Bankrupt Madera hospital granted financial ‘life raft,’ but needs millions more to reopen
Bankrupt Madera Community Hospital has just under a month to figure out how to reopen and secure state funding, following an extension granted Tuesday by a federal bankruptcy judge and a half-million dollar lifeline approved by Madera County supervisors.
U.S. Bankruptcy Judge René Lastretto II granted an extension through Aug. 24. This means the hospital can fend off creditors for another three weeks as it awaits news on its application for $80 million from California’s Distressed Hospital Loan Program and also irons out a deal with its potential reopening partner, Adventist Health. The faith-based, nonprofit health system confirmed Friday that it plans to take over management of Madera County’s only hospital.
Madera County Board of Supervisors decided on a 5-0 vote to appropriate $500,000 of federal American Rescue Plan funds to the hospital – a move intended to help the hospital pay for operating expenses, including building maintenance, utilities and salaries.
Supervisor Jordan Wamhoff said the county funding offered a hope, but not a guarantee, that the hospital would reopen.
“The hospital is still in the ocean,” he said, “this is only a temporary life raft.”
During Tuesday’s bankruptcy hearing, Riley C. Walter, the lawyer representing the Madera hospital in the bankruptcy proceedings, said there are “lots of issues” with the requirements baked into the letter of intent signed last week between Adventist Health and the hospital.
For one, Adventist Health’s agreement to take over management of Madera Community Hospital is contingent upon the hospital securing funding from the distressed hospital loan program and the California Health Facilities Financing Authority.
The letter of intent, Walter said, requires that the hospital secure $55 million for use in the first year of the distressed loan fund and $30 million in the second year.
“Both of those are problematic,” he said, later explaining that he has no indication from the state of what is likely to be granted.
“It’s not clear to me that it makes a huge amount of sense to pour unlimited time and effort until we know the level of funding that will come to the debtor from the distressed loan program,” he said.
A decision on the loan is expected this month, Walter said.
Walter also said that Adventist Health’s letter of intent isn’t clear about a plan or timeline to repay creditors.
Andrew Sherman, legal counsel for the creditor’s committee, agreed, and said that while the parties agreed to grant the hospital more time, it wasn’t yet clear whether a deal with Adventist would ever close.
“We’re optimistic, we’re hopeful,” he said, “but there are significant hurdles.”
Madera Community Hospital closed its doors late last year after Fresno-based St. Agnes Medical Center and its parent company, the hospital chain Trinity Health, walked away from a proposed merger with the troubled hospital. The hospital filed for bankruptcy in March.
