable conditions prior to granting approval, including, but not limited to
requiring Tenant to provide additional insurance coverage and provide additional financial
security. This Lease shall be amended to add additional, approved uses.
purpose.
B. Tenant shall not use or permit the use of the Premises for any other
C. Tenant shall not use the Premises nor conduct any activity thereon in any
manner that creates a nuisance, unreasonable annoyance, or waste. Tenant shall not
make or permit any noise or odors that constitute a nuisance within the meaning of
California Civil Code Section 3479 or California Penal Code Section 370, or their
I successors.
D. Prior to the Commencement Date and throughout the term, any
extensions and any holding over, Tenant shall obtain and maintain all licenses and permits
required by any federal, state, county, or local government or agency for the uses
permitted hereunder and for accreditation by all agencies having jurisdiction over
operations on the Premises. Tenant shall use the Premises and operate and manage all
facilities thereon in compliance with all laws, ordinances, rules, and regulations by
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agencies having jurisdiction over the Premises, the facilities and operations thereon
(including but not limited to those relating to earthquake retrofits).
E. Tenant understands and agrees that this Lease covers only the surface
of the Premises and only so much of the subsurface as is reasonably necessary for
Tenant's use of the Premises as permitted hereunder.
F. Tenant shall use the Premises in accordance with the business plan
submitted by Tenant to Landlord, which business plan is attached hereto as Exhibit "C" and
incorporated herein by this reference.
G. If Tenant performs the terms, covenants, and conditions of this Lease,
then Tenant shall peaceably and quietly hold and enjoy the Premises.
4. Rent. A. Tenant shall pay to Landlord as base rent the sum of One Dollar
($1.00) per year, in advance, without setoff, deduction, demand, or notice. If this Lease
terminates prior to its natural expiration for any or no reason, then Tenant shall not be
entitled to any refund of the rent. Tenant shall pay base rent on the Anniversary Date each
year to the address of Landlord shown herein for notices.
B. Tenant shall pay as additional rent the actual cost of maintaining the
Premises which Landlord has spent during the months of November, 2000 and December,
2000 and January, 2001, pursuant to the schedule attached hereto as Exhibit "D" and
incorporated herein by this reference, beginning on May 1, 2003.
C. Landlord will provide a tenant improvement allowance to Tenant in an
amount up to but not exceeding $2,000,000, so that Tenant can make or cause to be made
improvements to the Premises, which improvements are identified in Exhibit "E" attached
hereto and incorporated herein by this reference, provided, however, that Landlord shall
have no obligation to provide such tenant improvement allowance unless and until Tenant
proves to the sole satisfaction of Landlord that Tenant has immediately available: (i) cash,
(ii) a letter of credit, or (iii) another form of credit, in the amount of $17,000,000. Tenant
shall pay as additional rent an amount equal to the actual cost of these tenant
improvements, not to exceed $2,000,000, pursuant to Exhibit "D".
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D. Tenant shall pay as additional rent any sum not otherwise identified in this
Section 4 but authorized to be spent or advanced by Landlord under this Lease (and
actually spent by Landlord), whether or not designated as additional rent. Any other
sum(s) that Tenant must pay under this Lease shall also be deemed additional rent.
E. Notwithstanding anything to the contrary herein regarding default and the
opportunity to cure such default, Tenant's failure to make any payment due under Sub-
section 4(B), Sub -section 4(C), or Sub -section 4(D) when due or Tenant's request that
Landlord expend any funds [excluding the funds identified as the tenant improvement
allowance in Sub-section4(C)], whether for additional tenant improvements orfor any other
purpose relating to the Premises, shall be a material default entitling Landlord to terminate
immediately this Lease and to pursue all other remedies available to Landlord at law or in
equity.
F. If Tenant exercises its option to extend the term of this Lease, then base
rent shall be increased to fair market rent at the beginning of each extended term. Fair
market rent shall be determined as follows:
(i)' Promptly upon receipt of Tenant's notice to exercise its option to
extend, Landlord shall meet with Tenant to negotiate in good faith the fair market rent. If
the parties have not agreed on fair market rent at least ninety (90) days prior to the
Anniversary Date, then they shall attempt in good faith to name an appraiser not later than
seventy-five (75) days prior to the Anniversary Date. If they are unable to agree on an
appraiser within such 75 -day period, then they shall each appoint an appraiser not later
than sixty-five (65) days prior to the Anniversary Date. Within ten (10) days thereafter, the
two appointed appraisers shall appoint a third appraiser. If either Landlord or Tenant fails
to appoint its .appraiser within the prescribed time period, then the single appraiser
appointed within the prescribed time period shall determine the fair market rent. If both
parties fail to appoint appraisers within the prescribed time period, then the first appraiser
thereafter selected by a party shall determine the fair market rent. Each party shall bear
the cost of its own appraiser and the parties shall share equally the cost of the single or
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third appraiser, if applicable. Such appraiser(s) shall work in the Long Beach area and
shall be members of professional organizations such as MAI, American Institute of Real
Estate Appraisers or the Society of Real Estate Appraisers, or equivalent, and shall have
been in the active practice of the profession of real estate appraisal for at least ten (10)
years.
(ii) Fair market rent shall mean the price that a ready and willing tenant
would pay as of the closest Anniversary Date as monthly rent to a ready and willing
landlord of premises comparable to the Premises, including all of its components and
improvements, its size, location, and other features, if such premises were exposed for
lease on the open market for a reasonable amount of time.
(iii) The appraiser(s) shall determine the fair market rent no later than
thirty (30) days prior to the Anniversary Date and shall notify both parties in writing of the
determination of fair market rent. This Lease shall be amended to state the fair market rent
for the extended term.
5. Taxes. Tenant acknowledges that this Lease may create a possessory
interest subject to taxation and that Tenant may be liable for payment of taxes levied on
such interest. Tenant shall promptly pay, prior to delinquency, all taxes, assessments,
charges, and fees, however designated, levied or assessed against the Premises, the
buildings, improvements, fixtures, equipment and personal property on the Premises.
Tenant shall furnish to Landlord satisfactory evidence of exemption from or payment of
said taxes, assessments, charges and fees immediately on demand from Landlord.
6. Relocation. Tenant agrees that nothing in this Lease shall create any right
in Tenant to any relocation assistance or payment pursuant to the provisions of Title 1,
Division 7, Chapter 16 of the Government Code, or any successor statute; from Landlord
on the termination or expiration of this Lease.
7. Insurance. A. Concurrent with the execution of this Lease and throughout
the original and any extension term or holding over, Tenant shall procure and maintain, at
its cost, from insurance companies admitted to write insurance in the State of California or
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from nonadmitted insurers that are on California's List of Eligible Surplus Lines Insurers
CLESLI") and that have a minimum rating of or equivalent to ANIII by A.M. Best Company:
(i) As of the first Anniversary Date, commercial general liability insurance
(equivalent in coverage scope to Insurance Services Office, Inc. [" ISO'J form CG 00 01 11
85 or 1188), in an amount not less than Ten Million Dollars ($10,000,000) per occurrence
and general aggregate. Such insurance shall include (as may be applicable to Tenant's
operations, products and completed operations) environmental impairment liability,
underground storage tank liability, sexual molestation liability, garagekeepers legal liability,
and fire legal liability, and shall not limit or exclude coverage for contractual liability,
independent contractors liability, or cross liability protection. This insurance shall be
endorsed to include Landlord, its officials, employees and agents as additional insureds
(by an endorsement equivalent in coverage scope to ISO form CG 20 2611 85) and to
waive the insurers' rights of subrogation against Landlord, its officials, employees and
agents.
(ii) As of the Commencement Date, hospital professional liability insurance,
including as may be applicable to Tenant's operations, medical professionals' liability,
nurses' professional liability, pharmacists' professional liability, and other professional and
errors and omissions liability coverages in an amount not less than Ten Million Dollars
($10,000,000) per occurrence and in aggregate.
(iii) As of the first Anniversary Date, workers' compensation insurance as
required by the State of California and employer's liability insurance with minimum limits
of One Million Dollars ($1,000,000) per accident. The policy shall be endorsed by the
insurerto waive the insurer's rights of subrogation against Landlord, its officials, employees
and agents.
(iv) As of the first Anniversary Date, automobile liability insurance (equivalent
in coverage scope to ISO form CA 00 01 06 92) in an amount not less than Two Million
Dollars ($2,000,000) combined single limit per accident for bodily injury and property
damage covering Auto Symbol 1 ("Any Auto").
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(v) As of the Commencement Date, any other insurance that may be required
by the Joint Commission for Accreditation of Healthcare Organizations or similar
accreditation authority and state and federal regulatory authorities for continued
accreditation and licensing of the Premises.
(vi) As of the first Anniversary Date, "All Risk" property insurance, including
debris removal and boiler and machinery coverage, in an amount not less than Forty-six
Million Dollars ($46,000,000) to cover the full replacement value of all buildings and
structures on the Premises. Landlord shall be a named insured under this coverage. The
$46,000,000 minimum coverage may be adjusted immediately and retroactively to the
Commencement Date of Operation, at the sole discretion of Landlord's Risk Manager or
designee, after completion of an appraisal of the Premises by Landlord's Risk Manager or
agent thereof.
(vii) As of the date of any construction, "All Risk" property insurance,
including debris removal and builders risk coverage during the course of any construction
on the Premises, in an amount sufficient to cover the full replacement value of buildings
and structural improvements constructed or erected on or about the Premises by Tenant.
Landlord shall be named as an additional insured under a standard loss payable
endorsement.
(viii) As of the first Anniversary Date, "All Risk" property insurance, in an
amount sufficient to cover the full replacement value of Tenant's personal property and
equipment on the Premises, whether owned, leased, or in the care, custody or control of
Tenant, and of Landlord's personal property and equipment on the Premises including but
not limited to furnishings and equipment. Landlord shall be named as an additional insured
under a standard loss payable endorsement, as its interests may appear.
(ix) As of the first Anniversary Date, business interruption insurance providing
�I that the rent and additional rent due Landlord shall be paid for a period of up to twelve (12)
months if the Premises are destroyed or rendered inaccessible.
B. Tenant shall procure and maintain or cause to be procured and
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maintained the insurance required in sub -Section 7(A) above by Tenant's on-site
contractors, subtenants, and permittees, as may be applicable to their respective
operations, subject to the following:
(i) Tenant's contractors, subtenants, and permittees shall provide Commercial
General Liability insurance as required under sub -Section 7(A)(i) above in an amount not
less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars
($2,000,000) general aggregate, with the exception of any contractor or subcontractor
operating a parking garage on the Premises, as stated in sub -Section 7(A)(iii). This
insurance shall be endorsed to include Landlord, its officials, employees and agents as
additional insureds (by an endorsement equivalent in scope to ISO form CG 20 2611 85)
and endorsed to waive the insurer's rights of subrogation against Landlord, its officials,
employees and agents. All other applicable insurance requirements under sub -Section
7(A) shall also apply.
(ii) Tenant's contractors, subtenants and permittees whose operations or
services involve medical, surgical, pharmaceutical or other medical -related services or
operations on the Premises shall provide medical professionals' liability, nurses'
professional liability, pharmacists' professional liability, and other professional and errors
and omissions liability, as applicable to their respective operations, in an amount not less
than One Million Dollars ($1,000,000) per occurrence and in aggregate.
(iii) If any parking structure on the Premises is operated by a contractor,
subtenant or permittee of Tenant, then that operator shall provide garage liability in an
amount not less than One Million Dollars ($1,000,000) per occurrence and Three Million
Dollars ($3,000,000) general aggregate in place of the commercial general liability
requirement under Section 7(A)(i) above. Such insurance shall include garagekeepers
legal liability insurance in an amount not less than One Million Dollars ($1,000,000) per
occurrence. This insurance shall be endorsed to include Landlord, its officials, employees
and agents as additional insureds with respect to the operations of the operator or use of
the Premises by the operator and endorsed to waive the insurer's rights of subrogation
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against Landlord, its officials, employees and agents.
(iv) If Tenant commences development or construction on the Premises, then
Landlord reserves the right to require additional coverages from Tenant's contractors and
subcontractors, including but not limited to coverage for explosion, collapse, and
underground ("XCU") hazards, environmental impairment liability, design professionals'
liability, and construction management errors and omissions liability.
C. If Tenant fails to procure or maintain any insurance required herein, then
Landlord may, at Landlord's sole discretion, procure and maintain such insurance on behalf
of Tenant, at Tenant's sole expense, and Tenant shall pay the cost of such insurance to
Landlord as additional rent. The phrase "Fails to procure or maintain" shall be determined
by Landlord's Risk Manager or designee, in his/her sole discretion.
D. If Landlord exercises its discretion with respect to the procurement or
maintenance of insurance for and on behalf of Tenant hereunder, then Tenant shall pay
the cost of insurance as additional rent, within fifteen (15) days after receipt of an invoice
therefor. If Tenant fails to pay the invoice, when due, interest shall accrue and be due on
the unpaid amount at the rate of two percent (2%) per month, or the maximum allowed by
law, whichever is greater, commencing on the sixteenth (16th) day after the date of the
invoice and compounded monthly.
E. Tenant shall provide to Landlord all policy information requested by
Landlord and shall make available to Landlord during Tenant's normal business hours all
books, records and other information relating to insurance and shall provide copies of
policies to Landlord upon request.
F. On execution of this Lease or as otherwise stated herein, Tenant shall
deliver to Landlord certificates of insurance and endorsements required herein, including
the certificates and endorsements of Tenant's subtenants, permittees, contractors and
subcontractors for approval as to sufficiency and form. The certificates and endorsements
for each insurance policy shall contain the original signatures of persons authorized by that
insurer to bind coverage on its behalf. Tenant shall provide Landlord with certificates of
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insurance and endorsements for renewal policies within thirty (30) days after the existing
policy expires.
G. All insurance required herein shall be separately endorsed to require at
least thirty (30) days priorwritten notice of cancellation [or ten (10) days prior written notice
if cancellation is due to nonpayment of premiums], nonrenewal, or reduction in coverage
or limits (other than reduction of limits due to claims paid) and to provide that coverage
shall be primary and not contributing to any other insurance or self-insurance maintained
by Landlord, its officials, employees, and agents.
H. Any self-insurance program, self-insured retention or deductible must be
approved separately in writing by Landlord's Risk Manager, or designee, and shall protect
Landlord, its officials, employees and agents in the same manner and to the same extent
as they would have been protected had the policy or policies not contained such retention
or deductible provisions.
I. With respect to damage to property, Landlord and Tenant hereby waive
all rights of subrogation, one against the other, but only to the extent that collectible
commercial insurance is available for such damage.
J. Not more frequently than every three (3) years or upon any new
construction or development on the Premises or upon any assignment, transfer or
sublease approved by Landlord in accordance with the provisions of this Lease (excluding
the subleasesforthe Professional Office Building which Landlord has assigned to Tenant),
if in the opinion of Landlord's Risk Manager or designee, the amount, scope, or types of
coverages specified herein are not adequate, Tenant shall amend its insurance as required
by Landlord's Risk Manager or designee unless Tenant establishes that any such
amendments are not reasonably based on the insurance, or actuarially -certified self-
insurance, maintained by similar entities in the same geographic region. Such
amendments may include but are not limited to coverage for earthquake and flood, if
available from responsible insurance companies at reasonable cost. The phrase
"responsible insurance companies at reasonable cost" shall be determined by Landlord's
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Risk Manager or designee, in his/her sole discretion.
K. Such insurance as required herein shall not be deemed to limit Tenant's
liability in any way under.this Lease. The procuring or maintaining of insurance shall not
be construed as performance of the indemnity provisions of this Lease. Landlord makes
no representations that the limits or forms of coverage of insurance specified herein are
adequate to cover Tenant's liability or obligations hereunder or otherwise.
M. Any modification or waiver of any insurance requirement shall be made
I only with the written approval of Landlord's Risk Manager or designee.
8. Surrender of Premises. On the expiration or sooner termination of this
Lease, Tenant shall deliver to Landlord possession of the Premises in substantially the
same condition that existed immediately prior to the date of execution hereof, reasonable
wear and tear excepted. Tenant and Landlord acknowledge that Landlord gave to Tenant
prior to execution of this Lease a copy of a video tape showing the condition of the
Premises. Tenant shall deliver the Premises to Landlord in the same or better condition
that is shown in the video, normal wear and tear excepted. Landlord shall take and have
ownership of all improvements, at no cost to it, at the termination or expiration of this
Lease. Tenant shall remove its equipment, supplies and other items so as to leave the
Premises in a condition which does not damage the Premises and the improvements
thereto in any way, including but not limited to holes in walls, ceilings and floors, which
does not expose asbestos or other hazardous material, and which does not cause
asbestos to become friable and dispersed into the air.
9. Assignment. A. Except as described and approved herein, Tenant shall
not assign or transfer this Lease or any interest herein or any right hereunder, nor delegate
any duties hereunder. Tenant shall not grant any franchise, easement, right of way in, on,
over, under or across the Premises. Any attempted assignment, transfer, delegation, or
grant shall be void and any assignee, transferee, delegate, or grantee shall acquire no right
or interest by reason of such attempted assignment, transfer, delegation, or grant.
Subsequent to execution of this Lease Tenant may, however, sublease portions of the
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Premises with the prior written approval of the City Manager or designee provided that the
subleases incorporate by reference the general terms of this Lease, that is, those terms
which only Tenant is capable to perform.
B. Tenant hereby accepts assignment from Landlord of the subleases listed
in Exhibit "F' attached hereto and incorporated herein by this reference. Tenant agrees
to and shall execute all documents necessary to accept such assignment. Upon execution
of such documents by Tenant, Landlord will transfer to Tenant all security deposits that
Landlord has in its possession. Further, Tenant shall terminate all subleases prior to
expiration or sooner termination of this Lease if so requested by Landlord and, if Tenant
fails to do so, then Tenant shall defend, indemnify and hold Landlord harmless from and
against all claims, demands, damages, loss, liability, causes of action, costs and expenses
relating to Tenant's failure to do so, including but not limited to relocation costs.
10. Default. The occurrence of any one or more of the following acts shall
I constitute a default by Tenant:
(a) Failure to obtain the licenses necessary to operate the Premises as an
acute care facility on or before July 1, 2001;
(b) Failure to operate an acute care facility on the Premises;
(c) Failure to achieve a positive cash flow by the end of thirty-six (36) months
following the Commencement Date and for each fiscal year of Tenant thereafter;
II notice;
(d) Failure to pay rent when due if the failure continues after three (3) days'
(e) Abandonment of the Premises, in whole or in part, provided that failure
to occupy or operate all or any part of the Premises for ten (10) consecutive days shall be
deemed an abandonment as to all or as to that part so abandoned, except for temporary
closures for specified dates with the prior approval of Landlord. Temporary closures shall
not relieve Tenant of Tenant's duty to maintain the Premises at all times in accordance with
the terms of this Lease;
(f) Any attempted assignment, transfer, or sublease except as approved by
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Landlord pursuant to this Lease;
(g) Failure to maintain the insurance required herein or to cause Tenant's
contractors and subcontractors to maintain such insurance, subject to the thirty -day cure
period described in Sub -section "o" of this Section 10;
(h) Failure to maintain or pay for all necessary licenses or permits required
by the City of Long Beach in its municipal or regulatory capacity or required by any agency
or accreditation body having jurisdiction over the Premises and Tenant's operations
thereon or required by any federal, state or county regulatory agency including by way of
example but not limited to AQMD;
(i) Failure to pay when due all fees and charges for any municipal service
or commodity provided by the City of Long Beach in its municipal capacity, including but
not limited to water, sewer, gas, electricity, refuse collection, or recycling, subject to the
thirty -day cure period described in Sub -section "o" of this Section 10;
0) Failure to report or pay when due to the City of Long Beach in its municipal
or regulatory capacity all applicable sales taxes, transient occupancy taxes, utility users
taxes, or other excise taxes, if applicable;
(k) To the extent permitted by the United States Bankruptcy Code,
insolvency of Tenant, which shall be deemed to include an assignment by Tenant for the
benefit of creditors; the filing by Tenant of a voluntary petition in bankruptcy; an
adjudication that Tenant is bankrupt; the appointment of a receiver of the properties of
Tenant if the receiver is not discharged within fifteen (15) days; the filing of an involuntary
petition of bankruptcy and failure of Tenant to secure a dismissal of the petition within thirty
(30) days after filing; attachment of or the levying of execution on the leasehold interest
and failure of Tenant to secure discharge of the attachment or release of the levy of
execution within fifteen (15) days. In the event of any of the foregoing, no notice that an
event of default has occurred shall be required from Landlord;
(1) Failure to provide any required audited financial report or any other report,
11 subject to the thirty -day cure period described in Sub -section "o" in this Section 10;
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(m) Failure to comply with any applicable law, rule, ordinance, or regulation;
(n) Use of funds identified in Tenant's business plan for any purpose other
than operation of the acute care facility;
(o) Any failure to perform any otherterm, covenant, or condition of this Lease
not specifically identified in this Section or in elsewhere in this Lease, if said failure is not
cured within thirty (30) days after Landlord gives notice to Tenant of said failure. If the
default cannot reasonably be cured in thirty (30) days, then Tenant shall not be in default
if Tenant begins to cure within said period and diligently proceeds to cure to completion;
(p) Any occurrence described in Section 4(E) above.
11. Remedies. Upon the occurrence of any default, in addition to any other
rights or remedies of Landlord hereunder, by law or in equity, Landlord shall have the
following rights and remedies:
(a) Landlord may terminate this Lease by giving to Tenant notice of
termination, and Tenant shall immediately surrender possession of the Premises as
described elsewhere herein, leaving them in good repair and condition subject to
reasonable wear and tear. Termination hereunder shall not relieve Tenant from the
payment of any sum due to Landlord or from any claim that Landlord may have for
damages or indemnity. Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord including but not limited to the cost of recovering possession,
expenses related to repairs, and reasonable attorney's fees;
(b) Landlord may continue the Lease in full force and effect and
enforce all of its rights and remedies hereunder;
(c) Landlord may convert this Lease to a year-to-year tenancy or a
month-to-month tenancy by notice to Tenant;
(d) Landlord may require that Tenant provide evidence that Tenant
can meet its current financial obligations, liabilities and expenses;
(e) Landlord, at its option, may re -let the whole or any part of the
Premises from time to time, either in the name of Landlord or otherwise, to such tenants,
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for such terms ending before, on or after the expiration of the term of this Lease, at such
rent and on such conditions as Landlord, in its sole discretion, may determine to be
appropriate. To the extent allowed by law, Landlord shall not be liable for refusal to re -let
or, in the event of re -letting, for failure to collect rent, and no such failure shall operate to
relieve Tenant of any liability under this Lease;
(f) Whether or not Landlord retakes possession or re -lets the
Premises, Landlord shall have the right to recover unpaid rent, unpaid additional rent, and
all other damages caused by Tenant's default. Damages shall include but not be limited
to all unpaid rent, all unpaid additional rent, all legal expenses and related costs incurred
by Landlord as a result of Tenant's default, all costs incurred by Landlord in restoring the
Premises to good order and condition, and the value of Landlord's staff time expended as
a result of the default.
(g) To the extent permitted by law, Landlord may sue periodically for
damages as they accrue without barring a later action for further damages. Nothing in this
Lease shall be deemed to require that Landlord wait until the date on which the Lease term
expires to bring or maintain any suit or action relating to this Lease.
(h) These remedies are not exclusive but cumulative to other remedies
provided by law in the event of Tenant's default and the exercise by Landlord of one or
more rights and remedies shall not preclude Landlord's exercise of additional or different
remedies for the same or any other default by Tenant;
12. Notices. All notices required hereunder shall be in writing and personally
delivered or deposited in the U.S. Postal Service, first class, postage prepaid, as follows:
to Tenant: Community Hospital of Long Beach
1720 Termino Avenue
Long Beach, CA 90804
Attn: President
to Landlord: City of Long Beach
333 West Ocean Boulevard
Long Beach, CA 90802
Attn: City Manager
with a copy to the City Attorney at the address shown for Landlord. Change of address
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shall be given in the same manner as stated for other notices. Notice shall be deemed
given on the date deposited in the mail or on the date personal delivery is made, whichever
first occurs.
13. Indemnification. A. Tenant shall defend, indemnify, and hold harmless
Landlord, its officials, employees and agents (collectively in this Section 13 "Landlord")
from and against any and all causes of actions, damage, proceedings, claims, demands,
loss, liens, costs and expenses alleging injury to or death of persons, or damage to
property, including property owned by City, or any other claim of damage brought, made,
filed against, imposed on or sustained by the indemnified parties, or any of them, and
arising from or attributable to or caused, directly or indirectly (collectively or individually, a
"claim"):
(i) by the use of the Premises or any equipment or materials located
thereon, or from operations conducted thereon by Tenant, its employees,
invitees, agents, or by any person or persons acting on behalf of Tenant and
with Tenant's knowledge and consent, express or implied;
(ii) by reason of or arising out of the condition or state of repair or
maintenance of the Premises;
(iii) by the construction, improvement or repair of the improvements
and facilities on the Premises by Tenant, its officers, employees, contractors,
agents or invitees, or by any person or persons acting on behalf of Tenant
and with Tenant's knowledge and consent, express or implied; or
(iv) by reason of injury to or death of employees of Tenant or others
as a result of Tenant's failure or refusal to comply with the provisions of
Section.6300 et seq. of the California Labor Code or any federal, state or
local regulations or laws pertaining to the safety of the Premises or of
equipment located upon the Premises; and
(v) regardless of whether any act or omission of Landlord contributed
thereto, but excluding any claim caused by the sole negligence of Landlord.
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B. With respect to any claim, Landlord shall notify Tenant thereof, shall
tender to Tenant the defense thereof, and shall assist Tenant as may reasonably be
requested in the defense thereof. Tenant shall defend such claim, shall conduct or have
conducted the necessary investigations related thereto, and Tenant shall indemnify
Landlord, unless and until Tenant proves that the indemnity does not apply. Payment of
a claim by Landlord or entry of judgment shall not be a condition precedent to recovery
under this indemnity.
14. Landlord's Right to Re-enter on Termination or Exl2iration. Tenant shall
peaceably deliver possession of the Premises to Landlord on the date of expiration or
sooner termination of this Lease. On giving notice of termination to Tenant, Landlord shall
have the right to re-enter and take possession of the Premises on the date such
termination becomes effective without further notice of any kind and without instituting
summary or regular legal proceedings. Termination of the Lease and re-entry of the
Premises by Landlord shall in no way alter or diminish any obligation of Tenant under the
Lease. Tenant waives any and all right of redemption under any existing or future law or
statute in the event of eviction from or dispossession of the Premises for any reason or in
the event Landlord re-enters and takes possession of the Premises in a lawful manner.
Tenant agrees that if the manner or method used by Landlord in re-entering or taking
possession of the Premises give to Tenant a cause of action for damages or in forcible
entry and detainer, then the total amount of damages to which Tenant shall be entitled in
any such action shall be One Dollar. This Section may be filed in any such action and,
when filed, it shall be a stipulation of Tenant fixing the total damages to which Tenant is
entitled in such action.
15. Holding Over. If Tenant holds over and remains in possession of the
Premises after the expiration of the Lease, such holding over shall be construed as a
tenancy from month to month at a monthly rent of One Thousand Dollars ($1,000.00), but
otherwise on the same terms, covenants and conditions stated in this Lease.
16. Nondiscrimination. Subject to applicable laws, rules and regulations,
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Tenant shall not discriminate against any person or group on account of face, color, creed,
religion, sex, sexual orientation, AIDS, AIDS relation condition, HIV status, age, disability
or handicap, Vietnam Era veteran status, marital status, ancestry, or national origin in the
use, operation or maintenance of the Premises or in the employment of any individual.
17. Utilities. Landlord shall not provide any utilities in its capacity as landlord
and shall not pay for the installation or use of any utilities serving the Premises. Tenant
shall pay for the installation and use of all utilities, of whatsoever kind, to or for the benefit
of the Premises, including but not limited to electricity, water, sewer, gas, refuse, recycling,
and telephone.
18. Waiver by Tenant. Landlord shall not be liable for and Tenant hereby
waives, to the extent permitted by law, all claims against Landlord, its officials, employees
and agents for loss, theft, and damage to equipment, furnishings, furniture, trade and other
fixtures, records, and all personal property of Tenant, its employees, invitees, subtenants,
and all other persons in or about the Premises, or for loss or damage to Tenant's business,
or for loss of income from Tenant's business or use of the Premises, or for injury to or
death of persons on or about the Premises from any cause except to the extent caused by
Landlord's negligence or willful misconduct.
Tenant acknowledges that it is familiar with California Civil Code Section
1542 which states: "A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor." And, Tenant hereby
releases Landlord from any unknown claims and waives its rights under said Section 1542.
19. Brokers. By signing this Lease, each party represents that it has had no
I contacts or dealings regarding the execution of this Lease through a broker or agent or any
other person who can claim a right to a commission or fee.
20. Force Majeure. Except as to the payment of rent, in any case where
either party is required to do any act, the inability of that party to perform or delay in
performance of that act caused by or resulting from fire, flood, earthquake, explosion, acts
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of God, war, strikes, lockouts, or any other cause beyond the reasonable control of that
party and not due to that party's fault or neglect shall be excused and shall not be a default
hereunder. Financial inability to perform shall not be considered cause beyond the
reasonable control of the party.
21. Signs. Tenant shall not place, affix, maintain or permit any sign,
advertisement, name, insignia, logo, descriptive material, or similar item (collectively,
"sign") on the Premises without the prior written approval of Landlord's City Manager or
designee. Any approved sign shall be maintained by Tenant, at its sole cost, in good
condition. Any sign not approved by Landlord may be removed by Landlord at Tenant's
cost. The cost of removal shall be additional rent.
22. Americans with Disabilities Act. Except as to tenant improvements made
by Landlord, Tenant shall have and be allocated the sole responsibility to comply with the
Americans with Disabilities Act of 1990 ('ADA"), as and when amended, with respect to the
Premises and Tenant's use of and operation on the Premises. Tenant shall defend,
indemnify and hold Landlord harmless from and against all claims of any failure to comply
or violation of ADA except those attributable to tenant improvements made by Landlord.
23. Condemnation. A. If the whole of the Premises or improvements on the
Premises is taken by right of eminent domain or otherwise for any public or quasi -public
use, then when possession is taken thereunder by the condemnor or when Tenant is
deprived of practical use of the Premises or improvements, whichever date is earlier, this
Lease shall terminate. If there is a partial taking so that the remaining portion of the
Premises or improvements cannot be restored to an economically feasible operation or a
comparable kind to that which existed prior to the taking, then this Lease shall, at Tenant's
option, terminate as of the date when possession was taken by condemnor or when
Tenant was deprived of practical use of the Premises, whichever date is earlier.
B. If there is a taking by right of eminent domain, the rights and obligations
of the parties with reference to the award and the distribution thereof shall be determined
in accordance with this Section. The award shall belong to and be paid by Landlord,
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except that Tenant shall receive from award a sum attributable to the value of Tenant's
leasehold estate including improvements made by Tenant and loss of business income.
Said sum relating to the value of Tenant's improvements shall not exceed the actual cost
of improvements constructed by Tenant.
24. No Waiver of Landlord's Rights. The failure or delay of the Landlord to
re-enter the Premises, to insist on strict enforcement of any term, covenant or condition
herein, to exercise any right, power, privilege, or option arising from any default shall not
impair any such right, power, privilege or option or be construed or operate as or be
deemed a waiver of any term, covenant or condition of this Lease, of any default, or of any
right or remedy (including indemnity) that the Landlord may have and shall not be deemed
a waiver of any subsequent or other default of any term, covenant or condition hereof.
Landlord's approval to any act by Tenant requiring Landlord's approval shall not be
deemed to waive Landlord's approval of any subsequent act of Tenant where approval is
required. The receipt and acceptance by Landlord of rent, delinquent or timely, shall not
constitute a waiver of any default.
Any waiver of any default by Landlord shall be in writing.
Failure on the part of Landlord to require exact and complete compliance
hereof shall not be construed or deemed in any manner as changing this Lease, nor shall
the conduct of the parties be deemed to change this Lease. No right, power, privilege,
option, or remedy of Landlord shall be construed as being exhausted by the exercise
thereof in one or more instances.
25. Right of Entry. Landlord shall have the right to enter the Premises at all
reasonable times and without interruption of Tenant's business operations to inspect the
Premises or any portion thereof, to determine whether or not Tenant is complying with the
terms, covenants and conditions of this Lease, to serve, post, or keep posted any notices
or other signs, or for any other purpose deemed reasonable or necessary by Landlord.
Landlord shall also have the right to enter at any time in the case of emergencies.
Landlord shall be permitted to enter as described herein without any liability to Tenant for
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any temporary loss of quiet enjoyment, inconvenience, loss of business, or other damage
arising from Landlord's entry. Tenant shall not be entitled to an abatement or reduction in
rent if Landlord exercises its right of entry hereunder.
In addition, while the licenses of Catholic Healthcare West Southern California
CCHW') are in suspense with respect to the operation of health facilities on the Premises,
CHW shall have access to the Premises at reasonable times pursuant to written
permission from Landlord for such access only for purposes related to the licenses and
without interruption of Tenant's business operations.
26. Maintenance. Landlord shall have no responsibility for the repair or
maintenance of the Premises or any part thereof (including but not limited to seismic
upgrades or work required by any legislation relating to earthquake retrofitting) after
Landlord has made various tenant improvements between the first Anniversary Date and
the Commencement Date. Tenant shall at Tenant's sole cost maintain the Premises,
including all improvements and equipment in good repair, in a clean, orderly and safe
operating condition and in compliance with applicable laws, rules, regulations, permit and
licenses, including but not limited to the Alquist Act. "Maintenance" shall include repair and
replacement and shall be done promptly upon the discovery of the need to repair or
replace. Maintenance and repair shall be equal to or better in value, quality and use than
what existed prior to the need for maintenance and repair. In addition, Tenant shall
complete the preventive maintenance, repairs, and replacement of equipment and
systems identified on Exhibit"G" attached hereto and incorporated herein by this reference.
Within one (1) month prior to each Anniversary Date commencing with the second
Anniversary Date, Tenant shall prepare and submit to Landlord an annual preventive
maintenance plan for the following lease year which plan shall be in accordance with the
recommendations of manufacturers of the various equipment and systems and as required
by federal, state and accreditation agencies. Beginning on January 31, 2002 and
continuing on each January 31 thereafter, Tenant shall submit to Landlord a report on
Tenant's activities in achieving the annual preventive maintenance plan.
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Tenant shall make such repairs and take such preventive maintenance
actions as shall maximize the useful lives of the improvements and equipment. Landlord
may conduct an annual maintenance audit to evaluate maintenance, preventive
maintenance and Capital Projects and to determine compliance with the terms of this
Lease relating thereto.
27. Capital Projects. Within one (1) month prior to each Anniversary Date
commencing with the second Anniversary Date, Tenant shall submit to Landlord a
proposed schedule (each, a "Work Schedule") of Capital Projects to be performed during
the following lease year and, within one (1) month following each Anniversary Date, a
report on Capital Projects and Work performed during the immediately preceding lease
year. The Work Schedule shall identify each Capital Project and include the anticipated
cost of each Capital Project and such other detail as Landlord may require. The report
shall include the labor hours expended, the cost of the Work, and such other detail as
Landlord may require.
For purposes of this Lease, a "Capital Project' shall mean a specific
undertaking that involves the procurement, construction, or installation of facilities and
equipment which improves, preserves, enhances, or modernizes the Premises, has a
useful life of at least five (5) years, and that costs in excess of $10,000. Costs of Capital
Projects ("Capital Costs") shall mean direct labor and material costs. Capital Costs shall
not include any amounts reimbursed or paid with the proceeds of insurance.
28. Construction of Work. A. Tenant shall undertake no Capital Projects or
any other construction, alteration, or changes ("Work") on or to the Premises without the
prior written approval of Landlord's City Manager or designee. Landlord acknowledges
that Tenant's use of the Premises is under the jurisdiction of the Office of Statewide Health
Planning and Development with respect to approval of design and construction on the
Premises. However, prior to any construction Tenant shall obtain and deliver to Landlord
a performance bond in the amount of one hundred percent (100%) of the estimated cost
of work and a labor and material bond in the amount of one hundred percent (100%) of the
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estimated cost of Work, conditioned on payment of all claimants for labor and materials
used in the Work, which bonds are executed by Tenant or Tenant's contractor, as
Principal, and by a surety authorized to do business in California as Surety. Said bonds
shall name Landlord as joint obligee with Tenant. Nothing contained herein shall be
deemed to release Tenant from a duty to keep the Premises free of liens. The
performance bond shall remain in effect until completion of the Work; the labor and
material bond shall remain in effect until the expiration of the time for filing mechanic's or
materialman's liens or stop notices or until the Premises are free from the effect of such
liens or stop notices, if same have been filed.
B. Tenant shall insert the following statement into all contracts entered by
Tenant relating to the Premises, its use and its operation, relating to maintenance, Work,
or any Capital Project on the Premises:
"This contract shall in no way bind the City of Long Beach, its
officials or employees, nor obligate them for any costs or expenses
whatsoever under this contract."
C. Tenant shall give notice to Landlord twenty (20) days prior to
I commencement of Work or a Capital Project on the Premises to enable Landlord to post
and record Notice(s) of Nonresponsibility.
D. Tenant shall keep the Premises free of any mechanic's or materialman's
liens for any work done, labor performed or material furnished by or for Tenant. Tenant
shall defend, indemnify and hold Landlord, its officials and employees harmless from and
against all claims, demands, liens, damage, causes of action, loss, liability, costs, and
expenses (including court costs and reasonable attorney'sfees) of whatsoever kind for any
such work done, labor performed, or materials furnished on the Premises or to Tenant for
construction on the Premises.
If a mechanic's or materialman's lien is imposed on the Premises as a result
11 of maintenance, Work or a Capital Project on the Premises, Tenant shall: (i) record a valid
release of lien; (ii) deposit with Landlord cash in an amount equal to 125% of the amount
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of the lien and authorize payment to the extent of said deposit to any subsequent judgment
holder that may arise as a matter of public record from litigation with regard to lienholder's
claim; or (iii) procure and record a lien release bond in accordance with California Civil
Code Section 3143 issued by a surety authorized to do business in California.
E. Tenant shall not begin Work or a Capital Project until Tenant obtains and
delivers to Landlord copies of all necessary governmental permits, environmental or
regulatory agency written consents, licenses. All Work and Capital Projects shall be
performed in a good and workmanlike manner, in conformance with all code, statutory and
permit requirements.
F. On completion of Work or a Capital Project on the Premises, Tenant shall
file a Notice of Completion in the Official Records of the Los Angeles County Recorder.
G. All improvements to the main building on the Premises, which main
building is a registered historic landmark, shall be subject to Chapter 16.52 of the Long
Beach Municipal Code pertaining to historic landmarks.
29. Failure to Repair. If Tenant fails to perform maintenance or repair within
thirty (30) days after receipt of notice from Landlord to do so, Landlord may, but shall not
be obligated to, make such repairs or perform such maintenance and repairs. Tenant shall
reimburse Landlord for the cost thereof within thirty (30) days after receipt of Landlord's
invoice therefor as additional rent. Landlord's cost shall include, but not be limited to, the
cost of maintenance or repair or replacement of property neglected, damaged or
destroyed, including direct and allocated cost of maintenance or repair or replacement of
property neglected, damaged or destroyed, including direct and allocated costs for labor,
materials, supervision, supplies, tools, taxes, transportation, administrative and general
expense and other indirect or overhead expenses. In the event Tenant shall commence
and diligently make such repairs or performing required maintenance and from making
demand for such payment until the work has been completed by Tenant, and then only for
such portion thereof as shall have been made or performed by Landlord. The making of
any repair or the performance or maintenance by Landlord, which repair or maintenance
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is the responsibility of Tenant, shall in no event be construed as a waiver of Tenant's duty
or obligation to make future repairs or perform required maintenance as provided in this
Lease.
30. Restoration. Tenant shall promptly give notice to Landlord of damage
or destruction to the Premises and the date of same. Tenant shall promptly make proof
of loss and proceed to collect all valid claims that Tenant may have against insurers or
others based on such damage or destruction. All amounts recovered as a result of said
claims shall be used first for the restoration of the Premises, which Tenant shall promptly
begin and diligently pursue so that the Premises are restored to substantially the same
conditions as they were in immediately before such damage or destruction. If existing laws
do not permit restoration, then Tenant may terminate this Lease by notice to Landlord.
Restoration shall proceed in accordance with Section 29 of this Lease.
31. Fire System Maintenance. All fire protection sprinkler systems,
standpipe systems, fire alarm systems, portable fire extinguishers and other fire -protective
or extinguishing systems or appliances which may be installed on the Premises shall be
maintained by Tenant, at its cost, in an operative condition at all times and in compliance
with all applicable laws, codes and regulations applicable thereto.
32. Removal of Tenant's and Other's Property. Except as to property owned
by Landlord or property in which Landlord may have an interest, upon termination of this
Lease (whether by lapse of time or otherwise) Tenant shall cause all other property upon
the Premises, whether or not such property be owned by Tenant or by third parties,
including but not limited to Long Beach Community Hospital Foundation, to be removed
from the Premises prior to the end of the Lease term or any extension term and shall cause
to be repaired any damage occasioned by such removal as described elsewhere herein
provided, however, that if any of such property can not with due diligence be removed prior
to expiration or sooner termination of this Lease, then Tenant's obligation hereunder shall
be to remove it in the most expeditious manner and as rapidly as possible following the
expiration or sooner termination of this Lease. If the property is not so removed from the
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Premises, it shall be deemed abandoned and Section 33 of this Lease relating to
abandoned property shall apply.
33. Abandoned Property. If Tenant abandons the Premises or is
dispossessed by process of law or otherwise or if the property is not removed as required
by Section 32 above, then title to such property left on the Premises forty-five (45) days
after such abandonment or dispossession shaLll be deemed to have been transferred to
Landlord. Landlord shall have the right to remove, store and dispose of said property
without liability therefor to Tenant or to any person claiming under Tenant, and shall have
no duty to account therefor. Tenant hereby designates Landlord's City Manager as
Tenant's attorney in fact to execute and deliver such documents as may be reasonably
required to dispose of such abandoned property and transfertitle thereto. Tenant shall pay
the cost of removal, storage, sale or destruction as additional rent. Tenant hereby agrees
to and shall defend, indemnify and hold Landlord, its officials and employees harmless
from and against all claims, demands, damage, loss, liability, causes of action, costs and
expenses arising from or attributable to Landlord's removal, storage and disposal of such
property that is not owned by Tenant.
34. Waiver of Jury Trial. Landlord and Tenant hereby waive their respective
rights to trial by jury of any contract or tort claim, counterclaim, cross-complaint, or any
other cause of action in any action, proceeding, or hearing brought by either parry against
the other on any matter in any way connected with this Lease, with the relationship of the
parties, including but not limited to the enforcement of any law, rule, ordinance, or
regulation.
35. Financial Information. A. Tenant shall furnish to Landlord during the
term and any extension term:
(i) Annual Audited Financial Statements. Not laterthan ninety (90) days after
the end of each of Tenant's fiscal years, an audited financial statement prepared in
accordance with generally accepted accounting principles, by an independent certified
public accountant firm acceptable to Landlord, reflecting Tenant's year-end financial
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condition, results of operations during the fiscal year, and changes in cash position from
the prior year. The audited financial statement shall include a schedule of annual gross
revenues in a form acceptable to City;
(ii) Quarterly Financial Statements. Within the first twenty (20) calendar days
of each of Tenant's fiscal quarters, a financial statement prepared in accordance with
� generally accepted accounting principles.
B. Confidentiality. The parties acknowledge that the information submitted
by Tenant pursuant to this Section constitutes trade secrets of Tenant, and Landlord
agrees to keep such information confidential to the extent permitted by law.
C. Records. Tenant shall at all times during the term and any extension term
keep and maintain books, ledgers, accounts and other records (at a location within the City
of Long Beach) accurately reflecting Tenant's income and expenses in accordance with
generally accepted accounting principles. Such records shall include all supporting
materials, including without limitation contracts, bills, invoices, credit and adjustment
memoranda, billing correspondence and billing records. Such records shall be kept for a
minimum of three (3) years after the end of the fiscal year to which they pertain.
D. Audit and Inspection. Landlord shall have the right to inspect and copy
all books, ledgers, accounts and other records of Tenant relating to this Lease, upon
reasonable notice to Tenant. Landlord shall have the further right to conduct or obtain an
audit of Tenant's records. Such audit shall be at Landlord's expense, provided that Tenant
shall bear its own expenses in making its records available.
E. Quarterly Property Reports. Tenant shall also maintain and submit to
Landlord quarterly reports listing all personal property and equipment owned by third
parties and used on the Premises.
36. No Encumbrances. Tenant shall not encumber the Premises by any
mortgage, deed of trust or other encumbrance of any kind.
37. Hazardous Materials. A. Tenant shall conduct all aspects of its
operation and use of the Premises in strict accordance with all federal and state laws, rules
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condition, results of operations during the fiscal year, and changes in cash position from
the prior year. The audited financial statement shall include a schedule of annual gross
revenues in a form acceptable to City;
(ii) Quarterly Financial Statements. Within the first twenty (20) calendar days
of each of Tenant's fiscal quarters, a financial statement prepared in accordance with
� generally accepted accounting principles.
B. Confidentiality. The parties acknowledge that the information submitted
by Tenant pursuant to this Section constitutes trade secrets of Tenant, and Landlord
agrees to keep such information confidential to the extent permitted by law.
C. Records. Tenant shall at all times during the term and any extension term
keep and maintain books, ledgers, accounts and other records (at a location within the City
of Long Beach) accurately reflecting Tenant's income and expenses in accordance with
generally accepted accounting principles. Such records shall include all supporting
materials, including without limitation contracts, bills, invoices, credit and adjustment
memoranda, billing correspondence and billing records. Such records shall be kept for a
minimum of three (3) years after the end of the fiscal year to which they pertain.
D. Audit and Inspection. Landlord shall have the right to inspect and copy
all books, ledgers, accounts and other records of Tenant relating to this Lease, upon
reasonable notice to Tenant. Landlord shall have the further right to conduct or obtain an
audit of Tenant's records. Such audit shall be at Landlord's expense, provided that Tenant
shall bear its own expenses in making its records available.
E. Quarterly Property Reports. Tenant shall also maintain and submit to
Landlord quarterly reports listing all personal property and equipment owned by third
parties and used on the Premises.
36. No Encumbrances. Tenant shall not encumber the Premises by any
mortgage, deed of trust or other encumbrance of any kind.
37. Hazardous Materials. A. Tenant shall conduct all aspects of its
operation and use of the Premises in strict accordance with all federal and state laws, rules
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and regulations relating to any Regulated Substance as hereafter defined, and shall obtain
and maintain in good standing all licenses and permits relating to Regulated Substances.
B. Tenant shall use, store, transport and dispose of Regulated Substances
in strict accordance with all federal and state laws, rules and regulations relating thereto.
Tenant shall obtain and maintain in good standing all licenses and permits related to the
use, storage, transportation, and disposal of Regulated Substances, and shall assure that
Tenant's employees, agents, and contractors comply with the terms of this Lease relating
to Regulated Substances.
C. Tenant shall comply with all applicable requirements of the Clean Water
Act (33 U.S.C. 1251 et seq.), including either obtaining its own industrial permit or
complying with the applicable provisions of Landlord's NPDES permit (No. CAS004003,
as amended or renewed from time to time).
D. As used in this Lease, "Regulated Substance" means any substance,
material, or item the use, storage, or disposal of which is regulated under federal or state
law, rule or regulation and includes but is not limited to:
(1) Any "biohazardous waste" as defined in California Health and
Safety Code Section 117635;
(2) Any "hazardous substance" as defined in California Health and
Safety Code Section 108125 or the Comprehensive Environmental response,
Compensation, and Liability Act of 1980 ("CERCLN)(42 U.S. C. Sections 9601 et seq.);
(3) Any "medical waste" as defined in California Health and Safety
Code Section 117690;
(4) Any "pharmaceutical" as defined in California Health and Safety
II Code Section 117747;
II Section 117755;
I Section 40191;
(5) Any "sharps waste" as defined in California Health and Safety Code
(6) Any "solid waste" as defined in California Public Resources Code
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and regulations relating to any Regulated Substance as hereafter defined, and shall obtain
and maintain in good standing all licenses and permits relating to Regulated Substances.
B. Tenant shall use, store, transport and dispose of Regulated Substances
in strict accordance with all federal and state laws, rules and regulations relating thereto.
Tenant shall obtain and maintain in good standing all licenses and permits related to the
use, storage, transportation, and disposal of Regulated Substances, and shall assure that
Tenant's employees, agents, and contractors comply with the terms of this Lease relating
to Regulated Substances.
C. Tenant shall comply with all applicable requirements of the Clean Water
Act (33 U.S.C. 1251 et seq.), including either obtaining its own industrial permit or
complying with the applicable provisions of Landlord's NPDES permit (No. CAS004003,
as amended or renewed from time to time).
D. As used in this Lease, "Regulated Substance" means any substance,
material, or item the use, storage, or disposal of which is regulated under federal or state
law, rule or regulation and includes but is not limited to:
(1) Any "biohazardous waste" as defined in California Health and
Safety Code Section 117635;
(2) Any "hazardous substance" as defined in California Health and
Safety Code Section 108125 or the Comprehensive Environmental response,
Compensation, and Liability Act of 1980 ("CERCLN)(42 U.S. C. Sections 9601 et seq.);
(3) Any "medical waste" as defined in California Health and Safety
Code Section 117690;
(4) Any "pharmaceutical" as defined in California Health and Safety
II Code Section 117747;
II Section 117755;
I Section 40191;
(5) Any "sharps waste" as defined in California Health and Safety Code
(6) Any "solid waste" as defined in California Public Resources Code
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(7) Any substance regulated under the Radiation Control Law in
California Health and Safety Code Section 114960 et seq.;
(8) Any substance regulated under the Atomic Energy Act of 1954, as
amended (42 U.S.C.A. Section 2011 et seq.); and
(9) Any substance the active ingredient ofwhich is regulated underthe
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA")(7 U.S.C. Sections 136 et
seq.).
E. Tenant shall, at Tenant sole expense and with counsel reasonably
acceptable to Landlord, defend, indemnify and hold harmless Landlord, its officers,
employees and agents with respect to all claims, demands, damage (including but not
limited to consequential and punitive damages), loss, liability, causes of action (including
but not limited to remedial or enforcement actions), proceedings (including but not limited
to administrative proceedings), costs and expenses (including attorney's and consultant's
and experts fees and court costs) . arising from or related to the presence, release or
investigation of a Regulated Substance or arising from or related to any alleged violation
of any environmental law, rule, or regulation by Tenant, Tenant's employees, contractors,
agents, or invitees. This indemnification shall include but not be limited to losses
attributable to diminution in the value of the Premises. This indemnification shall survive
the termination or expiration of this Lease.
38. Miscellaneous. A. Each party shall bear its own costs and expenses in
connection with this Lease and enforcement thereof, including but not limited to attorney's
fees and court costs.
B. This Lease shall be binding on and inure to the benefit of the parties and
their successors, heirs, personal representatives, and subtenants, and all of the parties
shall be jointly and severally liable hereunder.
C. This Lease constitutes the entire understanding between the parties and
supersedes all prior negotiations, agreements and understandings, oral or written, with
respect to the subject matter hereof.
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D. This Lease may not be amended except in a writing duly executed by
both parties and authorized by Landlord's City Council (including an extension of term).
E. This Lease shall be governed by and construed under the laws of the
� state of California, and no choice of laws or principles thereof shall apply.
F. The captions and numbers herein and the grouping of the provisions of
this Lease into separate sections and paragraphs are for the purpose of convenience only
and shall not be considered a part hereof, and shall have no effect on the interpretation of
this Lease.
G. If any term, covenant, or condition of this Lease is found to be invalid,
ineffective, void, or unenforceable for any reason by a court of competent jurisdiction, the
remaining terms, covenants and conditions shall remain in full force and effect.
H. Time is of the essence in this Lease and all of its provisions. No notice
to Tenant shall be required to restore "time is of the essence" after waiver by Landlord of
any default.
I. This Lease shall not be recorded.
J. The relationship of the parties hereto is that of landlord and tenant, and
the parties agree that nothing contained in this Lease shall be deemed or construed as
creating apartnership, joint venture, principal -agent relationship, association, oremployer-
employee relationship between them or between Landlord or any third person or entity.
K. This Lease is created as a joint effort between the parties and fully
negotiated as to its terms covenants and conditions. This Lease shall not be construed
against either party as the drafter.
I condition.
L. Each provision of this Lease shall be deemed both a covenant and a
M. This Lease is created for the benefit of the parties only and is not
intended to benefit any third person or entity.
N. If Tenant is a corporation, each person signing this Lease on behalf of
that corporation represents and warrants that he/she is authorized to sign this Lease on
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behalf of the corporation and to bind the corporation.
O. Tenant shall allow a City representative to be on Tenant's Board of
Directors as an "ex officio" non-voting member.
IN WITNESS WHEREOF, the parties have caused this document to be duly
executed with all formalities required by law as of the date first stated above.
COMMUNITY HOSPITAL OF LONG BEACH, a
California non-profit public benefit corporation
2001 By G�7
President
, 2001 By u
Secretary
"Tenant"
CITY OF LONG BEACH, a municipal corporation
2001 B ig AUT City Manager
"Landlord" EXECUTED PURSUANT
TO SECTION 301 OF
THE CITY CHARTER.
This Lease is approved as to form on o2 , 2001.
ROBERT E. SHANNON, City Attorney
By AA,4nl�
Deputy
DFG2-14-01;Rev.2-21-01(HospitalLease)
32
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
County of Leo
NGi ;tLS ss.
Cin— 7--ZZ-01
Date
personally appeared
PAMELA E. DINGWELL
c: COMM. #12698Wm
N Notary Public-Calif-mla I(n
W , LOS ANGELES COUNTY
My Corfm. Exp. August $ 2004
(personally known to me
❑ proved to me on the basis of satisfactory
evidence
to be the person(s) whose name(s) is/are
subscribed to the within instrument and
acknowledged to me that he/she/they executed
the same in his/her/their authorized
capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)
acted, executed the instrument.
WISS my hand a d nfficial seal.
9�fw P t,
Place Notary Seal Above Signature of 746tgFy Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer
Signer's Name:
❑ Individual 111111111111L I
Top of thumb here
❑ Corporate Officer — Title(s):
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
O 1999 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth. CA 91313-2402 • www.nationalnotary.org Prod No. 5907 Reorder. Call Toll -Free 1-800-876-6827
COMMUNITY HOSPITAL LEASE AREA
LEGAL DESCRIPTION
PARCEL 1:
ALL THAT PORTION OF LOT 39, ALAMITOS TRACT, IN THE CITY OF LONG
BEACH, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 36 PAGE 37 ET. SEQ. OF MISCELLANEOUS RECORDS IN
THE OFFICE OF THE COUNTY RECORDER OF THE COUNTY OF LOS ANGELES,
LYING WESTERLY OF THE WESTERLY LINE OF THE FORMER 80 -FOOT RIGHT-
OF-WAY QUITCLAIMED TO ALAMITOS LAND COMPANY AND RECORDED IN
BOOK 7292 PAGE 112 OF DEEDS IN THE OFFICE OF THE COUNTY RECORDER,
AND SOUTHWESTERLY OF THE SOUTHWESTERLY LINE OF THAT CERTAIN
RIGHT-OF-WAY, 80 FEET WIDE, COMMONLY KNOWN AS THE OUTER TRAFFIC
CIRCLE, AS DEDICATED BY ORDINANCE NO. C1913 ADOPTED MAY 13, 1941 BY
THE CITY COUNCIL OF THE CITY OF LONG BEACH, AND SOUTHERLY OF THE
SOUTHERLY LINE OF PACIFIC COAST HIGHWAY, 100 FEET WIDE, AS
ESTABLISHED BY ORDINANCE NO. C-1323 ADOPTED NOVEMBER 30, 1934 BY
SAID CITY COUNCIL:
EXCEPT THEREFROM ALL OIL, GAS, HYDROCARBONS AND MINERALS OF
EVERY KIND AND CHARACTER LYING MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO DRILL
INTO, THROUGH AND TO USE AND OCCUPY PARTS OF SAID LAND LYING MORE
THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE THEREOF FOR ANY
AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND
PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCE OR MINERALS FROM
SAID OR OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER
THE SURFACE OF SAID LAND, OR ANY PORTION OF SAID LAND WITHIN FIVE
HUNDRED (500) FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES
WHATSOEVER, AS RESERVED BY THE CITY OF LONG BEACH IN DEED
RECORDED MAY 6, 1983 AS INSTRUMENT NO. 83-511177 OF OFFICIAL
RECORDS.
PARCEL 2:
LOT 9 OF EASTERN HEIGHTS TRACT, IN THE CITY OF LONG BEACH, COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 12
PAGE 27 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS
AND OTHER MINERALS WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR
EXHIBIT A
PAGE 1 OF 4
NOT, WITHIN OR UNDERLYING OR THAT MAY BE PRODUCED FROM SAID LAND,
AND ALSO EXCEPTING AND RESERVING THE SOLE AND EXCLUSIVE RIGHT TO
DRILL SLANTED WELLS FROM ADJACENT LANDS IN, TO AND THROUGH THE
SUBSURFACE OF SAID LAND FOR THE PURPOSE OF RECOVERING SAID
RESERVED PRODUCTS FROM SAID LAND AND FROM OTHER PROPERTIES,
PROVIDED, HOWEVER, THAT THE SURFACE OF A SAID LAND AND THAT
PORTION OF SAID LAND WITHIN -500 FEET OF -THE SURFACE SHALL NEVER BE
USED FOR THE EXPLORATION, DEVELOPMENT, EXTRACTION OR REMOVAL OF
SAID RESERVED PRODUCTS, AS EXCEPTED AND RESERVED BY LONG BEACH,
UNIFIED SCHOOL DISTRICT OF LOS ANGELES IN DEED RECORDED JANUARY 2,
1957 AS INSTRUMENT NO. 94 OF OFFICIAL RECORDS.
PARCEL 3:
A PARCEL OF LAND IN THE CITY OF LONG BEACH, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, BEING THAT PORTION OF THAT CERTAIN UNNAMED 10
FOOT WIDE STRIP OF LAND SHOWN ON THE MAP OF EASTERN EIGHTS TRACT,
RECORDED IN BOOK 12 PACE 27 OF. MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, ADJOINING LOTS 1 TO 16 OF SAID TRACT ON
THE NORTH AND LYING BETWEEN THE NORTHERLY PROLONGATION OF THE
EASTERLY AND WESTERLY LINES OF LOT 9 OF SAID TRACT.
EXCEPT THEREFROM ALL OIL, GAS, HYDROCARBONS AND MINERALS OF
EVERY KIND AND CHARACTER LYING MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO DRILL
INTO, THROUGH AND TO USE AND OCCUPY ALL PARTS OF SAID LAND LYING
MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE THEREOF FOR
ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND
PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM
SAID ON OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER
THE SURFACE OF SAID LAND, OR ANY PORTION OF SAID LAND WITHIN FIVE
HUNDRED (500) FEET OF THE SURFACE FOR ANY PURPOSE OR WHATSOVER,
AS RESERVED BY THE CITY OF LONG BEACH IN DEED RECORDED MAY 6, 1983
AS INSTRUMENT NO. 83-511177 OF OFFICIAL RECORDS.
PARCEL 4:
A PARCEL OF LAND IN LOT 39 OF ALAMITOS TRACT, IN THE CITY OF LONG
BEACH, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 36 PAGES 37 THROUGH 44 INCLUSIVE OF
MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, BEING PART OF THE ABANDONED RIGHT-OF-WAY OF THE
PACIFIC ELECTRIC RAILWAY COMPANY, AS SAID RIGHT-OF-WAY WAS
DESCRIBED IN DEED RECORDED IN BOOK 1786 PAGE 9 OF DEEDS, DESCRIBED
AS FOLLOWS:
EXHIBIT A
PAGE 2OF4
BEGINNING AT A POINT OF INTERSECTION OF THE SOUTHWESTERLY LINE OF
SAID ABANDONED RIGHT-OF-WAY WITH THE SOUTH LINE OF SAID LOT 39, SAID
POINT BEING NORTH 89 DEGREES 58 MINUTES 45 SECONDS EAST 659.41 FEET,
MORE OR LESS, FROM THE SOUTHWEST CORNER OF SAID LOT 39, THENCE
ALONG SAID SOUTH LINE, NORTH 89 DEGREES 58 MINUTES 45 SECONDS EAST
84.32 FEET TO THE NORTHEASTERLY LINE OF SAID ABANDONED RIGHT-OF-
WAY; THENCE NORTH 18 DEGREES 26- MINUTES 05 SECONDS WEST ALONG
SAID NORTHEASTERLY LINE 207.22 FEET OF THE SOUTHWESTERLY LINE OF
THE OUTER TRAFFIC CIRCLE AS DESCRIBED IN THE DEED TO THE CITY OF
LONG BEACH, RECORDED APRIL 25, 1941 AS INSTRUMENT NO. 1145 IN BOOK
18379 PAGE 173 OF OFFICIAL RECORDS; THENCE ALONG SAID
SOUTHWESTERLY LINE NORTHWESTERLY ON THE ARC OF A CURVE CONCAVE
TO THE NORTHEAST HAVING A RADIUS OF 580 FEET AND A CENTRAL ANGLE
OF 15 DEGREES 51 MINUTES 16 SECONDS A DISTANCE OF 160.49 FEET TO THE
SOUTHWESTERLY LINE OF SAID ABANDONED RIGHT-OF-WAY; THENCE SOUTH
18 DEGREES 26 MINUTES 05 SECONDS EAST THEREON 319.33 FEET TO THE
POINT OF BEGINNING.
EXCEPT THEREFROM, ALL OIL, GAS, MINERALS AND OTHER HYDROCARBONS
IN AND UNDER SAID LAND BELOW A DEPTH OF 500 FEET FROM THE SURFACE
THEREOF, WITHOUT, HOWEVER, ANY RIGHT OF ENTRY TO THE SURFACE OF
SAID LAND FOR THE PURPOSE OF DRILLING FOR, MINING OR OTHERWISE
EXTRACTING SAID GAS, OIL, MINERALS OR OTHER HYDROCARBON
SUBSTANCES AS RESERVED IN DEED RECORDED MARCH 17, 1971 AS
INSTRUMENT NO. 21.
PARCEL 5:
LOTS 1 AND 2 OF TRACT NO. 8613, IN THE CITY OF LONG BEACH, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 102,
PAGE(S) 22 AND 23 OF MAPS, IN THE OFFICE OF THE LOS ANGELES COUNTY
RECORDER, TOGETHER WITH THAT PORTION OF THE 5 FOOT ALLEY
ADJOINING SAID LOT ON THE NORTH AS SHOWN ON SAID TRACT, BOUNDED
EASTERLY AND WESTERLY BY THE NORTHERLY PROLONGATIONS OF THE
EASTERLY AND WESTERLY LINES, RESPECTIVELY OF SAID LOT, VACATED BY
ORDER OF THE CITY COUNCIL OF LONG BEACH, A CERTIFIED COPY OF WHICH
WAS RECORDED ON OCTOBER 6, 1960 AS INSTRUMENT NO. 3315 IN BOOK
D998 PAGE 405 OF OFFICIAL RECORDS.
FG:VA:emd/154-29.doc
EXHIBIT A
PAGE 30F4
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PACIFIC COAST HIGHWAY
70
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6
CITY OF LONG BEACH - CALIFORNIA
DEPARTMENT OF PUBLIC WORKS, ENGINEERING BUREAU
COMMUNITY HOSPITAL
LEASE AREA
EXHIBIT A
PAGE 4 OF 4
COMMUNITY HOSPITAL LEASE AREA "ADDITIONAL PREMISES"
LEGAL DESCRIPTION
LOTS 10, 11, 12, 13 AND 14 OF THE EASTERN HEIGHTS TRACT, IN THE
CITY OF LONG BEACH, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 12, PAGE 27 OF MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
FG:VA:emd
154-31.doc
EXHIBIT B
PAGE 1 OF 2
PACIFIC COAST HIGHWAY
50
5C
in CJ 1 nr_m J 1 RCC 1
T*
R
A
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T
No.
8
611
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14
13
112
111110
1 9
1 8
1 7
1 6
5
4
3
2
1
WILTON STREET
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Al 101111 1 1113114 15116
CITY OF LONG BEACH - CALIFORNIA
DEPARTMENT OF PUBLIC WORKS, ENGINEERING BUREAU
COMMUNITY HOSPITAL
LEASE AREA
11 „
ADDITIONAL PREMISES
EXHIBIT B
PAGE 2 OF 2
STRICTLY PRIVATE AND CONT WNTIAL
SAVE OUR NEIGHBORHOOD HOSPITAL COMMITTEE
STRATEGIC BUSINESS PLAN FOR
COMMUNITY HOSPITAL OF LONG BEACH
Prepared by
LONDON & PACIFIC HEALTHCARE DEVELOPMENT, INC.
September 2000
EXHIBIT "C".'!
STRICTLY PRIVATE AND CONFIDENTIAL
TABLE OF CONTENTS
I. VISION.......................................................................................................................................1
H. EXECUTIVE SUMMARY.......................................................................................................2
OperationalModel....................................................................................................................2
Summaryof Proforma Financial Performance.....................................................................4
III. CHLB SERVICE AREA.........................................................................................................5
ServiceArea Definition............................................................................................................5
ServiceArea Population and Demographic Trends............................................................6
HospitalUtilization..................................................................................................................
9
ProductLine Segments...........................................................................................................10
TargetPatient Population/Characteristics..........................................................................10
IV. COMPETITIVE ANALYSIS................................................................................................12
HospitalInventory..................................................................................................................12
CompetitivePosition..............................................................................................................12
Opportunities ..................................... ......................................................................................
14
CompetitiveThreats...............................................................................................................15
V. PHYSICIAN/COMMUNITY DEMAND ANALYSES....................................................17
PhysicianDemand Analysis..................................................................................................17
CommunityDemand Analysis.............................................................................................19
VI. STRATEGY ........................... :.................. .-..............................................................................
21
Key Competitive Capabilities................................................................................................21
KeyCompetitive Weaknesses...............................................................................................22
Strategy.............................................................................:.......................................................
22
VII. PRO FORMA FINANCIAL PROJECTIONS...................................................................25
ATTACHMENTS
Limitation and Statement Regarding Financial and Statistical
Estimates and Projections
The estimates and projections set forth in this Plan are provided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results
of operations of the hospital. They are provided for purposes of illustration only and
are based on certain assumptions made about the future of the hospital and its Service
Area. The reader is cautioned not to rely on the accuracy of these estimates or
projections of current or future performance. These estimates and projections have not
been audited or reviewed by a Certified Public Accountant.
CHLB STRATEGIC BUSINESS PLAN PAGE I -
STRICTLY PRIVATE AND CONFIDENTIAL
I. VISION
The Vision of Save Our Neighborhood Hospital Committee (SONH) is:
1. To secure high quality and financially sustainable basic acute care, emergency and
outpatient hospital services for the people in the Service Area of Community
Hospital of Long Beach and
2. To guarantee that the community and local medical care personnel have significant
ongoing oversight with respect to the quality, accessibility and character of
healthcare services provided.
CHLB STRATEGIC BUSINESS PLAN PAGE 1
STRICTLY PRNATE AND CONFIDENTIAL
II. EXECUTIVE SUMMARY
OPERATIONAL MODEL
Long Beach Community Medical Center (LBCMC) is poised to transform itself into
Community Hospital of Long Beach (CHLB), a new independent not-for-profit
community hospital. This new hospital would be developed to effectively meet the
unique needs of the patient population residing within the hospital's service area. The
Save Our Neighborhood Hospital Committee (SONH), a not-for-profit community-
based organization, is seeking to secure funding to sufficiently cover the initial
capitalization of the hospital and its working capital requirements through community
fund raising, debt financing and other appropriate means.
The total capital requirement for the project, as envisioned, is approximately $25m for
capital equipment and working capital. Costs associated with retrofitting the physical
plant to meet seismic requirements beginning 2008 are not included in the proforma
financial projections; however, financial projections would indicate that beginning
Year 3 of operations, the hospital would generate sufficient cash flow to address the
financial requirements of a seismic retrofit. Specific costs associated with the retrofit
would be determined upon assummi g operations of the facility.
SONH is pursuing a financing strategy to obtain capital equipment through
combination of Foundation, major donors and a capital campaign. Further, this strategy
requires obtaining a $10m revolving line of credit on accounts receivable, contingent
upon availability of $7.5 to $8.0 million in equity that can also be used for working
capital. SONH is investigating means by which this equity requirement can be partially
met through loans on equipment, other capital assets or leases.
Under new management, CHLB should be unencumbered by past obligations that
directly contributed to the significant negative financial performance generated by the
hospital over the past several years. The factors that contributed to the hospital's
inability to be financially sustainable were:
➢ Risk-based, capitated commercial and Medicare managed care contracts that
resulted in high proportion of out -of -network and out -of -area costs
(approximately $7m per year).
➢ High debt service (disproportionate fixed to variable ratio).
➢ A substantial corporate overhead allocation to support the system infrastructure
and share services within CHW.
➢ Retention of unprofitable product lines, programs and services in order to secure
and retain payer contracts.
CHLB STRATEGIC BUSINESS PLAN PAGE 2
STRICTLY PRIVATE AND CONFIDENTIAL
➢ Inability to secure its proportional market share of PPO, commercial and fee-for-
service Medicare patient volume.
Detailed data pertaining to recent historical operations of the facility are not currently
available to SONH. As such all data used to formulate assumptions within this report
are based upon publicly available information that is at least one year old.
In order to embark on a positive path reflective of the realities of today's marketplace, it
is recommended that CHLB implement the following strategies:
➢ Maintain high-quality basic hospital and emergency services.
➢ Reduce inpatient bed capacity to better serve the market, reduce operating
expenses and minimize costs associated with earthquake retrofit mandates
(under S131953).
➢ Eliminate risk-based capitated managed care contracts through terminating
agreements, negotiating per diem agreements directly with plans or
subcontracting with hospitals with capitated arrangements.
➢ Emphasize senior care programs and services that attract and retain a greater
proportion of fee-for-service Medicare patient volume.
➢ Strengthen physician recruitment and retention tactics to increase PPO and
commercial patient market share. Physicians surveyed for this Plan stated that
they would prefer to have LBCMC reopen after CHW relinquishes ownership/
management and would continue to refer their patients to the hospital. Many of
the physicians, however, stated that if the hospital were to close for an extended
period of time (i.e., 60 days or longer), it would be more difficult to recapture lost
patient volume.
➢ Reduce or eliminate unprofitable programs and services (e.g., Pediatric ICU and
NICU).
➢ Implement niche programs and services that will result in higher quality revenue
to the hospital.
➢ Work with California State University, Long Beach, Long Beach City College
and/or Long Beach Unified School District to provide education and classroom
space within the Hospital structure in order for the CHLB to realize revenue and
reduce its operating costs.
➢ Sizably reduce expenses associated with corporate overhead allocation.
Restructure fixed cost to reduce debt structure.
CHLB STRATEGIC BUSINESS PLAN PAGE 3
STRICTLY PRIVATE AND CONFIDENTIAL
SUMMARY OF PROFORMA FINANCIAL PERFORMANCE
The successful implementation of the foregoing strategies forms the foundation for the
projected proforma financial performance presented below.
(Refer to the Proforma Financial Performance Section for details regarding proforma
assumptions, proforma balance sheet, proforma income statement, statement of changes
in cash flow, proforma long-term debt schedule and proforma depreciation schedule.)
Inpatient Census
Inpatient Days
Outpatient Visits
Adjusted Patient Days
Total Patient Revenue
Interest Income
Other Income
Total Revenue
Total Expense
EBITDA
Depreciation
Interest Expense
Net Income/Loss
Year 1
65.0
Year 2
97.5
$36,779,1
$1,7
$53,877,
-$347,
Year 3
110.5
39,
$69,677,
$464,
$63,526,
$7,
$1,527,
Note: The estimates and proiectio_ns_set forth in this Plan are rovided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results of
operations of the hospital. They are provided for purposes of illustration only and are
based on certain assumptions made about the future of the hospital and its Service Area.
The reader is cautioned not to rely on the accuracy of these estimates or projections of
or
Public
CHLB STRATEGIC BUSINESS PLAN PAGE 4
.35,177
$36,478,91
$56,
$
$
'
$500,000
$36,978,91
$57,
$36,779,1
$1,7
$53,877,
-$347,
Year 3
110.5
39,
$69,677,
$464,
$63,526,
$7,
$1,527,
Note: The estimates and proiectio_ns_set forth in this Plan are rovided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results of
operations of the hospital. They are provided for purposes of illustration only and are
based on certain assumptions made about the future of the hospital and its Service Area.
The reader is cautioned not to rely on the accuracy of these estimates or projections of
or
Public
CHLB STRATEGIC BUSINESS PLAN PAGE 4
STRICTLY PRIVATE AND CONFIDENTIAL
III. CHLB SERVICE AREA
SERVICE AREA DEFINITION
Refer to the following map that illustrates the CHLB Service Area, demarcated between
East and West sub -markets:
Long Beach Community Medical Center
bellflower
Little Co of Mary
Torrance Memorial
0 1 2
Attachment A contains the detailed LBCMC 1998 patient origin data that was used to
delineate the hospital Service Area. The CHLB Service Area sub -markets represent two
distinct patient populations. The Eastside of Long Beach is comprised of the all or a
portion of the following cities/ communities:
➢ Long Beach east of Cherry Avenue
➢ Lakewood
➢ Bellflower
CHLB STRATEGIC BUSINESS PLAN PAGE 5
STRICTLY PRIVATE AND CONFIDENTIAL
➢ Seal Beach
➢ Portions of Los Alamitos
The Westside sub -market area represents a larger area and is comprised of all or a
portion of the following cities/communities:
➢ Long Beach west of Cherry Avenue
➢ Signal Hill
➢ Carson
➢ San Pedro
➢ Wilmington
➢ Compton
The CHLB Service Area was defined utilizing Office of Statewide Health Planning and
Development Hospital Discharge Reports for 1998.
SERVICE AREA POPULATION AND DEMOGRAPHIC TRENDS
There are approximately 863,000 people residing within the boundaries of the CHLB
Service area, representing a wide range of demographic trends.
1. Eastside Sub -Market Area
• There are 342,200 residents within the CHLB Eastside sub -market and this
population is projected not to experience an appreciable growth over the next
five years.
• The sub -market area has a greater percentage of senior residents (17%) compared
to the state average (11%). However, expected growth for seniors is only 2.5%
(1,100 residents) as compared to 8% for the state during the next five years.
• Concurrently, a large decrease in women of childbearing age is expected: a 3.1%
decrease or nearly 2,138 over the next five years.
The following table illustrates select population and demographic trends within
CHLB's Eastside sub -market compared to California state averages for 2000 to 2005:
CHLB STRATEGIC BUSINESS PLAN PAGE 6
STRICTLY PRIVATE AND CONFIDENTIAL
Selected 2000 Demographics
Population = 342,184
% Pop.
Growth
% Seniors
% Senior
Growth
%0-14
% 0-14
Growth
%em
15-44
% Fern 15
4 GrovAh
o Hispanic
% Hisoa is Growth
-10% 0%
■ CA Average
LB Eastside
10% 20% 30% 40% 50%
2. Westside Sub -Market
• It is estimated that a population of 521,100 is residing in the Westside sub -market
area. The Westside sub -market is expected to experience population growth of
5.0% over the next five years, which is a similar growth rate projection for the
state of California.
• The sub -market has a smaller percentage of seniors (8%) but similar senior
population five-year growth rate (8%) compared to state averages (11% and 8%
respectively).
• The population of women in childbearing age is projected to remain flat within
the next five years.
• th
Nearly half of the residents (47%) are of Hispanic enicity.
The following table illustrates population and demographic trends for the Westside sub-
market compared to California state averages:
CHLB STRATEGIC BUSINESS PLAN PAGE 7
STRICTLY PRIVATE AND CONFIDENTIAL
Selected 2000 Demographics
Population = 521,087
Po. Growth ■ CA Average
° Seniors row 1 ® LB Westside
% Senior Growth
%0-14
% 0-14 Growth
% F m 15-44
% Fern 15 Growth
% Hispanic
% Hispan c Growth
-10% 0% 10% 20% 30% 40% 50%
In summary the Service Area exhibits the following:
CHLB STRATEGIC BUSINESS PLAN PAGE 8
2000 Population
Westside
521,087
Eastside
342,184
Total Area
863,271
2005 Population
546,960
355,993
902,953
Population Growth
25,873
5.0%
13,809
4.0%
39,682
4.6%
2000 Senior Population
39,933
56,715
96,648
2005 Senior Population
43,286
58,120
101,406
Senior Population Growth
3,353
8.4%
1,405
2.5%
4,758
4.9%
2000 0-14 Years
146,488
60,820
207,308
2005 0-14 Years
148,947
61,276
210,223
0-14 Growth
2,459
1.7%
456
0.7%
2,915
1.4%
2000 Female 15-44
117,266
69,880
187,146
2005 Female 15-44
117,049
67,742
184,791
Female 15-44 Growth
(217)
0.2%)
(2,138)
3.1%
(2,355)
1.3%)
CHLB STRATEGIC BUSINESS PLAN PAGE 8
STRICTLY PRIVATE AND CONFIDENTIAL
HOSPITAL UTILIZATION
As illustrated in the population and demographic trends, the CHLB Service Area is
clearly demarcated between the Eastside and Westside sub -market areas. The Eastside
sub -market, characterized by a higher proportion of seniors residing in the area and
higher household incomes compared to Westside sub -market demographic trends,
exhibits inpatient hospital utilization of higher proportions of Medicare, PPO and
commercial patients and a significantly lower percentage of Medi -Cal. HMO utilization
percentages within the two sub -market areas are similar.
The significantly more populated Westside sub -market thus generates a greater number
of hospital admissions and discharges to hospitals located within and surrounding the
CHLB Service Area compared to the Eastside Market. In 1998, 63,559 inpatient hospital
discharges resulted from the population residing in the Westside sub -market, compared
to 39,333 discharges originating from residents within the Eastside sub -market.
The higher proportion of Medicare, PPO and commercial financial classes would
indicate that the Eastside market represents higher reimbursement rates for medical
services - a sub -market that CHLB significantly impacts.
1. Eastside Sub -Market
The following chart illustrates the payer mix for the 39,333 discharges generated
during 1998 from the approximately 342,000 residents in the sub -market area:
Medi -Cal
1. ,
N=39,333
Other Commercial
6% 4% HMO
Medicare ""°
42%
CHLB STRATEGIC BUSINESS PLAN PAGE 9
STRICTLY PRIVATE AND CONFIDENTIAL
2. Westside Sub -Market
The following chart illustrates the payer mix of the 63,559 hospital discharges
generated by the 521,000 residents within the Westside sub -market during Calendar
Year 1998:
Medi -Cal
32%
N=63,559
Other Commercial
10% 3% HMO
Medicare
29%
PRODUCT LINE SEGMENTS
PPO
5%
The following is a summary of the various product line segments that CHLB can deploy:
➢ General acute medical/ surgical inpatient services
➢ Inpatient and Outpatient surgical services
➢ Oncology
➢ Cardiology
➢ Outpatient ancillary services
➢ Senior outpatient healthcare services (Adult Day Health Care Program)
TARGET PATIENT POPULATION/CHARACTERISTICS
CHLB can operate as a community-based general acute care hospital intending to
market and re -capture fee-for-service patient populations that the hospital historically
CHLB STRATEGIC BUSINESS PLAN PAGE 10
STRICTLY PRIVATE AND CONFIDENTIAL
de-emphasized during the last decade in favor of risk-based, capitated managed care
contracts and affiliation with large medical groups.
Prior to the hospital ownership shifting to CHW, hospital management had been
making progress to recruit and retain physicians that have practices with a significant
number of patients with fee-for-service insurance and government-sponsored programs.
This effort was lost when, under CHW management, many hospital programs and
services were shifted to St. Mary Hospital and LBCMCs long-term future was in doubt,
resulting in many of these physicians shifting their practices to other hospitals in the
Service Area.
Market analysis of physicians on LBCMC's Medical Staff indicates that a strong core of
physicians could support the hospital and refer patients there. CHLB can capitalize on
this support through marketing to individual and small physician practices that have
traditionally had a higher proportion of patients with the following types of healthcare
insurance coverage:
➢ Non -managed care. Medicare
➢ Commercial
➢ Managed care on a non -risk, fee-for-service reimbursement.
CHLB STRATEGIC BusiNEss PLAN PAGE 11
STRICTLY PRIVATE AND CONFIDENTIAL
IV. COMPETITIVE ANALYSIS
HOSPITAL INVENTORY
The following is a list of competing hospitals within and surrounding the CHLB Service
Area or draw measurable market share from the Services Area:
Bellflower Comm
Location
Bellflower
A-,,ailable
Beds
145
OccupHospital
"/o
45.5%
32,560
Lakewood Reg
Lakewood
161
56.2%
44,958
LB Memorial
Long Beach
726
58.0%
192,365
Los Alamitos
Los Alamitos
173
56.6%
47,353
St. Mary
Long Beach 1
469
44.10/61
101,511
Torrance Mem
Torrance
360
67.2%
111,913
It should be noted that CHLB is the only hospital located within East Long Beach. The
hospitals listed above (with the exception of Torrance Memorial Medical Center, which
is situated West of the CHLB Total Service Area) are located just outside of the Eastside
sub -market. Refer to the map in Section III that indicates hospital locations in and
surrounding the Service Area.
COMPETITIVE POSITION
The following information reflects 1998 market share within the Eastside and Westside
sub -markets:
1. Eastside Sub -Market
The following pie chart demarcates the general acute care hospital market share for
inpatient volume generated by the population residing within the Eastside sub-
market during Calendar Year 1998.
CHLB STRATEGIC BUSINESS PLAN PAGE 12
STRICTLY PRIVATE AND CONFIDENTIAL
N=39,333
Others
28%
Los Alamitos
11%
Kaiser B�
�% akewood Reg
7%
LB Memorial
23%
St. Mary
6%
Bellflower
4%
LB Comm.
14%
➢ The data indicate that in 1998, Long Beach Memorial Medical Center had the
largest market share (28%), followed by LBCMC with a 14% share and Los
Alamitos Hospital at 11 %.
➢ These three hospitals have the greatest patient impact within the Eastside sub-
market, influencing over one-half of hospital admissions.
➢ No other hospital has more than a 10% share within this area.
2. Westside Sub -Market
The following pie chart indicates hospital market share generated by the population
residing within the Westside sub -market:
Others
36%
N=63,559
LB Memorial
19%
St. Mary
12%
Pacific
4% LAC Harbor/ UCLA
St. Francis 10%
4% LB Comm.
Kaiser HC 5%
5% Torrance Memorial
5%
CHLB STRATEGIC BUSINESS PLAN PAGE 13
STRICTLY PRIVATE AND CONFIDENTIAL
➢ The Westside sub -market generates over 61% more hospital patient volume
compared to the Eastside sub -market.
➢ Historically, although this sub -market represents a larger pool of patient volume,
LBCMC (with a 5% market share in the sub -market) had less of a market impact
this area compared to the Eastside sub -market.
➢ Like the Eastside sub -market, Long Beach Memorial Medical Center is the
dominant hospital with the largest market share (19%), followed by St. Mary
Hospital (12%) and Los Angeles County/UCLA Medical Center (10%).
➢ Market share within the Westside sub -market is more fragmented than the
Eastside, with more than one-third of discharges going to hospitals with 3% or
less of area market share.
OPPORTUNITIES
As the sole hospital operating within the Eastside sub -market, CHLB can leverage its
market position to become the high -service and quality hospital provider, serving as the
principal hospital for the population residing on the Eastside of Long Beach, in addition
to other targeted populations residing in the Greater Long Beach Service Area.
CHLB will operate virtually unencumbered by onerous contractual obligations and
adverse factors associated with being a member of a regional or statewide hospital
system, such as:
➢ Risk-based capitated managed care contracts that provide insufficient
reimbursement from health plans to offset high costs of providing direct medical
care and expenses incurred from out -of -network and out -of -area healthcare
services.
➢ Ongoing operations of unprofitable hospital programs and services that must be
financially supported in order to maintain managed care contracts.
➢ Significantly high corporate overhead allocation to support system/ affiliation
infrastructure that questionably returns commensurate value.
➢ Legacy debt obligations.
➢ Bureaucratic layers, top-down decision making from corporate headquarters and
lack of local focus and priorities inherent in multiple hospital systems.
➢ Resource drain resulting from decisions to accommodate needs of other
hospitals, programs and corporate departments within a large hospital system.
CHLB STRATEGIC BUSINESS PLAN PAGE 14
STRICTLY PRIVATE AND CONFIDENTIAL
CHLB can succeed operating in its Service Area through the following strategies and
market factors:
➢ Termination/ transfer of risk-based capitated managed care contracts, thus
eliminating out -of -area and out -of -network expenses that were costing the
hospital from $600,000 to $1,000,000 per month.
➢ Downsizing of inpatient bed capacity to more effectively and efficiently meet the
hospital needs of its patient base.
➢ Conversion of excess physical plant capacity to alternative uses (e.g., assisted
living, educational classrooms, etc.) that represent additional sources of revenue.
➢ Focused programs and services that will improve revenue base through
attracting and retaining physicians with PPO, Medicare, commercial and other
attractive fee-for-service patients.
➢ Elimination of hospital programs and services that have historically been
financial drains to the operations (i.e., NICU, Pediatric ICU).
➢ Provision education and classroom space within the Hospital building to CSULB,
LBUSD and/or LBCC.
➢ Implementation of inpatient and outpatient programs and services that attract
the senior patient population with fee-for-service Medicare coverage.
➢ Significant reduction of corporate overhead allocation expense through
separation from CHW (reduction is offset by need for administrative support
services and management information systems).
➢ Aggressive physician recruitment and retention strategies to build and preserve
the medical staff core supporting CHLB. The hospital will concentrate its
recruiting efforts to physicians who have a significant number of patients with
PPO, traditional Medicare and other fee-for-service insurance plans.
COMPETITWE THREATS
CHLB could face the following competitive threats:
➢ Larger Competing Hospitals - The competing hospitals within and surrounding
the Service Area are larger and will have higher intensive/ acute inpatient
programs and services. Long Beach Memorial Medical Center is the dominant
market share leader in the area and will continue in this role into the foreseeable
future.
CHLB STRATEGIC BUSINESS PLAN PAGE 15
STRICTLY PRIVATE AND CONFIDENTIAL
➢ Highly Competitive Market - It is recognized that the CHLB Service Area, in
total, has an excess capacity of general acute care hospital beds and thus the
market for hospital patient volume is highly competitive.
➢ Increased Presence of Managed Care - HMO market penetration is strong in Los
Angeles and Orange Counties. Managed care, through its provider contracts,
directs its subscribers to its participating physicians and hospitals. Since CHLB
will elect to avoid capitated managed care contracts, a number of its supportive
staff physicians will be contractually obligated to refer their HMO patients to
competing hospitals with risk-based HMO contracts.
➢ Potential for Reduced Reimbursement - The hospital relies on payments from
third party payers and government sponsored programs that in many instances
set/change reimbursement levels, procedure, policy, etc. As such, a potential
threat exists that can reduce revenue to the hospital.
➢ Requirements for Seismic Retrofit - Under SB 1953, CHLB must correct physical
plant deficiencies to meet seismic requirements. Projected costs are estimated at
between $16m to $30m under the current hospital facility configuration.
CHLB STRATEGIC BUSINESS PLAN PAGE 16
STRICTLY PRIVATE AND CONFIDENTIAL
V. PHYSICIAN/COMMUNITY DEMAND ANALYSES
PHYSICIAN DEMAND ANALYSIS
As part of this Business Plan, select members of LBCMCs Medical Staff were surveyed
to determine the depth of physician loyalty to the hospital if it were to reopen under
management different from CHW. Refer to Attachment B that contains the Medical Staff
Survey Report.
The following summarizes findings of the survey:
1. Survey Overview
The survey focused on the following:
➢ Level of support from physicians currently on staff if CHLB were to continue
operations under different ownership/ management.
➢ Level of patient volume the physicians would refer to the hospital.
➢ Hospital programs and services needed at the hospital.
➢ Perceived strengths and weaknesses at LBCMC
2. Survey Parameters
➢ More than 40 physicians were surveyed, who represented the core group of
physicians practicing at LBCMC.
➢ Survey principally targeted primary care physicians; however, a number of key
specialists were also surveyed.
➢ No physicians from Harriman Jones Medical Group (representing risk-based
managed care referrals) participated in the survey.
3. Summary of Findings
➢ All of the physicians stated that they would prefer to have LBCMC reopen after
CHW relinquishes ownership/management and would continue to refer their
patients to the hospital. Many of the physicians, however, stated that if the
hospital were to close for an extended period of time (i.e., 60 days or longer), it
would be more difficult to recapture lost patient volume.
CHLB STRATEGIC BUSINESS PLAN PAGE 17
STRICTLY PRIVATE AND CONFIDENTIAL
➢ Approximately 90% of the respondents cited some frustration at the shortage of
available inpatient beds at Long Beach Memorial Medical Center and Los
Alamitos Medical Center. In addition, long waits at Memorial's emergency
department were also mentioned.
➢ Ease of access to LBCMC was mentioned as one the greatest assets of the
hospital.
➢ LBCMC's location is a plus to the physicians and patients (note: most of the
physicians surveyed have office practices in East Long Beach).
➢ The emergency department at LBCMC is viewed as an important community
resource.
➢ Nursing and ancillary services at LBCMC were universally regarded as excellent
compared to competing hospitals in the area.
The physicians were asked to estimate the number of admissions per month by payer
would they admit to CHLB. The following represents the findings
Payer
Fee -For -Service Medicare
PPO/POS
Self Pay
Total
Admissions
ALOS
Patient Days
131 _
6.65
871
29
4.05
117
1
4.00
4
161
27
992
(Note: Average length of stay was derived from OSHPD data by payer for zip codes
within the LBCMC Service Area)
The 992 patient days per month translates to an average daily census of 33 inpatients.
Based on EMS data that indicates that the LBCMC emergency department generates
approximately 70 admissions per month (1999). Assuming a start-up scenario, the
following model projects the average daily census for CHLB under new
ownership/ management.
* Note: Those physicians using one or more hospitals in addition to CHLB.
CHLB STRATEGIC BUSINESS PLAN PAGE 18
1999
Projected
Admission Source
Base Year
Year 1
Year 2
Year 3
Surveyed Physicians
25
15
27
30
Physician "Splitters"*
15
10
15
20
Emergency
70
40
55
60
Total
110
65
97
110
* Note: Those physicians using one or more hospitals in addition to CHLB.
CHLB STRATEGIC BUSINESS PLAN PAGE 18
STRICTLY PRIVATE AND CONFIDENTIAL
The physician strategy for the new CHLB, would be:
➢ In Year 1, retain its core of loyal physicians (assuming some out -migration to
other hospitals), capture a small portion of physicians who use one or more
hospitals in addition to CHLB and realize a portion of admissions from the ER.
➢ In Years 2 and 3, loyal physicians will continue to increase their admissions to
the hospital and aggressive recruitment efforts will result in capture of greater
share of referrals from physicians who use one or more hospitals in addition to
CHLB.
➢ Emergency room admissions will increase to former levels as CHLB establishes
itself as the community hospital for East Long Beach and surrounding areas.
COMMUNITY DEMAND ANALYSIS
An analysis of the CHLB Service Area and competitive environment (refer to Sections IV
and V of the Plan) indicates that hospital utilization will continue to increase, which is
supported by historical trend data, projected population increases and a continuing
aging population base.
In particular, within East Long Beach, population, demographic and hospital utilization
data indicate that the residents proportionately have more senior citizens, generate
higher incomes, have a greater healthcare insurance coverage and have a higher
proportion of IPO/POS/commercial insurance subscribers.
It should be noted that the 2000 population of the Eastside sub -market (Southeast +
Northeast) is approximately 67% of the size of the population residing within the
Westside sub -market (Southwest + Northwest).
During 1998, residents within the CHLB Service Area generated the following average
daily census by payer source, segmented by Service Area Quadrant:
Southeast
Northeast
Southwest
Northwest
Total
Commercial
8.4
7.9
15.2
9.5
40.9
HMO
45.4
50.5
65.7
65.0
226.7
Medi -Cal
28.6
39.1
146.5
117.5
331.6
Medicare
158.0
126.5
195.8
160.8
641.0
PPO
22.4
21.1F_17.01
17.91
78.4
Other
19.1
16.9 1
55.21
43. 7134.9
Total
281.9
262.0 1
495.41
414.3
1,453.6
CHLB STRATEGIC BUSINESS PLAN PAGE 19
STRICTLY PRIVATE AND CONFIDENTIAL
Refer to Attachment C that contains the detailed hospital utilization by zip code and
payer for areas within the CHLB Service Area.
The above table indicates that the Eastside sub -market (representing the Southeast and
Northeast quadrants) generated an average daily census of 544 while the Westside sub-
market (representing the Southwest and Northwest quadrants) generated an ADC of
909, totaling 1,453 for the CHLB Total Service Area.
Assuming a modest 0.7% annual growth rate for hospital inpatient volume, CHLB
drawing around 80% of its volume from this area and conservatively netting out the
HMO volume (CHLB will not assume any capitated, risk-based managed care contracts,
although will negotiate per diem or discounted fee-for-service arrangements), the
following indicates the projected market share that CHLB can conceivably achieve
during its first three years of operation under new ownership/ management:
Service Area ADC (excluding HMO)
1,253
1,262
1,270
CHLB Projected Total IP ADC
65
97
110
CHLB ADC from Service Area 80%
52
78
88
Anticipated Service Area Market Share
4.2%
6.2%
6.9%
The above table indicates that CHLB's market share within its Service Area can
conservatively increase from 4.2% in the Year 1 to 6.9% by Year 3 (net of HMO volume).
It should be noted that during 1988, LBCMC generated an 8.5% share within the Service
Area.
CHLB STRATEGIC BUSINESS PLAN PAGE 20
STRICTLY PRIVATE AND CONFIDENTIAL
VI. STRATEGY
KEY COMPETITIVE CAPABILITIES
The following represents CHLB's key competitive capabilities:
➢ Strong Support of Community -Based Physicians - A survey of practicing
physicians in the community indicates that a significant core exists to support
CHLB as a community-based hospital serving the Eastside of Long Beach and
surrounding areas.
➢ Reduced Equipment Cost - The hospital has a strong Foundation that can raise
sufficient capital to cover a sizable portion of the cost to acquire needed medical
equipment, and thus reducing CHLB's capital needs and debt.
➢ Competitive Market Favors Low -Cost Provider - CHLB will be well positioned
to compete in the market as the low-cost provider, since its principal competitors
are large medical centers that are required to support expensive acute care
programs.
➢ Advantageous Location - As stated earlier, CHLB is the only general acute care
hospital located in the East Long Beach and is well situated to serve as the
primary hospital for the population residing in the immediate area. In addition,
the sub -market population comprises a higher proportion of senior residents
(compared to county and state averages), who utilize hospital services at a higher
rate.
➢ Positioned to be Low -Cost Provider - CHLB, with its decreased inpatient
capacity and reduced array of programs and services will enable the hospital to
operate more efficiently and effectively and become the low-cost hospital
provider without sacrificing quality of care.
➢ Unencumbered with Legacy Problems and Obligations - CHLB will be
positioned to operate without the obligations under the previous ownership
structures. These obligations included significant corporate overhead allocation
payments to support the CHW system and heavy debt service for the overall
CHW-Southern California Region.
CHLB STRATEGIC BUSINESS PLAN PAGE 21
STRICTLY PRIVATE AND CONFIDENTIAL
KEY COMPETITIVE WEAKNESSES
➢ Lower Visibility in the Market - Compared to competing hospitals in the Service
Area, LBCMC currently has lower than average market visibility with
physicians, patients and payers. Upon assuming operations of LBCMC,
management will need to aggressively market the hospital to the required
constituents in the Service Area.
➢ Immediate Critical Capital Needs - SONH presently is seeking various means to
secure the required capital at hand to effectively assume the operations of the
hospital. Through this Business Plan, SONH will have the "roadmap" to secure
the necessary start-up funding to acquire assets and provide initial working
capital.
➢ Start -Up Operation - Under new ownership and management, CHLB will be
starting from "ground zero" and will have to build patient volume, revenue and
cash flow without the benefit of any ongoing operations or momentum
(assuming that CHW will close the hospital on or before October 2, 2000).
➢ Physical Plant in Need of Upgrade to Meet Seismic Requirements - Like virtually
all hospitals in California, CHLB will experience significant costs to meet seismic
code upgrades by the year 2008.
STRATEGY
The following is a list of strategic initiatives that will be implemented for CHLB under
new ownership and management:
➢ Pursue Fee -For -Service Medicare Patients - LBCMC historically has managed
Medicare fee-for-service (DRG -based) patient volume well, enabling the hospital
to generate adequate margin for this patient population. In addition, the
immediate service area surrounding the hospital contains a higher proportion of
senior citizens residents compared to Long Beach City, Los Angeles County and
California State averages. A majority of these seniors are enrolled as traditional
Medicare beneficiaries and not part of a Medicare HMO plan.
Senior patients and other Medicare beneficiaries (social security recipients under
disability categories) tend to utilize hospital services at a rate approximately 10
times more frequently compared to the rest of the general population.
CHLB will provide inpatient and outpatient hospital and support services that
will attract seniors and other fee-for-service Medicare beneficiaries. These
programs and services include:
CHLB STRATEGIC BUSINESS PLAN PAGE 22
STRICTLY PRIVATE AND CONFIDENTIAL
• Adult Day Health Care Program
• Geropsychiatric Inpatient and Day Care
• General acute care focusing on chronic disease (i.e., cardiology, orthopedic
surgery, nephrology, etc.)
• Transportation
• Alternative uses of unused capacity within the existing hospital building
(e.g., assisted living)
• Senior Community Services
➢ Aggressive Physician Recruitment/ Retention Programs - According to a survey
of physicians on the LBCMC Medical Staff, there is a core of loyal physicians
who will continue to support the hospital under management outside of CHW.
Patient volume projections indicate that this core of physicians, coupled with
admissions generated from the emergency department and admissions from
"splitter" physicians will generate an estimated average daily census of 65 for the
first year. Strategies will be implemented to further strengthen this core of
physicians through recruiting new physicians and gaining additional patient
referrals from "splitter" physicians on staff in order to increase volume over the
next years of operation.
It is believed that physicians will be attracted to a high-quality, high -service
oriented hospital that serves as an alternative to competing hospitals that are
burdened by administrative bureaucracy, lack of access to programs and services
and inconvenient locations away from East Long Beach.
➢ Properly Size Hospital Capacity to Meet Service Area Needs - To reduce
required capital expenditure and operating expense, the new CHLB will be a
hospital with a smaller inpatient bed capacity when compared to the existing
facility. Inpatient bed capacity will be reduced to 130 set-up beds from its
existing 261 licensed beds, thus reducing fixed costs to equip and maintain the
hospital beds. The remaining 131 beds will remain on the hospital license and
could be brought online if appropriate patient volumes are reached.
In addition, the hospital will eliminate products, programs and services that
have traditionally been unprofitable, including neonatal intensive care, pediatric
intensive care, open heart surgery, etc. These programs may be reinstated when
patient volume increases to levels that will adequately support them.
➢ Reduce/ Eliminate Capitated Managed Care Contracts - Historically, the hospital
had realized significant losses due to aggressively pursuing a managed care
strategy in order to capture risk-based, capitated patient revenue. Under new
management, CHLB will reduce/ eliminate capitated contracts with managed
care plans and physician groups. Rather, contracts with plans will be structured
to reimburse the hospital on a discounted fee-for-service or per diem
arrangement.
CHLB STRATEGIC BUSINESS PLAN PAGE 23
STRICTLY PRIVATE AND CONFIDENTIAL
➢ Position CHLB as the Communi Hospital Serving East Long Beach - Although
the hospital competitive environment in the Greater Long Beach area is intense,
there are no other hospitals operating within the eastern area of the city. As
such, CHLB will be positioned as the community hospital serving the residents
of East Long Beach and immediate surrounding areas. This area possesses a
patient population that is generally older, wealthier, and has a higher proportion
of individuals with healthcare insurance compared to the overall CHLB Service
Area, Los Angeles County and California.
➢ Explore Alternative Uses of Building Space - With the anticipated reduced
inpatient bed capacity at CHLB, there will be unused facility space that can be
converted to alternative uses. Potential uses include:
• Adult Day Health Care Program
• Assisted Living Facility
• Educational Classrooms and Programs, in conjunction with CSULB, Long
Beach City College and/or Long Beach Unified School District.
These programs and services will assist the hospital through generating non-
operating revenue, increasing patient referrals through senior programs, and
provide a means to recruit and secure additional hospital staff.
In addition, these alternative uses may be exempted from hospital seismic
retrofit requirements and thus would reduce the projected costs to bring CHLB
into compliance by 2008.
CHLB STRATEGIC BUSINESS PLAN PAGE 24
STRICTLY PRNATE AND CONFIDENTIAL
VII. PRO FORMA FINANCIAL PROJECTIONS
The following summarizes proforma financial projections in this section:
➢ $24,933,439 in total initial capital required available at project start-up
(7% interest rate; loan repaid over 20 years)
➢ $3,243,969 loss in Year 1 ($199,738 EBITDA)
➢ $347,861 loss in Year 2 ($3,398,579 EBITDA)
➢ $3,066,680 income in Year 3 ($7,115,853 EBITDA)
In addition to this proforma financing scenario, SONH is pursuing a financing
alternative to obtain capital equipment through combination of Foundation, major
donors and a capital campaign. Further, this strategy requires obtaining a $10m
revolving line of credit on accounts receivable, contingent upon availability of $7.5 to
$8.0 million in equity that can also be used for working capital. SONH is investigating
means by which this equity requirement can be partially met through loans on
equipment, other capital assets or leases.
Contents of this section:
1. Proforma Assumptions - Pages 26 - 27
2. Proforma Balance Sheet - Page 28
3. Proforma Income Statement - Page 29
4. Proforma Statement of Changes in Cash Flow - Page 30
5. Proforma Long Term Debt Schedule - Page 31
6. Proforma Depreciation Schedule - Page 32
Refer to Attachment D for selected financial data of comparable hospitals in Southern
California.
Note:
Limitation and Statement Regarding Financial and Statistical
Estimates and Projections
The estimates and projections set forth in this Plan are provided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results
of operations of the hospital. They are provided for purposes of illustration only and
are based on certain assumptions made about the future of the hospital and its Service
Area. The reader is cautioned not to rely on the accuracy of these estimates or
projections of current or future performance. These estimates and projections have not
been audited or reviewed by a Certified Public Accountant.
CHLB STRATEGIC BUSINESS PLAN PAGE 25
CHLB STRATEGIC BUSINESS PLAN See note on page 25 in this Section Page 26
LONG BEACH COMMUNITY HOSPITAL - PROFORMA ASSUMPTIONS
Year 1
Year 2
Year 3
# of Beds
130
% Occupancy
50%
75%
85%
ADC
65
97.5
110.5
Inpatient Days
23,400
35,100
39,780
Outpatient Visits
50,000
75,000
100,000
Adjusted Patient Days
35,177
52,766
63,334
Market Mix
Medicare
50%
PPO
15%
Other
35%
Average Revenue/APD
$1,037
$1,068
$1,100
Average Cost/APD
$1,046
$1,021
$1,003
Contribution Margin
-$9
$47
$97
Balance Sheet Accounts
Measurement
Year 0
Year 1
Year 2
Year 3
Cash
Days Cash on Hand
50
30
35
40
Accounts Receivable
Days in AR
90
90
68
65
Other receivables
% of other revenue
0.00%
1%
1%
1%
Inventory
% of supplies
5.00%
5.00%
5.00%
5.00%
Prepaids/Other Current Assets
% of revenue
0.00%
0.50%
0.50%
0.50%
Property, Plant and Equipment
Investment per bed
$67,000
$15,000
$15,000
$15,000
Bond Reserve Fund
1 Year P+I
See Debt Schedule
Accounts Payable
Payable Turnover
60
60
60
60
Accrued Liabilities
% of patient revenue
5%
5%
5%
5%
Due to govt programs
% of Medicare
0%
0%
0.5%
1%
CPLTD
See Schedule
Other current liabilities
% of revenue
0.50%
0.50%
0.50%
0.50%
Long Term Debt
See Schedule
CHLB STRATEGIC BUSINESS PLAN See note on page 25 in this Section Page 26
LONG BEACH COMMUNITY HOSPITAL - PROFORMA ASSUMPTIONS
Income Statement
Measurement
Year 0
Year 1
Year 2
Year 3
Growth Rate
Medicare Inpatient Days
Market mix = 44%
25%
11,700
17,550
19,890
Cost per APD
Medicare Rev./ Inpatient Day
Ave. Net Rev (60% allowance)
$39
$1,040
$1,071
$1,103
3.0%
PPO Inpatient Days
Market mix = 20%
3%
3,510
5,265
5,967
$10
Revenue per PPO Day
Ave. Net Rev (60% allowance)
Purchased Services
$1,511
$1,557
$1,603
3.0%
Medicare Outpatient Days
Market mix = 44%
Cost per bed
25,000
37,500
50,000
10%
Revenue/Medicare Outpatient Visit
Ave. Net Rev (60% allowance)
$3,500
$318
$328
$337
3.0%
PPO Outpatient Days
Market mix = 20%
5%
7,500
11,250
15,000
% of revenue
Revenue per Outpatient Visits
Ave. Net Rev (60% allowance)
0.50%
$283
$291
$300
3.0%
Other Inpatient Days - blended
Market mix = 36%
8,190
12,285
13,923
Revenue/Other Inpatient Day
Ave. Net Rev (70% allowance)
$830
$854
$880
3.0%
Other Outpatient Visits
Market mix = 36%
17,500
26,250
35,000
Revenue/Other Outpatient Visit
Ave. Net Rev (70% allowance)
$122
$126
$130
3.0%
Interest Income
% Return on Prev. Inv. Bal.
5.0%
5.0%
5.0%
5.0%
Contributions
$0
$0
$0
$0
Other Income
$0
$500,000
$500,000
$500,000
Growth Rate
Salaries
Cost per APD
$488
$464
$440
-5%
Benefits
% of salary costs
25%
25%
25%
Registry/Other Professional
Cost per APD
$37
$38
$39
3%
Supplies
Cost per APD
$184
$190
$195
3%
Medical Fees
Cost per APD
$10
$10
$11
3%
Purchased Services
Cost per APD
$126
$130
$134
3%
Maintenance and Rental Costs
Cost per bed
$2,300
$2,530
$2,783
10%
Insurance
Cost per bed
$3,500
$3,570
$3,641
2%
Bad Debt
% of patient Revenue
5%
5%
5%
Other Expense
% of revenue
0.50%
0.50%
0.50%
CHLB STRATEGIC BUSINESS PLAN See note on page 25 In this Section Page 27
LONG BEACH COMMUNITY HOSPITAL - PROFORMA BALANCE SHEET
Assets
Year 0
Year 1
Year 2
Year 3
Cash and Investments
$0
$3,206,740
$5,395,064
$7,228,216
Accounts Receivable
$0
$9,119,729
$10,645,764
$12,580,723
Other Receivable
$0
$5,000
$5,000
$5,000
Inventory
$0
$323,630
$500,009
$618,161
Prepaids/Other Current Assets
$0
$184,895
$286,381
$353,213
Total Current Assets
$0
$12,839,994
$16,832,218
$20,785,314
PPE
$8,710,000
$10,660,000
$12,610,000
$14,560,000
Accumulated Depreciation
,$0
$1,742,000
$3,874,000
$6,396,000
Net PPE
$8,710,000
$8,918,000
$8,736,000
$8,164,000
Bond Reserve Funds
Total Assets
Liabilities
Accounts Payable
Accrued liabilities
Due to govt programs
CPLTD
Other current liabilities
Total Current Liabilities
Long Term Debt
Deficit/(Surplus) Debt
Total Liabilities
Fund Balance
Total
�O $2,948,379 $2,86612
$8,710,000 $24,706,374 $28,42-9,330
$2,773,845
$31,723,159
$0 $6,129,863 $8,979,608 $10,587,796
$0
$1,823,946
$2,817,996
$3,483,893
$0
$0
$155,412
$388,137
$0
$1,246,672
$1,246,672
$1,246,672
�O
$182,395
$281,800
$348,389
$0
$9,382,875
$13,481,488
$16,054,886
$0
$23,686,767
$22,440,095
$21,193,423
$8,710,000
($5,119,300)
($3,900,423)
($5,000,000)
$8,710,000
$27,950,342
$32,021,160
$32,248,309
$0 -$3,243,969 -$3,591,830 -$525,150
$8,710,000 $04,706,374 $28,429,330 $31,723,159
CHLB STRATEGIC BUSINESS PLAN See note on page 25 in this Section Page 28
LONG BEACH COMMUNITY HOSPITAL - PROFORMA INCOME STATEMENT
Year 0 Year 1
Medicare Inpatient Revenue
$0
PPO Inpatient Revenue
$0
Medicare Outpatient Revenue
$0
PPO Outpatient Revenue
$0
Other InPatient Revenue
$0
Other Outpatient Revenue
$00
Total Patient Revenue
$0
Interest Income
$0
Contributions
$0
Other Income
�-o
Tota/ Revenue
$0
Salaries
Benefits
Registry/Other Professional
Supplies
Medical Fees
Purchased Services
Maintenance and Rental Expense
Insurance
Bad Debt
Other Expense
Total Expense $0
EBITDA 1 $0
Depreciation
Interest Expense
Net Income/Loss $0
CHLB STRATEGIC BUSINESS PLA
$12,168,000
32.9%
$5,304,312
14.3%
$7,950,000
21.57.
$2,121,000
5.77.
$6,793,605
18.4%
$2,142,000
5.8%
$36,478,917
98.6%
$0
0.0%
$0
0.0%
$500,000
L4%
$36,978,917
100.0%
$17,166,466
46.4%
$4,291,617
11.6%
$1,301,556
3.57.
$6,472,602
17.57.
$351,772
L07.
$4,432,325
12.0%
$299,000
0.8%
$455,000
L27.
$1,823,946
4.9%
$184,895
0.57.
$36,779,179
99.5%
$199,738
0.54%
$1,742,000
$1,701,707
-$3,243,969
-8.8%
Year 2
$18,799,560
32.8%
$8,195,162
14.3%
$12,282,750
.21.49
$3,276,945
5.77.
$10,496,120
18.3%
$3,309,390
5.8%
$56,359,927
98.4%
$416,302
0.77.
$0
0.07.
$500,000
0.9%
$57,276,2Z9
100.0%
$24,462,215
42.77.
$6,115,554
10.77.
$2,010,904
3.57.
$10,000,170
17.5%
$543,488
0.9%
$6,847,943
12.07.
$328,900
0.6%
$464,100
0.8%
$2,817,996
4.9%
$286,381
0.57.
$53,877,650
94.1%
$3,398,579
5.93%
$2,132,000
$1,614,440
-$347,861
-0.9%
See note on page 25 in this Section
Year 3
$21,945,353
31.1%
$9,566,486
13.57.
$16,868,310
23.9%
$4,500,338
6.4%
$12,252,470
17.3%
$4,544,896
6.4%
$69,677,853
98.6%
$464,774
0.77.
$0
0.0%
$500,000
0.77.
$70,642,627
100.07.
$27,893,723
39.57.
$6,973,431
9.9%
$2,486,083
3.57.
$12,363,224
17.57.
$671,914
LO%
$8,466,121
12.07.
$361,790
0.57.
$473,382
0.77.
$3,483,893
4.9%
$353,213
0.57.
$63,526,774
89.9%
$7,115,853
10.1%
$2,522,000
$1,527,173
$3,066,680
4.37.
age
29
LONG BEACH COMMUNITY HOSPITAL PROFORMA - STATEMENT OF CHANGES IN CASH FLOW
Purchase of property and equipment -$8,710,000 -$1,950,000 -$1,950,000 -$1,950,000
Increase in Debt
Year 0
Year 1
Year 2
Year 3
Net Earnings
$0
-$3,243,969
-$347,861
$3,066,680
Depreciation
$0
$1,742,000
$2,132,000
$2,522,000
Change in assets and liabilities
$0
-$2,948,379
$87,267
$87,267
A/R
$0
-$9,119,729
-$1,526,035
-$1,934,959
Other A/R
$0
-$5,000
$0
$0
Inventory
$0
-$323,630
-$176,378
-$118,153
Prepaids/Other Current Assets
$0
-$184,895
-$101,487
-$66,832
A/P
$0
$6,129,863
$2,849,745
$1,608,187
Other accrued liabilities
$0
$1,823,946
$994,050
$665,896
Due to gov't programs
$0
$0
$155,412
$232,725
Other current liabilities
$0
$182,395
$99,405
$66,590
Net Cash from Operating Activities
$0
-$2,999,019
$4,078,851
$6,042,134
Purchase of property and equipment -$8,710,000 -$1,950,000 -$1,950,000 -$1,950,000
Increase in Debt
$24,933,439
$0
$0
Payments on long term debt
$0
$0
-$1,246,672
-$1,246,672
Deficit/(Surplus) Debt
$8,710,000
($13,829,300)
$1,218,877
($1,099,577)
Long Term Assets (Bond Funds)
$0
-$2,948,379
$87,267
$87,267
Net Change in Cash and Investments
$0
$3,206,740
$2,188,324
$1,833,152
Cash, Beginning of the Year
$0
$0
$3,206,740
$5,395,064
Cash, End of the Year
$•0
$3,206,740
$5,395,064
$7,228,216
CHLB STRATEGIC BUSINESS PLAN see note on page 25 in this section Page 30
Debt Issued
Amortization Period (Years)
Interest Rate
CPLTD
Year 0
Year 1
Year 2
Year 3
Minimum Cash Requirement
LONG BEACH COMMUNITY HOSPITAL - PROFORMA LONG TERM DEBT SCHEDULE
$24,933,439
20
7.00%
$1,246,672
Long Term Debt Balance
0
$23,686,767
$22,440,095
$21,193,423
-$5,000,000
Interest Paid
$0
$1,701,707
$1,614,440
$1,527,173
CHLB STRATEGIC BUSINESS PLAN see note on page 25 in this section Page 31
ATTACHMENT A
LONG BEACH COMMUNITY MEDICAL CENTER
PATIENT ORIGIN INFORMATION
1998
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Eastside
Eastside
Eastside
Eastside
Westside
Westside
Westside
Westside
Eastside
Eastside
Westside
Westside
Eastside
Eastside
Eastside
Eastside
Total L13CMC
Discharges % of Total
4,412
4,084
4,119
3,032
7,124
9,865
6,159
5,445
4,405
1,696
4,155
3,929
3,626
2,915
8,674
2,356
! 4,030
11,738
5,369
3,349
6,621
-� 1,875
5,372
6,097
5,726
8,042
1,411
8,865
a 2,443
363
7,371
2,783
9,600
1,060
4,371
5,176
7,123
1,259
2,985
-_
4,113,
7,266
i u 9,438
8,309
349
29%
23%
18%
23%
10%
6%
10%
10%
9%
24%
9%
8%
7%
9%
2%
6%
3%
1%
2%
2%
1%
3%
1%
1%
1%
1%
3%
1%
0%
1%
10%
0%
1%
0%
3%
1%
1%
0%
2%
1%
1%
0%
0%
0%
5%
Source: OSHPD 1998, excludes normal newborns Page 1 of 8
LBCMC
Zip Code
Discharges
% of Total
Cumulative %
90804
1,258
12%
12%
90815
958
9%
21%
90808
752
7%
28%
90803
704
7%
35%
90813
692
7%
41%
90805
621
6%
47%
90806
613
6%
53%
90802
547
5%
58%
90740
411
4%
62%
90814
408
4%
66%
90807
372
4%
69%
90810
323
3%
72%
90712
266
3%
75%
90713
256
2%
77%
90706
215
2%
79%
90720
139
1%
80%
90630
126
1%
82%
90650
97
--1%
- - 83%
90723
97
1%
84%
90703
77
1%
84%
90745
76
1%
85%
90715
64
1%
86%
90744
57
1%
86%
90220
52
0%
87%
90221
46
0%
87%
92683
46
0%
87%
90716
43
0%
88%
90620
41
0%
88%
92804
37
0%
89%
90701
36
0%
89%
90801
36
0%
89%
90731
34
0%
90%
92649
34
0%
90%
90201
33
0%
90%
90623
33
0%
91%
90241
32
0%
91%
92647
31
0%
91%
90262
27
0%
91%
92845
27
0%
92%
90746
23
0%
92%
90242
22
0%
92%
90255
19
0%
92%
90250
18
0%
92%
90280
18
0%
93%
92645
18
0%
93%
Eastside
Eastside
Eastside
Eastside
Westside
Westside
Westside
Westside
Eastside
Eastside
Westside
Westside
Eastside
Eastside
Eastside
Eastside
Total L13CMC
Discharges % of Total
4,412
4,084
4,119
3,032
7,124
9,865
6,159
5,445
4,405
1,696
4,155
3,929
3,626
2,915
8,674
2,356
! 4,030
11,738
5,369
3,349
6,621
-� 1,875
5,372
6,097
5,726
8,042
1,411
8,865
a 2,443
363
7,371
2,783
9,600
1,060
4,371
5,176
7,123
1,259
2,985
-_
4,113,
7,266
i u 9,438
8,309
349
29%
23%
18%
23%
10%
6%
10%
10%
9%
24%
9%
8%
7%
9%
2%
6%
3%
1%
2%
2%
1%
3%
1%
1%
1%
1%
3%
1%
0%
1%
10%
0%
1%
0%
3%
1%
1%
0%
2%
1%
1%
0%
0%
0%
5%
Source: OSHPD 1998, excludes normal newborns Page 1 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN - 1998
Total LBCMC
Discharges % of Total
6,705
2,831
4,919
5,059
3,224
779
3,824
2,357
3,245
2,543
5,081
2,493
5,515
3,023
56
i 3,318
1,290
�- 8,172
6,341
2,792
4,439
7,317
2,307
66
3,474
1,432
3,293
3,886
t 3,433
2,293
172
39
4,708
i 6,596
7,873
3,462
5,185
3,202
2,607
2,888
2,277
_ _------3,246
4,072
5,676
#DIV/0!
0%
1%
0%
0%
0%
2%
0%
0%
0%
0%
0%
0%
0%
0%
16%
0%
1%
0%
0%
0%
0%
0%
0%
11%
0%
0%
0%
0%
0%
0%
3%
15%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 2 of 8
LBCMC
Zip Code
Discharges
% of Total
Cumulative %
17
0%
93%
90660
15
0%
93%
90680
15
0%
93%
90059
13
0%
93%
92646
13
0%
93%
92648
13
0%
94%
92655
12
0%
94%
90222
11
0%
94%
90240
11
0%
94%
90278
11
0%
94%
90621
11
0%
94%
92708
11
0%
94%
92841
11
0%
94%
90002
9
0%
94%
90504
9
0%
94%
90714
9
0%
95%
92833
9
0%
95%
90040
8
._0%
_ 95%
92376
8
0%
95%
90033
7
0%
95%
90249
7
0%
95%
90638
7
0%
95%
90640
7
0%
95%
90710
7
0%
95%
90809
7
0%
95%
91750
7
0%
95%
92844
7
0%
95%
90275
6
0%
95%
90501
6
0%
95%
90604
6
0%
95%
90732
6
0%
96%
90742
6
0%
96%
90743
6
0%
96%
92630
6
0%
96%
90001
5
0%
96%
90019
5
0%
96%
90048
5
0%
96%
90247
5
0%
96%
90260
5
0%
96%
90274
5
0%
96%
90601
5
0%
96%
90717
5
0%
96%
91765
5
0%
96%
92626
5
0%
96%
92703
5
0%
96%
Total LBCMC
Discharges % of Total
6,705
2,831
4,919
5,059
3,224
779
3,824
2,357
3,245
2,543
5,081
2,493
5,515
3,023
56
i 3,318
1,290
�- 8,172
6,341
2,792
4,439
7,317
2,307
66
3,474
1,432
3,293
3,886
t 3,433
2,293
172
39
4,708
i 6,596
7,873
3,462
5,185
3,202
2,607
2,888
2,277
_ _------3,246
4,072
5,676
#DIV/0!
0%
1%
0%
0%
0%
2%
0%
0%
0%
0%
0%
0%
0%
0%
16%
0%
1%
0%
0%
0%
0%
0%
0%
11%
0%
0%
0%
0%
0%
0%
3%
15%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 2 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Cumulative %
96%
96%
96%
96%
96%
96%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
98%
98%
98%
98%
98%
98%
Total LBCMC
% of Total
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
0%
67%
25%
11%
1%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 3 of 8
LBCMC
Zip Code
Discharges
% of Total
92808
5
0%
92840
5
0%
92869
5
0%
90003
4
0%
90057
4
0%
90502
4
0%
90704
4
0%
91710
4
0%
92211
4
0%
92688
4
0%
92706
4
0%
92801
4
0%
92802
4
0%
92843
4
0%
9070
3
0%
90022
3
0%
90023
3
0%
90044
3
._0%
90045
3
0%
90248
3
0%
90301
3
0%
90505
- 3
0%
90603
3
0%
90702
3
0%
91010
3
0%
91423
3
0%
91719
3
0%
91720
3
0%
91740
3
0%
91745
3
0%
91761
3
0%
92402
3
0%
92612
3
0%
92640
3
0%
92667
3
0%
92704
3
0%
92705
3
0%
93230
3
0%
25601
2
0%
33436
2
0%
85020
2
0%
89117
2
0%
90016
2
0%
90020
2
0%
90049
2
0%
Cumulative %
96%
96%
96%
96%
96%
96%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
97%
98%
98%
98%
98%
98%
98%
Total LBCMC
% of Total
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
0%
67%
25%
11%
1%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 3 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Zip Code
90061
90063
90270
90277
90302
90303
90503
90605
90670
90721
90853
91108
91311
91708
91732
91737
91755
91786
91790
91801
91950
92260
92399
92507
92543
92627
92629
92641
92644
92670
92692
92712
92714
92782
92805
92831
93030
93031
93551
97303
98226
720
2114
2879
9082
LBCMC
Discharges
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
% of Total
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
_-0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Cumulative %
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
- 98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98%
98% !
98%
98% !
98% !
98%
98% j
98%
98%
98%
98% !
98%
98%
Total
Dischar es
LBCMC
% of Total
3,138
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
18%
0%
0%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
7%
0%
0%
0%
0%
0%
2%
0%
13%
11%
100%
25%
50%
100%
6,093
2,443
3,177
3,174
2,833
4,240
3,724
1,703
27
11
1,150
3,535
96
6,838
11302
a 1,573
t 5,473
_
5,342
t 5,170
I 5,828
'f. 3,914
r 4,377
3,973
_
6,261
5,162
�� 2,562
501
326
496
3,585
28
664
1,059
_ 6,374
2,448
9,428
110
2,629
15
181
1
4
21
v�
1j
Source: OSHPD 1998, excludes normal newborns Page 4 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN - 1998
Cumulative %
98%
98%
98%
98%
98%
98%
98%
98%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
Total LBCMC
% of Total
100%
33%
33%
17%
33%
50%
33%
50%
8%
14%
50%
50%
33%
33%
20%
13%
17%
100%
50%
100%
100%
100%
50%
100%
20%
50%
33%
7%
6%
4%
3%
4%
1%
1%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 5 of 8
LBCMC
Zip Code
Discharges
% of Total
9813
1
0%
12065
1
0%
14150
1
0%
15146
1
0%
22304
1
0%
23450
1
0%
30144
1
0%
32210
1
0%
33446
1
0%
33903
1
0%
44092
1
0%
45309
1
0%
48081
1
0%
48094
1
0%
58103
1
0%
60045
1
0%
60103
1
0%
61701
1
._0%
62864
1
0%
64106
1
0%
66710
1
0%
68730
1
0%
70121
1
0%
73136
1
0%
76248
1
0%
80751
1
0%
83654
1
0%
83814
1
0%
85044
1
0%
85260
1
0%
85282
1
0%
85710
1
0%
89102
1
0%
89115
1
0%
90004
1
0%
90006
1
0%
90007
1
0%
90011
1
0%
90012
1
0%
90018
1
0%
90024
1
0%
90030
1
0%
90038
1
0%
90043
1
0%
90046
1
0%
Cumulative %
98%
98%
98%
98%
98%
98%
98%
98%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
Total LBCMC
% of Total
100%
33%
33%
17%
33%
50%
33%
50%
8%
14%
50%
50%
33%
33%
20%
13%
17%
100%
50%
100%
100%
100%
50%
100%
20%
50%
33%
7%
6%
4%
3%
4%
1%
1%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 5 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Cumulative %
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
Total LBCMC
% of Total
0%
1%
0%
0%
8%
0%
3%
1%
5%
0%
0%
0%
0%
0%
0%
2%
2%
1%
2%
6%
25%
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 6 of 8
LBCMC
Zip Code
Discharges
% of Total
90047
1
0%
90060
1
0%
90062
1
0%
90065
1
0%
90102
1
0%
90210
1
0%
90223
1
0%
90251
1
0%
90263
1
0%
90266
1
0%
90292
1
0%
90304
1
0%
90305
1
0%
90602
1
0%
90606
1
0%
90608
1
0%
90632
1
0%
90707
1
—0%
90733
1
0%
90734
1
0%
90832
1
0%
90840
1
0%
91101
1
0%
91103
1
0%
91106
1
0%
91107
1
0%
91204
1
0%
91206
1
0%
91302
1
0%
91316
1
0%
91384
1
0%
91706
1
0%
91709
1
0%
91724
1
0%
91739
1
0%
91744
1
0%
91768
1
0%
91770
1
0%
91773
1
0%
91776
1
0%
91911
1
0%
92037
1
0%
92060
1
0%
92061
1
0%
92064
1
0%
Cumulative %
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
Total LBCMC
% of Total
0%
1%
0%
0%
8%
0%
3%
1%
5%
0%
0%
0%
0%
0%
0%
2%
2%
1%
2%
6%
25%
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5%
0%
0%
Source: OSHPD 1998, excludes normal newborns Page 6 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Zip Code
92067
92116
92117
92225
92252
92270
92284
92307
92330
92335
92336
92337
92345
92346
92365
92392
92410
92411
92413
92503
92504
92505
92506
92509
92530
92545
92557
92584
92586
92591
92605
92610
92616
92653
92654
92656
92672
92673
92680
92691
92715
92728
92803
92806
92807
LBCMC
Discharges
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
% of Total
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
._0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Cumulative %
99%-�7
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
99%
_ _ 99%_
99%
99%
99%
99%
99%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100% t
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Total
Discharges
LBCMC
% of Total
2
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0 o
2%
0%
3%
0%
2%
0%
0%
0%
0%
0%
0%
3%
1%
0%
0%
3,316
4,725
2,307
1,344
1,673
2,838
4,119
73
9,039
3,025
I 1,523
i-- 7,014
E 4,601
354
i 8,021
5,440
3,206
82
6,331
? 4,931
3,514
3,722
5,745
3,994
f 4,256
3,446
1,103
! 4,241
i 1,594
50
713
38
8,339
57
2,517
_
4,083
1,037
1,529
r- 3,996
281
31
_
151
2,953
- - - 2,955
Source: OSHPD 1998, excludes normal newborns Page 7 of 8
LONG BEACH COMMUNITY HOSPITAL
PATIENT ORIGIN -1998
Total
10,603
Cumulative %
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Total LBCMC
1,
1,
1.
2,219
5,551
4,610
1
6,746
—
F 1,732
I 980
,E 8,107
4,648
1.876
1,759
1,116
4,009
j 125
5.100
2,722
63
i 1
15
6
1
I
77-
2
1,038,776
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
%00
0%
0%
2%
100%
7%
17%
100%
6%
50%
Source: OSHPD 1998, excludes normal newborns Page 8 of 8
LBCMC
Zip Code
Dischar-ges
% of Total
92821
1
0%
92832
1
0%
92865
1
0%
92866
1
0%
92868
1
0%
92870
1
0%
93023
1
0%
93065
1
0%
93277
1
0%
93304
1
0%
93402
1
0%
93422
1
0%
93436
1
0%
93550
1
0%
93552
1
0%
93908
1
0%
94110
1
0%
94124
1
--0%
94306
1
0%
94588
1
0%
94949
1
0%
95124
1
0%
95306
1
0%
95351
1
0%
95670
1
0%
95688
1
0%
96140
1
0%
96440
1
0%
98002
1
0%
98055
1
0%
98080
1
0%
98502
1
0%
99111
1
0%
10,603
Cumulative %
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Total LBCMC
1,
1,
1.
2,219
5,551
4,610
1
6,746
—
F 1,732
I 980
,E 8,107
4,648
1.876
1,759
1,116
4,009
j 125
5.100
2,722
63
i 1
15
6
1
I
77-
2
1,038,776
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
%00
0%
0%
2%
100%
7%
17%
100%
6%
50%
Source: OSHPD 1998, excludes normal newborns Page 8 of 8
ATTACHMENT B
MEDICAL STAFF SURVEY REPORT
AUGUST 2000
Long Beach Community Hospital
Survey and Analysis of Physicians' Support for Continued
Operation after Oct. 2nd, Deadline.
August 2000
J. T. Consulting Co.
Joseph Tay, MBA
Project Overview
London & Pacific Healthcare Development, Inc., retained Joseph Tay, an independent healthcare consultant, to
develop and implement a fast track initiative that will determine the level of support from the hospital's current
medical staff for continued operation of Long Beach Community Hospital and to assess the physicians landscape in
light of the impending deadline imposed by Catholic Healthcare West, the current owner, to close the hospital on
or before October 2, 2000.
A survey was developed and used as a tool to obtain the information needed. The survey consisted of 9 questions
that range in importance from one to nine, and focused on the period after CHW transfers the facility to the City of
Long Beach. The survey sought to determine the following: .
• The level of support the continued operation of LBCH would receive from the physicians currently on staff
• How that support is translated into business for the hospital, and what kind of business
• What kind of inpatient services will meet their current pattern of practice, or what would be ideal to have
• What would they accept as a minimum of services in a hospital in order for them to continue supporting it
• What they liked about practicing at LBCH versus other competing hospitals in the area
• Their final thoughts and/or comments on what they would like to see come about of the current situation
The survey was conducted within well-defined parameters and generated findings and recommendations listed on
the following pages.
J T CONSULTING Page 1
Physicians Survey Parameters
• The survey was conducted over a two-week period during the month of August 2000. The majority of
physicians surveyed were contacted in one-on-one meetings, with the remainder conducted by telephone.
• More than 40 physicians were surveyed, representing the core group that accounts for a significant percentage
of admissions to LBCH. That is 40 out of a total active medical staff of 152, excluding physicians of HJ medical
group.
• In some instances, only one survey form was filled out for'the group where several physicians are practicing
together out of one location, but admit to the hospital under one name or use a hospitalist.
• The survey targeted primarily PCPs (primary care physicians), but also included some important specialists who
admit patients or consult at the hospital.
• No physicians from Harriman Jones Medical Group were contacted or surveyed, and admission data related to
the their group were not included in the findings.
• Physicians among the `core group' who recently relocated their offices or their practices to other hospital
campuses were also surveyed.
• For some of the questions, physicians provided approximate answers; if that wasn't feasible, statistics were
obtained from their Mgr./Biller with their permission.
• For physicians who were out of town, out of country, or did not return calls, the survey incorporated their
admission data from previously documented reports.
J T CONSULTING Page 2
Summary of Findings
From the responses provided by physicians during the survey, their comments and perspectives on the situation
could be summarized into two categories. The first includes reasons, opportunities and other factors that will help
LBCH continuing to exist. The second consists of their concerns, uncertainties, and lack of ready -answers to some
of the most vexing questions.
• Cited Reasons for Continued Support of Hospital:
1. In what amounted to a universal answer, all the physicians surveyed said they would like to see the hospital
somehow re-emerge after the imposed closure deadline passes. 90% of the respondents cited their frustration at
the shortages of available beds at LB Memorial and at Los Alamitos hospitals. Additionally, 95% of physician
respondents cited the horrendous waiting time their patients are currently experiencing at LB Memorial
Emergency Dept. when compared to the relatively no -wait, excellent care experienced at LB Community ER
Dept. This fact was particularly true for those physicians who had to switch their patients to LB Memorial
recently due to managed care contractual obligations.
2. Ease of use of LBCH versus other hospitals in town was cited by 87% of the physicians surveyed. Especially
the getting in -and -out for on -the -go providers in this hurried age of managed care.
3. Location... Location... Location. Again here, 76 % of the physicians surveyed said that, from the prospective
of their practice and patients' convenience, Long Beach Community Hospital is in an ideal location, followed
by Memorial at 54%, and Los Alamitos in third place among the top tier. Other area hospitals were far below in
terms of location preference. It is helpful keeping in mind that most of these physicians have offices that serve
residents of East Long Beach; and to them LBCH is centrally located, thus geographically irreplaceable.
J T CONSULTING Page 3
4. Some of the physicians surveyed, who have some intimate knowledge of the LBCH operation, stated that one
big reason to keep the hospital open is the steady volume to the ER Dept., which has not only held steady
throughout the current situation, but also gained volume. (Currently stands at little over 2,400 visits per month
between urgent care and ER.). Those physicians cite the profitability of this Dept. and its valuable contribution
to the hospital's bottom line in addition to the crucial services it provides to the surrounding community.
5. Almost universally, 91 % of the physicians surveyed thought the nursing care and ancillary services at LBCH
including Radiology, Pathology and Lab were excellent, thus translating into better care for their patients,
especially when compared with response time of same services at other hospitals. Half of those commenting on
this point went on to add that some outpatient care programs at LBCH such as the Disease Management clinic,
and Pain Management clinic, were very valuable to their practices.
6. 65% of the physicians agreed with the LA County Emergency Medical Services Commission Report about the
importance of LBCH, especially the ER services. They say if no hospital was there to back up the ER, it could
pose additional risk for the safety of their patients, and put undue burden on them.
7. 100% of the physicians surveyed cited the friendly atmosphere and the close-knit family environment the
hospital had as one of the reasons they would support the continued presence of LBCH, and would come back if
they had already moved their practice away.
J T CONSULTING Page 4
• Cited Concerns and Uncertainties:
1. Mostly all of the physicians interviewed, especially the ones still admitting at LBCH now, expressed concerns
of what will become of the hospital after the closure date.
2. Current owners have already announced that on September 8th, they will stop all inpatient surgeries. On
September 15th, they will stop all outpatient surgeries, thus winding the operation at the hospital to a
complete halt shortly after. Few knowledgeable physicians interviewed, who had discussed this issue with their
hospital-based colleagues, thought any new owner has tomove extremely fast to re -activate licenses and
permits for most ancillary services which may be feasible if CHW only suspended them. But they say the
Laboratory Licensing is a more complicated story, since the regulations state, that if you close your hospital lab
for one single day, you have to re -apply all new to HCFA for re -certification from scratch; and in the case of
LBCH, those who know say it would be extremely difficult to attain that.
I Some very loyal physician -supporters of the hospital said that they might be able to tolerate a reasonable period
of time for closure/transfer to new ownership, during which the hospital may be closed (about 60 days) but no
more than that. They added that, if the closure/transfer-period drags on, the consequence could be irreversible
damage in terms of losing medical staff. The point being, it is extremely difficult in this day and.age to re-
assemble a medical staff again. Those concerns are represented in physicians who already left or are leaving
LBCH gradually.
4. Although 95% of the physicians surveyed said they would be supportive of a re-emerging hospital, that is where
the consensus stopped. When asked what kind of a hospital they would like, a full service versus basic Med.
Surg., and if it is the latter, what kind of services should it have? The answers were widely varied. To illustrate
J T CONSULTING Page 5
the variations in responses, here is a snapshot of the opinions mentioned during the interviews:
PCPs said they would support a hospital without Heart, Neonatal or other high-end tertiary care
programs. They said they're happy sending those cases to Memorial
Cardiologists said they would like to have a surgical program in place to support their
Cathorization procedures, otherwise they wouldn't feel safe performing Stents, PTCAs, etc..
OBGYNs said they would like the hospital when it re-emeges to have both a pediatric unit, 24
hrs. Anesthesia, and at a minimum a Neonatalogist 24hrs.-on-call, that to back them up in case
newborns get in trouble, otherwise it would be very difficult for them to work at such facility.
- Ortho -Surgeons said they would like to have a pediatric unit so they could take on children
cases which constitute good part of their practicds. Although a mid -way solution to their request can
be accommodated, one thing is sure, LBCH was cited in the past for putting peds into adult beds and
certainly cannot do that again.
Pediatricians want a full Peds. Department.
5. Of the physicians surveyed, 90% said they have concerns about long term financial viability of the hospital.
They don't want to see the hospital resurrected on loose financial footings only to close again a year later.
6. Small percentage interviewed said the have concern about loss of skilled hospital-based medical staff, including
Radiologists, Anesthesiologists, and others specialty care nurses.
7. Several physicians surveyed had learned of St. Mary Medical Center's plan of setting up a large, yet un-
announced, urgent care clinic right next door to the LBCH (Traffic Circle Bldg.). This clinic would refer
patients to SMMC for further treatment, and would further confuse the surrounding community residents about
ownership. Concern was expressed about the prospects of this plan, and its impact LBCH urgent care and ER
operation.
J T CONSULTING Page 6
Compiled Results of Survey:
J T CONSULTING Page 7
r
�r ,..�.
':F�.3'!?:1�si! ,�^ •a.;F �.�v: ����"[
rY:1^� ,'vn �. ..�. '��w�
�@A.
1
Are you interested in staying at LBCH or moving to
95% interested in staying at LBCH if it remains open
another acili ?
2
If you plan to stay, how interested would you be in
91 % are interested in a non -managed care hospital
Some suggested
helping to establish a non -managed care hospital?
taking managed
care in 2 years
3
If you stay, what kind of hospital would like to have,
46% would like Full -Service hospital
The 46% who
full service or basic Med.Surg. with various Specialty
50% would like Med.Surg. hospital
want full service
Care Programs, ie: Geri -psych., Oncology,
4% would work with either model
consisted of 40%
Cardiology, Pain Mgt., Etc.
PCPs & 60% Spc.
4
Does it matter to you if the hospital is
96% NO., it does not matter
owned/managed by non-profit versus for profit
entity?
Breakdown your patients' mix by percentages?
Managed Care Volume:
5
(0-20%)---(20-40%)---(40-60%)—(60-80%">80%)
35% 12% 32% 18% 3%
How to read the answers:
(in the next column, first line of percentages refer to
Medicare FFS Volume:
volume of that financial class out of total patient mix.
(0-20%)---(20-40%)---(40-60%"60-80%)—(>80%)
Second line of percentages right below it, refer to
23% 41% 19% 16% 0
number of physicians out of all those surveyed with
their respective volume of that financial class)
PPOs & POS Volume:
(0-20%)---(20-40%)---(40-60%"60-80%)—(>80%)
55% 26% 12% 7% 0
J T CONSULTING Page 7
5
"Continued" answers to question # 5.
Cash/Self Pay Volume:
(0-20%)---(20-40%)---(40-60%)—(60-80%)—(>80%)
89% 10% 0 0 0
Medi -Cal Volume:
(0-20%)---(20-40%)---(40-60%"60-80%)—(>80%)
72% 10% 12% 6%
6
How many monthly hospital admissions you are
Managed care admissions per month:
generating from your practice for each financial
# of admissions:(1-2)------ (3-5) ------- (6-9) ------ (>_10)
Potential number
class?
% of physicians: 55% 19% 12% 2%
of admissions
Note:
I
extracted from
In compiling the responses to this question, the
Medicare FFS admissions per month:
physicians'
following applied:
# of admissions:(1-2)------ (3-5) ------- (6-9) ------ (>_10)
responses is:
• Admissions counted were only for inpatient stays
% of physicians: 37% 28% 19% 6%
24 hrs. or over.
Medicare FFS:
• No outpatient or day -surgery admissions were
PPO & POS admissions per month:
131 admissions per
included.
# of admissions:(1-2)------ (3-5) ------- (6-9) ------ (>_10)
month.
• OB deliveries were NOT included as admissions
% of physicians: 38% 23% 6% 0
so not to skew the results.
PPOs & POSs:
• The second row of data representing "percentage
Cash/Self-Pay/Others admissions per month:
29 admissions per
of physicians" does NOT equal to 100%, due to
# of admissions:(1-2)------ (3-5) ------- (6-9) ------ (>_10)
month
some physicians' lack of admissions.
% of physicians 9% 3% 0 0
Cash/ self pay/othr
MediCal admissions per month:
1 admission per
Most MediCal volume represented OB deliveries and
month
Pediatric cases. When those were excluded, very little
was left to account for. So, other than the OBGYNs &
Pediatricians, these physicians had a negligible or zero
MediCal volume in their practices.
J T CONSULTING Page 8
J T CONSULTING Page 9
Physicians'
7
answers to this
What kind of inpatient acute-care services your
Medicare FFS patients admitted for:
question, although
patients needed most when admitted. List in general
-CHF, Circulatory & Heart related: 50% of the times
based on rough
for each class of patients, but especially for Medicare
-Pneumonia/Lung Diseases: 15%
estimates, still lead
FFS and PPO/POSpatients. Base your answer on
-Orthopedic related causes: 15%
to two important
your last 12 months experience?
-Psyche related: 5%
conclusions:
-All others combined: 15%
a) if you are
going to rely in
PPOs, POS, / Others admitted for:
the future on
Note:
Varying djagnosises with no emphasis on any
Medicare FFS
Although Neonatalogy, Pediatric and Heart services
particular disease: 100%
as one of the
have not been available at LBCH for past several
main financial
months, surveyed physicians were speaking in
MediCal patients admitted for:
classes, you
general terms.
-Deliveries/Women Services: 70%
may want to
-Pediatric cases: 20%
have some
-Very little (everything else) diagnoses: 10%
kind of
modified heart
services in
place, if not a
full service
heart program.
b) Having OB
and Peds
departments
will surely
attract more
MediCal
J T CONSULTING Page 9
8
What did you like most about working at LBCH in the
Answers were summarized in previous section of this
past? And why do want to work there again?
report.
What would you like to see happens from all this?
Answers were summarized in previous sections and in
9
Your comments?
the final recommendations of this report.
Consistenly Top 40 admitting physicians to LBCH:
(PCPs and Specialists)
Thomas Hendon, MD. (PCP)
(OBGYNs only)
John Cardin, MD.
Richard Wigod, MD. (PCP) I Nicholas Lee, MD.
Andrew Manos, MD. (PCP) Helen Mahoney, MD.
Joseph Au, MD. (PCP) Arthur Lunsk, MD.
Jared Piety, MD. (PCP)
Reginald Yeske, MD. (PCP)
Larry Walydrop, MD. (PCP)
J T CONSULTING Page 10
Ronald Phillip, MD.
(PCP)
Cornelia Barton, MD.
(PCP)
Tony Sotelo, MD.
(PCP)
Guy Lemire, MD.
(PCP)
George Hancok, MD.
(Spec.)
Andrew Stanitsas, DO.
(PCP)
Dennis Clark, MD.
(PCP)
Jerry Miller, MD.
(PCP)
John Prosser, MD.
(PCP)
Nancy Eugenio, MD.
(PCP)
Winston Chung, MD.
(PCP)
Kenneth Carell, MD.
(PCP)
William Ross, MD.
(PCP)
J T CONSULTING Page 11
George Field, MD.
(PCP)
Pitar Mitreveski, MD.
(Spec.)
Douglas Garland, MD.
(Spec.)
Eknath Deo, MD.
(Spec.)
Robert Goebel, MD.
(Spec.)
Joe Golden , MD.
(Spec.)
Jack Rubin, MD.
(PCP)
Marvin Appel, MD.
(Spec.)
Rene Perez -Silva, MD.
(PCP)
Gerald Cohen, MD.
(PCP)
Clayton DeJong, MD.
(PCP)
John Issa, MD.
(PCP)
Mike Vasilomanalakis, MD. (Spec.)
J T CONSULTING Page 12
Robert Shuman, MD. (Spec.)
William Stanton, MD. (Spec.)
Phillip Hill, MD. (Spec.)
The survey was based on input of above top admitting providers. For some of them, admission statistics were
retrieved from current and /or past admission data. r
Recommendations:
The following recommendations were extracted from physicians' responses, mainly to question number 9, where it
allowed the physician to freely express what they would like to see happen of the current situation, and what steps
in their opinions should be taken during the transition phase and after the hospital re -opens.
• Minimize or halt if possible the loss of medical staff to other facilities.
• Bring pre-CHW administration team back.
• Start as a basic Med.Surg. for the first two years, but definitely add managed care thereafter.
• Resurrect LBCH with strong outpatient programs ie: Diabetes, Pain Management, Disease Management, etc.
• Resurrect the hospital but try the best to keep it under "Local Control".
J T CONSULTING Page 13
• When you open the hospital again, let physician have greater role in management
• Retrofit the tower part of the hospital, but have the city help with cost, why only help the Aquarium!!
• Manage the hospital better that CHW has done.
• Be more aggressive in you billing and collection effort. It has been a weak link of the operation for 5 years.
• Focus on Specialty Care programs that make money: ie geri-psych, foot -care program, etc.
• Enhance the ER even more, it is been very good.
• Resurrect the hospital and model it after Los Alamitos, duplicate that formula if possible.
• Make sure you have at least the following: ER, OR, and ICU, the rest can be added gradually.
• It not important to have a TCU on hospital ground when you open back up, eliminate it.
• Make sure the business office is on campus and run by competent people.
• Explore partnering with Memorial, but get guarantees first not to turn LBCH into a SNF.
• Have a small surgical program in place to support the Cardiologists, not a full open heart surg. program
• Don't take on any captitated contracts
J T CONSULTING Page 14
® Have a local community Board be in charge.
® Add OB after 6 months, then add Heart in about a year from the date you open back up.
• Do not be part of any "damn" healthcare chains!! Try your best no to.
® Make sure the facility is operating at a minimum level even during transition, switching the lights off, may
cause more irreversible damage in the long run.
® Learn from the mistakes of CHW and UniHealth, neither knew how to run hospitals.
In conclusion, I hope the above information will be helpful in formulating your business plan. The involvement
and input of the medical staff in any hospital operation is crucial, it is more so in the case of LBCH.
I will be available to answer any questions you may have regarding this survey. Thanks.
J T CONSULTING Page 15
ATTACHMENT C
CHLB SERVICE AREA
HOSPITAL UTILIZATION BY ZIP CODE AND PAYER
1998
LBCMC SERVICE AREA BY SUB -MARKET
PATIENT DAYS BY ZIP CODE AND PAYER -1998
Market Area
Zip Code
Commercial
HMO
Medi -Cal
Medicare
Other
PPO
Total
NE
90706
1,161
6,771
10,224
18,535
3,324
2,536
42,551
NE
90712
423
3,998
1,482
9,721
1,116
1,477
18,217
NE
90713
556
3,212
972
7,304
759
1,393
14,196
NE
90808
739
4,456
1,596
10,600
981
2,294
20,666
NW
90220
564
4,411
11,406
11,506
3,561
700
32,148
NW
90221
482
3,599
12,912
7,893
3,368
661
28,915
NW
90746
530
4,702
2,484
5,643
1,457
1,029
15,845
NW
90747
1
9
57
18
2
-
87
NW
90805
1,057
7,458
13,695
18,214
6,198
2,724
49,346
NW
90807
816
3,541
2,321
15,410
1,347
1,430
24,865
SE
90720
406
1,885
516
6,479
901
1,450
11,637
SE
90740
434
2,171
294 '
18,006
644
1,144
22,693
SE
90803
637
2,648
1,578
8,109
1,478
1,960
16,410
SE
90804
438
3,854
5,631
8,662
2,498
876
21,959
SE
90814
303
1,760
972
4,323
550
676
8,584
SE
90815
848
4,249
1,449
12,020
913
2,059
21,538
SE
90840
-
19
1
57
-
-
77
SW
90744
715
3,346
8,673
7,750
2,952
854
24,290
SW
90745
778
6,425
7,699
12,706
2,680
1,859
32,147
SW
90802
826
3,070
6,623
16,098
3,433
759
30,809
SW
90806
1,024
4,409
10,445
13,441
3,872
1,137
34,328
SW
90810
449
3,434
6,153
8,518
1,964
786
21,304
SW
90813
1,756
3,308
13,866
12,949
5,212
816
37,907
SW
90822
-
2
2
12
27
7
50
TOTAL
14,943
82,737
121,051
233,974
49,237
28,627
530,569
Source: OSHPD 1998 Discharge Date, excluding normal newborn Page 1 of 1
LBCMC SERVICE AREA BY SUB -MARKET
DISCHARGES BY ZIP CODE AND PAYER -1998
Market Area
Zip Code
Commercial
HMO
Medi -Cal
Medicare
Other
PPO
Total
NE
90706
326
1,989
2,138
2,951
679
590
8,673
NE
90712
129
1,015
334
1,576
167
405
3,626
NE
90713
127
869
205
1,208
142
364
2,915
NE
90808
185
1,193
315
1,737
158
531
4,119
NW
90220
133
1,206
2,222
1,699
681
156
6,097
NW
90221
113
1,034
2,727
1,038
650
164
5,726
NW
90746
103
1,049
494
878
270
191
2,985
NW
90747
1
2
10,
5
2
-
20
NW
90805
251
2,193
3,103
2,689
1,023
606
9,865
NW
90807
167
914
473
2,059
235
307
4,155
SE
90720
97
516
121
1,103
125
394
2,356
SE
90740
116
556
69'
3,205
125
334
4,405
SE
90803
173
706
240
1,243
211
459
3,032
SE
90804
117
1,106
1,369
1,145
456
219
4,412
SE
90814
85
453
274
574
123
187
1,696
SE
90815
230
1,103
291
1,786
184
490
4,084
SE
90840
-
4
1
10
-
-
15
SW
90744
164
1,054
2,027
1,258
634
235
5,372
SW
90745
225
1,719
1,457
2,215
566
439
6,621
SW
90802
174
902
1,471
2,102
600
196
5,445
SW
90806
211
1,196
2,041
1,772
639
300
6,159
SW
90810
120
877
1,130
1,250
352
200
3,929
SW
90813
212
946
3,168
1,680
861
257
7,124
SW
90822
-
1
1
5
7
47
61
TOTAL
3,459
22,603
25,681
35,188
8,890
7,071
102,892
Source: OSHPD 1998 Discharge Date, excluding normal newborn Page 1 of 1
LBCMC SERVICE AREA BY SUB -MARKET
AVERAGE LENGTH OF STAY BY ZIP CODE AND PAYER -1998
Market Area
Zip Code
Commercial
HMO
Medi -Cal
Medicare
Other
PPO
Total
NE
90706
3.56
3.40
4.78
6.28
4.90
4.30
4.91
NE
90712
3.28
3.94
4.44
6.17
6.68
3.65
5.02
NE
90713
4.38
3.70
4.74
6.05
5.35
3.83
4.87
NE
90808
3.99
3.74
5.07
6.10
6.21
4.32
5.02
NW
90220
4.24
3.66
5.13
6.77
5.23
4.49
5.27
NW
90221
4.27
3.48
4.73
7.60
5.18
4.03
5.05
NW
90746
5.15
4.48
5.03
6.43
5.40
5.39
5.31
NW
90747
1.00
4.50
5.70 '
3.60
1.00
-
4.35
NW
90805
4.21
3.40
4.41
6.77
6.06
4.50
5.00
NW
90807
4.89
3.87
4.91
7.48
5.73
4.66
5.98
SE
90720
4.19
3.65
4.26
5.87
7.21
3.68
4.94
SE
90740
3.74
3.90
4.26 '
5.62
5.15
3.43
5.15
SE
90803
3.68
3.75
6.58
6.52
7.00
4.27
5.41
SE
90804
3.74
3.48
4.11
7.57
5.48
4.00
4.98
SE
90814
3.56
3.89
3.55
7.53
4.47
3.61
5.06
SE
90815
3.69
3.85
4.98
6.73
4.96
4.20
5.27
SE
90840
-
4.75
1.00
5.70
-
-
5.13
SW
90744
4.36
3.17
4.28
6.16
4.66
3.63
4.52
SW
90745
3.46
3.74
5.28
5.74
4.73
4.23
4.86
SW
90802
4.75
3.40
4.50
7.66
5.72
3.87
5.66
SW
90806
4.85
3.69
5.12
7.59
6.06
3.79
5.57
SW
90810
3.74
3.92
5.45
6.81
5.58
3.93
5.42
SW
90813
8.28
3.50
4.38
7.71
6.05
3.18
5.32
SW
90822
-
2.00
2.00
2.40
3.86
0.15
0.82
TOTAL
4.32
3.66
4.71
6.65
5.54
4.05
5.16
Source: OSHPD 1998 Discharge Date, excluding normal newborn Page 1 of 1
ATTACHMENT D
SELECTED FINANCIAL DATA OF
COMPARABLE HOSPITALS IN SOUTHERN CALIFORNIA
1999
Financial Performance of Select Southern California Hospitals
FAC -NO
106190017
106190243
106190949
106301205
106190422
106190812
106190475
FAC -NAME
Alhambra Hospital
Downey Community
Henry Mayo Newhall
Hoag Memorial
Torrance Memorial
Valley Presbyterian
AVERAGE
LONG BEACH COMI
BEG -DATE
07/03/98
07/01/98
10/01/97
09/07/97
01/01198
11/01/97
12/01/98
END -DATE
06/30/99
06/30/99
09/30/98
09/05/98
12/31/98
10/31/98
06/30/99
DAY -PER
363
365
365
364
365
365
212
DATA -IND
AUDITED
IN PROCESS
AUDITED
AUDITED
AUDITED
AUDITED
AUDITED
COUNTY
19
19
19
30
19
19
19
TYPE_CNTRL
INVESTOR
NON-PROFIT
NON-PROFIT
NON-PROFIT
NON-PROFIT
NON-PROFIT
NON-PROFIT
TYPE -CARE
GENERAL
GENERAL
GENERAL
GENERAL
GENERAL
GENERAL
GENERAL
CITY
ALHAMBRA
DOWNEY
VALENCIA
NEWPORT BEACH
TORRANCE
VAN NUYS
LONG BEACH
BED _LIC
144
199
273
416
380
347
293
278
BED -AVL
144
186
216
356
360
347
268
278
BED_STF
105
186
216
356
251
347
244
160
DAY_MCAR
16,722
19,422
26,664
38,817
26,364
26,185
25,696
8,444
DAY_MCAL
17,931
4,880
2,489
809
5,704
18,723
8,423
4,218
DAY_CNTY
-
-
260
1,161
-
-
237
9
DAY THRD
3,035
18,477
17,861
53,538
57,677
15,196
27,631
13,421
DAY_OTH
719
1,344
3,547
5,179
2,659
1,214
2,444
1,111
DAY TOT
38,407
44,123
50,821
99,504
92,404
61,318
64,430
27,203
VIS MCAR
4,317
12,458
7,123
53,104
23,644
21,487
20,356
7,860
VIS_MCAL
2,282
3,648
6,984
967
3,023
25,875
7,130
5,755
VIS_CNTY
-
-
1,439
2,422
-
-
644
596
VIS THRD
2,292
33,662
27,326
142,514
105,331
55,645
61,128
23,599
VIS_OTH
1,858
4,397
13,082
12,955
8,556
15,114
9,327
9,299
VIS -TOT
10,749
54,165
55,954
211,962
140,554
118,121
98,584
47,109
DAY -HMO
-
8,726
17,158
26,606
43,618
7,217
17,221
4,320
DAY -MAN -CR
2,563
3,715
703
22,969
14,000
7,212
8,527
7,597
VIS_HMO
-
11,472
4,250
70,128
50,943
22,913
26,618
2,093
VIS -MAN -CR
2,252
4,884
234
71,114
30,300
18,625
21,235
14,752
DAYS PIPS
-
-
-
26,606
-
-
4,434
-
GR_PT REV
90,177,085
253,894,877
180,579,718
485,406,175
470,808,425
222,159,689
283,837,662
111,579,414
DED -FR -REV
55,824,246
178,628,975
108,098,320
217,315,258
309,353,619
139,292,329
168,085,458
71,456,531
NET -PT -REV
34,352,839
75,265,902
72,481,398
268,090,917
161,454,806
82,867,360
115,752,204
40,122,883
OTH_OP_REV
212,122
908,085
2,531,352
10,710,337
-
1,197,721
2,593,270
308,565
TOT -OP -EXP
32,371,012
86,496,315
77,804,755
257,008,648
152,032,859
81,652,620
114,561,035
50,796,052
NET FRM_OP
2,193,949
(10,322,328)
(2,792,005)
21,792,606
9,421,947
2,412,461
3,784,438
(10,364,604)
NONOP_REV
31,105
12,445,781
-
46,715,586
11,445,791
5,795,787
12,739,008
190,135
NONOP EXP
33,934
1,375,540
599,297
757,725
-
4,008,785
1,129,214
-
INC -TAX
_
-
-
-
EXT -ITEM
-
-
-
-
169,429
_
28,238
-
NET INCOME
2,191,120
747,913
(3,391,302)
67,750,467
20,867,738
4,030,034
15,365,995
(10,174,469)
GR_IP MCAR
38,283,147
76,636,574
59,463,933
129,061,890
100,229,640
71,227,075
79,150,377
21,762,375
GR_IP_MCAL
28,967,028
16,247,469
6,752,055
2,909,693
21,038,216
63,838,001
23,292,077
14,117,389
GR_IP_CNTY
-
-
962,039
3,657,898
-
-
769,990
39,228
GR_IP_THRD
7,677,341
85,279,633
55,623,877
187,848,485
235,090,020
54,884,882
104,400,706
46,590,578
GR_IP_OTH
2,220,100
5,047,395
13,037,505
16,324,856
11,247,239
5,171,671
8,841,461
3,733,339
Pagel of 4
Financial Performance of Select Southern California Hospitals
FAC -NO
FAC -NAME
GRIP TOT
GR -OP MCAR
GR OP_MCAL
GR_OP_CNTY
GR_OP_THRD
GR_OP_OTH
GR -OP -TOT
NETRV MCAR
NETRV MCAL
NETRV CNTY
NETRV THRD
NETRV OTH
EXP DLY
EXP -AMB
EXP ANC
EXP -PIP
EXP -RES
EXP -ED
EXP -GEN
EXP FISC
EXP -ADM
EXP_UNASSG
EXP -SAL
EXP -BEN
EXP_PHYS
EXP_OTHPRO
EXP_SUPP
EXP_PURCH
EXP_DEPRE
EXP -LEASES
EXP_INSUR
EXP_INTRST
EXP_OTH
CUR -ASST
ASST_LIMTD
NET -PPE
CONST_PROG
INV_OTH
INTAN_ASST
TOT -ASST
CUR_LIAB
DEF_CRED
NET_LTDEBT
EQUITY
106190017
Alhambra Hospital
77,147,616
5,100,125
2,773,524
3,635,743
1,520,077
13,029,469
18,229,417
11,752,941
3,147,226
1,223,255
9,529,101
1,136,003
9,620,664
6,200,831
1,194,473
3,312,720
1,377,220
11,654,958
2,921,885
386,920
1,108,276
5,454,915
7,678,574
308,798
1,041,422
227,321
121,954
1,465,989
6,409,986
2,760,889
9,170,875
7,196,976
1,973,899
106190243
Downey Community
183,211,071
17,436,139
3,747,287
46,099,865
3,400,515
70,683,806
33,297,409
4,519,114
30,691,605
6,757,774
13,349,100
4,419,087
32,110,608
1,577,402
12,893,614
3,929,892
9,877,850
8,338,762
38,554,576
8,395,446
317,080
3,085,431
15,183,038
6,223,231
5,972,434
112,947
733,327
3,179,091
4,739,714
15,296,400
99,760,609
37,045,508
3,630,559
28,714,924
184,448,000
16,407,396
1,275,913
54,128,691
112,636,000
106190949
Henry Mayo Newhall
135,839,409
9,031,735
1-,577,337
1,110,538
24,996,484
8,024,215
44,740,309
30,786,518
2,995,269
1,692,184
23,383,476
13,623,951
13,571,857
3,740,107
28,203,699
2,742,617
12,026,616
3,309,365
6,027,102
8,183,392
27,098,759
3,958,439
236,700
11,246,344
20,705,001
3,904,549
640,251
922,614
4,433,612
4,658,486
28,804,788
2,680,249
45,956,029
11,181,600
21,944,235
110,566,901
20,874,312
50,685,160
39,007,429
106301205
Hoag Memorial
339,802,822
39,468,238
470,780
1,344,947
97,190,926
7,128,462
145,603,353
69,626,657
9,521,505
2,142,428
172,348,353
14,451,974
33,489,398
10,059,752
93,570,514
27,792,192
30,122,069
7,427,629
33,113,812
21,433,282
82,378,136
28,450,058
3,710,822
6,995,386
48,311,742
44,711,662
17,660,577
5,024,596
2,062,638
6,692,484
11,010,547
44,364,402
537,721,284
125,022,304
36,882,433
18,263,071
1,393,215
763,646,709
77,711,065
9,121,288
191,604,866
485,209,490
106190422
Torrance Memorial
367,605,115
18,885,828
4,099,623
73,280,654
6,937,205
103,203,310
46,542,858
7,030,571
97,543,212
10,338,165
23,991,037
3,543,953
62,128,655
31,344,515
4,003,997
13,050,834
13,969,868
58,740,866
19,241,649
2,254,416
31,599,415
14,998,053
13,850,177
3,230,698
819,122
2,389,426
4,909,037
33,475,251
138,939,699
83,802,988
4,298,920
703,970
261,220,828
54,923,137
42,078,530
164,219,161
106190812
Valley Presbyterian
195,121,629
7,248,623
4,788,455
14,264,407
736,575
27,038,060
51,147,807
20,551,104
10,799,336
369,113
18,606,414
1,818,669
28,531,096
12,690,985
2,517,789
9,474,866
8,012,801
28,984,827
11,859,371
1,222,158
4,835,514
13,634,992
7,212,109
5,251,684
515,610
1,125,102
2,894,756
4,116,497
48,831,524
45,843,724
2,007,448
25,155,298
2,107,470
123,945,464
22,735,394
442,296
48,805,000
51,962,774
106190475
AVERAGE
LONG BEACH COMI
216,454,610
86,242,909
16,195,115
4,756,045
2,909,501
1,763,437
409,248
71,340
43,244,680
16,664,621
4,624,508
2,081,062
67,383,051
25, 336,505
41,605,111
11,429,764
9,395,084
2,581,916
639,102
110,568
56,318,868
24,384,200
7,794,039
1,616,435
18,756,151
7,893,901
4,119,595
1,537,187
42,360,873
14,285,385
5,089,135
5,707,441
-
4,241
262,900
-
17,646,438
6,661,049
3,730,524
1,098,635
12,476,197
7,343,268
10,219,221
6,264,945
41,235,354
15,159,192
12,471,141
5,032,768
939,497
1,131,727
3,085,954
1,911,271
20,905,074
6,485,790
16,921,438
14, 059,625
7,824,703
2,731,247
1,760,921
637,694
981,687
1,166,315
3,285,221
481,123
5,150,045
1,999,300
29,530,392
12,992, 007
129,850,307
-
66,278,426
26,376,131
9,666,827
1,508,894
15,796,916
200,000
1,043,596
-
242,166,463
41,077,032
33,308,047
23,101,501
1,806,583
3,351,282
64,550,375
15, 932,600
142,501,459
(1,308,351)
Page 2 of 4
Financial Performance of Select Southern California Hospitals
FAC _NO
106190017
106190243
106190949
106301205
106190422
106190812
106190475
FAC -NAME
Alhambra Hospital
Downey Community
Henry Mayo Newhall
Hoag Memorial
Torrance Memorial
Valley Presbyterian
AVERAGE
LONG BEACH COMI
LIAB_EQ
9,170,875
184,448,000
110,566,901
763,646,709
261,220,828
123,945,464
242,166,463
41,077,032
CASH
889,876
-
9,303
-
4,282,011
3,863,124
1,507,386
27,029
BLDGS
-
6,693,747
59,263,983
95,604,626
127,537,546
76,050,286
60,858,365
13,214,069
EQUIPMENT
-
47,986,722
28,021,562
152,690,200
62,999,148
45,902,537
56,266,695
12,876,249
TOT -PPE
-
104,095,859
91,546,789
292,998,844
196,534,623
123,540,045
134,786,027
29,107,379
ACC_DEPRE
-
67,050,351
45,590,760
167,976,540
112,731,635
77,696,321
78,507,601
2,731,248
MORT PAY
-
-
-
-
-
-
-
-
CAP_LEASE
-
-
16,935,465
-
-
-
2,822,578
-
BOND_PAY
-
-
34,474,695
191,000,000
43,343,530
51,980,000
53,466,371
16,736,556
TOT LTDEBT
-
56,348,691
51,410,160
191,647,191
43,343,530
51,980,000
65,788,262
16,736,556
CUR -MAT
-
2,220,000
725,000
42,325
1,265,000
3,175,000
1,237,888
803,956
INTER_REC
-
19,462,627
23,843,159
5,434,304
-
14,674,728
10,569,136
-
INTER_PAY
-
-
-
-
-
-
4,609,683
CUR -RAT
0.89
5.74
1.38
6.42
3.14
2.15
3.29
0.56
DAYS -AR
36.01
51.22
65.05
36.83
54.36
80.03
53.92
57.89
BD -RATE
2.28
2.5
1.96
1.'85
1.5
0.54
1.77
2.89
LTD ASST
0
29.35
45.84
25.09
16.11
39.38
25.96
38.79
NET RTN_EQ
111
0.66
-8.69
13.96
12.71
7.76
22.90
777.66
OP -MARGIN
6.35
'-13.55
-3.72
7.82
5.84
2.87
0.94
-25.64
AGE PLANT
0
11.23
11.68
9.51
8.14
14.79
9.23
1
PPE -BED
-
204,402
209,295
389,194
231,847
137,900
195,440
100,306
Days Cash on Hand
10.13
-
0.05
-
11.31
18.46
5.15
0.21
A/R Turnover
10.14
7.13
5.61
9.91
6.71
4.56
6.77
6.31
Gross Revenue per Day
Medicare
2,289.39
3,945.86
2,230.12
3,324.88
3,801.76
2,720.15
3,080.30
2,577.26
Medi -Cal
1,615.47
3,329.40
2,712.76
3,596.65
3,688.33
3,409.60
2,765.40
3,346.94
County Indigent
#DIV/01
#DIV/01
3,700.15
3,150.64
#DIV/O!
#DIV/01
3,251.19
4,358.67
Other Third
2,529.60
4,615.45
3,114.26
3,508.69
4,075.98
3,611.80
3,778.44
3,471.47
Other
3,087.76
3,755.50
3,675.64
3,152.13
4,229.88
4,260.03
3,618.11
3,360.34
Total
2,008.69
4,152.28
2,672.90
3,414.97
3,978.24
3,182.13
3,359.56
3,170.35
Gross Revenue per OP Visit
Medicare
1,181.40
1,399.59
1,267.97
743.23
798.76
337.35
795.61
605.09
Medi -Cal
1,215.39
1,027.22
225.85
486.85
1,356.14
185.06
408.07
306.42
County Indigent
#DIV/0!
#DIV/0!
771.74
555.30
#DIV/0!
#DIV/01
635.97
119.70
Other Third
1,586.28
1,369.49
914.75
681.97
695.72
256.35
707.44
706.16
Other
818.13
773.37
613.38
550.25
810.80
48.73
495.82
223.79
Total
1,212.16
1,304.97
799.59
686.93
734.26
228.90
683.51
537.83
% Deductions (IP + OP)
Medicare
58%
65%
55%
59%
61%
35%
56%
57%
Page 3 of 4
Financial Performance of Select Southern California Hospitals
FAC -NO
106190017
106190243
106190949
106301205
106190422
106190812
FAC -NAME
Alhambra Hospital
Downey Community
Henry Mayo Newhall
Hoag Memorial
Torrance Memorial
Valley Presbyterian
Medi -Cal
63%
77%
64%
-182%
72%
70%
County Indigent
#DIV/01
#DIV/0!
18%
57%
#DIV/0!
#DIV/01
Other Third
72%
77%
71%
40%
68%
84%
Other
67%
20%
35%
38%
43%
94%
Total
62%
70%
60%
45%
66%
63%
Paver Mix by Days
Medicare
44%
44%
52%
39%
29%
43%
Medi -Cal
47%
11%
5%
1 %
6%
31%
County Indigent
0%
0%
1%
1%
0%
0%
Other Third
8%
42%
35%
54%
62%
25%
Other
2%
3%
7%
5%
3%
2%
Paver Mix by OP Visits
Medicare
40%
23%
13%
25%
17%
18%
Medi -Cal
21%
7%
12%
U%
2%
22%
County Indigent
0%
0%
3%
1%
0%
0%
Other Third
21%
62%
49%
67%
75%
47%
Other
17%
8%
23%
6%
6%
13%
Total Patient Days
38,407
44,123
50,821
99,504
92,404
61,318
Total OP Visits
10,749
54,165
55,954
211,962
140,554
118,121
Adjusted Patient Days
44,894
61,146
67,559
142,141
118,346
69,815
Expenses per APD
Salaries & Wages
259.61
630.53
401.11
579.55
496.35
415.17
Employee Benefits
65.08
137.30
58.59
200.15
162.59
169.87
EB Percentage
25%
22%
15%
35%
33%
41%
MD Professional Fees
8.62
5.19
-
26.11
-
17.51
Oth Professional Fees
24.69
50.46
3.50
49.21
19.05
69.26
Supplies
121.51
248.31
166.47
339.89
267.01
195.30
Purchased Services
171.04
101.78
306.47
314.56
126.73
103.30
Leases & Rentals
23.20
1.85
9.48
35.35
27.30
7.39
Insurance
5.06
11.99
13.66
14.51
6.92
16.12
Interest
2.72
51.99
65.63
47.08
20.19
41.46
Other
32.65
77.51
68.95
77.46
41.48
58.96
Expenses per Bed
Leases & Rentals
7,232.10
607.24
2,964.13
14,114.03
8,974.16
1,485.91
Insurance
1,578.62
3,942.62
4,271.36
5,793.93
2,275.34
3,242.37
40%
106190475
AVERAGE
LONG BEACH COMI
64%
84%
46%
0%
62%
61%
42%
72%
59%
64%
40%
31%
13%
16%
0%
0%
43%
49%
4%
4%
21%
17%
7%
12%
1%
1%
62%
50%
9%
20%
64,430 27,203
98,584 47,109
84,487 35,195
488.07
430.72
147.61
143.00
30%
33%
11.12
32.16
36.53
54.31
247.44
184.28
200.29
399.48
20.84
18.12
11.62
33.14
38.88
13.67
60.96
56.81
6,566.52 2,293.86
3,660.74 4,195.38
Page 4 of 4
I . ,
COMMUNITY HOSPITAL OF LONG BEACH
ASSUMPTIONS TO PROFORMA FINANCINGICASH SCENARIO
WORST CASE
1. Assumes a 45% decrease from the middle case for adjusted patient days in the first
year and a 32% decrease in subsequent years.
2. 130 beds Years 1 — 3; 170 beds Years 4 — 5.
3. Initial Hospital equipment and other first year capital expenditures provided through
Foundation contributions and other community-based gifts and programs. Amount
contributed in the first year = $2.6 million
4. $5 million cash contributions for operations start-up ($4m from the Community
Hospital Foundation and $1.0m from Pacific Hospital of Long Beach Charitable
Trust) plus $1m from PH LB Trust to offset cost of providing charity healthcare (at an
approximate $250 per patient day for Medi -Cal patients); balance of initial funds for
operations provided through revolving credit line secured by receivables.
5. City provides land and buildings via long-term lease for $1 per year.
6. Capital expenditures in Years 2 — 5, including building program to increase bed
capacity, are as follows:
Year 2 Year 3 Year 4 Year 5
Capital Expenditure $1,750,000 $4,750,000.$2,300,000 $2,300,000
$446,200 $446,200 $446,200 $446,200
$1,211,100 $1,211,100 $1,211,100
$586,400 $586,400
$586,400
Total P+I Pmts for Cap Ex $446,200 $1,657,300 $2,243,700 $2,830,100
Interest at 10% APR, principal paid over 5 years.
7. Revolving credit line paid down as cash is available.
Note: The estimates and projections set forth in this document are provided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results of
operations of the hospital. They are provided for purposes of illustration only and are based on
certain assumptions made about the future of the hospital and its Service Area. The reader is
cautioned not to rely on the accuracy of these estimates or projections of current or future
performance. These estimates and projections have not been audited or reviewed by a Certified
Public Accountant.
PRO FORMA FINANCING/CASH SCENARIO FOR DISCUSSION ONLY
FIRST FIVE YEARS OF OPERATION - WORST CASE SCENARIO
Inpatient Beds
IP ADC
OP Visits
Inpatient Days
Adjusted P Day
IP Rev
Op Rev
Total Pt Rev
Cash at Time of Service
Collections
Charity Care from PHLB
Other Income
Total Gross Cash
Fixed Cost
Management Overhead
Variable Direct Costs
Other Expenses
Credit Line Fees
Total Expense Before Interest
Net Cash Before Interest/Amort
Total P+1 Pmts for Cap Ex
Repayment of City loan
Surplus/(Deficit)
Equity Contributions for Operations
Net Surplus/(Deficit)
Revolver Draw Principal
Revolver Interest (Accumulated)
(Total Revolver)/Fund Balance
Pre -Op
Year 1
Year 2
Year 3
Year 4
Year 5
130
130
130
170
170
34.92
61.00
70.15
80.67
92.77
28,500
64,500
74,175
85,301
98,096
12,745
22,265
25,605
29,445
33,862
19,471
37,487
43,110
49,577
57,013
$13,216,197
$23,781,584
$28,169,286
$33,366,519
$39,522,642
$6,961,410
$16,227,413
$19,221,371
$22,767,714
$26,968,357
$20,177,607
$40,008,997
$47,390,657
$56,134,233
$66,490,999
$201,776
$400,090
$473,907
$561,342
$664,910
$12,464,445
$33,086,127
$44,310,264
$52,485,508
$62,169,084
$1,000,000
$500,000
$500,000
$500,000
$500,000
$500,000
$14,166,221
$33,986,217
$45,284,171
$53,546,850
$63,333,994
$629,590
$793,000
$816,790
$1,100,153
$1,133,158
$850,000
$600,000
$618,000
$636,540
$655,636
$17,902,219
$34,002,583
$40,276,060
$47,706,993
$56,508,933
$100,888
$200,045
$236,953
$280,671
$332,455
$120,000
$120,000
$60,000
$0
$0
$1,432,000
$19,602,697
$35,715,628
$42,007,803
$49,724,358
$58,630,182
($1,432,000)
($5,436,476)
($1,729,411)
$3,276,367
$3,822,493
$4,703,812
($446,200)
($1,657,300)
($2,243,700)
($2,830,100)
($157,000)
($157,000)
($205,000)
($1,432,000)
($5,436,476)
($2,175,611)
$1,462,067
$1,421,793
$1,668,712
$5,000,000
-
$3,568,000
$5,436,476
$2,175,611
$1,462,067
$1,421,793
$1,668,712
$0
($1,868,476)
($4,089,320)
($352,000)
0
$0
($45,233)
($428,512)
($451,783)
($350,755)
($243,651)
$0 $1,913,709 $4,517,832($3,507,648($2,436,510) $1,011,449)
Note: The estimates and projections set forth in this document are provided for purposes of illustration
only and do not represent assurance, guarantee or prediction of the results of operations of the hospital.
They are provided for purposes of illustration only and are based on certain assumptions made about the
future of the hospital and its Service Area. The reader is cautioned not to rely on the accuracy of
these estimates or projections of current or future performance. These estimates and projections
have not been audited or reviewed by a Certified Public Accountant
COMMUNITY HOSPITAL OF LONG BEACH
PRO FORMA FINANCINGICASH SCENARIO FOR DISCUSSION ONLY
FIRST TWO YEARS OF OPERATION - WORST CASE SCENARIO
Fbrod Cost
Pm, -0P Month
Month
Month
Month4
Months
Month
Month?
Month
Month
Month 10
Month 11
Mort 12
Year
IP ADC
15.00
21.00
28.00
30.01)
33.00
38.00
38.00
40.00
42.00
44.00
46.00
48.00
34.92
OP Visits
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
3,500
3,750
28,500
Inpatlerd Days
456
839
791
913
1,004
1,095
1,156
1,217
1,278
1,338
1,399
1,460
12,745
Ad) rated P Day
692
934
1,145
1,326
1,476
1,628
1,740
1,800
1,888
2,105
2,225
2,345
19,471
IP Rev
$473,134
5882,387
$820,098
$94007
$1,040,894
$1,135,520
$1,198,805
$1,201,1189
31,324,774
$1,387,858
$1,450,943
$1,514,027
$13,218,197
Op Rev
$2 280
S3 55,325
$388y
$427455
1114N520
$549`585
5810,850
$071,715
3732780
$793,843
$854.910
5915,975
58,981,410
Total Pt Rev
$717,394
$907,712
$1,185,488
$1,373,722
$1,529,414
S1,1185,105
$1,809,255
$1,933,404
$2,057,554
S2,151,703
52,305,853
32,430,002
$20,177,807
Cash at Time of Service
$7,174
$9,677
31103
$13,737
$15,294
$18,851
$18,093
$19,334
$20,570
$21,817
$23,059
$24,300
5201,778
Collections
($382,903)
($285,378)
(5227.002)
$674,350
$909.649
$1,115,298
$1,281,299
$1,437,849
$1,583,989
$1,700,700
$1,817,400
31,934,101
$12,484,445
Charily Care fmmPHLB
$43,044
558,083
$71,189
$82,423
$91,785
$101,108
$108,555
$118,004
$123,453
$130,902
$73,495
$0
$1,000,000
Other Income
.444 S41.447
141.442
$1447
$41667
141.447
$41,
$41.447
$41,647
$41.68
141.492
X1,687
1!11.441MD0,044
Total Gross Cash
$5,000,000 $91,8&1
$108,407
$124,721
5812,177
$1,055,375
$1,274,923
$1,459,1113
$1,514,1154
$1,769,695
$1,895,088
$1,955,620
$2,000,087
$14,168,221
Fbrod Cost
$42,088
$42,098
$42,098
$42,098
$42,098
$42,098
$52,833
$112,833
$82,833
$82,833
$62,633
$82,833
SB29,590
Mamwntent Ovoftad
$100,000
5100,000
$80,000
570.000
270,000
$70,000
$50,000
$80,000
$80,000
$60,000
$60.000
$50,000
$850.000
Variable Direct Costs
$689,408
$895,933
$1,089,881
$1,251,935
31,380,933
$1,507,302
$1,803,111
$1,699,158
$1,800,849
$1,901,842
$2,001,537
$2,100,834
$17,902,219
Other Expenses
$3,587
$4,839
$5,932
$8,859
$7,617
$8,428
$9,048
$9,667
$10,288
$10,909
$11,529
$12,150
$100,888
Loan and Bark Fees
$10,000
3101000
$10,000
$10,000
$10,000
310,000
$10,000
$10,000
510,000
$10,000
$10,000
$10,000
$120,000
Total E)perna Before Interest
$1,432,000
$825,091
$1,052,870
$1,227,912
$1,380,802
$1,510,876
$1,837,828
$1,744,991
$1,841,658
71,943,970
$2,045,384
$1,145,900
$2,245,517
$19,802,897
Not Cash OdomlreerosVAmort
33,888,000
($733,207)
($913,484)
($1,103,191)
(5588,725)
($432,304)
($382,903)
($285,370)
(5227,002)
($174,275)
(5150,29%
(11190,280)
($245,450)
($5,438,478)
Total PA Pmts for Cap Ex
NotSupkmtWdt
$3,588,000
($733,207)
($943,464)
($1.103,191)
($508,725)
($452,304)
($382,903)
($285,378)
(5227.002)
($174275)
($150,299)
($190,280)
($245,450)
($5,438,478)
CunNot Cash Before interval
$3,588,000
$2,834,793
$1,891,330
$708,138
$219,414
($232,890)
($598,793)
($881,171)
($1,108,173)
($1,202,446)
(111,432,747)
($1,823,020)
($1,888,476)
Revolver Draw
$3,888,000
$2,834,793
$1,891,330
$788,138
$239,903
(5203,882)
($584,168)
(5851,724)
($1,084,882)
(51 08,431)
($1,430,1583)
(51,834,732)
($1,895,830)
Interest
520,489
$8,538
$2,599
(52,180)
(58,135)
($9,293)
($11,853)
($13,870)
($15,648)
($17,879)
($45,233)
Total
$3,568,000
$2.834,793
51,891,330
$808,828
5248,441
(5201,283)
(5580,347)
($857,880)
($1,094,156)
($1,280,284)
($1,444,452)
($1,850,380)
($1,913,709)
Note: The estimates and pmjedons set font In ft downaril aro provided forpuposss of astratton
ony and do not represerd aswancs, Custard" or prediction of Br reslab of operations of the hospital.
They ars provided for puposes of BustraBon only and are based on amain asswvuons mads about the
fu8as of the hospital and Its Saha Area. The reader Is caudonsd not to rely on the It-, cy of
tuns es9maUs or projections of entrant orfuhss performance. These estimates and projections
have not been audited or nlviewed by a Certified PrW a Aaou tart
Pape 1 of 2
COMMUNITY HOSPITAL OF LO
PRO FORMA FINANCINGICASF
FIRST TWO YEARS OF OPERA
IP ADC
OP Vlslb
In patent Days
Adpwted P Day
IP Rev
OP Rev
Total Pt Rev
Cash at Tlma of Service
Collections
Charity Caro from PH1B
Dow Income
Total Gmu Cash
Fled Cost
Marmprnard Overhead
Variable Direct Coats
Other Expenses
Loan and Bank Fees
Total F)pense Before Interest
Net Cash Before lntsssVAnort
Total PA Pmts for Cap Ex
Not SuphalDeOdt
Cum Net Cash Before Irderest
Rewlver Drew
Interest
Total
Month 13
Mordh14
Monthly
Month IS
Month i7
Mordhl8
Mordh19
Month 20
Month 21
Month 22
Mordh23
Month 24
Year2
61.00
60.00
52.00
54.00
88.00
58.00
60.00
62.00
84.00
5,750
68.00
6,000
88.00
8,250
70.00
6,500
72.00
6,750
64,500
4,000
4,250
4,500
4,750
5,000
5,250
5,500
1,521
1,582
1,643
1,703
1,784
1,825
1,886
1,847
3,304
2,008
3,424
2,068
3,543
2,129
3,683
2,190
3,783
22,285
37,487
2,465
2,585
2,705
2,824
2,944
3,064
3,154
51,824,425
$1,689,402
$1,754,379
$1,819,356
$1,884,333
$1,949,310
$2,014,267
$2,079,264
$2,144,241
$1.509,527
$2,208,218
$1.572,424
$2,274,198
$1.635,321
$2,339,172
518
323,781,584
318 7413
$1,008.351
31069 4a
$1.132,145
$1,196,042
$1957,939
51.320.638
$1.383,733
$3,398,020
51.448.630
$3,525,894
53,553,768
$3,781,642
$3,909,516
$4,037,390
$40,008,997
$2,830,776
$2,758,650
$2,888,624
$3,014,398
$3,142,2 2
$3,270,148
528,308
$27,687
$28,885
530,144
$31,423
$2,593,131
$32,701
$2,713,333
$33,980
$2,833,634
$35,259
$2,953,736
$38,638
$3,073,937
$37,818
$3,194,139
$39,093
$3,314,340
$40,374
$3,434,542
$400,090
$33,086,127
$2,050,801
$2,167,502
$2,254,202
$2,472,930
$41667
$2,118,776
$41,667
$2,238,755
$41.1557
$2,354,734
SAIDA 7
$2,544,740
$41.667
$2,888,221
s41.e67
52,787,701
541.667
52,909,181
$41,687
$3,030,881
341.667
$3,152,142
$41.1567
$3,273,822
541,611
$3,393,102
$41.7
$3,518,582
$33,988,217
588,083
568,083
$86,083
$W.083
$88,083
588,083
$68,083
388,083
$68,083
550,000
386,083
$50,000
$66,083
$50,000
$88,083
$50,000
$793,000
3800,000
$50.000
$2235,727
$50,000
$2,344,422
$50,000
$2,453,117
$50,000
$2,581,812
$50,000
$2,670,606
550,000
$2,779,201
$50,000
$2,887,8%
$50,000
$2,998,691
$3,105,288
$3,213,981
$3,322,875
$3,431,370
$34,002,583
$1000000
$10099
$103000
$100m00
$10,0000
$10,20 0
$10.000080
$10,0000
$20,187
0:108070
it1i0.o000
$10100000
$10,7000
$100000
$2,921,635
$3,030,969
$3,140,304
$3,249,838
$3,358,972
$3,488,308
$3,577,640
$35,715,628
$2,374,964
$2,484,298
$2,593,633
$2,702,967
$2,812,301
((537,183)
($($37,183)
((537,1
((537,1 7)
(11121788)
((537183)
(837,183)
(97,498) 57,183)
($37 183)
(537,183)
($1,729,411)
(5448,200)
537,183)
(537,783)
(537,183)
($283,372)
($264,727)
(5276,082)
($195,410)
($183,284)
($171,118)
($158,972)
($140,828)
($134,679)
($122,533)
(5110,397)
($98,241)
($2,175,811)
($2,161,648)
($2,448,575)
($2,72$867)
($2,918,087)
($3,101,331)
($7,272,448)
($3,431,420)
($3,678,245)
($3,712,925)
($3,835,455)
($3,945,648)
(34,044,087)
($2,207,081)
($2,512,540)
($2,812,767)
($3,035,647)
($3,249,080)
($3,454,017)
($3,845,554)
(53,833,183)
($4,007,798)
($4,172,290)
(54,325,550)
($4,470,488)
($428,612)
38,875)
($2(640,237)
(5481) 3086,418)
(S3,282,9D0)
($3,4895,68)
($3068 S7)
($3,8",11 9)
(54049,757)
(54,218,872) 163)
(54,372.225)
($4,617,832)
(52,227,613)
(52,624,135)
Note: The "*"a and pm)eglonm ad forth In Bis docurord are provided for purposes of Illustration
oriy arrd do not ,Mart assurance, puarsrtn or prediction of the resits of operations of the hospital
They are provided for puposea of Ilustre8on any and ars based on certain assumplions made about the
Tutus of the hospital and Its Service Area The reader is cautioned rot to rely on the accuracy of
owes astimabs or pmjx8onsof urrent orfutus perfommnee. Time admetes and pm)eclons
have rot been witted or m0aved by a Certified Pubic Accountant.
Pape 2 of 2
COMMUNITY HOSPITAL OF LONG BEACH
ASSUMPTIONS TO PROFORMA FINANCING/CASH SCENARIO
MIDDLE CASE
1. Achieves previous census less capitation at end of first year of operations.
2. 130 beds Years 1— 3; 170 beds Years 4 — 5.
3. Initial Hospital equipment and other first year capital expenditures provided through
Foundation contributions and other community-based gifts and programs. Amount
contributed in the first year = $2.6 million
4. $5 million cash contributions for operations start-up ($4m from the Community
Hospital Foundation and $1.Om from Pacific Hospital of Long Beach Charitable
Trust) plus $1 m from PHLB Trust to offset cost of providing charity healthcare (at an
approximate $250 per patient day for Medi -Cal patients); balance of initial funds for
operations provided through revolving credit line secured by receivables.
5. City provides land and buildings via long-term lease for $1 per year.
6. Capital expenditures in Years 2 —"5, including building program to increase bed
capacity, are as follows:
Year 2 Year 3 Year 4 Year 5
Capital Expenditure $1,750,000 $4,750,000 $2,300,000 $2,300,000
$446,200 $446,200 $446,200 $446,200
$1,2.11,100 $1,211,100 $1,211,100
$586,400 $586,400
$586,400
Total P+I Pmts for Cap Ex $446,200 $1,657,300 $2,243,700 $2,830,100
Interest at 10% APR, principal paid over 5 years.
7. Revolving credit line paid down as cash is available.
Note: The estimates and projections set forth in this document are provided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results of
operations of the hospital. They are provided for purposes of illustration only and are based on
certain assumptions made about the future of the hospital and its Service Area. The reader is
cautioned not to rely on the accuracy of these estimates or projections of current or future
performance. These estimates and projections have not been audited or reviewed by a Certified
Public Accountant.
PRO FORMA FINANCINGICASH SCENARIO FOR DISCUSSION ONLY
FIRST FIVE YEARS OF OPERATION -MIDDLE CASE
Inpatient Beds
IP ADC
OP Visits
Inpatient Days
Adjusted P Day
IP Rev
Op Rev
Total Pt Rev
Cash at Tune of Service
Collections
Charity Care from PHLB
Other Income
Total Gross Cash
Fixed Cost
Management Overhead
Variable Direct Costs
Other Expenses
Credit Line Fees
Total Expense Before Interest
Net Cash Before Interest/Amort
Total P+I Pmts for Cap Ex
Repayment of City loan
Surplus/(Deficit)
Equity Contributions for Operations
Net Surplus/(Deficit)
Pre -Op
Year 1
130
65.00
50,000
23,725
35,525
$24,602,944
$12,213,000
$36,815,944
$368,159
$22,551,943
$1,000,000
$500,000
$24,420,102
$629,590
$1,432,000 $850,000
$32,647,867
$184,080
$120,000
$1,432,000 $34,431,537
($1,432,000) ($10,011,435)
($1,432,000) ($10,011,435)
$5,000,000
$3,568,000 ($10,011,435)
Revolver Draw Principal $0 ($6,443,434)
Revolver Interest (Accumulated) $0 ($387,920)
(Total Revolver)/Fund Balance $0 $6,8( 31,355)
Year 2
Year3
130
130
97.50
109.00
80,000
100,000
35,588
39,780
54,468
63,334
$38,011,548
$43,764,309
$20,127,024
$25,913,544
$58,138,572
$69,677,853
$581,386
$696,779
$52,760,436
$65,148,793
$500,000
$500,000
$53,841,822
$66,345,571
$793,000 $816,790
$600,000 $618,000
$49,404,746 $59,170,518
$290,693 $348,389
$120,000 $60,000
$51,208,439 $61,013,697
$2,633,383 $5,331,874
($446,200) ($1,657,300)
($157,000)
$2,187,183 . $3,517,574
$2,187,183 $3,517,574
($4,644,172) $0
($876,343) ($441,641)
$5,520,514 $2,444,581
Note: The estimates and projections set forth in this document are provided for purposes of illustration
only and do not represent assurance, guarantee or prediction of the results of operations of the hospital.
They are provided for purposes of illustration only and are based on certain assumptions made about the
future of the hospital and its Service Area. The reader is cautioned not to rely on the accuracy of
these estimates or projections of current or future performance. These estimates and projections
have not been audited or reviewed by a Certified Public Accountant
Year
170
127.08
115,000
46,382
73,522
$52,558,808
$30,694,593
$83,253,401
$832,534
$77,841,930
$500,000
$79,174,464
Year 5
170
146.14
132,250
53,340
84,551
$82,255,908
$36,357,745
$98,613,653
$986,137
$92,203,766
$500,000
$93,689,902
$1,100,153
$1,133,158
$636,540
$655,636
$70,749,798
$83,803,136
$416,267
$493,068
$0
$0
$72,902,758
$86,084,998
$6,271,705 $7,604,904
($2,243,700) ($2,830,100)
($157,000) ($205,000)
$3,871,005 $4,569,804
$3,871,005 $4,569,804
($195,567)
$1,230,857 $5,800,661
COMMUNITY HOSPITAL OF LONG BEACH
PRO FORMA FINANCINGICASH SCENARIO FOR DISCUSSION ONLY
FIRST TWO YEARS OF OPERATION - MIDDLE CASE
Fbmd Cost
Pro -Op Month
Month
MorM3
Month4
Morsh5
MordhS
Month
Month
Morsh9
MorM10
Month 11
Month 12
Year
IP ADC
30.00
37.00
44.00
51.00
57.00
83.00
89.00
75.00
81.00
88.00
91.00
08.00
63.00
OP Visits
2.000
2,000
2,000
3,250
4,000
4,600
4,750
5,000
5,250
5,500
5,750
8,000
50,000
Irpetlers Days
013
1,125
1,338
1,551
1,734
1,916
2,099
2,281
2,464
2,616
2,768
2,920
23,725
A*wted P Day
1,383
1,697
1,810
2,318
2,878
2,978
3,220
3,481
3,703
3,814
4,125
4,338
35,525
IP Rev
$948,287
$1,167,083
$1,387,858
$1,808,854
$1,707,807
$1,987,181
$2,178,414
52,385,668
$2.554,921
$2,712,832
$2,870,343
$3,028,035
$24,502,944
Op Rev
$485.620
3488,520
$4 1320
S7�845
$977,040
$1.000,170
$11.80235
$1.221,300
SU923`65
51.343,430
$1.404.405
$1.4&5.580
$12,213.000
Total Pt Rev
$1,434,787
$1,855,683
$1,878,378
52,402,490
52,774,047
$3,088,331
$3,338,840
$3,588,088
$3,837288
24,058,082
24,274,838
$4,493,815
$38,815,044
Cash at Time of Sella
$14,348
$18,558
$18,764
$24,025
$27,749
$30,863
$33,386
$35,670
$38,373
$40,581
$42,748
$44,038
5388,159
Co ns
(8878,602)
(3572,471)
($511,145)
$1,345,700
$1,55(1,248
21,763,790
22,258,340
22,1108,451
22,901,181
$3,138,450
$3,371,750
$3,807,040
22$551,943
Chanty Cara from PHLB
$86,057
299,335
$112,583
$144,150
$168,497
$185,160
5200,199
$5,970
Revolver Draw
83,568,000
$2,212,010
31,000,000
Dow Income
S5.W0.000 $41,007
541.887
541.80?
541,647
1141.887
541.887
,441.44?
541.087
541,447
$41.887
541,667
,7:41.807
Total Gross Cash
$5,000,000 $142,102
$157,557
2173,013
31,558,541
31,792,161
82,021,505
$2,533,581
$2,891,957
$2,981,191
43215,878
23,458,183
33,893,832
$24,420,103
Fbmd Cost
$42,008
$42,098
$42,098
$42,098
$42,098
$42,098
582,533
$82,833
282,833
$62,833
$82,833
$62,533
$829,590
ManaOementOveA»ad
$1,432,000
$100,000
51001000
550,000
$70.000
$70.000
$70.000
580,000
$80.000
$80,000
$60,000
$80,000
$80,000
$850.000
Varl" Direct Costs
$1,338,812
$1,532,721
$1,723,437
52,189,587
$2,505,705
$2,760,838
52,856,535
$3,152,333
$3,358.394
53.535,170
83,710,363
$3,863,972
332,647,687
OtherE)pmroes
87,174
$8276
29,382
812,012
813,873
815,432
818,683
817,035
819,186
820280
821,374
822,488
8/84,080
Loan and Bank Fees
$10440
$10,000
210.800
310QQQ
510.0w
$16.000
210.000
510,0W
Sill, 4
$14.400
314,444
514,444
3124.404
Total E)Wnsa Odom Irdetes1
$1,432,000
$1,498,054
81,693,098
$1,004,918
82,323,888
82,641,878
$2,898,388
$3,100,052
83,303,102
$3,510,414
83,688,254
$3,854,570
$4,039,273
$34,431,537
Net Cash BeforelntenesifAmon
83,588,000
(81,355,982)
(31,515,540)
(81,991,904)
(8785,157)
(8849,517)
(8870,W2)
(8372,471)
(8811,145)
(8529224)
(8489,808)
(5408,405)
(8345,022)
(510,011,434)
Total P+I Pmt3 for Cap Ex
NotSupldDeW
83,588,000
(81,338,882)
(31,535,540)
(81,091,904)
(8785,157)
(8849,517)
(8878,602)
(3572,471)
($511,145)
(8529,224)
(3408,009)
($408,405)
(8345,022)
(810,011,434)
Cum Net Cash Before Irderest
83,588,000
82212,018
8870,478
(81,015,428)
(51,750,553)
(52,530,100)
(83,500,902)
($4,079,433)
(84,090,578)
(85,219,501)
(85,088,407)
(88,097,813)
($a,443,434)
Revolver Draw
83,568,000
$2,212,010
8078,478
(81,015,426)
(81,780,583)
($2,641,100)
($3,537,252)
(84,138,544)
(84,788,321)
(85,382,797)
($5,884,707)
(80,351,037)
(86,781,848)
Interest
(811,000)
(81929%
(8211,821)
- (838,832)
(845253)
(852,354)
(858,854)
(804,387)
(589,509)
(8387,920)
Total
83,580,000
82,212,018
$578,478
(81,015,426)
(81,791,583)
(82,060,390)
(83,568,073)
(84,177,178)
(24,833,574)
(83,415,181)
(85,943,431)
(88,410,224)
(80,831,355)
Note: The estimetes and pmjeW ns set forth M this downers ars provided for purposes of fttration
only and do rot mixesel sawana, grmrendae or prod cdon of the results of operations of the hospital.
They am pmvlded for purposes of Blstralen orsy and am based an artaln sssarrpdons made abols the
fub m of the hospital and 8s Se vice Area. The wader Is aWaned not to"on the scarecy of
these estimates or projections of ascent orftd= performance. These estimates and projections
have not been aad led or Wowed by a Coffed Pd)10 Aecowtvil.
Page 1 of 2
COMMUNITY HOSPITAL OF LO
PRO FORMA FINANCING/CAW-
FIRST TWO YEARS OF OPERA
FbmdCost
Month 13
Month 14
Month 15
Month 18
Month 17
Month 18
Mort 19
Month 20
Morsh 21
Month 22
Month 23
Month 24
Year2
IP ADC
97.00
97.00
97.00
97.00
97.00
97.00
98.00
98.00
98.00
98.00
98.00
98.00
97.50
OP Malts
8,000
8,000
8,000
8,000
7,000
7,000
7,000
7,000
7,000
7,000
7,000
7,000
80,000
Inpollent Days
2,950
2,950
2,950
2,950
2,950
2,950
2,981
2,981
2,981
2,981
2,981
2,981
35,688
Adpratad P Day
4,388
4,368
4,358
4,388
4,602
4,602
4,833
4,633
4,833
4,633
4,833
4,633
54,468
IP Rev
$3,151,385
$3,151,385
$3,161,385
$3,151,385
$3,151,385
$3,151,385
$3,183,873
$3,193,873
$3,183,973
$3,183,873
$3,183,973
$3,183,873
$38,011,"$
Op Rev
$1,509,521
$1,509,527
$1,509,527
$1.609,627
$1.781,118
$1,761.115
$1,781,116
$1,781,115
$1.781,115
$1,781.115
$1.781.115
$1.761,116
$20,127,024
Total PI Rev
$4,650,912
$4,680,912
$4,880,912
$4,88.912
$4,912.499
$4,912,498
$4,944,988
$4,84/,958
$4,944,988
$4,941,988
$4,944,988
$4,944,988
$58,138,672
Cash atTime ofService
$"Am
$48,809
$48,809
$48,609
$49,125
$49,125
$49,450
$49,450
$49,450
$49,450
$49,450
$49,450
$581,388
Collections
$3,812,899
$4,018,348
$4,223,998
$4,381,257
$4,381,257
$4,381,257
$4,381,257
$4,817,749
$4,617,749
$4,648,289
$4,848,289
$4,848,289
$52,78.438
Charity Caro from PHLS
($7,077,510)
($7,192,1122)
(117,104,353)
($e,880,702)
($6,828,922)
($8,794,492)
($0,787,118)
($8,642,870)
($6,288,541)
($8,021,025)
($5,740.834)
(15,457,807)
Otherlrxwme
}41.44?
541J67
$41.48?
$41.687
$41.441
$41.887
$41,0147
$41.487
341497
$41.867
341447
$41.1167
3544.404
Total Gross Cash
$3,80.974
$4,109,624
$4,312,274
$4,489,633
$4,472,049
$4,472,049
$4,472,313
114,708,1180
$4,708,086
$4,739,405
$4,739,405
$4,739,405
$63,641,822
FbmdCost
$8.083
$80,083
$85,083
06,063
$86,083
$6.083
$e.083
$W,083
$88,083
$8.083
$8.083
$86,083
$793,000
ManagementOverltead
$50,000
$5.000
$5.000
$5.000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
1115.000
$50,000
$80.000
Variable Direct Costs
$3,980,558
$3,980,556
$3,960,556
$3,950,556
$4,114,022
$4,174,622
$4,20$211
$4,202,211
$4,202211
$4,202,211
$4,202,211
$4 02,211
$49,404,745
Other Expenses
$23,305
$23,305
$23,305
$23,305
$24,562
$24,582
$24,725
$24,725
$24,725
$24,725
$24,725
$24,725
$29.893
Loan and Bark Fees
1111),
$10.000
$14,444
sip,
X000
$10.000
$10,000
,1110,444
$10.000
1110 Q
31,0.000
310X00
S120,000
Total Erqunse Before Interest
$4,109,948
$4,109,948
$4,109,946
$4,109,948
$4,325,288
$4,325,258
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$51,208,439
Net Cash Before IraeresVAmort
($208,972)
($3,322)
$202,327
$359,587
$146,781
$146,781
$119,354
$355,648
$355,646
$386,385
$386,385
$388,385
$2,633,383
Total Pal Pmts for Cap Ex
($37,163)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($440,200)
NotSupkmWct
(11246,155)
($40,506)
$165,144
$322,403
$109,597
$109,597
$82,170
$318,863
$316,683
$349,202
$349,202
$349,202
$2,187,183
Cum Net Cash Before Irderest
($8,889,690)
($8,730,086)
($8,564,951)
($8,242,546)
($8,132,951)
($8,023,353)
($5,941,183)
($5,622,520)
($5,303,857)
($4,954,856)
($4,806,453)
($4,266,251)
Revolver Draw
($7,077,510)
($7,192,1122)
(117,104,353)
($e,880,702)
($6,828,922)
($8,794,492)
($0,787,118)
($8,642,870)
($6,288,541)
($8,021,025)
($5,740.834)
(15,457,807)
Interest
($74,008)
($77,475)
($78,753)
($77,817)
($75,187)
($74,794)
($74,417)
($74,333)
($71,686)
($68,011)
($85,975)
($8'!,907)
($878,$43)
Total
($7,151,6111)
($7,289,497)
($7,183,105)
($11,9311,619)
($8,904,089)
($8,669,286)
($6,861,633)
($6,617,204)
($8,370,227)
($0,090,038)
(35,60.609)
($5,620,514)
Note; The estimates and pm)edons set forth In this doommt are provided for purposes of Illatratian
onty and do not represent asuaanee, parents or pedkgon of the results of operations of the hospital.
They are provided for plaposes of Il araa5on orgy and are based on eerfaln assumptions made about the
Page 2 of 2
COMMUNITY HOSPITAL OF LONG BEACH
ASSUMPTIONS TO PROFORMA FINANCING/CASH SCENARIO
BEST CASE
1. Assumes donations of $1 m annually continue to be received in years 2 thru 5.
2. 130 beds Years 1 — 3; 170 beds Years 4 — 5.
3. Initial Hospital equipment and other first year capital expenditures provided through
Foundation contributions and other community-based gifts and programs. Amount
contributed in the first year = $2.6 million
4. $5 million cash contributions for operations start-up ($4m from the Community
Hospital Foundation and $1.0m from Pacific Hospital of Long Beach Charitable
Trust) plus $1 m from PHLB Trust to offset cost of providing charity healthcare (at an
approximate $250 per patient day for Medi -Cal patients); balance of initial funds for
operations provided through revolving credit line secured by receivables.
5. City provides land and buildings via long-term lease for $1 per year.
6. Capital expenditures in Years 2 —'5, including building program to increase bed
capacity, are as follows:
Year 2 Year 3 Year 4 Year 5
Capital Expenditure $1,750,000 $4,750,000 $2,300,000 $2,300,000
$446,200 $446,200 $446,200
$1,211,100 $1,211,100
$586,400
Total P+I Pmts for Cap Ex $446,200 $1,657,300 $2,243,700
Interest at 10% APR, principal paid over 5 years.
7. Revolving credit line paid down as cash is available.
$446,200
$1,211,100
$586,400
$586,400
$2,830,100
Note: The estimates and projections set forth in this document are provided for purposes of
illustration only and do not represent assurance, guarantee or prediction of the results of
operations of the hospital. They are provided for purposes of illustration only and are based on
certain assumptions made about the future of the hospital and its Service Area. The reader is
cautioned not to rely on the accuracy of these estimates or projections of current or future
performance. These estimates and projections have not been audited or reviewed by a Certified
Public Accountant.
PRO FORMA FINANCING/CASH SCENARIO FOR DISCUSSION ONLY
FIRST FIVE YEARS OF OPERATION - BEST CASE SCENARIO
Note: The estimates and projections set forth in this document are provided for purposes of illustration
only and do not represent assurance, guarantee or prediction of the results of operations of the hospital.
They are provided for purposes of Illustration only and are based on certain assumptions made about the
future of the hospital and its Service Area The reader is cautioned not to rely on the accuracy of
these estimates or projections of current or future performance. These estimates and projections
have not been audited or reviewed by a Certified Public Accountant.
Prep
Year 1
Year 2
Year 3
Year 4
Year 5
Inpatient Beds
130
130
130
170
170
IP ADC
65.0
97.5
109.0
127.1
146.1
OP Visits
50,000
80,000
100,000
115,000
132,250
Inpatient Days
23,725
35,588
39,780
46,382
53,340
Adjusted P Day
35,525
54,468
63,380
73,522
84,551
IP Rev
$24,602,944
$38,011,548
$43,764,309
$52,558,808
$62,255,908
Op Rev
$12,213,000
$20,127,024
$25,913,544
$30,694,593
$36,357,745
Total Pt Rev
$36,815,944
$58,138,572
$69,677,853
$83,253,401
$98,613,653
Cash at Time of Service
$368,159
$581,386
$696,779
$832,534
$986,137
Collections
$22,551,943
$52,760,436
$65,148,793
$77,841,930
$92,203,765
Charity Care from PHLS
$1,000,000
Other Income
$500,000
$5002000
$500,000
$500,000
$5001000
Total Gross Cash
$24,420,102
$53,841,822
$66,345,571
$79,174,464
$93,689,902
Foxed Cost
$629,590
$793,000
$816,790
$1,100,153
$1,133,158
Management Overhead
$850,000
$600,000
$618,000
$636,540
$655,636
Variable Direct Costs
$32,647,867
$49,404,746
$59,213,493
$70,749,798
$83,803,136
Other Expenses
-$184,080
$290,693
$348,389
$416,267
$493,068
Credit line Fees
$120,000
$120,000
$601000
$0
$0
Total Expense Before Interest
$1,432,000
$34,431,537
$51,208,439
$61,056,673
$72,902,758
$86,084,998
Net Cash Before Interest/Amort
($1,432,000)
($10,011,435)
$2,633,383
$5,288,899
$6,271,706
$7,604,904
Total P+I Pmts for Cap Ex
($446,200)
($1,657,300)
($2,243,700)
($2,830,100)
Repayment of City loan
($157,000)
($157,000)
($205,000)
Surplus/(Deficit)
($1,432,000)
($10,011,435)
$2,187,183
$3,474,599
$3,871,006
$4,569,804
Equity Contributions for Operations
$5,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
Net Surplus/(Deficit)
$3,568,000
($10,011,435)
$3,187,183
$4,474,599
$4,871,006
$5,569,804
Revolver Draw Principal
$0
($6,443,434)
($3,644,172)
$0
Revolver Interest (Accumulated)
$0
($387,920)
($814,554)
($445,873)
($43,000)
(Total Revolver)/Fund Balance
$0($6,831,355($4,458,726)
$430,000
$4,398,006
$9,967,810
Note: The estimates and projections set forth in this document are provided for purposes of illustration
only and do not represent assurance, guarantee or prediction of the results of operations of the hospital.
They are provided for purposes of Illustration only and are based on certain assumptions made about the
future of the hospital and its Service Area The reader is cautioned not to rely on the accuracy of
these estimates or projections of current or future performance. These estimates and projections
have not been audited or reviewed by a Certified Public Accountant.
COMMUNITY HOSPITAL OF LONG BEACH
PRO FORMA FMANCINGICASH SCENARIO FOR DISCUSSION ONLY
FIRST TWO YEARS OF OPERATION - BEST CASE SCENARIO
I
Note: The estimates and projections set forth in this document are provided for purposes of Illustration
only and do not represerd assurance, guarantee or prediction of the results or operations of the hospital.
They are provided for purposes of Illustration only and are based on certain assumptions made about the
future of the hospital and Its Service Area The reader is cautioned not to rely on the accuracy of
these estimates or projections of eunent orfuture performance. These estimates and projections
have riot been audited or reviewed by a Certified Public Accountant
Page 1 of 2
Pre -Op
Monty 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Year 1
IP ADC
30.00
37.00
44.00
51.00
57.00
83.00
69.00
75.00
81.00
86.00
91.00
96.00
65.00
OP Visits
2,000
2,000
2,000
3,250
4,000
4,500
4,750
5,000
5,250
6,500
6,750
8,000
60,000
Inpatient Days
913
1,125
1,338
1,551
1,734
1,916
2,099
2,281
2,464
2,618
2,768
2,920
23,725
Adjusted P Day
1,385
1,597
1,810
2,318
2,678
2,978
3,220
3,461
3,703
3,914
4,125
4,336
35,525
IP Rev
$946,267
$1,167,063
$1,387,858
$1,608,654
$1,797,907
$1,987,161
$2,178,414
$2,365,688
$2,554,921
$2,712,832
$2,870,343
$3,028,055
$24,602,944
Op Rev
$488,520
$488,520
$488,520
$793.845
$977.040
$1,099.170
$1,160,235
$1,221,300
$1,282,385
$1,343,430
$1.404,495
$1.485,680
$12.213,000
Total Pt Rev
$1,434,787
$1,665,683
$1,878,378
$2,402,499
$2,774,947
$3,088,331
$3,338,649
$3,566,968
$3,837,288
$4,056,062
$4,274,838
$4,493,815
$38,815,944
Cash at Time of Service
$14,348
$16,558
$18,764
$24,025
$27,749
$30,883
$33,366
$35,870
$38,373
$40,581
$42,748
$44,938
$368,159
Collections
$1,348,700
$1,558,248
$1,763,796
$2,258,349
$2,608,451
$2,901,151
$3,136,450
$3,371,750
$3,807,049
$22,651,943
Charity Care from PHLB
$86,087
$99,335
$112,583
$144,150
$166,497
$185,180
$200,199
55,970
$0
$0
$0
$0
$1,000,000
Other income
6,000,000
$41,667
$41,667
$41,667
$41,667
$41,667
$41,667
$41,667
$41,667
$41,687
$41,667
$41,667
$41,687
$500,000
Total Gross Cash
5,000,000
$142,102
$157,557
$173,013
$1,558,641
$1,792,181
$2,021,505
$2,533,581
$2,691,957
$2,981,191
$3,218,678
$3,456,165
$3,693,652
$24,420,103
Fixed Cost
$42,098
$42,098
$42,098
$42,098
$42,098
$42,098
$62,833
$62,833
$62,833
$82,833
$62,833
$82,833
$829,590
Management Overhead
$100,000
$100,000
$80,000
$70,000
$70,000
$70,000
$60,000
$60,000
$80,000
$60,000
$80,000
$60,000
$850,000
Variable Direct Costs
$1,338,812
$1,532,721
$1,723,437
$2,189,687
$2,605,705
$2,760,638
$2,958,635
$3,152,333
$3,358,394
$3,535,170
$3,710,383
$3,883,972
$32,647,867
Other Expenses
$7,174
58,278
$9,382
$12,012
$13,875
$16,432
$16,683'
$17,935
$19,188
$20,280
$21,374
$22,468
$184,080
Loan and Bank Fees
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$120,000
Total Expense Before Hemet
$1,432,000
$1,498,084
$1,693,098
$1,864,918
$2,323,698
$2,641,878
$2,898,368
$3,108,052
$3,303,102
$3,610,414
$3,688,284
$3,854,570
$4,039,273
$34,431,537
Net Cash Before InteresHAmort
$3,568,000
($1,355,982)
($1,535,640)
($1,691,904)
($765,157)
($649,517)
($876,862)
($572,471)
($611,145)
($529,224)
($469,608)
($408,405)
($345,622)
($10,011,434)
Total P+I Pmts for Cap Ex
Net Surplus/Deficit
$3,568,000
($1,355,982)
($1,535,540)
($1,691,904)
($785,157)
($849,517)
($876,882)
($572,471)
($811,145)
($529,224)
($469,608)
($408,405)
($345,622)
($10,011,434)
Cum Net Cash Before Interest
$3,568,000
$2,212,018
$678,478
($1,015,426)
($1,780.683).($2.6W.1100)
($3,508,962)
($4,079,433)
($4,690,578)
($5,219,801)
($5,689,407)
($8,097,813)
($8,443,434)
Revolver Draw
$2,212,018
$678,478
($1,015,426)
($1,780,583)
($2,641,100)
($3,537,252)
($4,138,644)
($4,788,321)
($5,362,797)
($5,884,767)
($8,351,837)
($6,781,848)
Interest
($11.000)
($19,290)
($28,821)
($38,632)
($45,253)
($52,364)
($58,664)
($64.387)
($89,509)
($387,920)
Total
$3,688,000
$2,212,018
$676,478
($1,015,428)
($1,791,583) ($2,680,390)
($3,588,073)
($4,177,178)
($4,833,674)
($5,415,161)
($5,943,431)
($8,418,224)
($8,831,355)
Note: The estimates and projections set forth in this document are provided for purposes of Illustration
only and do not represerd assurance, guarantee or prediction of the results or operations of the hospital.
They are provided for purposes of Illustration only and are based on certain assumptions made about the
future of the hospital and Its Service Area The reader is cautioned not to rely on the accuracy of
these estimates or projections of eunent orfuture performance. These estimates and projections
have riot been audited or reviewed by a Certified Public Accountant
Page 1 of 2
COMMUNITY HOSPITAL OF LON
PRO FORMA FINANCINGICASH
FIRST TWO YEARS OF OPERAT
IP ADC
OP Visits
Inpatient Days
Adjusted P Day
IP Rev
Op Rev
Total Pt Rev
Cash at Time of Service
Collections
Charity Care from PHLB
Other Income
Total Gross Cash
Fixed Cost
Management Overhead
Variable Direct Costs
Other Expenses
Loan and Bank Fees
Total Expense Before Interest
Net Cash Before Interest/Amon
Total P+I Pmts for Cap Ex
Net Surplus/Deficit
Cum Net Cash Before Interest
Revolver Draw
Interest
Total
R
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
Month 19
Month 20
Month 21
Month 22
Month 23
Month 24
Year 2
97.00
97.00
97.00
97.00
97.00
97.00
98.00
98.00
98.00
98.00
98.00
98.00
97.50
6,000
6,000
6,000
8,000
7,000
7,000
7,000
7,000
7,000
7,000
7,ODO
7,000
80,000
2,950
2,950
2,950
2,950
2,950
2,950
2,981
2,981
2,981
2,981
2,981
2,981
35,588
4,368
4,366
4,366
4,366
4,602
4,602
4,633
4,633
4,633
4,633
4,633
4,633
64,468
$3,151,385
$3,151,385
$3,151,385
$3,151,365
$3,151,385
$3,151,385
$3,183,873
$3,183,873
$3,183,873
$3,183,873
$3,183,873
$3,183,873
$38,011,548
$1,509,627
$1,509,527
$1,509,527
51,509,527
$1,781.115
$1,761,115
$1,761,115
$1,761,115
$1.761.115
$1.781,115
$1.781.115
$1,781,115
520,127,024
$4,660,912
$4,660,912
$4,660,912
$4,660,912
$4,912,499
$4,912,499
$4,944,988
$4,944,988
$4,944,988
$4,944,988
$4,944,988
$4,944,988
$58,138,572
$48,609
$48,609
$46,609
$46,609
$49,125
$49,125
$49,450
• S49,450
$49,450
$49,450
$49,450
$49,450
$581,386
$3,812,699
$4,018,348
$4,223,998
$4,381,257
$4,381,257
$4,381,257
$4,381,257
$4,817,749
$4,617,749
$4,648,289
$4,648,289
$4,648,289
$52,760,438
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$1,500,000
$3,984,308
$4,189,957
$4,395,607
$4,552,866
$4,555,382
$4,555,382
$4,555,707
$4,792,199
$4,792,199
$4,822,738
$4,822,738
$4,822,739
$54,841,822
$68,083
$66,083
$68,083
$W.083
$68,083
$66,083
$68,083
$68,083
$68,083
$68,083
$66,083
$68,083
$793,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$800,000
$3,960,558
$3,960,558
$3,960,558
$3,960,558
$4,174,622
$4,174,622
$4,202,211
$4,202,211
$4,202,211
$4,202,211
$4,202,211
$4,202,211
$49,404,748
$23,305
$23,305
$23,305
$23,3D5
$24,582
$24,582
$24,725'
$24,725
$24,725
$24,725
$24,725
$24,725
$290,693
$10,000
$10,000
$10,0D0
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,DDO
$120,000
$4,109,946
$4,109,948
$4,109,948
$4,109,946
$4,325,268
$4,325,268
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$4,353,020
$51,208,439
($125,639)
$80,011
$285,661
$442,920
$230,114
$230,114
$202,687
$439,180
$439,180
$469,719
$469,719
$489,719
$3,633,383
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($37,183)
($446,200)
($162,822)
$42,828
$248,477
$405,737
$192,931
$192,931
$165,504
$401,996
$401,998
$432,535
$432,535
$432,535
$3,187,183
($8,606,258)
($8,563,428)
($6,314,951)
($5,909,215)
($5,7,16,284)
($5,523,353)
($5,357,650)
($4,955,853)
($4,553,857)
($4,121,322)
($3,868,788)
($3,258,251)
($8,994,177)
($7,025,355)
($8,853,450)
($8,524,651)
($8,408.799)
($8,285,366)
($8,190,044)
($5,856,899)
($5,522,708)
($5,154,357)
($4,782,348)
($4,408,305)
($74,006)
($78,572)
($76,938)
($75,079)
($71,497)
($70,182)
($68,852)
($67,805)
($84,184)
($60,525)
($58,495)
($52,421)
($814,554)
($7,068,183)
($7,101,927)
($6,930,387)
($6,599,730)
($8,478,296)
•($8,355,547)
($8,258,895)
($5,924,704)
($5,588,892)
($5,214,881)
($4,838,841)
($4,458,728)
Note: The estimates and projections set forth In this document are provided for purposes of Illustration
only and do not represent assurance, guarantee or prediction of the results of operations of the hospital.
They are provided for purposes of Illustration only and are based on certain assumptions made about the
Page 2 of 2
* TO BE REPLACED WITH ACTUAL FIGURES
BY JULY 1, 2001
COMMUNITY HOSPITAL OF LONG BEACH
LEASE AMORTIZATION SCHEDULE
Period
Ending
2001 '
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
,)n13
2014
2015
2016
2017
2018
2019
2020
Beginning Debt
Balance
$2,330,000 00
2,353,300.00
2,494,498.00
2,494,498.00
2,494,498.00 °
2,449, 031.49
2,400,836.99
2,349,750.81
2,295,599.47
2,238,199.04
2.177,354.60
2,112,859.48
2,044,494.66
1,972,027.94
1,895,21323
1,813,789.63
1,727,480.61
1,635,993.06
1,539,016.25
$1,436,220.83
Principal
$45,466.51
48,194.50
51,086.17
54,151.34
57, 400.42
60,844.45
64,495.12
66,364.82
72,466.71
76,814.72
81,423.60
86,309.01
91,487.56
96,976.81
102,795.42
1,436,220.83
$2,494,498.00
Interest
$23,300.00 2
141,198.00 2
149,669.88
149,669.88
149,669.88
146,941.89
144, 050.22
140,985.05
137,735.97
134, 291.94
130,641.28
126,771.57
122,669.68
118,321.68
113,712.79
108,827.38
103.648.84
98,159.58
92,340.98
86,17325
$2,418,779.72
Debt Service
Payments
(May 1'`)
45 9
195;136:39
195,136:39
195,136.39
195.136.39
195;136.39
1.95,136:39
1;95,136:39
195,136.39
195,136.39
1.95;136:39
195;136.39
195,136.39
195,13e.39
195,136.39
195,136.39
1,522',394.08 '
$4,748,779.72
Ending Debt Balance
Notes: ' Begins accruing interest on the Delivery Date.
2 Unpaid interest is applied to Debt Balance.
Interest only payments in 2003-04.
" Debt Balance is amortized over 25 years, however, repayment of the Lease is accelerated
due to a Balloon Payment made on May 1, 2020.
$2,353,300.00
2,494,498.00
2,494,498.00
2,494,498.00
2,449,031.49
2,400,836.99
2,349,750.81
2,295,599.47
2,238,199.04
2,177,354.60
2,112, 859.48
2,044,494.66
1,972,027.94
1,895,213.23
1, 813, 789.63
1,727,480.61
1,635,993,06
1.539,016.25
1,436,220.83
$0.00
** TOTAL PAGE.02 **
Community ospital
Capital Projects
Fire Alarm /Protection Systems
$200,000.00
Elevator Upgrades (+ADA)
$75,000.00
Boiler Cert
$20,000.00
Boiler Replacement (if cert fails)
$200,000.00
Chiller Repairs
$50,000.00
Cooling Tower Repair
$45,000.00
Ext Painting/Window Seals
$150,000.00
HVAC Systems
$325,000.00
N/acuum System Upgrade/Cert
$50,000.00
Roof Repairs
$80,000.00
Emergency Generator Repair/Cert
$10,000.00
ADA Upgrades
$450,000.00
Ceiling Tile Replacement
$5,000.00
Isolation/Infection Control Areas Upgrades
$100,000.00
Asbestos Survey
$35,000.00
Engineering Services
$200,000.00
Restore Gas/Air Systems
$70,000.00
Oxygen Storage System
$50,000.00
Fire Certification
$60,000.00
Contingency 25%
$543,750.00
OSHPD Fee 1.64%
$44,588.00
Total
$2,763.338.00
EXHIBIT '"�"
u
Exhibit "F"
Community Hospital
Professional Office Building Leases
(as of 2/01/01)
Suite G-18
Charles Morrell Medical Center &
Stanley Goldberg, M.D., Inc.
Suite G-21
Hezekiah Moore, M.D. &
Kenneth Kim, M.D.
Suite 100
John Cardin, Jr., M.D.
Suite 105
Adel Eldahmy, M.D.
Suite 107
Michael Lieppman, M.D.
Suite 108
Kungsoo (Kenneth) Kim, M.D.
Suite 114
Alan W. Heller, M.D.
Suite 116
George Jayatilaka, M.D.
Suite 200
Nicholas S.C. Lee, M.D.
Suite 207
Robert Pugach, M.D.
Suite 207B
Richard Bell, D.P.M.
Suite 208
Long Beach Advanced Orthopedic
Medical Center
Suite 222
Andrew Manos, D.O.
Suite 300
Helen Mahoney, M.D.
Suite 306
Thomas M. Norum, M.D.
Suite 308
Cardiovascular Associates,
A Medical Group, Inc.
Suite 309
Guy G. Lemire, M.D.
Suite 314
E. Mike Vasilomanolakis, M.D.
Hospital Systems Requiring Documented Preventive
Maintenance
• Heating, Ventilation and Air Conditioning (HVAC) System
• Boilers
• Switch gear
• Emergency Generators
• Fire Protection Systems (sprinklers, fire suppression systems)
• Fire Alarm Systems
• Medical Gas System
• Medical Vacuum System
• Sumps and pumps related to pluming system
• Liquid Oxygen System
• Elevators
• Security Systems
• Specialized Medical equipment.
• Refrigeration equipment (such as but not limited to food
services area and morgue)
This list is to be considered the minimum list of equipment requiring
documented preventive maintenance. Accreditation organizations
may require additional maintenance coverage on other systems or
equipment.
Maintenance intervals for systems and equipment are determined by
run time, system use, application, location, federal and state
requirements and manufacture's recommendation.
EXHIBIT "G'°