Rise and Fall of Edgewater Hospital

By Ron Cohn

Media professionals Todd and Stephani, an appealingly energetic thirtysomething couple, captivated a standing-room-only audience with a fast-paced, hourlong telling of a tale covered fully in their podcast series “If the Walls Could Talk.” They presented it as a story of contrasts, tracing the arc of Edgewater Hospital “from the best of the best to the worst of the worst” over the course of 60 years – a saga replete with comedy and tragedy, heroes and villains.

Nearly 100 years ago, as the ’20s roared, an enterprising and ambitious young heart surgeon named Maurice Mazel acted on his vision to build a first-class hospital specializing in cardiac care. A resident of the Edgewater Beach Apartments, he thought it should be in his neighborhood. He envisioned a facility with amenities and services that would appeal to the celebrity clientele of the Edgewater Beach Hotel, as well as providing the needed premium medical care to the upscale residents of the community.

Dr. Mazel was only 33 years old in 1929, when his dream was realized. With the Depression looming, the hospital opened at the corner of Hollywood and Ashland, thanks to a half-million dollars in funding from Edgewater developer John Lewis Cochran’s real estate firm. Todd described it as “a five-star hospital, a luxury hospital – built to look like a hotel and run like a hotel where you got the best of the best.”

Todd and Stephani went on to recount how Edgewater, from its opening, boasted features and amenities unseen in hospitals of those times, with all of the rooms having windows facing outdoors, each with a telephone and handcrafted furniture. Some even had a bar, if you can imagine that. Other niceties appealing to the “in-crowd” were a pool, rooftop solarium and sundeck. Later a helipad was added, used by Frank Sinatra and Illinois Gov. “Big Jim” Thompson.

“Interestingly, they had these private rooms that were for people who weren’t sick,” Todd related. “Back then you didn’t go to rehab. If you were a celebrity, you tucked away in a hospital somewhere and Edgewater saw this as an opportunity.”

“Luckily, there was no social media,” Stephani added, “so you didn’t read that Britney Spears checked into Edgewater for a week to dry out.” So famous folk, usually coming from the Edgewater Beach Hotel, were frequently sequestered at the hospital. The staff competed to work those floors, and it was told how an aide, attracted by the round-the-clock guards on duty outside one room, found a pretense to get inside, only to find it occupied by a henchman of Al Capone.

Fifty years of dedicated leadership

Besides the lavish treatment and amenities afforded name patients, serious, often groundbreaking heart and pulmonary care distinguished Edgewater Hospital under the stewardship of its founder. Dr. Mazel’s force of personality and leading-man good looks contributed to his emergence as a local celebrity. His ability as a physician was notable, a forerunner in his field. An open-heart surgical procedure that he originated was practiced for over a decade worldwide and he pioneered the development of a clot-busting drug still in use today. With all this, he came to work virtually every day until his death in 1980, personally overseeing patient care and the operation of the growing hospital as it achieved medical center status with a campus eventually occupying most of the block.

Much of this expansion was driven by Medicare, which proved to be a double-edged sword. Stringent caps on reimbursement ate away at the bottom line, and by the time of Mazel’s death, the hospital was edging toward financial trouble. The process was accelerated by the installation of his widow, Harriet, to succeed him as CEO. His second wife, she had been a featured equestrian performer for several circuses and was enshrined in the Circus Hall of Fame. She and the doctor had been an attractive Chicago power couple. But despite gaining experience in hotel management after her circus days, and working hard at running the hospital – engaging with patients and staff and even instituting a state-of-the-art birthing center – Harriet was unqualified for the top management role. In 1985, in failing health and with the hospital bleeding money, she stepped down as CEO but remained on the board of directors.

Enter the villain

By the time of her death in 1989, Edgewater was in bad shape. The family decided its only course of action was to sell. Finally, desperate after a fruitless six-month search for a better offer, it sold the hospital to Peter Rogan of northwest Indiana, a onetime health-care consultant, for $1 million and the assumption of $10 million in debt and other liabilities.

“Rogan was a doctor, a Ph.D, not a medical doctor,” Todd said. “But he liked to be called ‘doctor,’” Stephani added.

“So the hospital was sold,” Todd said, “everyone breathed a sigh of relief and over 700 jobs were saved. Edgewater was in working order, and in two years,” he continued, “Rogan had turned the place around. After losing over $30 million in ’88, it showed a profit of just over $1 million in ‘91, which had everyone asking, ‘How did this genius do it?’ Then came the investigation.”

“In those times,” he continued, “for a hospital to make money you had to get patients in, you had to fill up the beds, and Edgewater’s plan was to do this in the worst possible way.”

They worked deals with low-income senior centers on the South Side, offering residents free on-site blood pressure and diabetes testing. Most of the tests were reported as positive, and the residents were ushered north to the hospital, where unneeded medical procedures, even surgeries, were performed and billed to Medicare and Medicaid. With this and other, even more egregious fraudulent schemes, Edgewater made millions in the ‘90s.

Inexplicably, through most of that decade, the hospital continued to operate as a legitimate care facility, with regular patients and much of the staff unaware of the poverty-level “inmates” being stored on the second floor, awaiting their unnecessary treatments.

A sad ending to the tale

A hospital in Chicago’s South Shore neighborhood was, at that time, under investigation by the FBI for similar criminal activity, and in 1997, Edgewater was caught in the same net. A doctor wearing a wire was cooperating with the feds, and the game was up. Rogan had sold the hospital but continued to run it through the ’90s via an operating company he owned. In March 2001, that company was indicted, and in December of that year Edgewater Hospital closed its doors, putting 666 employees out of work. Todd and Stephani noted the inescapable significance of the number.

Who went to prison, and who didn’t? Peter Rogan ultimately wound up behind bars, but that was later. Although he was never criminally indicted, he fled to Canada, pursued by civil judgments against him totaling over $188 million. Four doctors, a vice president and the management company pleaded guilty to charges involving kickbacks for patient referrals and medically unnecessary admissions and treatments.

Rogan returned to the States after nine years, took a plea deal over a perjury charge and served 18 months. By contrast, his vice president had spent six years in a federal penitentiary. Rogan is still around, living in Indiana.

After 15 years as a vacant, decaying and dangerous eyesore, Edgewater Hospital was demolished in 2016 and redevelopment began for residential rentals and homes. But a final indignity remained to be heaped on the rubble of Maurice Mazel’s dream. Tens of thousands of medical records had never been properly stored or removed. They moldered there with the remnants of private patient and identity information, to be picked over by a constant stream of vandals and “urban explorers.”

Their hunt for the most valuable treasures, however, had been thwarted. Edgewater’s birth records for Hillary Rodham Clinton and serial killer John Wayne Gacy had been removed for safekeeping.

(This article was originally published in the September 2022 Malibu East Dialogue newsletter)