Palo Verde Healthcare District Files For Bankruptcy

The Palo Verde Hospital District (PVHD) last week filed for Chapter 9 bankruptcy in an effort to stabilize the hospital’s finances while preserving access to emergency and outpatient services in Blythe.

“For months, we have sounded the alarm and pursued every practical avenue for short-term bridge funding from lenders, the county, the state of California and federal partners to avoid Chapter 9 bankruptcy. Those funds have not materialized,” Board President Carmela Garnica said at the October 1 meeting. “With mounting pressure, growing debts and no sign of immediate relief, seeking the protection of the bankruptcy court is the only responsible way to complete a reorganization plan focused on long-term viability.”

According to the bankruptcy filing, the hospital was no longer able to pay its bills as they came due and was diligently seeking to cut nonessential costs while also collecting money owed to the hospital for provided services.

“PVHD only currently provides emergency services with seven available beds, and does not have any in-patient services,” the filing stated. “The majority of the hospital building is currently not operational.”

Both Garnica and bankruptcy attorney Ed Hays, partner at Marshack Hays Wood LLP, stressed that the bankruptcy filing did not mean that the hospital would close.

“The bankruptcy filing is an effort by the district to keep the hospital open,” Hays said at the meeting. “The bankruptcy gives the district an opportunity to try to reorganize its finances and its debts that it owes to various different creditors.”

While questions came up at last month’s Riverside County Local Agency Formation Commission (LAFCO) meeting about whether a bankruptcy filing would impact the agency’s ability to proceed with the dissolution of PVHD, County Executive Officer Jeff Van Wagenen said in an interview with The Riverside Record that it “certainly does introduce a wrinkle into the procedure.”

“My guess is it’s not the first time that an entity that is being dissolved, or being considered for dissolution, has entered bankruptcy, but it does certainly add extra steps,” he said.

While it was not immediately clear how the filing might impact the commission’s decision to start the process of dissolving PVHD and finding a successor agency, Van Wagenen said it did not impact the work currently being done by a large working group to address issues with supplies and cash.

“On the supplies front, Palo Verde Hospital is working on getting us a list and clarifying that list to determine what those supplies that they need are,” he said. “We’re then working with our medical partners on the work group to determine how and if we can meet those demands.”

When it comes to getting the hospital the money it needs to continue operating its limited facilities, Van Wagenen said the working group, which includes a number of county departments and regional agencies, was working with the hospital to collect payments due. He said the group was also working with some of the hospital’s creditors to see if there was a possibility for short-term relief on that end as well.

“The reason why it’s so important for us to look at the immediate, short-term needs of the hospital is there is a feeling amongst the working group…that if the doors close to the emergency department, it becomes almost impossible to open those doors back up,” he said. “So there is a very conscious and intentional effort to try and keep those doors open.”

That concern was highlighted last month when PVHD filed a Worker Adjustment and Retraining Notification (WARN) Act notice with the state that said the district would be closing the hospital November 23 and permanently laying off all staff due to lack of funds. In an email to The Record, Joanna Gonzalez, public information officer for the hospital, said the notice was filed “solely to ensure compliance.”

“There is a lot happening, and we remain committed to continuing healthcare services for the Blythe community while seeking support from state, county, and partner organizations,” she said.

Another potential hurdle for the hospital to overcome is the federal government shutdown, which could cause delays in the processing of claims that might start to impact the hospital in the event of a prolonged shutdown.

“New claims and some reimbursements will be slowed down, so that is something that we’re definitely taking a look at,” Van Wagenen said. “But my understanding is that some of the accounts receivable for the Palo Verde Hospital are not federally reimbursed, but rather from state or from the health plans.”

The next regularly scheduled LAFCO meeting is set for October 16, with the next regularly scheduled PVHD board meeting set for October 29.