The Palo Verde Healthcare District is seeking Chapter 9 bankruptcy protection amid ongoing financial instabilities that could result in the closure of Blythe, Calif.-based Palo Verde Hospital.
“This is an important step since getting the news that we would not be receiving emergency funding from the state of California,” Sandra Anaya, CEO of Palo Verde Hospital, said in an Oct. 1 news release. “One of the advantages of filing for Chapter 9 bankruptcy is that we can continue to operate the hospital and clinic while continuing to negotiate with our creditors.”
The district has faced months of cash flow issues, state loan deferrals and service cutbacks. In late May, Palo Verde Hospital suspended inpatient admissions and surgeries, while its clinic and emergency room remained open. As of Sept. 30, the district had around a week’s worth of cash reserves to operate the hospital.
The filing comes after the district filed a Sept. 24 “closure permanent” California WARN notice for 94 employees, effective Nov. 23.
The notice, written by Ms. Anaya and obtained by Becker’s, said that “the district will be closing Palo Verde Hospital due to lack of funds and will be permanently laying off all employees as a result.”
Potentially affected leadership positions include CEO, COO, CNO, human resources director, revenue cycle manager and director of IT.
“The WARN notices indicate that the action is expected to be permanent; however, they were issued solely to ensure compliance with the requirements of the WARN Act and Labor Code section 1400 et seq.,” Joanna Gonzalez, human resources generalist and district board clerk, said in an Oct. 7 statement shared with Becker’s. “There is a lot happening, and we remain committed to continuing healthcare services for the Blythe community while seeking support from state, county, and partner organizations.”
On Sept. 26, the Riverside County (Calif.) Local Agency Formation Committee voted to begin the dissolution of the district and seek support to restore Palo Verde’s services. The 51-bed facility also received the authority to file for a Chapter 9 bankruptcy petition in mid-July.
“Chapter 9 is the last tool left while we work to fix the financial management challenges that have so drastically impacted the hospital during the past several years,” Carmela Garnica, board president, said in the release. “Our community deserves a functioning hospital. We are doing everything we can to keep it open.”
