Two Valley hospitals are getting a monetary lifeline from the state of California. For one, it may mean enough to reopen. For the other, it may be enough to stay afloat.
The Department of Health Care Access and Information announced on Thursday the 17 California hospitals receiving a piece of its $300 million Distressed Hospital Loan Program. The 0% interest loans were meant to plug the holes left by COVID-19 and declining Medical reimbursement rates to the most financially distressed hospitals.
Kaweah Health in Visalia received $20.75 million after applying for $75 million.
Madera Community Hospital — which closed in December 2022 — received a $2 million bridge loan to cover operational costs. If Adventist Health follows through on its intended takeover of the hospital, Madera Community will receive an additional $50 million — the biggest earmark of hospitals on the list.
State Sen. Anna Caballero (D-Merced) was among the legislators behind the loan program. Two hospitals in her district, including Madera Community, received loans. Assemblywoman Esmeralda Soria (D-Merced) was also among the authors of the bill.
“It brings me tremendous relief to know that Madera Community Hospital and Hazel Hawkins Memorial Hospital, in San Benito County, have received grant awards and will be able to ensure that community members can once again receive services in their own communities,” Caballero said in a news release. “When seconds mean the difference between life and death, we cannot afford to have hospital doors closed.”
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Analysts: Madera Needs Its Loans Forgiven
In July, Adventist Health signed a letter of intent saying it would administer operations of Madera Community.
Shortly before that, Madera County supervisors commissioned a financial analysis of what it would take to reopen Madera Community.
Force 10, the group commissioned for the study, found it would take $44.8 million just to reopen the hospital and operate it for 180 days. That includes rehiring staff and operational costs.
In order to be financially viable in the long run, Robert Minkin, managing partner for Force 10, said the hospital would need at least $30 million. That amount would also need to be a grant rather than a loan.
According to the terms of the state loans, the money can be repaid over 72 months.
Hospital administration is also trying to keep its license active. Madera supervisors granted the hospital $500,000 to keep it open through August. Without that money, the hospital’s license could expire, costing Adventist Health even more should it officially take over operations.
The $2 million bridge loan would go toward that same purpose.
Nearly $21 Million to Keep Kaweah Open
Kaweah Health had requested $75 million from the $300 million fund. In a May interview, Kaweah CEO Gary Herbst had said the hospital really needed $50 million to get back on its feet.
The hospital lost $140 million over the course of the pandemic, Herbst said. Without the ability to perform surgeries, hospital income was limited while at the same time, hospitals paid vastly more for staffing costs.
“A big thank you to Senator Shannon Grove, Assemblyman Vince Fong, and Assemblyman Devon Mathis for their work to make the Distressed Hospital Loan Program a reality,” said Herbst in a statement to GV Wire.
To cover its losses, Kaweah had to use up its cash on hand. The bond covenants issued by Kaweah Health mandate that the hospital never drop below 90 days cash on hand. At one point, the amount had dropped to 62 days.
Herbst said the money will go directly into replenishing their cash reserves.
“We have more work to do, but I’m proud to have led this effort, and am grateful the Legislature and governor moved quickly to ensure vulnerable communities across California have healthcare access when they need it most,” Soria said.
