$57 Million in California Aid Helps Reopen Shuttered Madera County Hospital

A California hospital that left a county of 160,000 people without critical emergency care when it shut down 13 months ago took a significant step toward reopening last week, and it could begin accepting patients as early as this summer.

That’s good news for the residents of Madera County, but the court-approved deal to revive the hospital elicited mixed reactions among some San Joaquin Valley leaders who wanted a different option.

A bankruptcy court last week approved a bid from a Modesto-based hospital management company, American Advanced Management, Inc., to take over and reopen Madera Community Hospital.

That decision effectively shot down a last-minute proposal from industry powerhouses UCSF Health and Adventist Health. Several lawmakers from the region had endorsed the UCSF-Adventist plan and said in written statements after the bankruptcy hearing that they were still pulling for that proposal.

The hospital’s reopening is close but not quite a done deal. Madera County and other parties have another week to appeal the decision. The California Department of Public Health also must approve the hospital’s change-of-management application.

The Madera hospital’s closure alarmed the Legislature last year, leading it to create a $300 million bailout fund for financially distressed hospitals. The Madera hospital is eligible for $57 million from that fund.

American Advanced Management has submitted its management plan to the California Department of Health Care Access and Information to unlock that money. The department said it is still reviewing the application.

Matthew Beehler, chief strategy officer at American Advanced Management, said that pending these approvals, the hospital will be on track to reopen within 4 to 6 months. The company has committed $30 million on top of what the state will chip in to reopen the hospital.

“Our focus has always been on reopening this hospital as quickly as possible to improve the health and lives of community members,” he said in a written statement after the bankruptcy hearing.

11th-hour bid for Madera hospital

After months of scrambling to find suitors, Madera Community Hospital entered negotiations with the American Advanced Management last fall. Then, earlier this month, UCSF Health and Adventist Health announced that they, too, were interested in taking over the hospital and that they’d team up to enter a bid.

For months, lawmakers representing the Madera area pushed for the UC Health system to take over the hospital with the idea that it could bring much-needed resources to the valley. In a press conference earlier this month, they called the proposed UCSF and Adventist partnership “a dream come true.”

But the UCSF and Adventist bid came too late. Judge René Lastreto of the U.S. Bankruptcy Court for the Eastern District of California said during last week’s hearing that it didn’t “behoove the creditors or the estate to continue to delay this any further” by entertaining the new proposal.

Democratic lawmakers Sen. Anna Caballero, Assemblymember Esmeralda Soria and Assemblymember Joaquin Arambula said they were disappointed the court didn’t give UCSF and Adventist more of a hearing.

“We hoped that the court would have granted UCSF, Adventist Health, and Madera County the opportunity to move forward and provide a full presentation of their joint venture to purchase and reopen Madera Community Hospital — to show what it could mean immediately for the residents and the long-term viability of this hospital for the region,” they said in a written statement.

Reopening in sight, but no maternity ward

American Advanced Management plans to reopen the hospital with an emergency room, an intensive care unit, medical imaging and a laboratory, but it will not immediately reopen labor and delivery, Fresnoland first reported.

That means pregnant patients will continue to travel to Fresno or Merced counties to give birth. Maternity wards in California are closing at an accelerated pace. Last year, in addition to Madera Community’s total closure, 11 other hospitals terminated their maternity services.

Beehler at American Advanced Management said the company decided not to reinstate a maternity ward because obstetrics is a resource-intensive department that is poorly reimbursed. Other hospitals have released similar statements when announcing the elimination of labor and delivery.

“Reopening maternity would be like reopening two hospitals at the same time,” Beehler said.

Madera Community Hospital delivered 735 babies in 2022 and another 720 in 2021. The county has a slightly higher birth rate than the state’s at 57.9 births per 1,000 women.

Beehler said the company plans to provide prenatal services through the hospital’s clinics.

Quick hiring key to reopening

Sara Bosse, Madera County’s public health director, told the court last week that a critical element to the hospital’s reopening is how soon a new operator will be able to hire the necessary staff. She said that UCSF and Adventist could more easily attract providers to work in Madera.

“A physician that is looking for a position and is actively being recruited they probably would consider a position with UCSF before they would look at a position with an entity they may have not heard of before,” Bosse later told CalMatters.

Lawyers for American Advanced Management argued there was no evidence that the smaller hospital operator would have any trouble hiring staff. American Advanced Management is known for buying and managing distressed facilities in largely rural parts of the state. It operates hospitals in Colusa, Glenn and Coalinga.

Securing a strong workforce is critical, especially in an area that has long struggled with a shortage of primary care providers and specialists (PDF) compared to wealthier parts of California.

“All of those things have to happen pretty quickly in order for any organization to open up a hospital and get it to a place that’s solvent,” Bosse said. “Both bringing on workforce and attracting patients.”

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.