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The story of Santa Ana-based hospital operator Integrated Healthcare Holdings Inc. is worthy of “General Hospital.”
What started as a way to keep four Orange County hospitals running has turned into three years of legal turmoil and infighting among executives and doctors. There have been charges of fraud, mismanagement, slander and even claims of a planted gun.
The soap opera is a distraction for Integrated, which is working on a turnaround.
The company, which trades on the low-profile Bulletin Board exchange, expects to report a loss of $3 million for the three months through June, narrowed from $6 million a year earlier.
Revenue could come in at $94 million, up 8% from a year earlier.
Integrated’s thinly traded shares have a recent market value of about $20 million, down by about half since January.
What’s at stake are four local hospitals that serve some of the county’s poorest residents.
Integrated runs Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Santa Ana’s Coastal Communities Hospital and Chapman Medical Center in Orange.
The hospitals make up 12% of Orange County’s hospital beds.
Integrated bought them from Tenet Healthcare Corp. of Dallas in 2005 for $70 million. Tenet sold them as it was dealing with a federal probe into suspected Medicare fraud.
The latest chapter in Integrated’s saga came in July, when a group of doctors sued the company and Chief Executive Bruce Mogel over allegations of fraud and breached fiduciary duty.
The doctor’s group, Orange County Physicians Investment Network LLC, owns 43% of Integrated.
The group contends Integrated’s $91 million financing deal with Anaheim’s Medical Capital Corp. is “oppressive” and at “outrageous rates,” according to the lawsuit.
The suit also takes issue with pay raises for Chief Executive Mogel amid losses and questions his past performance at Los Angeles-based Alta HealthCare System Inc., now part of Prospect Medical Holdings Inc. of Culver City.
The suit “is a direct result of the mismanagement of the company by its CEO,” said Marc Miles, a lawyer with Callahan
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