This story was updated Wednesday, Feb. 14, with additional reporting. See more coverage from KVPR on the closure of Madera Community Hospital.
FRESNO, Calif. – A judge on Tuesday approved a plan by American Advanced Management (AAM) to operate Madera Community Hospital, capping off a lengthy day of hearings and a year of legal hurdles for the bankrupt hospital.
It was supposed to be a big day for the company all along since it had entered into negotiations to operate the hospital in December. A judge only needed to decide whether to finally approve the company’s management services agreement. The agreement had already overcome many regulatory, financial and legal hurdles, including receiving the support of Attorney General Rob Bonta, that had stalled previous takeover plans from Trinity Health and Adventist Health.
AAM Chief Strategy Officer Matthew Beehler said following the judgment the company was “Excited, as we have been all along, to reopen this hospital for this community.” Madera Community Hospital CEO Karen Poalinelli made similar remarks.
Questions about last-minute bid for the hospital
The approval meant the judge declined a last-minute purchase bid submitted by UCSF Health, Adventist Health and Madera County. In a motion filed late Monday, attorneys for Madera County strongly backed the proposal first announced last week, describing it as having “substantially better value and benefits.”
During a press conference first announcing the proposal, officials had said it would have restored hospital services in addition to turning the hospital into a teaching facility for medical students in the San Joaquin Valley. However, few other details about the plan were publicly revealed until the night before the hearing.
At the hearing Tuesday morning, multiple parties, including representatives of the California Department of Public Health, the Attorney General’s office, the county and community groups, all appealed to the judge to delay his decision. Although most in the room agreed time is of the essence to restore hospital services, they requested more time to review the 11th-hour purchase bid.
"It is in the public's interest to have more time," agreed Deputy Attorney General Melissa Hamill.
The proposal by UCSF Health, Adventist and Madera County largely focused on funding they could make immediately available. County attorneys noted the county has already funded over $3 million to keep the hospital’s lights on during the bankruptcy. The new proposal offered roughly $35 million right away to pay creditors and cover fees and a deposit for the purchase.
County attorneys also expressed concern that the AAM deal gave them a right to terminate the transaction for any reason until April 15 and would impose “substantial conditions” before closing.
An attorney representing the unsecured creditors’ committee told the court, however, the company had waived its right to walk away from the deal if their management agreement was approved Tuesday. He also stated that due to some technicalities, the financial difference between the two plans was “immaterial,” or not relevant.
Others in the courtroom argued that the proposal by UCSF, Adventist and the county was worth considering because it proposed to make Madera Community Hospital a teaching facility for medical residents and fellows. Some also argued UCSF has a better track record for quality of care and ability to recruit doctors, which the company disputed.
“Those were all anecdotes for a reason,” Beehler said after the hearing. “There was nothing written about that. There was nothing presented about that. There were no numbers about that.”
He also said even under AAM’s reopening plan, partnering with academic institutions was not off the table.
“We are open to any conversations and we are all ears to how we can work together,” he said.
Legislators who had helped bring together the UCSF Health and Adventist Health bid issued a response Tuesday evening, saying that bid would have brought “critical advantages” to healthcare in the region. They were disappointed the judge did not want to wait to consider the new bid.
Judge decided to prevent further delay
Attorneys for American Advanced Management made the case to the judge that they had made progress to prepare for a “rapid reopening” of the hospital, including getting approval from proper agencies, submitting a reopening plan to qualify for a state loan, and assembling a management and administrative team for the hospital.
AAM officials also told the court they were involved in active recruitment of physicians across specialties to restore services and 24-hour care.
“We've been at this for months and we're at the finish line, your honor,” an attorney for the company said in court Tuesday. "We've spent countless hours costing millions of dollars to get to this moment."
There were signs at first that Judge René Lastreto would heed the objections of community groups and agency representatives and would postpone making a decision on AAM’s proposal until more details on the competing bid could be obtained. However, he questioned why UCSF and Adventist waited so long to put forward their bid, and ultimately reasoned that moving forward with AAM’s proposal best served the interests of the hospital, its stakeholders and the community.
“The court has not been given any evidence to suggest [American Advanced Management] will not be a good steward for healthcare for the people of Madera County,” said Lastreto in his ruling. “It doesn't behoove the creditors or the estate to further delay a process that is as far along as it is.”
Representatives of AAM estimate the hospital could be back up and running in four to six months.
Madera Community Hospital has been closed since December 2022, and has faced setbacks ever since Trinity Health pulled out of a deal to run the hospital. The hospital was the only general acute healthcare facility in Madera County, a region with a population of roughly 160,000 where many rely on state health insurance.
A roughly $50 million loan from the state could still be available to help with reopening costs, but the actual figure from the loan will be determined once a full reopening plan is available.
