With millions in state funding on the table, bankrupt Madera Community Hospital says it can’t access it
MADERA, CA. – Nearly five months after Madera Community Hospital closed its doors and clinics, there is now more than $150 million in state funding to help with reopening efforts. But hospital leaders say they have no way to access that money.
The problem? State funding requires a concrete reopening plan – one that the hospital doesn’t have and one that leaders say can only be completed with the help of a third party consulting firm.
With the hospital undergoing bankruptcy, it’s no longer in control of its own finances. It is instead depending on a secured creditor and committee to make financial decisions as part of its Chapter 11 bankruptcy.
The hospital maintains that it needs money to hire a consulting firm to produce a turnaround plan estimated to cost $250,000 with a two to three month timeline. The initial request was denied by the Madera County Board of Supervisors back in March.
Without that plan, hospital leaders say they’ve been unable to apply for the $150 million through the Distressed Hospital Loan Program. They say the same issue has also prevented them from accessing $5 million in state funding.
“It's kind of like the chicken or the egg. You don't have the money to pay for the plan, but you can't get the loan if you don't have the plan,” Madera hospital board chair Deidre da Silva said.
Hospital board pens letter to senator
The funding issue was one of many points da Silva laid out this week in a letter addressed to state Sen. Anna Caballero, a key San Joaquin Valley legislator who has twice helped to secure state emergency funding: $150 million through the new Distressed Hospital Loan Program signed into law this month, and $5 million set aside last September for operational costs.
The letter was sent at the request of the Madera Community Hospital Board of Trustees on May 23 and was the hospital’s attempt to “defend itself from mischaracterizations and misrepresentations,” said da Silva.
Hospital leaders claim Caballero has wrongly accused the hospital of not turning over financial information. The letter attached a January email addressed to the offices of Caballero and State Assemblymember Esmeralda Soria, showing receipt of audited financial statements from the past five years.
“We don't need to set ourselves up for another failure by making it look like we're not cooperating,” da Silva said.
Caballero’s office confirmed receiving the financial statements, but spokesperson Elisa Rivera told KVPR the hospital has not provided current financial statements that have repeatedly been requested beyond June 2022. But da Silva said she was unaware of any such request and stated that a current outlook would be available after the fiscal year ends this June.
Despite the letter, da Silva applauded Caballero’s efforts to secure funding to reopen the hospital.
“I am very, very appreciative of the $5 million and I know that wasn't an easy task for them to put together that distressed loan program so quickly,” da Silva said. “I hope she'll understand and not take it as a personal affront and I hope that it will lead us to open up the communications between one another and find the best solution.”
County takes cautious steps
Madera County Board of Supervisor chair David Rogers said his vote to deny the request to fund a turnaround plan was the county’s attempt to spend cautiously on hospital matters.
“We want an accurate accounting of what’s going on,” Rogers said.
In February, the supervisors agreed to hire a firm to review Madera Community Hospital’s financial history. The firm was tasked with analyzing the hospital’s finances in the five years leading up to the closure.
Rogers said the board would need to see the firm’s report before agreeing to any further county funding for the hospital.
“We're not going to just spend money that is irretrievable and put money into something that is not going to be sustainable,” Rogers said.
However, at its May 16 meeting, the county did approve $100,000 from American Rescue Plan Act funds to cover potential state licensing costs. But Rogers told KVPR that money has not been used.
In fact, hospital officials confirmed the state has agreed to defer the payment to keep the hospital’s license active, which was set to expire May 26.
Rogers could not provide a timeline for the hospital’s financial analysis to be complete. The letter from the hospital board to Caballero states the hospital needs at least $50 million to reopen.
But da Silva cautioned: even if the hospital had that amount of money to reopen, it would be back in debt within a short time due to the persistent issue of low rates for Medi-Cal reimbursements which has long been a concern of hospital officials.
On top of that, da Silva’s letter also pointed to a different burden: a California law requiring hospitals to retrofit buildings to be seismically compliant by 2030.
“What good is a $150 million loan program now to prop up many California rural hospitals so they continue to operate at a loss as they careen toward a fiscal cliff in a few short years?”