The multitude of issues and incompetence that has resulted in the loss of hospital services for hundreds of thousands of Californians received national attention in a recent Wall Street Journal investigative story, “California Nonprofit Hospitals Turn to Bankruptcy for Leverage Against State.”
“You look at every sector of life in California and the state government is failing,” said California Senate Minority Leader Brian W. Jones (R-San Diego). “First it was a failing school system, failing roads, a failing unemployment department, but now, failing to work with hospitals to provide lifesaving care? That’s low, even for California Democrat elected officials.”
You may recall earlier this year that Madera Community Hospital, serving a largely rural, Latino-majority community in the San Joaquin Valley, closed its doors. The closure occurred after Attorney General Rob Bonta forced complex and unnecessary restrictions on the emergency sale of the hospital that was taking place to keep the doors open. Other hospitals around the state are now facing the same fate, including Beverly Hospital in Montebello.
In the Journal investigative story, the lawyer for Beverly Hospital exposed the issue at hand, saying they had to enter into bankruptcy before the state’s attorney general would work with them. Hospital officials said the risk of bankruptcy “facilitated a dynamic whereby the state attorney general’s office had to come to the table to work with us.”
One in five hospitals currently faces closure due to financial struggles. When the Journal team reached out to the attorney general for comment, his office tried to put the blame solely on hospitals. According to the reporting, instead of taking ownership of the problem, his office said it was the buyer that “‘did not act in good faith’ and dropped the ball.”
“It’s time for Bonta to buck up and come to the table,” said Leader Jones. “It shouldn’t take the impending risk of hospital closures for him to do his job. Californians deserve more than the blame game he is playing with their literal lives.”
Leader Jones partnered with Senator Shannon Grove (R-Bakersfield) earlier this year in introducing Senate Bill 774, the “Save Our Hospitals” bill. The measure would help prevent the California attorney general from imposing unreasonable, unworkable, and unnecessary conditions on hospitals seeking to stay open by merging, or selling to, another hospital. SB 774 is coauthored by the entire California Senate Republican Caucus.
Background:
In January, after years of low Medi-Cal reimbursement rates and the pandemic helping to push the hospital into complete financial ruin, Madera Community Hospital shut its doors. The hospital served a largely rural, Latino-majority community in the San Joaquin Valley. Trinity Health, a potential buyer, stepped in to purchase Madera Community Hospital and save it from closing. However, California state law requires nonprofit hospitals to get approval from the California attorney general for any mergers, partnerships, or agreements with for-profit entities or corporations. Attorney General Bonta forced complex and unnecessary restrictions before the sale, including price rate caps on all hospital services for five years, causing the deal to fall through and the hospital to close.
- SB 774 would have prohibited the California attorney general from putting conditions on hospital mergers, partnerships, or agreements that would:
- Limit or restrict the normal operations of the hospital, such as entering into contracts or setting rates. Have an adverse effect on the financial condition of the continued operation of the hospital.
Impose political conditions targeted at the hospital that were not required in similar mergers in the past.