LAFCO Talks Next Steps For Palo Verde Hospital

The Riverside County Local Agency Formation Commission (LAFCO) Thursday discussed how to move forward after the board voted last month to dissolve the Palo Verde Healthcare District (PVHD).

“Even though we’re taking these initial steps, doesn’t mean the hospital’s closing,” LAFCO Executive Officer Gary Thompson said at the October 16 meeting. “That’s down the road.”

Michael Rose, interim chief financial officer, told the commission that the district currently had 10 days of cash on hand, an increase from the last LAFCO meeting when he said the district had roughly six days due to increased payments coming into the hospital.

“Although this strategy has worked since May, this is a precarious position to operate a hospital in, one that is fraught with risks,” he said. “As these risks continue to accrue with no discernible short-term assistance and very low cash balances, the district exercised its ability under a board resolution to file a chapter nine bankruptcy petition on September 30, in an effort to keep the doors open and continue to provide emergency care in Blythe.”

Thompson said that the district’s bankruptcy filing would require changes to the process, since the case was now being handled in bankruptcy court, but that it wouldn’t change the goal of keeping the hospital operating as best as it can.

“[The court] can’t go in there and run the hospital, but certainly they’ll be making decisions that may affect some of the things that are going on,” he said. “We’ll just have to see how that plays out.”

In looking into the rules governing the dissolution of a special district, Thompson said he found that the commission had previously dissolved a healthcare district, Valley Health System, in 2020 under similar circumstances.

“That one took 10 years to get from when it actually closed until it actually got dissolved, because, again, they had things to wrap up, including litigation and things like that,” he said. “We don’t know how this one’s going to go right now.”

The first steps, he said, would be to establish a “zero sphere of influence,” meaning that the district would no longer have a physical area that it serves, and to issue a notice of intent to dissolve the district. Both of these items, Thompson said, would be brought back to the commission in December.

“It does not initiate the actual dissolution of the district, that will come later,” he said, noting that the bankruptcy case would have to be resolved before any final action could be taken. 

“We’re going to have to be in a wait and see mode, and just keep monitoring the situation and periodic updates to the commission as to what’s going on out there and whatnot, and see where that goes,” he said.

Rose the situation was “years in the making,” even though the impacts had just started to manifest over the past few months.

“Our already limited, yet dedicated, staff continue doing their best under very difficult circumstances with the shared vision of keeping services in Blythe, while recognizing that the future of the hospital will likely look very different than it has in the past,” Rose said. “Please be aware that as much time, effort and collaboration is being given to support operations.”

Palo Verde Hospital Chief Executive Officer Sandra Anaya thanked the commission and the county for supporting the district as it grappled with the situation while ensuring the hospital could continue to provide emergency care to the community.

“At the end of our day, our goal is not merely to save a hospital, it is to protect the health, the hope and heart for deserving members,” she said.

The commission also approved a conflict of interest waiver creating a boundary within the Office of County Counsel to prevent any potential conflicts of interest related to the dissolution of PVHD since both LAFCO and the county are represented by the office.