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Closure of Madera Community Hospital highlights structural healthcare issues

Public panel hosted by KVPR and NPR’s 1A show. 1A host Jenn White was joined by California Sen. Anna Caballero and Madera County Health Officer Dr. Simon Paul.
Soreath Hok
A community discussion around healthcare is hosted at Fresno City College on March 2, 2023, by KVPR and NPR’s 1A show. 1A Host Jenn White was joined by California Sen. Anna Caballero, Madera County Health Officer Dr. Simon Paul and Madera Community Hospital CEO Karen Paolinelli.

This story is one of three in a series from KVPR's latest coverage of the closure of Madera Community Hospital. For past coverage, click here.

FRESNO, Calif. – The financial viability of Madera Community Hospital continues to be a question two months after the hospital shut its doors with the intention to file for bankruptcy.

Last week, in the first public discussion since the hospital’s closure, hospital CEO Karen Paolinelli provided her assessment of the financial issues the hospital had faced long before it closed.

Paolinelli spoke at a panel hosted by KVPR and NPR’s 1A show. She was joined by California Sen. Anna Caballero and Madera County Health Officer Dr. Simon Paul.

Much of the discussion centered on the sustainability of a hospital in Madera – and in other rural and urban areas of the state – and structural issues with Medi-Cal reimbursements and private insurance rates offered to hospitals.

Reimbursement tug-of-war

Caballero said low Medi-Cal reimbursements were not the sole issue facing Madera Community Hospital – the hospital was getting the fullest reimbursement from Medi-Cal possible, she said. However, due to Madera Community Hospital’s high volume of Medi-Cal patients, the reimbursements were likely not going as far as the hospital needed that revenue to go in order to stay open, Caballero said.

Paolinelli agreed the hospital was falling short on funds, but said despite getting full Medi-Cal reimbursements, it didn’t mean the hospital was getting an adequate allocation. Paolinelli added 84 percent of the hospital’s patients were on Medi-Cal or Medicare insurance.

“We don't get a hundred percent of our reimbursement, we get about 20 to 30 cents on the dollar,” she said.

Paolinelli and Caballero zeroed in on private insurers who sought services outside of the hospital and took that revenue elsewhere.

“It's the commercial payers that are causing the problem,” Caballero said. 

Last week, Fresnoland reported a likely reason for Trinity Health’s pulloutof a deal to purchase Madera Community Hospital was an issue of low private insurance rates.

Madera Community Hospital sits empty, two months after it shut down in late December.
Soreath Hok
Madera Community Hospital sits empty, two months after it shut down in late December.

Could $1.5 billion save California hospitals?

The California Hospital Association, an advocacy group that works with more than 400 hospitals across the state, has requested $1.5 billion from the state to help struggling hospitals.

Caballero, at the public discussion held at Fresno City College, said the funds would have to come from the state’s general fund but that could only last until December.

But the senator said that’s going to require the governor and legislature to work together, despite slower revenue this year.

Only the most at-risk hospitals would be targeted with the funding – Caballero said there are seven or eight hospitals that could close across the state without funding.

Madera County Department of Public Health Officer Dr. Simon Paul, also speaking at the panel discussion, compared hospital bargaining rates to baseball. He said some hospitals can be competitive, and others not so much.

“It doesn't mean your college baseball team isn't a great team and well-managed. But you do not have the resources or the depth to go up against these large players. So, of course you can have the worst reimbursement rates,” Paul said, speaking of hospitals like Madera Community Hospital.

Paul added that in the face of hospital strain across the state and the country, he has not yet seen an example of a sustainable model for community hospitals.

“I think it's extremely challenging to have a hospital in this sort of area that's financially viable,” Paul said. “I think you have to look at new models and new reimbursement methods.”

Consequence of closure on medical staff and education

KVPR and 1A's Remaking America present: What Happens When Your Hospital Closes? Public panel discussion at Fresno City College, March 2, 2023.
Soreath Hok
An audience listens to a discussion around healthcare held by KVPR and 1A's "Remaking America" project at Fresno City College on March 2, 2023.

The hospital discussion addressed questions that came from healthcare workers. Some questioned the hospital’s leadership and pointed to the consequences of the closure on nursing staff and students.

Gretchen Nelson, a full-time registered nursing faculty member at Fresno City College, said nurses have told her there's mistrust of Madera Community Hospital’s leadership. Nelson said nurses felt reluctant to return to Madera Community Hospital, even if it did reopen. One complaint brought up was the loss of PTO hours following the hospital’s closure.

Katharine McGregor, a work-based education programs liaison at Community Health System, which covers Community Regional Medical Center, Clovis Community Medical Center and other care centers, asked about the impact of the hospital’s closure on hundreds of nursing and Allied Health students who she said have been displaced from their education.

“They are now scrambling to complete all of their clinical hours on time in order to qualify for further semesters. How do we address the problems created by the sudden disappearance of these clinical education opportunities without causing overcrowding and staff burnout at other local hospitals that take on these hundreds of displaced students,” McGregor asked.

Sen. Caballero echoed the concerns.

“They need to do clinical work and the clinical work for the most part, is done in hospitals. And when a hospital closes, then all of the clinical slots disappear and they have to go further in order to be able to meet their clinical needs,” she said.

Systemic health issues plague region

Caballero said there's interest in establishing medical schools at UC Merced and Fresno State, but it takes years to build facilities and build up the staffing required.

Alyssa Kennett, Director of the San Joaquin Valley Public Health Consortium, a forum of public health department leaders representing 11 counties in central California, said in a previous interview with KVPR that the Valley’s lack of access to equitable healthcare is a systemic problem – and education is a chronic issue that impacts the ability to recruit providers locally.

“Just the fact that there are 11 counties that I cover and not one of them has a medical school that is producing doctors who will come and serve a place that they call home, is concerning,” Kennett said.

Last year, the San Joaquin Valley Public Health Consortium released a report analyzing health equity in the region.

The report looked at 98 indicators for health, comparing Central Valley counties to other parts of California in terms of income, employment, exposure to pesticides and pollution, access to drinking water and more. It found that for most health indicators, the San Joaquin Valley region fares worse than other California counties, often by a large margin.

Kennett said it shows an area suffering and often with no safety net – and then you add a closed hospital.

“When you have under-investment in complementary systems for decades, having the closure of hospitals is almost inevitable,” Kennett said.

Clarification: A previous version of this story stated 84 percent of patients were on Medi-Cal. That figure reflects patients on Medi-Cal and Medicare combined, according to hospital records. The story has been updated.

Soreath Hok is a multimedia journalist with experience in radio, television and digital production. She is a 2022 National Edward R. Murrow Award winner. At KVPR she covers local government, politics and other local news.
Cresencio Rodriguez-Delgado is KVPR's News Director. Prior to joining the station's news department in 2022, he was a reporter for PBS NewsHour and The Fresno Bee.