California hospital to close after takeover deal falls through

Gardens Regional Hospital and Medical Center, a 137-bed nonprofit hospital in Hawaiian Gardens, Calif., is closing.

The hospital, which serves mostly low-income patients and is part of Los Angeles County's safety net, has faced financial troubles for years and filed for Chapter 11 bankruptcy in 2016.

According to bankruptcy documents, Gardens Regional faced more than $30 million in debt as of June and was not generating enough revenue to cover its costs. In court papers, board member David Herskovitz said that although more people have insurance under the ACA, the increase in insurance reimbursement isn't enough to offset the cost of caring for the low-income population that continues to be chronically underinsured or have plans with high deductibles.

In July, Riverside, Calif.-based Strategic Global Management showed interest in purchasing Gardens Regional. In November, the California Attorney General's office said it would approve the transaction if certain conditions were met, including SGM agreeing to provide $2.25 million in charity care annually for six years and paying $2.4 million under the Hospital Quality Assurance Fee program.  

After the California Attorney General denied a request to lower the charity care amount earlier this month, Gardens Regional's proposed deal with SGM fell apart.

On Tuesday, Gardens Regional's lawyers filed an emergency motion in U.S. Bankruptcy Court in Los Angeles, requesting to close the facility.

"With its remaining cash on hand dwindling and no other buyer willing to acquire Gardens' assets as a going concern, the debtor has determined in its best business judgment that it must close the hospital," the motion reads. 

Although a hearing on the emergency motion is set for Thursday afternoon, the hospital began shutting down Wednesday morning. The Los Angeles County Department of Health Services sent out a letter stating Gardens Regional will close its emergency room at 7 a.m. Wednesday, according to the Los Angeles Times

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