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A judge has decided who will reopen Madera Community Hospital. Here's how we got here

Judge René Lastreto heard hours of testimony before approving a plan by American Advanced Management to operate Madera Community Hospital.
Kerry Klein
Judge René Lastreto heard hours of testimony before approving a plan by American Advanced Management to operate Madera Community Hospital.

Madera Community Hospital is now on a path to reopening, thanks to a judge’s decision earlier this week. After months of exclusive negotiations between the hospital and Modesto-based American Advanced Management, a federal judge on Tuesday approved of the company’s plans to take over and reopen the shuttered facility. The company estimates the hospital could reopen as soon as this summer.

That’s good news for the people of Madera County, who have been without a hospital since December 2022. And yet, during the Tuesday hearing, many groups were trying to push the judge to delay his decision, and several lawmakers have since expressed their disappointment that the judge didn’t allow more time.

To find out why, KVPR host Elizabeth Arakelian spoke to reporter Kerry Klein, who viewed the Tuesday proceedings from inside the courtroom.

Listen to the interview in the player on this page, and read the transcript below.

ELIZABETH ARAKELIAN, HOST: With KVPR News, I'm Elizabeth Arakelian. Madera Community hospital now has a path to reopening thanks to a federal judge's decision earlier this week. That's good news for the people of Madera County, and yet many groups were trying to push the judge to delay his decision. To learn why I'm speaking to KVPR’s Kerry Klein, who was at the hearing earlier this week. Kerry, thanks for being here.

KERRY KLEIN: Happy to be here.

ARAKELIAN: Okay. So first off, a recap of where we are with this situation.

KLEIN: Right, so Tuesday, a federal judge approved the transition plan from American Advanced Management. That's a Modesto-based company, it already operates many hospitals in California, and they will now be the operator to reopen Madera Community Hospital. This should not have been a surprise. This company has been in exclusive negotiations with the hospital since late December, but there were some question marks. A last-minute offer came in last week. It was a joint venture between UC San Francisco Health, Adventist Health and Madera County. It was not fully fleshed out, but it at least had signaled that it would reopen the hospital fully, plus turn it into a teaching hospital. And so the hearing on Tuesday became a bit of a back and forth about the merits of these two plans and it became you know, pretty heated.

ARAKELIAN: Heated how?

KLEIN: Well for two hours, these two plans were debated. There were lawyers, doctors, health officials, community advocates, all speaking on behalf of one of these two plans. The main request was for more time for this competing plan to get fleshed out. They argued that this new plan had a lot of potential and that it could be better for the hospital in the long term if given a chance.

ARAKELIAN: Okay, so what were the main differences or arguments between these two proposals?

KLEIN: Well, it came down to a number of different main points. One of them was money. One might offer more money off the bat, but another one might have been actually spending a lot of money already so far. So the answer is, they might not actually be all that different in terms of the money they offer, at least not immediately. Then there's the question of quality of care. A lot of health agencies and health officials got up to say that UCSF has this world renowned reputation for its medical schools and for the hospitals that it runs and so it has a better quality of care than this company, AAM. But AAM pointed out none of those speakers actually offered any data or information or hard numbers on that. It was purely anecdotal. And also the idea of reputation was important because perhaps, if the hospital were run by UCSF, these folks were arguing that they wouldn't have any trouble hiring and bringing in talent to the Valley. And then AAM rebutted: yes, but Community Regional Medical Center, which has a partnership with UCSF Fresno downtown, they have had many hiring challenges, especially with the pandemic, so that reputation wouldn't solve everything.

ARAKELIAN: Okay, you mentioned Madera County was a part of that offer with UC San Francisco and Adventist Health. Now your reporting says that Madera County has been financing the cost to keep this building up over the last year, even though it's been closed. They've been paying to keep it potentially operational in the near future once a deal goes through. Didn't they inadvertently kind of take a side by choosing to endorse that UCSF-Adventist proposal?

KLEIN: I don't think it was inadvertent. They very clearly took a side. In fact the Madera County Public Health Director Sarah Bosse got up and testified in support of getting more time for UCSF and Adventist to put together their plan. And then when I spoke to AAM afterwards, an official with them, he did say they've had a very good relationship with the county so far. So this shouldn't necessarily impact how the hospital gets open later on, but it certainly is very interesting that they decided to throw their weight along with this competing plan so late in the game.

ARAKELIAN: So why did that competing offer come in so late? Do we have context there?

KLEIN: No, I think that's a very good question, too. The judge had the same question, especially because Adventist backed out of their own deal with the hospital last fall. And so a spokesperson for the joint venture argued that this was not actually late at all, that this is a way a sale like this should go. There's an offer on the table that becomes the baseline and it's used to leverage better offers, and then you get a bidding war. And he argued that another few weeks of back and forth wouldn't actually matter after 14 months already of being closed. But the judge was not impressed by those arguments, not won over, and ultimately decided that delaying further would do more harm than good financially and from a public health perspective.

ARAKELIAN: So let me recap here because there's a lot of companies and names being thrown around. So Adventist was going to purchase the hospital in November. That fell through, they backed out. Then AAM came in late December and they said they want to purchase the hospital. It's going through a bankruptcy proceeding. In February it arrives at the court and a week before it arrives at the court, UCSF and Adventist comes back and Madera County come back and say, actually, we think the three of us should be operating the hospital, and that is what the judge was parsing through this week.

KLEIN: That's exactly right.

ARAKELIAN: Okay. So where do we go from here?

KLEIN: So, from here on out, most regulatory hurdles with this deal with AAM, most of those are cleared, including it has the approval of Attorney General Rob Bonta. And that approval is what killed the deal with Trinity Health back in 2022 that set this all off in motion. They did not have the approval of the Attorney General at that point. However, this current deal does still need approval from the California Department of Public Health. It's unclear what could come back if they do not approve of this deal. And there's still a couple of financing hurdles, but AAM, the company itself, waived any ability to walk away from this deal for their own reasons. Even if the 50 million dollar distressed hospital loan from the state, even if that does not come through, AAM has waived its ability to walk away from this deal. And they estimate the hospital could be back in reopen in four to six months.

ARAKELIAN: Okay, that was KVPR reporter Kerry Klein staying on top of the story of the sale of Madera Community Hospital. Thanks so much, Kerry.

KLEIN: Thank you, Liz.

Kerry Klein is an award-winning reporter whose coverage of public health, air pollution, drinking water access and wildfires in the San Joaquin Valley has been featured on NPR, KQED, Science Friday and Kaiser Health News. Her work has earned numerous regional Edward R. Murrow and Golden Mike Awards and has been recognized by the Association of Health Care Journalists and Society of Environmental Journalists. Her podcast Escape From Mammoth Pool was named a podcast “listeners couldn’t get enough of in 2021” by the radio aggregator NPR One.