Madera hospital seeks $80 million loan from new program; 15 other hospitals pursue money, too
The Madera Community Hospital is one of 16 across the state seeking loans from California’s newly created program for distressed hospitals, officials told The Bee this week.
The hospitals are seeking more money than what’s available.
The funding being sought across the 16 preliminary loan applications is more than the $300 million that is available through the new program. Thus far, the total amount combined across all the applications that have been submitted to the state is $385.3 million, said Scott Christman, chief deputy director at the California Department of Health Care Access and Information, which is administering the program.
The Madera hospital alone is seeking an $80 million loan to reopen, Riley Walter, the bankruptcy attorney for the now-closed hospital, said. The hospital submitted its application more than 10 days ago.
Christman confirmed the Madera hospital application is under review.
“How much MCH will receive is currently unknown ...,” Riley told The Bee in an email. “The loan is only one thing needed for reopening.”
Initially, Christman said, only $150 million was allocated to the Distressed Hospital Loan Program from the state’s general fund. But the 2023-24 state budget allocated another $150 million from the Managed Care Organization tax, for a total of $300 million.
The program emerged from new legislation to help nonprofit and public hospitals facing financial hardship, such as the Madera hospital. In order to be considered for loan assistance under the first round of funding, hospitals must apply by 5 p.m. July 31.
Assembly Bill 412 was introduced by Assemblywoman Esmeralda Soria, D-Fresno, in February to establish an emergency loan program for hospitals facing financial difficulties. AB 412 was included in AB/SB 112 to speed up the process for the program, and in early May, state lawmakers passed that bill. It was later signed by Gov. Gavin Newsom.
Soria in April told The Bee that if the legislation to create the program passed, she hoped it would help entice a potential buyer to reopen the Madera hospital.
The Madera hospital has been closed since January. In early March, it filed for bankruptcy.
The process to reopen the hospital will take time, Riley said, even when the loan is approved and an agreement is reached with a suitor.
As of Wednesday, he said, talks were underway with two suitors and possibly a third one.
“The Board is doing everything within its power to engage with a suitor, obtain funding and reopen,” he said. “Getting a suitor is dependent on getting State funding.”
Christman said decisions on the loan determinations are expected in August, but the date is subject to change. The Bee requested a copy of the Madera hospital’s application to the state, but Christman said they are not being released to the public at this time.
“The Department of Health Care Access and Information is currently reviewing the preliminary application,” he told The Bee. “We are not disclosing applications while under consideration. We are considering disclosing applications at a later date.”
When and if the Madera hospital reopens, the hospital’s leadership team would be based on the agreement reached with a suitor.
“Most suitors have said they wish to be in the lead,” Riley said.
In March, two months after the hospital closed, former Madera hospital Chief Executive Officer Karen Paolinelli confirmed she was one of more than 30 employees still drawing a salary but wouldn’t answer questions by The Bee about hospital management practices.
The Madera hospital closed soon after a deal with Trinity Health, the owner of Saint Agnes Medical Center in Fresno, fell through.
After more than a year of negotiations, Trinity Health in late December called off the purchase of the Madera hospital, which had been financially “distressed.” At the time, Trinity Health said given complex circumstances and additional conditions imposed by California Attorney General Rob Bonta, it couldn’t move forward with an affiliation agreement.
For the first half of this year, Madera residents have been without any adult acute care hospital in the county. Madera patients have died while being transported miles away to Fresno and to Valley Children’s Hospital, which has also seen an increase in adult patients since the start of the year.
This story was originally published July 14, 2023 at 2:30 PM.
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