Madera hospital strikes deal with Adventist Health to avoid liquidation, officials say

UPDATE:

Adventist Health has confirmed it plans to take over management of bankrupt Madera Community Hospital, potentially saving the hospital from liquidation and pledging to provide a “sustainable future for healthcare” in the county.

The 11th hour deal means low-income Madera County residents in need of primary, specialty and urgent medical services might not have to travel to other clinics or to Fresno and Madera counties for care. It’s unclear how many jobs could be saved or restored until more details of the potential management services agreement are finalized. It’s also unclear what level of service might return to the hospital under Adventist management, but the facility would remain open in some form.

“California hospitals face many financial challenges, and for independent rural hospitals, these challenges can sometimes be almost insurmountable,” said Kerry L. Heinrich, president and chief executive of Adventist Health, in a press release issued Friday morning.

The non-binding letter of intent is contingent upon the Madera hospital securing state funding through the California’s Distressed Hospital Loan Program and and the California Health Facilities Financing Authority.

“If Madera succeeds in getting the financial resources it needs, Adventist Health will provide Madera Community Hospital with the expertise of a large healthcare system, helping to secure a sustainable future for healthcare in Madera County,” Heinrich said.

Madera Community Hospital chief executive officer Karen Paolinelli said she was “thrilled” about the potential management relationship with Adventist Health.

“Their clinic expertise perfectly aligns with the work we have passionately pursued for the past 51 years,” she said in the press release. “Together, we can significantly and positively impact the communities we serve.”

Losing the hospital was “devastating,” Andrea Kofl, president of Adventist Health Central Valley Network said in the release. “I am proud to help reestablish the hospital to continue providing quality, local access to healthcare in this community,” she said.

ORIGINAL STORY:

Bankrupted Madera Community Hospital has reached an initial agreement with hospital chain Adventist Health to take over operations of the property and save it from liquidation, a source with knowledge of the deal told The Fresno Bee.

“I can confirm the (Madera Community Hospital) board accepted a letter of intent with a suitor,” Riley C. Walter, an attorney representing the hospital in its bankruptcy proceedings, said in an email statement to The Bee. Walter said he could not disclose the identity of the suitor.

A management services agreement will be negotiated “in the near term,” he said.

A source, who asked to remain anonymous because they’re not at liberty to share information publicly, confirmed with The Bee that the letter of intent was with Adventist Health, a faith-based, nonprofit health system operating in California, Oregon and Hawaii. It already operates several hospitals in the San Joaquin Valley and agreed last month to acquire the financially troubled Bakersfield Heart Hospital.

The deal comes at a critical time for the Madera hospital, which has been seeking a buyer or financial partner of some kind to keep it from being liquidated to pay its debts.

Fresno-based St. Agnes Medical Center and its parent company, the hospital chain Trinity Health, walked away from a proposed merger late last year. Madera filed for Chapter 11 bankruptcy in March.

Valley Public Radio has also reported that Adventist Health is the likely partner.

Adventist Health Chief Executive Officer Kerry L. Heinrich couldn’t be immediately reached for comment.

Madera Hospital board chair Deidre DaSilva couldn’t be immediately reached for comment. Board vice chair Stell Manfredi declined to comment and referred The Bee’s questions to Walter, the lawyer.

Robert Poythress, hospital board member and Madera County supervisor, declined to comment on specifics about a letter of intent with Adventist Health.

However, he said in an interview with The Bee on Thursday afternoon that he is “looking forward” to the board of supervisor’s meeting on Tuesday, when the board will vote on whether to extend a half-million dollar lifeline to the shuttered hospital.

Madera County officials said earlier this week that disbursement of these funds is contingent upon the county’s receipt of a letter of intent from a credible partner, provider or suitor for the hospital.

Poythress said he’s “hoping and assuming that there’s going to be some kind of executed LOI that we can act on.”

In a bankruptcy hearing Tuesday, Walter, the lawyer, argued that Madera hospital should be allowed to continue running a skeletal operation while it seeks a buyer and develops a reopening plan. He also said the hospital board expected to receive a proposal from a potential partner and would discuss the proposal in a Wednesday board meeting.

Madera Community Hospital is the only general acute-care hospital in Madera County, serving a population of around 160,000 residents. The hospital, which operated emergency room services, specialty care services and rural clinics, is likely to reopen as an acute care facility, possibly with scaled back services.

According to data from the National Academy for State Health Policy, Madera Community Hospital saw a steady decline in inpatient volume in the decade leading up to the hospital’s closure. As of 2021, Madera Community Hospital discharged less than 6,000 patients, which is about half of the 11,300 patients discharged 10 years prior in 2011. The hospital also experienced financial losses in four of the eight years from 2014 through 2021.

In a report presented to the Madera County Board of Supervisors on Tuesday, Force 10 Partners – a financial advisory firm hired by the county to analyze hospital reopening options – estimated that it would take six to nine months for the hospital to reopen once an agreement is reached with a system-affiliated operator.

This is a developing story.