Madera hospital could reopen with new management partners. What to know
Nearly a year after shutting down operations, Madera Community Hospital has approved a second deal with a financial partner to help it reopen.
The hospital board of trustees approved a temporary management service agreement on Monday with American Advanced Management Inc., a Modesto-based hospital management company. Neither party provided further details Tuesday or a timetable for reopening.
In a news release, AAMI said its “goal is to restore services to the Madera community as quickly as possible.”
Consultants hired earlier this year by the Madera County Board of Supervisors to analyze reopening costs estimated that it would take six to nine months to reopen once an agreement was reached with a system-affiliated operator.
Before it closed, Madera Community Hospital was the only general acute hospital that served Madera County’s 160,000 residents, primarily made up of low-income Latino agricultural workers. Local and state officials and others have feared the hospital would not find a suitable partner and leave the county without access to emergency room services.
The agreement comes days after California Attorney General Rob Bonta asked a federal bankruptcy court to give the hospital more time to find a suitor as the bankruptcy has dragged on for nine months and creditors are growing impatient to be repaid.
Any proposed partnership is subject to approval of the attorney general’s office and a federal bankruptcy judge.
The hospital has struggled to secure a reopening partner since closing nearly a year ago, despite receiving over $50 million in state loan funding to help it reopen.
Last month, the hospital’s would-be reopening partners Adventist Health, a faith-based nonprofit health system operating in California, Oregon and Hawaii, announced they were pulling out of a deal with the hospital because it was “unable to find a fiscally viable solution.”
AAMI has reopened or restored nine hospitals and other community healthcare services over 10 years in California and Texas, including four specialty hospitals and three critical access hospitals. AAMI owns Colusa Medical Center, Glenn Medical Center, Sonoma Specialty Hospital, Central Valley Specialty Hospital, and Coalinga Regional Medical Center, Matthew Beehler, AAMI’s chief strategy officer, told The Bee last week. They currently have management service agreements with Orchard and Kentfield Hospitals and are working towards ownership of these hospitals, too.
AAMI said in the news release that it would eventually plan to acquire Madera Community Hospital.
“American Advanced Management has the vision, experience and resources to reopen our hospital and create a strong future for our community’s health care,” Madera hospital’s Chief Executive Officer Karen Paolinelli said in the joint news release. “They have a track record of successfully reopening and sustaining closed hospitals in California, which uniquely qualifies them to move this forward. We’re excited about their leadership and partnership.”
The selection of the new partner marks a shift in what appeared to be a contentious relationship after the hospital alleged that AAMI tried to improperly influence Paolinelli earlier this year.
In September, Paolinelli and Madera hospital attorneys said in court filings that AAMI leadership tried to “improperly gain a competitive advantage” during the bidding process for a reopening partner when they offered Paolinelli a job and a $150,000 check in May. Paolinelli did not accept the check and reported the incident.
AAMI representatives denied the allegations and said the check was a “signing bonus.”
The proposed deal comes nearly a month after the hospital’s committee of unsecured creditors filed a liquidation plan to kick start proceedings to liquidate the hospital’s assets to repay creditors. A lawyer for the creditor’s committee said the case had been pending for “quite some time” and they couldn’t “sit by and wait any longer.”
Madera Community Hospital closed its doors in late December and filed for Chapter 11 bankruptcy in March, after a deal to sell the hospital to St. Agnes Medical Center owners, Trinity Health, fell through.
Attorney General weighs in
On Friday, the attorney general’s office filed a response to the creditor committee’s plan to initiate liquidation of the Madera hospital in a federal bankruptcy court.
The attorney general is a party of interest in the hospital’s bankruptcy proceedings. All transactions, sales or transfers involving nonprofit healthcare facilities require approval of the attorney general under state law.
Bonta’s office asked the court to give Madera Community Hospital more time to select a suitor in order to help restore “important and necessary healthcare services to the Madera community,” saying that the hospital was in negotiations with two suitors.
After Adventist Health walked away from the proposed deal, the hospital’s lawyer said they were reviewing proposals from two suitors, AAMI and a group called Praise Healthcare LLC.
“The Attorney General therefore requests that the Court allow a reasonable amount of additional time for the debtor in possession (Madera Community Hospital) to try to secure a purchaser that would re-open the hospital and re-start health care services before implementing the process of proceeding to any liquidation plan,” Bonta, Senior Assistant Attorney General Renu R. George and Supervising Deputy Attorney General Neli Palma, Deputy Attorney General Melissa Hamill said in a statement filed with the court.
Local community advocates welcomed Bonta’s efforts.
Patience Milrod, co-counsel representing the Madera Coalition for Community Justice, a party in interest in the bankruptcy proceedings, said in an email statement to The Bee that MCCJ “emphatically supports” the attorney general’s request.
“The human cost of the hospital’s closure is hard to count, and growing every day,” she said. “We support whatever extraordinary measures might be necessary to resuscitate Madera’s only in-county acute care hospital.”
Baldwin Moy, an attorney for community advocacy group California Rural Legal Assistance, said in an interview with The Bee earlier this month that he was hoping the attorney general’s office would get involved in the case.
“If Bonta steps in,” Moy said, “it’s a whole new ball game.”
Moy added that this case can’t be treated as a routine financial transaction because the future of healthcare access for thousands of Madera residents is at stake.
“This bankruptcy proceeding is not simply a transactional affair between creditors and debtor,” he said in an email statement to The Bee on Monday. “The court has an obligation to protect the interests of the Madera community in the long term,” he said.
This story was originally published December 19, 2023 at 7:54 PM.
