Bankrupt California hospital closes

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

The hospital, which served mostly low-income patients and was part of Los Angels County's safety net, 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 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 in early January, Gardens Regional's proposed deal with SGM fell apart. On Jan. 17, Gardens Regional's lawyers filed an emergency motion in U.S. Bankruptcy Court in Los Angeles, requesting to close the facility.

According to a report filed in the bankruptcy case by the patient care ombudsman, Gardens Regional sent a request to suspend its license to the health facilities inspections division of the Los Angeles County Department of Health on Jan. 31. The hospital officially closed Feb. 1 after the last two patients were transferred.

The hospital may reopen in the future, as documents filed last week in the bankruptcy case indicate there are two organizations — Promise Hospital of East Los Angeles and Le' Summit Healthcare in Los Angeles — interested in purchasing Gardens Regional's assets.  

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