October 4, 2023

By Bernard J. Wolfson | KFF Well being Information

Madera Neighborhood Hospital in California’s Central Valley, which ceased operations final December and filed for Chapter 11 chapter in March, moved a step nearer to reopening Thursday when California’s new fund for troubled hospitals mentioned it was ready to supply the power as much as $52 million in interest-free loans.

This system is providing an extra $240.5 million in no-interest loans to 16 different troubled hospitals, together with Beverly Neighborhood Hospital in Montebello and Hazel Hawkins Memorial Hospital in Hollister, each of which filed for chapter earlier this 12 months.

Hazel Hawkins will get a mortgage of $10 million, and Beverly will get a bridge mortgage of $5 million whereas it’s being purchased out of chapter by Adventist Well being’s White Memorial in Los Angeles, in accordance with the state’s Division of Well being Care Entry and Info, which unveiled the lending particulars Thursday.

Adventist Well being has additionally agreed conditionally to handle Madera if it reopens. If all goes properly it will take six to 9 months to reopen, officers mentioned.

Madera will get a bridge mortgage of $2 million to cowl primary prices whereas Adventist Well being, a big multistate well being system with 22 hospitals in California, works on a “complete hospital turnaround plan,” the division mentioned. As soon as such a plan is accepted, Madera “may be eligible for an extra $50 million mortgage” from the distressed hospital program, it mentioned.

For many of final 12 months, Fresno-based St. Agnes Medical Middle, a part of the big Catholic hospital chain Trinity Well being, appeared poised to rescue Madera Neighborhood Hospital from monetary wreck in a deliberate acquisition that was accepted by California Legal professional Basic Rob Bonta. However Trinity walked away from the deal on the final minute with scant clarification, infuriating Bonta together with a number of different political leaders, neighborhood advocates, and well being care officers.

Trinity, which had loaned Madera $15.4 million throughout their merger talks, turned its largest creditor within the chapter that ensued. On the time of its chapter submitting in March, Madera reported whole money owed of simply over $30 million.

Adventist Well being agreed final month to a nonbinding letter of intent to handle Madera. On the time, Kerry Heinrich, Adventist’s president and CEO, mentioned that if the shuttered hospital bought the requisite financing, Adventist Well being would use its experience in “serving to to safe a sustainable future for healthcare” within the county.

Adventist Well being spokesperson Japhet De Oliveira mentioned Thursday that his group stays intent on doing so. Reopening Madera “could be a very good factor, and we are going to put each effort into making that occur,” De Oliveira mentioned. He added: “We are going to want all events to be concerned in creating the accepted plan and negotiating the phrases of administration companies.”

Karen Paolinelli, the CEO of Madera Neighborhood Hospital, didn’t reply to emailed questions by publication time.

State political leaders representing the area expressed satisfaction with Thursday’s information. “It brings me great reduction to know that Madera Neighborhood Hospital and Hazel Hawkins Memorial Hospital in San Benito County have obtained grant awards and can be capable of make sure that neighborhood members can as soon as once more obtain companies in their very own communities,” mentioned Sen. Anna Caballero, a Democrat who represents the areas wherein these amenities are situated.

The Adventist letter of intent for Madera mentioned that along with paying off collectors within the chapter, the hospital would wish to safe $55 million within the first 12 months to pay for all facets of reopening, plus an extra $30 million within the second 12 months.

The $52 million the state proposes lending to Madera is considerably wanting the $80 million the hospital utilized for. Assuming the total $52 million materializes, the overall quantity loaned to the 17 hospitals could be $292.5 million — practically your complete $300 million obtainable to the fund for fiscal years 2023 and 2024.

With $52 million from the state, Madera Neighborhood Hospital would nonetheless want to seek out an extra $33 million. Madera mentioned in a chapter courtroom submitting earlier this 12 months that it expects simply over $33 million in revenues from “supplier charges” and from the Federal Emergency Administration Company.

The regulation that created the distressed hospital mortgage fund, AB 112, initially offered for $150 million in lending to assist troubled hospitals, principally rural ones, that confronted the danger of closing. One other $150 million was later added to the pot. Small hospitals throughout the state — and the nation — have been buffeted by the ailing financial winds of the covid-19 pandemic, which ratcheted up the price of medicine, provides, and labor.

Hospital business officers have additionally pointed to low fee charges by authorities applications, particularly Medi-Cal, California’s Medicaid program, which they are saying has saddled many hospitals with monetary losses.

Madera made the identical argument, however state knowledge exhibits it obtained sufficient supplemental funds to earn practically $15 million from Medi-Cal in 2021, although it misplaced over $11 million treating Medicare sufferers.

The hospitals awarded the biggest loans by the distressed hospital fund are Tri-Metropolis Medical Middle in Oceanside, with $33.2 million; Dameron Hospital Affiliation in Stockton, with $29 million; Pioneers Memorial Healthcare District in Imperial County, with $28 million; and El Centro Regional Medical Middle, with $28 million.

This text was produced by KFF Well being Information, previously often known as Kaiser Well being Information (KHN), a nationwide newsroom that produces in-depth journalism about well being points and is without doubt one of the core working applications at KFF — the impartial supply for well being coverage analysis, polling, and journalism. KFF Well being Information is the writer of California Healthline, an editorially impartial service of the California Well being Care Basis.