May 2018 file photo of Tulare Regional Medical Center

published on June 19, 2018 - 12:03 PM
Written by John Lindt

Kaweah Delta Healthcare District sent the board of the Tulare hospital some good news and some bad this week.

The good news is the Visalia district hospital is ready to help, offering affiliation with the shuttered medical center and saying it can help reopen the doors of Tulare Regional Medical Center by the end of this year.

As for the bad news, in a June 18 letter, Kaweah’s CEO Gary Herbst advised that the Visalia district hospital is “not in a position to invest in or loan TRMC the requested $22 million of funds.”

The $22 million figure was included in Tulare’s May 25 Request For Proposals that they sent out to four area hospitals.

In that RFP, Tulare notes “projections indicated a short-term need for a $10 million loan or credit facility to re-open and an additional $12 million need to stabilize the hospital operations. What type of credit and on what terms would you be willing to initially provide?”

In response to the request, Herbst responded that Kaweah would be neither the source of funding nor would it be able to move forward unless Tulare obtained the funds first.

Herbst’s June 18 letter says “We would only move forward with an affiliation if TRMC is able to secure such funds from another source (i.e., the State through the budgetary process or declaration of emergency condition).”

Tulare does have a request pending with the state’s Emergency Services office but Tulare Board Member Kevin Northcraft is not optimistic.”Their initial repose was not very positive,” shrugs Northcraft, despite  a plea from the county Board of Supervisors.

Looking to encourage a longterm affiliation, the Tulare RFP suggests a partner wouldn’t be throwing their money away, arguing that “projections also indicate that an annual operating profit of approximately $8 million can be achieved once the hospital achieves an annual average occupancy of 40 beds” in the 112-bed complex.

The Tulare statement continues ”Offering to provide such assistance will be an essential part of the District’s decision in choosing an Affiliate/leasing partner. Further, the Affiliate’s operating lease could be used to help secure an issue of lease revenue bonds to provide, in part, the financing needed to re-open, re-staff and ramp-up the Hospital’s operations.”

The partner hospital might expect a long term lease (25 years) to spread the investment over time, said Northcraft.

To make the happen there would be a voter referendum on the matter.

Tulare would like to set an October opening date, about  a year after the hospital closed. But in Kaweah’s response Herbst says they would need more time given the state of affairs, long closure and bankruptcy as well as “the manner in which it (the operation) was maintained and managed by HCCA,” the former management team now ousted by the community and under investigation by the Tulare County District Attorney.

Kaweah suggests Tulare work to “secure an extension of the license suspension to December 31, 2018. Kaweah Delta is prepared to support you in this effort and believes that our collaborative efforts can be successful.”

The letter from Herbst adds that “Contrary to what some folks might believe, Kaweah Delta fully supports TRMC’s desire to operate as an acute-care hospital — delivering babies, performing surgery, treating a host of medical and surgical illnesses and injuries and operating a busy emergency department. We don’t see TRMC performing open-heart surgery, neurosurgery or other high-end procedures generally left to tertiary-level hospitals. but we do see TRMC running as a very busy acute-care hospital, helping Kaweah Delta and Sierra View Medical Center meet the healthcare needs of Tulare County residents.”

Northcraft says the Tulare board will meet the week of June 27 to hear recommendations of affiliation now that the four” affirmative” responses have been received.

Given that Northcraft and the Tulare board knew the hurdles a district hospital with their own expensive seismic issues faces — Kaweah’s response is probably no surprise to Tulare.

”We’re kinda in the same boat,”  figures Northcraft.

Northcraft says he would describe Kaweah’s decision of offering no financing “a major obstacle” to an affiliation with them, but added that the Visalia team has been “just great “ to work with, noting that Visalia has taken the brunt of impacts when Tulare residents need emergency care.

Northcraft says some of the other hospitals have offered financing in their response to the RFP, but the details have to be worked out over what security the partner would accept.

“State law does not allow borrowing on hospital buildings” and Tulare’s fitness complex — Evolutions — has a lien on it from HCCA.

The three other potential partners are Fresno’s Community Medical Center affiliated with the Santee medical group, Dignity Health with a facility in Bakersfield and Adventist Health with facilities in Selma, Reedley and Hanford.

Look for some news June 27.

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