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Kaweah Medical Center 'limping' toward recovery as pandemic costs strain the hospital

The exterior of Kaweah Health Medical Center is a large gray building with lots of windows.
Courtesy Kaweah Health
Kaweah Health Medical Center in Visalia.

VISALIA, Calif. — Kaweah Medical Center’s Chief Executive Officer Gary Herbst says over 1,000 employees and local residents have delivered a pleading letter to Gov. Gavin Newsom as the Visalia area hospital struggles financially.

A large, blue banner at the top of Kaweah Medical Center’s website makes an urgent plea in bold, white letters: “Urge Governor Newsom to Take Action!” The message provides information on how to contact Newsom.

A pre-filled form details the ongoing financial burden that Kaweah and other district hospitals in the state have endured since the COVID-19 pandemic began.

Herbst first appealed to the governor in a personal letter late last year, which the governor’s press office says it received. In it, Herbst pleaded for funds and explained how district hospitals have suffered while trying to provide much needed care during the pandemic. He also asked for Medi-Cal reimbursement reform which he hopes will increase the funds distributed to hospitals.

But a spokesperson with the governor’s press office says they have not received the most recent letters asking for support. The spokesperson did not respond to KVPR’s request for comment regarding the claims detailed in the letter. (A spokesperson for Kaweah says they have since re-sent a letter with the names, zip codes and email addresses of all who submitted the online form.)

Pandemic cash crunch

Like many local hospitals, Kaweah has been in a cash crunch brought on by the pandemic. Herbst’s calls for change echo a similar sentiment by the CEO of Madera Community Hospital, who in April also called for reimbursement reforms as the hospital struggled with finances.

That hospital, facing bankruptcy, closed this month.

The only general hospital in rural Madera County will close, in a move that is expected to trigger negative effects on residents relying on its medical care.

On Thursday, Congressman Jim Costa (D-21) and Congressman-elect John Duarte (R-13) sent a joint letter to Secretary of Health and Human Services Xavier Becerra and Chiquita Brooks-LaSure, the administrator for the Centers for Medicare and Medicaid Services, asking them to declare a local health emergency over the hospital’s closure.

The request included sending Medical Reserve Corps members to ensure residents in Madera receive care.

The sudden closure of Madera Community Hospital, combined with an influx of patients with flu, cold and respiratory symptoms, has placed Fresno-area hospitals in a difficult position and has highlighted the fragile state of healthcare in the Valley.

Kaweah hospital, so far, is managing through its financial pains.

In a fall fiscal video update posted to Kaweah’s website, Herbst says the hospital has lost $135 million dollars since the start of the pandemic through October 31, 2022. About $61 million dollars in federal COVID relief funding helped, but the remainder “came out of our cash reserves and put us in the financial strait we’re in right now,” Herbst says in the video.

As of Nov. 30, Kaweah was operating with 75-and-a-half days of cash on hand.

“We’re going on three years of uninterrupted strain on the organization and it’s taken its toll, there’s no doubt about it,” Herbst told KVPR this week. “ Our people are exhausted. Our leaders are exhausted.”

Cost-saving measures at Kaweah

The closure of the Madera hospital triggered a health emergency in Fresno and Madera counties, and even Kaweah hospital took in some patients from Madera. The growing healthcare problems in the region have left local supervisors asking for more support.

“We need to sound the alarm and let the legislature and Sacramento and the governor realize that we have an issue here,” Brian Pacheco, a Fresno County supervisor who also served on the Board of Directors for Community Regional Medical Centers, said.

Herbst says the pandemic has been catastrophic to the healthcare industry and workforce, and, in the meantime, cost-saving measures are in place at the hospital.

“Hospitals have kind of limped into the aftermath,” Herbst said. “We were pretty much devastated financially just surviving the pandemic, and now we enter in the post-pandemic and we’re on the brink of collapse and there’s no rescue coming.”

Herbst had a plan in November to secure a line of credit with a bank. He sent out roughly 50 requests for proposals to lenders, but says a recent downgrade to the hospital’s Moody’s credit rating made that virtually impossible. He said the new rating “spooked off” lenders.

The hospital has stopped contributing to employees’ 401K plans, and over 100 people have been laid off. Clinics were also closed down and open positions were eliminated.

Hospital leaders are also considering selling buildings which Kaweah owns, but may lease back. That plan would cost more in the long run, but provide much-needed cash flow, according to Herbst.

Herbst says leaders are also exploring getting money from medical claims in advance. It’s a model that worked during the pandemic with Medicare. Medicare pre-paid $90 million worth of claims to Kaweah, which the hospital was able to pay back, according to Herbst. He says, this may be something the hospital can arrange with private insurance companies, such as Aetna or Blue Cross, to give the hospital some breathing room.

Herbst says the hospital is on a financial path forward that could balance its deficit by March. But the hospital, still facing debt, would continue to lose money.

Elizabeth Arakelian is the host of All Things Considered. A Valley native, Elizabeth earned her bachelor's degree in English Language Literatures from the University of California, Santa Cruz and her master's degree in journalism from New York University. She has covered a range of beats. Her agriculture reporting for the Turlock Journal earned her a first place award from the California Newspaper Publishers Association. While in graduate school she covered the New Hampshire Primary for NBC Owned Television Stations and subsequently worked as a television ratings analyst for the company's business news network, CNBC. Upon returning to California, her role as a higher education public relations professional reconnected her to the Valley's media scene. She is happy to be back to her journalism roots as the local host of All Things Considered.
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