For most of last year, St. Agnes Medical Center, based in Fresno, California, looked like a white knight poised to rescue smaller Madera Community Hospital from financial ruin.<\/p>\n

Now, with the nonprofit Madera, California, hospital bankrupt and shuttered, St. Agnes looms as a dark knight, pushing to liquidate the hospital to get a loan it made to Madera paid back \u2014 even if that means dashing the hopes of the community activists, political leaders, and health care officials that the hospital can still reopen.<\/p>\n

A pivotal moment in the case could come July 25, when a bankruptcy judge in Fresno will hear arguments on whether the Madera hospital should be allowed to spend its dwindling cash reserves on things such as building maintenance, security, utilities, and the salaries of its three top executives.<\/p>\n

The hospital wants to run a skeletal operation while it seeks a buyer and develops a reopening plan. But the federal bankruptcy court in Fresno has authorized it to spend money only through July 29<\/a>. If the judge doesn\u2019t think the hospital has a viable plan, he may refuse an extension, which would likely mean liquidation.<\/p>\n

Problems like Madera\u2019s are common among other small, financially challenged hospitals in California and nationwide. They typically have low patient volumes and rely disproportionately on payments from Medicaid and Medicare, which constrains revenue and makes it difficult to attract talent or invest in cutting-edge equipment. Add to the mix a crushing surge in expenses stemming from the covid-19 pandemic, and dozens of such facilities are struggling to survive. Two others<\/a>, both in California, have filed for bankruptcy this year.<\/p>\n

Yet Madera had problems that were all of its own making. The hospital made money on patients insured by Medi-Cal, the state safety-net insurance program that pays notoriously low rates, according to financial data filed with state regulators. But it lost money on its commercially insured patients due to low volume and bad deals with insurance providers. It also failed to seek covid relief<\/a> funds in a timely manner. A state hospital bailout fund<\/a> came too late.<\/p>\n

Plus, Madera had no backup plan when St. Agnes and its parent company, the hospital chain Trinity Health, walked away from a proposed merger with the troubled hospital late last year, giving virtually no notice and scant explanation. Their move shocked and infuriated officials, former employees, and community advocates in Madera and Sacramento.<\/p>\n

In a brief December press release<\/a>, St. Agnes and Trinity blamed their decision on \u201ccomplex circumstances\u201d and \u201cadditional conditions\u201d imposed by state Attorney General Rob Bonta. But industry experts said Bonta had agreed to most of what St. Agnes asked for and were baffled as to why they walked away from the deal.<\/p>\n

The spectacle of St. Agnes and Trinity now pushing in court for the liquidation of tiny Madera has drawn Bonta\u2019s ire.<\/p>\n

\u201cFor Trinity, it was always about profit, not the health of the Madera community,\u201d Bonta told KFF Health News in a statement. \u201cThey are now attempting to use their position as Madera\u2019s biggest creditor to extract every dollar possible, instead of keeping the community\u2019s interests at heart.\u201d <\/p>\n

Bonta said his office had \u201coffered maximum flexibility to Trinity in recognition of Madera\u2019s financial circumstances.\u201d<\/p>\n

An agricultural area of 2,150 square miles and home to nearly 160,000 people, Madera County is 60% Hispanic, and more than one-fifth of its residents live below the poverty line, according to census data.<\/p>\n

A Community Left in the Lurch<\/strong><\/p>\n

Jennifer Lara, a former Madera Community Hospital nursing assistant, said she and colleagues had been looking forward to positive change after the anticipated merger with St. Agnes. \u201cWe were floored when we found out the hospital was closing,\u201d she said. \u201cWe didn\u2019t think anything other than the hospital continuing on was going to happen.\u201d<\/p>\n

St. Agnes and Trinity declined to comment. The longtime CEO of St. Agnes, Nancy Hollingsworth, retired in May amid a reorganization that made the hospital part of a regional group based in Idaho. It\u2019s unclear whether her departure was related to the collapse of the Madera deal. Hollingsworth could not be reached for comment.<\/p>\n