Coalinga Regional Medical Center has chosen a Modesto-based company to take over the closed hospital with a goal of reopening it next year.
Hospital CEO Wayne Allen said the district board has accepted a proposal by Coalinga Medical Center LLC/American Advanced Management Group to lease the hospital with an option to purchase.
Financial terms will have be finalized, but Allen said he has been “directed to get into some hardcore negotiations.”
Coalinga Medical Center, a limited liability company created by Dr. Gurpreet Singh of Modesto, has proposed a 20-year lease option that includes a five-year option to buy the hospital. Singh is a part of AAMG. AAMG has reopened rural hospitals in other rural communities in California, including in Colusa and Glenn counties.
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Under the Coalinga proposal, AAMG would contribute $6 million to $10 million to reopen the hospital, including the emergency room. It would have an option to buy the hospital for $1 million.
The proposal by AAMG also includes reopening a 99-bed skilled nursing facility that the hospital had operated, Allen said. Patients, most of them frail and elderly, had to be transferred to nursing homes in other cities when the hospital closed.
The Coalinga district board chose the AAMG proposal over a proposal made by Cura Healthcare, a Carlsbad, California, private for-profit company.
Coalinga Regional Medical Center closed June 30, and the board voted in September to file for Chapter 9 bankruptcy protection. The hospital has a debt of about $5 million that it owes to unsecured creditors. The 24-bed hospital employed about 200 people. The closure left the city of nearly 17,000 without an emergency room for 40 miles.
This is a second attempt to rescue the hospital. A plan by Singh and the Modesto-based group to keep the hospital open in June fell apart when the California Department of Public Health would not approve a plan to fast-track a reopening. The latest proposal will be a “total restart,” Allen said. “But it’s going to take several months.”