RivCo Board Set To Take Further Action To Assist Bankrupt Hospital

RIVERSIDE, CA — Riverside County supervisors are slated Tuesday to review the proposed terms of a loan expansion for bankrupt Palo Verde Hospital, following the Executive Office's decision last week to go ahead with committing a $3.4 million payment to sustain the facility.

A "strike team" previously authorized by the board and composed of medical professionals from the Riverside University Health System initiated a reformation intended to stabilize the Blythe hospital's emergency clinic.

The team's deployment was appended to a $1 million stabilization loan for the hospital. However, on Feb. 24, county Chief Executive Officer Jeff Van Wagenen signed off on a $3.44 million payment to the California Department of Health Services. That disbursement was made without a vote by the Board of Supervisors because the panel was not in session. Executive Office spokeswoman Brooke Federico said the payment covered a Palo Verde Healthcare District obligation to the state's Voluntary Rate Range Program, or VRRP.

Without emergency services at the Blythe facility, the area's roughly 20,000 residents would lose access to "timely treatment for life-threatening conditions where minutes matter," according to a county statement in January.
Outside of the hospital, the nearest option for emergency healthcare is more than 70 miles away.

The "intergovernmental transfer" payment, which Van Wagenen did not mention publicly during the board's previous meeting, has enabled the Palo Verde Healthcare District to tap into taxpayer-backed credit to bolster hospital operations.

"As a result of the county's action, the ... district has already
received approximately $8.9 million in program funds, with the remaining expected in the coming days," Federico said, adding that because of Medi-Cal requirements, "immediate action was required" and could not wait on the Board of Supervisors.

The board will scrutinize the proposed revised loan agreement with the district, under which it would be on the hook for the county's $3.44 million outlay, on top of the $1 million previously authorized for the insolvent hospital.

The supervisors also have been requested to fill two vacancies on the Palo Verde District Board of Directors. The vacant seats have hamstrung the district's ability to convene a quorum to vote on pending actions, according to PVHD President Carmela Garnica.

"In the interest of restoring a fully functioning five-member board, I respectfully request that the county ... complete the appointment process for the two vacant seats," she said in a letter to Supervisor Manuel Perez, whose Fourth District encompasses Blythe.

Under a proposed management services agreement additionally on the agenda, RUHS staff can implement all necessary processes connected to the county's 180-day strike team support plan, with the goal of maintaining emergency operations at the cash-strapped hospital.

"We aren't just here to manage a transition; we are here to support the incredible frontline staff and ensure that every resident has access to the high-quality, stable care they deserve," RUHS CEO Jennifer Cruikshank said last month.

The monetary agreement specifies the county will have "first
priority" status among the healthcare district's creditors and will under no circumstances be liable for any of its debts. The loan structure calls for a roughly nine-month grace period, during which no payments on the loan are required. However, starting in October, initial payment on loan principal will be necessary. A 3% annual interest rate will be assessed beginning January 2027, and the $1 million will have to be fully amortized by October 2031.

At the end of September, the PVHD board voted to seek federal Chapter 9 bankruptcy protection while efforts were made to stanch ongoing financial losses.

Administrators noted the hospital had been struggling to remain afloat since the start of the current decade, with revenue streams withering while patient loads remained unchanged.

The California Health Facilities Financing Authority extended an $8.5 million infusion from the Distressed Hospital Program in 2023, but that turned into a short-term fix, according to the district. Administrators expressed frustration at the time about the inability to recruit a chief financial officer who would stay the course in sorting out possible solutions. Four CFOs came and went in an 18-month span.

Only the emergency room remains open. All other hospital operations have been shut down.

The county's original loan will pay for staff salaries and benefits, pharmaceuticals, equipment purchases, utilities, billing operations and some legal expenses associated with Chapter 9 proceedings.

The possibility of a wholesale county takeover of the hospital's
emergency department has not been ruled out publicly.

City News Service