Adventist Health and Madera Community Hospital announced today they have begun the first steps toward reopening the shuttered hospital.

The two hospitals approved a non-binding letter of intent for Adventist to take over the hospital. State and local governments had put conditions on a reopening plan being made before rescue dollars would be released to the hospital to reopen it.

The agreement between the two hospitals now allows Madera Community officials to apply for money from California’s Distressed Hospital Loan Program necessary to reopen the doors.

Karen Paolinelli, president of Madera Community Hospital said Adventist Health “truly understands the needs of rural underserved areas.”

“Their clinic expertise perfectly aligns with the work we have passionately pursued for the past 51 years,” she said. “Together, we can significantly and positively impact the communities we serve.”

Formal Agreement Required Before Hospital Can Get State, Local Money

As part of the agreement, Madera Community leadership will apply for loan money from the state, according to a news release from Adventist.

A spokesperson for Adventist Health said the organization did not have details on the amount requested. Kaiser Health News reported that the hospital had requested $80 million of the $300 million available to California hospitals.

A consultant hired by the Madera County Board of Supervisors said the hospital would need at least $30 million from the program to reopen sustainably. It would also need some, if not all, of that money forgiven.

Sixteen hospitals have applied for $385 million, according to Kaiser Health News.

More immediately, the hospital needs $500,000 to operate through August, according to a letter written by Paolinelli to Madera County supervisors.

The hospital spends $500,000 a month to keep the lights on, something Supervisor Rob Poythress said is necessary for the reopening procedures.

Supervisors said they would give the hospital $500,000 of American Rescue Plan dollars so long as a formal letter of intent was signed.

As of this reporting, Poythress said they still have not seen a signed agreement. Supervisors had directed county staff to come back on Tuesday, Aug. 1 with an agreement.

Assemblywoman Esmeralda Soria said finding a serious partner is something state and local leaders have been working toward.

“Although I am aware that it will take time, I remain optimistic that Madera Community Hospital will reopen its doors and be able to provide the critical care that families in our region need and deserve,” Soria said.

Adventist Has Long History With Distressed Hospitals

Kerry Heinrich, president and CEO of Adventist Health said California hospitals are facing many financial challenges, which for independent rural hospitals, “can sometimes be almost insurmountable.”

“If Madera succeeds in getting the financial resources it needs, Adventist Health will provide Madera Community Hospital with the expertise of a large healthcare system, helping to secure a sustainable future for healthcare in Madera County,” Heinrich said.

Adventist Health is familiar with acquiring distressed hospitals up and down Highway 99.

In June, Adventist agreed to purchase the financially-ailing Bakersfield Heart Hospital, according to the Bakersfield Californian. With that addition, Adventist operates four hospitals in Kern County.

Before the pandemic, Adventist Health purchased Tulare Regional Medical Center after managing it for nearly a year. Financial mismanagement put the Tulare hospital into near ruin. A criminal case is still pending against former CEO Benny Benzeevi and a number of other TRMC officials.

In 2011, Adventist purchased Reedley Hospital.

“Losing Madera Community Hospital was devastating for more than 160,000 San Joaquin Valley residents who relied on the hospital for care. I am proud to help reestablish the hospital to continue providing quality, local access to healthcare in this community,” said Andrea Kofl, president of Adventist Health Central Valley Network.

Caballero: Deal Came “Just in Time,” Staffing Will be Difficult

State Senator Anna Caballero said the deal came just in time. Bankruptcy courts have been holding weekly meetings because without a proposed merger, purchase, or takeover, they have been clamoring for a liquidation of the hospital’s assets to pay off debts.

St. Agnes is the biggest creditor to Madera Community Hospital after floating a $15 million loan to the hospital conditional on a takeover. When that deal fell apart late last year, Madera Community became on the hook for that money. They have repaid $8 million of that amount.

Caballero added that a $5 million grant from the state of California may be available to Madera Community again. The state withdrew the money after the hospital closed.

Details of the reopening haven’t been made public yet. The hospital may reopen in stages.

Caballero said the hospital will be hard pressed to get back labor it lost after closing in January. Hospitals compete with each other for the same pool of people, Caballero said.

“You got to recruit people back and assure them you have the wherewithal to continue operating the hospital,” Caballero said. “So they’re going to need to bring back things gradually in stages.”

Madera Community also operated three clinics in Madera County.

If Madera does reopen inside Adventist’s network, that will likely mean access to physicians groups and staff.

“They have experience with rural communities that have large MediCal populations,” Caballero said. “So they’ve got experience with California, they know how to deal with the state and they provide excellent medical care, so I’m excited about it.”