Outlines of the Madera Community Hospital sign being covered by a tarp at the Emergency Room entrance of the hospital on Jan. 2, 2023. Photo by Larry Valenzuela, CalMatters/CatchLight Local

Officials with Adventist Health confirmed Friday that the Roseville-based health system has struck an agreement to operate Madera Community Hospital, which has been closed since December.

The Madera Community Hospital board has approved a non-binding letter of intent for Adventist Health to manage the hospital. Adventist Health owns four Central Valley hospitals, including the former Tulare Regional Medical Center, which began operating under Adventist in 2018 after it closed due to internal management strife.

The agreement is contingent on several factors, including Madera Community Hospital securing a loan through the state’s newly created Distressed Hospital Loan Program. The hospital applied for an $80 million loan through the program, reported The Fresno Bee, out of $300 million available in the fund.

“California hospitals face many financial challenges, and for independent rural hospitals, these challenges can sometimes be almost insurmountable,” stated Kerry L. Heinrich, president and CEO of Adventist Health. “If Madera succeeds in getting the financial resources it needs, Adventist Health will provide Madera Community Hospital with the expertise of a large healthcare system, helping to secure a sustainable future for healthcare in Madera County.”

The Madera County Board of Supervisors will consider $500,000 in assistance for Madera Community Hospital at its Tuesday meeting, contingent on a signed letter of intent. The weekly payments of $125,000 would go toward keeping the facility in operating condition.

The board commissioned a report by financial advisory consultant Force 10 Partners finding that it could take up to $45 million for a large health system such as Adventist Health to reopen the hospital — a process that could take 6-9 months.

The health system, founded by the Seventh-day Adventist Church, operates more than 20 hospitals and 250 clinics in the Western U.S. Locally, it also operates hospitals in Selma, Hanford and Reedley in addition to Tulare.

“I am thrilled to announce the potential management relationship with Adventist Health, a hospital that truly understands the needs of rural underserved areas,” stated Karen Paolinelli, president of Madera Community Hospital. “Their clinic expertise perfectly aligns with the work we have passionately pursued for the past 51 years. Together, we can significantly and positively impact the communities we serve.”

The Madera Community Hospital board filed for bankruptcy protection in March with more than $27 million in debt. That includes $7 million of a $15.4 million loan from Trinity Health, the operator of St. Agnes Medical Center that originally sought to purchase the hospital before California Attorney General Rob Bonta put conditions on the sale. Trinity walked away from the deal in December.

While Bonta isn’t in a position to put conditions on this agreement, a bankruptcy judge must also approve the letter of intent, said Riley Walter, the bankruptcy attorney representing Madera Community Hospital.

This week’s developments are a positive step toward restoring emergency health coverage in Madera County, according to Adventist’s regional leader.

“Losing Madera Community Hospital was devastating for the more than 160,000 San Joaquin Valley residents who relied on the hospital for care. I am proud to help reestablish the hospital to continue providing quality, local access to healthcare in this community,” stated Andrea Kofl, president of Central Valley Network.