Photo of Madera Hospital by Ben Hensley

Madera’s Affiliated Physician Practice, Inc. (APP) has closed its doors and filed for bankruptcy protection with debts of more than $6.25 million.

“Thank you for allowing us to serve you for the last 7 years. It is with great sorrow to announce that APP has closed their doors,” according to a notice of closure on the practice’s website. “We wish you good health and happiness”

APP filed for Chapter 7 liquidation, which includes the sale of nonexempt property and the distribution of the proceeds to creditors.

According to the bankruptcy filing, most of the practice’s debt is owed to Madera Community Hospital.

Following the closure of APP, doctors at the practice have transferred their patients to new locations throughout the Fresno and Madera areas.

Riley Walter, an attorney with Wanger Jones Helsley PC in Fresno, represents Madera Community Hospital in its own bankruptcy. He said the closure of APP is a result of Madera Community Hospital’s demise. APP and Madera Community Hospital had a management services agreement, meaning that APP was a multispecialty medical group that rendered services. During this time, the hospital loaned money to the practice. When the practice was unable to pay back the loan, the hospital foreclosed and took over the assets.

“In California, a hospital cannot employ a physician,” said Walter. “So, almost every hospital has these kinds of arrangements. It has a physician group that renders services at the hospital.”

As part of the agreement, Madera Community Hospital took possession of patients’ medical records and gaining access to them would have to be requested through the hospital.

KVPR news published a Feb. 24 letter to Madera Community Hospital CEO Karen Paolinelli listing nearly two dozen physicians owed a total of $787,716 by the hospital for services.

The letter was written before the hospital’s bankruptcy filing last Friday with more than $27 million in debt. The filing was expected back in January.

“It is our understanding that [Madera Community Hospital] has delayed its bankruptcy filing and that it has hired personnel to assist with efforts to reopen the hospital,” wrote Madeeha Ashraf, representative for the doctors. “Given this encouraging news, we expect that medical staff members will also be paid what they are owed…without further delay and that these obligations will be given priority as the hospital pays off its debts.

Some of the doctors worked for APP. Walter responded by informing the doctor they may have a bankruptcy claim against the hospital.