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Madera County pitches in to save its only hospital’s license. What that means for reopening

Madera County supervisors unanimously approved setting aside $100,000 in federal COVID-19 recovery funds to help pay license renewal costs for Madera Community Hospital.

Tuesday’s vote came with little fanfare, but has potentially significant consequences for the 106-bed hospital, which closed in January amid severe financial difficulties. The hospital’s license is currently in suspense with state officials as local leaders explore ways to reopen the facility, which was Madera County’s only acute-care hospital for adults before it closed and filed for bankruptcy earlier this year.

The hospital’s license is set to expire May 26, according to Jessica Leon, a principal administrative analyst for the county.

County Administrative Officer Jay Varney said California’s hospital regulatory officials have expressed considerable flexibility on the license expiration as the local facility explores options for reopening. He said Madera County will set aside the $100,000 in American Rescue Plan Act money until the state makes a formal request for the license renewal fee to be paid.

Expiration of the license, Varney added, means that whoever might take over the closed hospital likely would have to start from scratch as if licensing a brand new hospital – a process that might require meeting an entirely new set of requirements compared to hospitals that are already licensed.

“The bottom line is that if it’s going to reopen as an acute-care hospital, that licensing is very important, and I think it would be a reasonable commitment on behalf of the county to pay for that licensing,” Varney told the county supervisors at their May 9 meeting.

According to the California Department of Public Health, licensing and certification fees for general acute-care hospitals are set at $828 per licensed bed. At 106 beds, that would put the license fee for Madera Community Hospital at almost $88,000.

A possible lifeline from the state

The vote comes a day after Gov. Gavin Newsom signed into law the Distressed Hospital Loan Program, a new state program aimed at providing interest-free loans for public and nonprofit hospitals facing significant financial distress. Local government agencies can also qualify for loans to prevent the closure of a hospital or to help reopen a closed hospital.

The bill authorizes up to $150 million from the state’s general fund into the loan program for the 2022-23 and 2023-24 budget years. The loan program would be available through the end of 2031.

State Assemblymember Esmeralda Soria, D-Fresno, and state Sen. Anna Caballero, D-Merced, both hailed the bill as a potential lifeline for Madera Community Hospital and other financially troubled hospitals in the central San Joaquin Valley.

“I am grateful to the governor for prioritizing state assistance so Madera Community Hospital and other struggling hospitals have access to emergency funding,” Soria said Monday. “Reopening Madera Community Hospital has been my top priority this year and (Monday’s) action give me hope towards restoring emergency health care, labor and delivery services, and preventative care access that is critical to the community.”

Caballero said she was “thankful for the swift, collaborative work of my Assembly and Senate colleagues along with the support and work of Gov. Newsom and his team to ensure that our hospitals remain open and able to serve our residents.”

“Madera Community Hospital was financially unable to continue providing services and was forced to close three clinics in rural communities, along with their … hospital,” Caballero added. “Our health care system is in crisis.”

Madera County studies feasibility for hospital’s reopening

In addition to the $100,000 approved on Tuesday, county supervisors voted last week to hire a consulting company to study the feasibility of various options for reopening the hospital.

Force 10 Partners LLC will be looking at business scenarios for an agency or entity to acquire the hospital with the goal of “turning it around and converting it to some hospital health care facility,” said Joel Bugay, deputy county administrative officer. The work will also include an analysis of break-even prospects for various types of services and estimating how much money would be needed to reopen the hospital if a new operator can be found.

The contract has no set amount, but the total cost for the various aspects of the study are estimated to come in between $400,000 and $440,000, Bugay said.

As for possible suitors for the hospital, Varney said there have been “very, very preliminary discussions.” He told The Fresno Bee on Tuesday that he is not able to go into detail on who might get involved.

For now, he said, potential operators are waiting for more detailed information on costs, the potential mix of insurance and other payers for services, reimbursement rates and time delays and more.