Signs outside Madera Community Hospital explain that the medical facility is closed. With its closure, there isn't a single hospital in Madera County. Omar Rashad / Fresnoland.

What's at stake:

According to its 2022 financial report, Madera Community Hospital lost $11 million in 2022, depleted its $15.5 million in limited use cash and only had $8.6 million in cash reserves.

On Monday, administrators at Madera Community Hospital filed its 2022 financial report to the state of California — five days after Fresnoland reported it was getting fined $100 a day for missing a deadline at the end of January.

The hospital had until Jan. 29 to submit the report, after already having five and a half months to get it in. But it blew past the deadline, instead filing the report on March 6 — 36 days late.

The Madera hospital will be fined $3,600 for not complying with state law, said a spokesperson with California’s department of Health Care Access and Information (HCAI). HCAI will issue a penalty notice to the hospital, which will then have 15 days to pay the fine, or possibly appeal it.

The report reveals that Madera Community Hospital suffered an $11 million loss between July 2021 and June 2022 — its largest annual loss in the last two decades, according to a Fresnoland review of the hospital’s annual financial reports since 2002. 

While hospitals are required to file quarterly and annual financial reports, they are not required to explain what factors played a role in losses or profits. 

The submitted financial report also shows how the hospital had $19.6 million in cash reserves in June 2020. But by June 2022, it fell to only $8.7 million — an amount that’s on the lower end of the hospital’s typical cash reserves over the last decade.  

The report also shows how Madera Community Hospital used up all of its limited use cash — $15.5 million — between July 2021 and June 2022. It’s unclear what the money was used for exactly. 

Out of the $8.6 million it had last summer, it is also unclear how much the hospital still has, but its administrators are hopeful Madera County can help it reopen. At a Madera County Board of Supervisors meeting on Tuesday, county staff recommended the supervisors approve an item to hire a third party — Kaufman, Hall & Associates — to study the viability of the Madera hospital if it was reopened.

“We want to get this hospital reopened, whatever that path will be,” said Stell Manfredi — the vice chair of the Madera hospital’s board of Trustees — at the Tuesday meeting. “I think this will give us options. It’ll talk about the feasibility. It’ll talk about what we really need at the ground level to do this.”

The item would have cost Madera County $250,000, but at the meeting Tuesday, concerns were raised about whether the third party would be objective in its study, along with whether the county, rather than the hospital itself, should take on the cost of bringing in Kaufman, Hall and Associates.

The Madera hospital already spends $900,000 a month to sit idle, ever since it closed down in December 2022. That monthly bill covers security, cleaning and accounting costs, according to a KVPR story published last week. It is unclear whether that monthly bill also includes the salaries of hospital administrators, including Chief Executive Officer Karen Paolinelli, whose annual salary was $341,773 in 2020.

Madera County supervisors Leticia Gonzalez and Jordan Wamhoff voted to approve paying $250,000 to bring on the third party, but supervisors Robert Macaulay and David Rogers dissented. Supervisor Robert Poythress, who is also on the Madera hospital’s board of trustees, was absent, so the vote tallied up at 2-2. The measure failed since it needed a majority vote to pass.  

Regardless of a feasibility report being commissioned by a third party or a new buyer entering the equation, if the hospital reopens, its leadership would have to contend again with all the issues that mired Madera Community Hospital last year, including low private insurance reimbursement rates, poor retention at the hospital, old equipment and requirements to meet seismic retrofitting goals.

California Attorney General Rob Bonta would also have to assess any change in the Madera hospital’s ownership. But two state legislators — senators Shannon Grove and Brian Jones — are trying to cut the attorney general out of the equation after the Madera hospital’s closure. They newly introduced a bill to do so.

On the flip side, California State Assemblymember Jim Wood, who is the chair of the state assembly’s committee on health, has authored a bill to expand the attorney general’s authority in assessing nonprofit hospital acquisitions and require the attorney general to hold public hearings before issuing a decision.

2022 report shows more details on payor mix

The 2022 financial report also shows that Madera Community Hospital did not have an unusual year in terms of the percentage of Medi-Cal patients it served. Between July 2021 and June 2022, about 44% of all its patients were on Medi-Cal — which is California’s version of the federal Medicaid program.

Madera Community Hospital had its largest proportion of Medi-Cal patients between 2016 and 2018, with about 46% of its patients on Medi-Cal.

The Madera hospital, like thousands of health providers across the country, experienced an uptick in Medi-Cal patients starting in 2014, thanks to an expansion of the program’s eligibility requirements that year. Millions of previously uninsured Americans gained health insurance in 2014.

Since the 2014 Medicaid expansion, the percentage of all patients on Medi-Cal at Madera Community Hospital has consistently stayed between about 40% and 46% every year.

The Madera hospital also had 8,232 Medi-Cal patients between July 2021 and June 2022 — which is the highest annual count of Medi-Cal patients for the hospital in the last two decades.

That isn’t far ahead of 2014 numbers, when 8,224 Medi-Cal patients received care at the hospital. However, since 2020, the Madera Hospital has had an uptick in total Medi-Cal patients.

Chief Executive Officer Karen Paolinelli did not answer phone calls from Fresnoland. Questions were emailed to her and Sherrie Bakke, a former Madera hospital employee who is now providing crisis communication and public relations services to the hospital.

Bakke provided a statement from Paolinelli to Fresnoland about how there is a national hospital crisis, how her energy is focused on reopening the hospital and that she is “responding to the demands of preparing for the chapter 11 filing.”

Paolinelli also added how important it is to “engage media resources” but did not directly answer any questions sent over email.

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Omar Shaikh Rashad is the government accountability reporter for Fresnoland.

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