The Sierra Kings District Hospital board of directors voted Tuesday afternoon to file for bankruptcy protection, a move the interim chief executive says will give the hospital time to dig itself out of a financial hole.
The Reedley hospital has a debt of more than $3 million in bills it owes to vendors.
"Our cash resources are nowhere near that," said Sandy Haskins, who took over operations of the hospital last month as acting chief when the board placed Pamela Ott on unpaid administrative leave pending the outcome of elder abuse charges against her in Kern County.
The hospital plans to file for Chapter 9 bankruptcy protection today, Haskins said. Chapter 9 of the bankruptcy code covers municipalities and other government entities.
The hospital qualifies because it is a taxpayer-supported district hospital established under the state's district laws.
Bankruptcy will allow the hospital protection from creditors while a debt-repayment plan is developed.
Filing Chapter 9 will give the hospital time to improve its performance and collect on overdue payments to the hospital from insurance companies and patients, Haskins said.
The hospital is carrying about $6 million on its books of uncollected payments that are past due, Haskins said.
Sierra Kings has more than 200 employees. Haskins said he would be meeting with employee groups today.
"The hospital is going to continue to operate," he said. "The filing does not mean we're shutting the doors."
Michael Goldring, a Fresno attorney representing the hospital, said Sierra Kings looked at other options including talking with other hospitals about a possible joint powers agreement. But no deals were made.
"And due to the highly competitive health-care market, most hospitals were not willing to enter into an agreement," Goldring said. "This was a difficult decision, but it was the right one."
Trish Johnson, chairwoman of the Sierra Kings Hospital District, agreed that the decision was not easy. But she hopes restructuring will allow the hospital to take advantage of new improvements, including a new emergency room.
"The Chapter 9 filing is imperative to help us bridge the gap that we have," Johnson said. "This hospital is very much a part of the community, and it became more and more apparent to us that we needed to try and keep it."
The hospital has been operating in Reedley for more than 40 years.
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