Palo Verde Healthcare District Files for Bankruptcy
Jesus Reyes
BLYTHE, Calif. (KESQ) – The Palo Verde Healthcare District has filed for Chapter 9 bankruptcy in an attempt to stabilize its longstanding financial struggles and preserve services at Palo Verde Hospital in advance of its planned Nov. 23 closure.
The district’s board of directors voted on Sept. 22 to file for bankruptcy and the petition was filed Tuesday in the U.S. Bankruptcy Court for the Central District of California, Riverside Division.
As reported by News Channel 3’s Athena Jreij, the district began the process of closing the hospital Sept. 24.
The hospital serves Blythe and its surrounding areas, and is more than 90 miles from the next nearest hospital in the Coachella Valley.
The financial stress stemmed from a host of problems, including pandemic-related costs, a cyberattack that halted billing and collections, reduced Medicare funding, Provident Bank seizing about $2.8 million to satisfy its line of credit and a turnover of four chief financial officers.
As of Tuesday, the district had about a week’s worth of cash to operate the hospital, officials said.
“Chapter 9 is the last tool left while we work to fix the financial management challenges that have so drastically impacted the hospital during the past several years.” board President Carmela Garnica said in a statement. “Our community deserves a functioning hospital. We are doing everything we can to keep it open.”
Despite receiving $4 million in emergency assistance from the state in May for payroll and operating costs, the hospital had insufficient funds to sustain the facility and suspended inpatient and services and surgeries.
Chapter 9 will allow the district to continue daily operations while it plans to adjust debts and communicate with employees about any changes.
“One of the advantages of filing for Chapter 9 bankruptcy is that we can continue to operate the hospital and clinic while continuing to negotiate with our creditors,” hospital CEO Sandra J. Anaya said in a statement.
The hospital will close on Nov. 23, with a layoff of 94 employees, according to California Employment Department. Officials notified the state on Sept. 24 to satisfy terms of the Worker Adjustment and Retraining Notification Act, which requires employers to give a 60-day advance notice of layoffs or closures to all employees.
The next steps will be to continue to consult with legal and financial consultants and communicate with everyone involved, the district said.