Madera Community Hospital in California’s Central Valley, which ceased operations last December and filed for Chapter 11 bankruptcy in March, took a step closer to reopening on Thursday as the new California fund for troubled hospitals said it was willing to buy the facility. offer up to $52 million in interest. -free loans.

The program provides an additional $240.5 million in interest-free loans to 16 other troubled hospitals, including Beverly Community Hospital in Montebello and Hazel Hawkins Memorial Hospital in Hollister, both of which filed for bankruptcy earlier this year.

hazel

Hawkins will receive a $10 million loan, and Beverly will receive a $5 million bridging loan as it is bought out of bankruptcy by Adventist Health’s White Memorial in Los Angeles, according to the US Department of Health Care Access and Information.

Adventist Health has also conditionally agreed to manage Madera when it reopens. If all goes well, the reopening will take six to nine months, officials say.

Madera will receive a $2 million bridging loan to cover basic costs, while Adventist Health, a large multistate health care system with 22 California hospitals, is working on a comprehensive hospital turnaround plan, the department said. Once such a plan is approved, Madera could qualify for an additional $50 million loan from the ailing hospital program, the report said.

For most of last year, the Fresno-based St. Agnes Medical Center, part of the major Catholic hospital chain Trinity Health, looked poised to save Madera Community Hospital from financial ruin through a planned acquisition approved by California.

Attorney General Aty. Gene.

Robert Bonta. But Trinity backed out of the deal at the last minute with a scanned explanation, infuriating Bonta along with multiple other political leaders, community advocates and health care officials.

Trinity, which had loaned Madera $15.4 million during their merger talks, became the largest creditor in the bankruptcy that followed. At the time of its bankruptcy filing in March, Madera reported total debt of just over $30 million.

Adventist Health last month agreed to a non-binding letter of intent to manage Madera. At the time, Adventists president and CEO Kerry Heinrich said that if the closed hospital received the required funding, Adventist Health would use its expertise to secure a sustainable future for the county’s healthcare system.

Adventist Health spokesperson Japhet De Oliveira said Thursday that his organization continues to plan to do so. Reopening Madera would be a really good thing, and we will do everything we can to make that happen, De Oliveira said. He added: We will need all parties to be involved in developing the approved plan and negotiating the terms of the management services.

Karen Paolinelli, the CEO of Madera Community Hospital, did not respond to email inquiries at the time of publication.

The political state leaders representing the region expressed their satisfaction with Thursday’s news. It gives me immense relief to know that San Benito County’s Madera Community Hospital and Hazel Hawkins Memorial Hospital have received grants and can help community members receive services in their own communities again, said Senator Anna Caballero

(D-Salinas), a Democrat

representing the areas in which these facilities are located.

The Adventist letter of intent for Madera stated that in addition to paying off creditors in the bankruptcy, the hospital would need to secure $55 million in the first year to pay for all aspects of the reopening, plus an additional $30 million in the second year .

The $52 million the state wants to loan to Madera is significantly less than the $80 million the hospital has applied for. Assuming the full $52 million is realized, the total loan amount to the 17 hospitals would be $292.5 million, nearly the full $300 million available to the fund for fiscal years 2023 and 2024. The program will move to expected to end after 2031.

With $52 million from the state, Madera Community Hospital should find another $33 million. Madera said in a bankruptcy filing earlier this year that it expects just over $33 million in revenue from carrier fees and from the Federal Emergency Management Agency.

The law that created the emergency hospital loan fund, AB 112, initially provided $150 million in loans to help distressed hospitals, especially in rural areas, that were at risk of closing. Later, another $150 million was added to the pot. Small hospitals across the state and across the country have suffered from the bad economic winds of the

COVID covid

19 pandemic, which increased the cost of medicines, supplies and labor.

Hospital industry officials have also pointed to the low payment rates of government programs, particularly Medi-Cal, California’s Medicaid program, which they say has saddled many hospitals with financial losses.

Madera made the same argument, but the state records show

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it received enough additional payments to earn nearly $15 million from Medi-Cal in 2021, even though it lost more than $11 million treating Medicare patients.

The hospitals that received the largest loans from the distressed hospital fund are the Tri-City Medical Center in Oceanside, with $33.2 million; Dameron Hospital Ass

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in Stockton, with $29 million; Pioneers Memorial Healthcare District in Imperial County, with $28 million; and El Centro Regional Medical Center, with $28 million.

This article was produced by

KFF Health News

a national newsroom that produces in-depth journalism on health issues.