California hospital files for bankruptcy after missing payroll

Tulare (Calif.) Regional Medical Center, a 112-bed hospital managed by Tulare-based HealthCare Conglomerate Associates, filed for Chapter 9 bankruptcy Saturday.

The hospital filed for bankruptcy a few days after HCCA, which is paid by the local hospital district, said it was done footing the hospital's bills. "HCCA provided substantial revolving funding to the hospital over the years, to a cumulative total of $14 million," Benny Benzeevi, MD, chairman and CEO of HCCA, said at a board meeting Sept. 28, according to the Valley Voice. "But in light of the current destructive political environment, HCCA will not continue to do so."

Tensions have flared between HCCA and the hospital district's board since last year, and that battle is partially to blame for a recent credit rating downgrade by Fitch Ratings.

On Sept. 29, less than 24 hours after Dr. Benzeevi declared HCCA would no longer provide financial support for the hospital, several nurses and other staff walked off the job after not being paid. HCCA said a cash shortage by the hospital district was the reason it was unable to fund the entire payroll.

Tulare Regional Medical Center's bankruptcy petition revealed the hospital has zero cash in its bank accounts. The cash shortage poses a risk to public health and safety, as the hospital does not have the funds to purchase adequate medical supplies and "critical vendors" have discontinued service to the hospital due to lack of payment, according to bankruptcy documents.

Chapter 9 bankruptcy is a bankruptcy proceeding that offers distressed municipalities protection from creditors while a repayment plan is negotiated.

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