Bankrupt Triad Healthcare to Close West Valley Hospital : Canoga Park: Firm failed to find buyer for 139-bed facility. Move is expected to strengthen its Sherman Oaks Hospital.

A bankrupt health care company said Wednesday that it will close West Valley Hospital and Health Center in Canoga Park after failing to find a buyer for the money-losing, 139-bed facility.

Triad Healthcare Inc. of Encino said shuttering the hospital will financially strengthen its other holding, the more prominent Sherman Oaks Hospital and Health Center, which operates a well-known burn center and HIV-treatment ward.

Triad said about 250 employees will lose their jobs when the west San Fernando Valley hospital is shut down Sunday. On Wednesday, 15 patients remained at West Valley as doctors and family members arranged for their transfer to other hospitals.

Medical experts said closure of West Valley--a small facility with no unique medical facilities--will have little impact on the availability of health care in the area. The hospital has lost large sums in recent years, and its patient count has dropped steadily.

“The West Valley, if anything, has a surfeit of hospitals,” said David Langeness, spokesman for the Hospital Council of Southern California. “There are plenty of services--emergency services, surgical services and outpatient services--available.”

West Valley has “traditionally been a hospital with a very low (patient) census,” he said. “And it’s in competition with several large hospitals that are close geographically,” including Kaiser Permanente in Woodland Hills and West Hills Regional Medical Center.

Dennis I. Simon, the court-appointed trustee acting as Triad’s chief executive officer while it remains in bankruptcy, said West Valley’s financial problems stemmed from its failure to obtain more managed-care contracts with insurers and its 1992 loss of a large doctor’s group that deprived the hospital of numerous patients.

“We couldn’t sell it as an operating business. To fix it would have required an enormous capital infusion. And so, unfortunately, that left the option of having to close it,” he said.

Simon declined to provide figures on how much the hospital was losing. But according to the state’s Office of Statewide Health Planning and Development, West Valley suffered a net loss of more than $11 million in the year that ended March 31.

In the previous year, the hospital lost more than $5 million, the state said.

Simon said that profits from Sherman Oaks Hospital had been used to subsidize losses at West Valley, and that closing West Valley will take financial pressure off Sherman Oaks. He described Sherman Oaks as financially sound and said Triad does not anticipate closing it.

The financial future of both hospitals became clouded last year when Triad declared bankruptcy after defaulting on a $167-million loan insured by the state.

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Triad acquired the hospitals in 1991 with the help of a loan guarantee by Cal-Mortgage, a state program that has helped many health care institutions qualify for low-interest loans.

But Triad defaulted in July, 1993, forcing state officials to suspend the program, potentially leaving taxpayers on the hook for the loan. The default damaged the hospitals’ reputations and triggered state investigations.

Triad last year filed a plan to reorganize its finances and begin paying off creditors. Under the plan, payments to the state--Triad’s biggest creditor--would not begin until 1997, with an initial payment of $3 million.

Before Triad filed for bankruptcy, West Valley had few contracts with HMOs, now the major source of patients for Southern California hospitals. West Valley’s average daily patient count had fallen steadily in recent years, reaching a low of fewer than 27 last year.