A Central California hospital district sought bankruptcy protection, a few months after shutting its operations.
The Coalinga Regional Medical Center District filed for Chapter 9 bankruptcy in federal court Sept. 9, after the hospital board voted Sept. 5 to take that action, said Wayne Allen, hospital CEO/administrator.
“It’s a situation of many small rural hospitals across America: declining volume and then the infrastructure of fixed expenses it takes to operate a hospital,” he said. “The expenses exceed the revenues when you have declining volumes.”
The hospital has $5 million in unsecured short-term debt and $12 million in long-term bond debt, Allen said.
The unsecured creditors are not being paid but bond payments, secured by a property tax assessment, will continue to be made, he said.
The district issued $13.6 million in refunding and capital improvement bonds that have a 2043 maturity date.
The elected hospital district board adopted a resolution declaring a fiscal emergency. The resolution stated that the hospital will be unable to pay its obligations within 60 days.
The Coalinga Regional Medical Center District hospital ceased medical services in June and shut its nursing facility in July after announcing that it had faced increasing financial difficulty over the past two years.
“CRMC has struggled with multiple challenges and is no longer financially sustainable as an independent hospital,” officials said in a May news release.
The closure of the hospital left the city of 16,000 about 40 miles from the nearest emergency room.
The hospital had 24 in-patient beds and 99 skilled nursing facility beds. Its services included an emergency room, physical therapy, rural health clinic and other departments. It had about 200 employees who have been or will be laid off.
Allen said the hospital board hopes to use bankruptcy protection to reorganize and reopen in some fashion. One option is to reopen with a “strong out-patient model,” he said.
“I’m continuing to look for business affiliations or purchases,” he said. “That activity is underway and continues to be underway. It takes a long time.”
