By Bernard J. Wolfson | KFF Health News
In a positive development for Madera Community Hospital in California’s Central Valley, which closed its doors last December and filed for bankruptcy, the new fund for struggling hospitals in the state announced that it is prepared to offer the facility up to $52 million in interest-free loans. This program, created in response to the financial challenges faced by healthcare institutions, is also offering $240.5 million in no-interest loans to 16 other troubled hospitals, including Beverly Community Hospital in Montebello and Hazel Hawkins Memorial Hospital in Hollister, both of which filed for bankruptcy earlier this year.
As part of the lending details unveiled by California’s Department of Health Care Access and Information, Hazel Hawkins Memorial Hospital will receive a loan of $10 million, while Beverly Community Hospital will receive a bridge loan of $5 million as it undergoes a buyout by Adventist Health’s White Memorial in Los Angeles. Additionally, Adventist Health has conditionally agreed to manage Madera Community Hospital if it reopens, with an estimated reopening timeline of six to nine months.
Madera Community Hospital will receive a bridge loan of $2 million to cover basic costs while Adventist Health develops a comprehensive hospital turnaround plan. Upon approval of the plan, Madera may be eligible for an additional $50 million loan from the distressed hospital program.
In a previous acquisition deal, Fresno-based St. Agnes Medical Center, part of the Trinity Health chain, had planned to rescue Madera Community Hospital. However, Trinity ultimately walked away from the deal, leaving Madera in financial distress and prompting its bankruptcy filing.
Adventist Health’s nonbinding letter of intent to manage Madera provides hope for the hospital’s future. The organization remains committed to reopening Madera and ensuring a sustainable healthcare future for the county. Receiving the proposed funding from the state would significantly contribute to realizing this goal.
State political leaders representing the region, including Sen. Anna Caballero, expressed relief at the news of the grant awards. These grants will enable Madera Community Hospital and Hazel Hawkins Memorial Hospital to once again provide vital services to their respective communities.
With the $52 million loan from the state, Madera Community Hospital still needs to secure an additional $33 million. The hospital expects to generate revenue from provider fees and support from the Federal Emergency Management Agency, as stated in their bankruptcy court filing.
Overall, the distressed hospital loan fund established by AB 112 aims to provide $300 million in lending to financially struggling hospitals, particularly those in rural areas. The impact of the COVID-19 pandemic, coupled with low payment rates from government programs, has placed significant financial burdens on small hospitals across the state and country.
Other hospitals receiving major loans from the distressed hospital fund include Tri-City Medical Center, Dameron Hospital Association, Pioneers Memorial Healthcare District, and El Centro Regional Medical Center.
This article was produced by KFF Health News, a national newsroom known for in-depth journalism on health issues. KFF Health News operates under KFF, an independent source for health policy research, polling, and journalism. KFF Health News is also the publisher of California Healthline, an editorially independent service of the California Health Care Foundation.
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