Editor’s note: This story was reported by KVPR, a partner of CVJC.
A judge on Tuesday approved a plan by American Advanced Management to operate Madera Community Hospital, capping off a lengthy day of hearings and a year of legal hurdles for the bankrupt hospital.
It was supposed to be a big day for the company all along since it had entered into negotiations to operate the hospital in January. A judge only needed to decide whether to finally approve the company’s management agreement. The agreement already received the support of many stakeholders including the Attorney General.
The approval meant the judge declined a last-minute purchase bid submitted by UCSF Health, Adventist Health and Madera County. Late Monday, attorneys for Madera County filed a motion in court strongly backing the proposal first announced last week that the attorneys described as having “substantially better value and benefits.”
At the hearing Tuesday morning, multiple parties appealed to the judge to delay his decision, requesting more time to review the 11th-hour purchase bid, of which details were not publicly known until the night before.
Although most in the room agreed time is of the essence to restore hospital services, there were signs at first the latest deal would move forward. The California Department of Public Health, the Attorney General’s office, the county and community groups all agreed time was also needed to properly review the new bid.
The proposal by UCSF Health, Adventist and Madera County largely focused on immediately available funding. County attorneys noted the county has already funded over $3 million to keep the hospital’s lights on during the bankruptcy. The new proposal offered roughly $35 million right away to pay creditors and cover fees and a deposit for the purchase.
To try to make their case to the judge, in their filing, county attorneys said the proposal by American Advanced Management did not allow the hospital to “maximize the value of its estate,” and would bar the hospital from considering alternate proposals. Attorneys further argued there was no evidence American Advanced Management had put any money into the hospital or whether they had $30 million or a financing plan immediately available to pay creditors.
Other points raised by county attorneys included that the American Advanced Management deal gave them a right to terminate the transaction for any reason until April 15 and would impose “substantial conditions” before closing. An attorney of the unsecured creditors’ committee told the court, however, the company had waived its right to walk away from the deal if their management agreement was approved Tuesday.
Attorneys for American Advanced Management entered their own court filing on Monday telling the judge they had made progress to prepare for a “rapid reopening” of the hospital, including getting approval from proper agencies, submitting a reopening plan to qualify for a state loan, and assembling a management and administrative team for the hospital.
American Advanced Management officials also told the court they were involved in active recruitment of physicians across specialties to restore services and 24-hour care.
“We’ve been at this for months and we’re at the finish line, your honor,” an attorney for the company said in court Tuesday.
In his ruling, Judge Rene Lastreto said, “the court has not been given any evidence to suggest [American Advanced Management] will not be a good steward for healthcare for the people of Madera County.”
In their announcement last week, UCSF Health and Adventist Health officials had promised their purchase bid would show they were ready to make an offer. However, in court, a member of the unsecured creditors committee stated the financial difference between the two plans was “immaterial,” or not relevant.
Under the UCSF Health and Adventist proposal, officials say it would have restored hospital services in addition to turning the hospital into a teaching facility for medical students in the San Joaquin Valley.
Madera Community Hospital has been closed since December 2022, and has faced setbacks ever since Trinity Health pulled out of a deal to run the hospital. The hospital is the only general acute healthcare facility in Madera County, a region with a population of roughly 160,000 where many rely on state health insurance.
A roughly $50 million loan from the state could still be available to help with reopening costs, but the actual figure from the loan will be determined once a full reopening plan is available.
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