The Brief

Three California hospitals that declared bankruptcy earlier this year are hashing out deals that could bring back or save much-needed health care services for their communities.

Defunct Madera Community Hospital in the San Joaquin Valley, cash-strapped Beverly Community Hospital east of Los Angeles and Hazel Hawkins Memorial Hospital in rural San Benito County are trying to clinch lifelines in deals with health chains that have a reputation for revitalizing distressed hospitals.

The proposals are far from the finish line, but they present a glimpse of hope for residents who face longer journeys to emergency rooms and increased risk when local medical centers close. Two of the three — Madera Community and Hazel Hawkins — are the only hospitals in their counties.

“This is really great news. There will be a number of stages, and the first stage is for (partnering chains) to indicate their interest,” said state Sen. Anna Caballero, a Democrat whose district includes Madera and San Benito counties. “Now there’s a lot of work that has to happen in a very quick period of time.”

Madera Community, which shut down at the start of the year, is trying to secure a management agreement with Adventist Health, the seventh largest health system in the state. As proposed, Adventist would take over operations of the closed hospital and its affiliated rural clinics. If all goes according to plan, Madera Community could reopen in six to nine months.

Adventist Health is also a candidate to buy Beverly Community Hospital in the city of Montebello outside of L.A. That hospital has to secure a deal ahead of a key bankruptcy court deadline this week.

Meanwhile, Hazel Hawkins Memorial Hospital in Hollister recently announced a proposed “lease to own” partnership with American Advanced Management, a company that operates six other California hospitals.

The three are among a handful of hospitals that in the past year or so publicly announced their financial troubles. The state responded this spring with a $300 million interest-free loan program that can provide emergency funds to hospitals. The state is expected to distribute the money later this month. The three bankrupt hospitals have already asked for $125 million.

Saving Madera Community Hospital

The proposed partnership in Madera is largely dependent on Madera Community securing an $80 million loan from the state’s Distressed Hospital Loan Program.

Karen Paolinelli, chief executive of Madera Community Hospital, told CalMatters that while she recognizes the requested amount is substantial, her hospital is the only one that is currently closed. “It is very expensive to reopen a hospital,” she said. “We don’t want to just reopen, we want to be sustainable; we don’t want to be back here in a couple of years.”

Madera is also awaiting another $5 million in state funding that was granted in last year’s budget but placed on hold when the hospital closed.

In a letter outlining its terms, Adventist Health said it will require at least $55 million to fund staffing, supplies, maintenance, training and services in the first year, and another $30 million in the second year. Madera Community Hospital would have to pay Adventist a management fee.

In exchange, the health system would provide its management expertise and personnel to support Madera’s reopening. According to the proposal, Adventist would have the option to purchase the hospital after three years.

Outlines of the Madera Community Hospital sign are partly covered by a tarp at the emergency room entrance on Jan. 2, 2023. Madera County Sheriff Tyson Pogue announced a state of emergency for the county when the hospital closed due to bankruptcy.

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Larry Valenzuela

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CalMatters/CatchLight Local

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Paolinelli said a management agreement is the hospital’s best bet at reopening. It has not found a buyer for a straightforward sale. Paolinelli said she has not discussed with Adventist whether she will stay on as head of the hospital.

Adventist Health has experience reopening closed hospitals. For example, five years ago Adventist reopened and rebranded what was once known as Tulare Regional Medical Center. That hospital is now Adventist Health Tulare.

Obstacles to Beverly hospital’s sale 

Beverly Community, a 202-bed hospital in Montebello east of Los Angeles, filed for bankruptcy in April. It suspended a number of services by June, including maternity, pediatric and outpatient radiology.

The Attorney General’s office last month announced the conditional approval of the hospital’s sale to a Glendale-based chain called American Healthcare Systems. That proposed deal is quickly dissolving.

According to bankruptcy court documents, bondholders raised concerns about American Healthcare Systems’ ability to support the hospital financially. Recent filings show that Beverly Hospital is now exploring an alternative transaction with Adventist Health.

“Given Beverly Hospital’s critically low cash position and as of now uncertainty about state funding (from loan program), the bid from Adventist Health represents Beverly’s greatest chance of continuing to serve the community it has served for the past 75 years,” said Justin Bernbrock, a lawyer for Beverly Hospital.

This month will be key for the hospital. Beverly is losing about $5 million a month and projects to run out of cash by September, court documents show. The hospital applied for $35 million from the Distressed Hospital Loan Program.

On Thursday, the hospital is due to present a deal proposal to a bankruptcy court judge.

Hazel Hawkins takes first step with potential partner

Twenty-five bed Hazel Hawkins Memorial Hospital is San Benito County’s sole hospital. After months of looking for potential partners, management at Hazel Hawkins recently announced that it received a “letter of intent” from Modesto-based American Advanced Management.

The small chain is a private, for-profit company that operates six other hospitals in the state. It’s proposing to lease Hazel Hawkins for five to 10 years before having the option to purchase the hospital.

American Advanced Management has taken over a handful of distressed or closed hospitals in rural parts of the state, according to its website. These include Coalinga Regional Medical Center, Glenn Medical Center and Colusa Medical Center.

Hazel Hawkins is part of a publicly governed health care district, and the deal would need to be approved by the district’s board and by county voters.

Hospital leaders sought a partner that, among other things, “possessed the resources to guarantee a continuum of care delivery for the future needs of our county,” Mary Casillas, interim CEO at Hazel Hawkins, said in a statement.

Hazel Hawkins declared a fiscal crisis late last year, and in May filed for Chapter 9 bankruptcy, but has continued to provide services. Last month, the hospital applied for $10 million from the state’s Distressed Hospital Loan program. If the hospital is approved for this loan, it would be in addition to a separate $3 million loan it received from the state in January.

In its May bankruptcy filings, the hospital said it expected to run out of cash in November 2024. At least one group, the California Nurses Association, has questioned whether the hospital filed for bankruptcy prematurely. The nurses union said it has asked the hospital to explain how it calculates its projections but has not received answers.

According to its financial statements, the hospital reported earnings of just over $2 million in calendar year 2022.

The union represents about 120 nurses at Hazel Hawkins. Filing for bankruptcy, according to the union, has prompted nurses to leave for jobs in other hospitals, leaving staff there shorthanded.

On Tuesday, street safety advocates and families of victims of vehicle collisions demanded that Los Angeles Mayor Karen Bass declare a state of emergency on traffic violence in the city.

Sandra Sanchez Loulakis’s son died last year after she said he was hit by a negligent driver.

“I’ve been struggling just to survive daily,” she said at the news conference organized by traffic safety nonprofit Streets are for Everyone. “This is what happens to a parent when they lose a child.”

The city has seen 8% more fatal traffic collisions this year than during the same period last year, according to LAPD data from the end of August.

Advocates said an emergency declaration would better coordinate resources to respond to traffic fatalities, which have exceeded the rate of homicides for the last three years.

“ This is not a matter of we don't know what to do,” Damian Kevitt, who leads Streets are for Everyone, said Tuesday. “This is a matter of we know exactly what to do. We’re just not making this a priority as a city.”

Kevitt said more than 1,250 people signed an open letter delivered to the mayor and L.A. City Council. One of the demands listed in the letter is for the city to restore transportation department staff.

Earlier this year, the city gave up $100 million in state grants to make streets safer because it did not have the personnel to complete the projects in compliance with state-mandated deadlines.

Draft executive directive on Vision Zero

It appears there had been momentum from the mayor’s office earlier this year to issue an executive directive recommitting the city to its Vision Zero goals of reducing traffic fatalities to zero.

According to emails from May shared with LAist, the mayor’s senior director of transportation told an activist that a draft executive directive was “under review” and expected to be released “within the next three weeks.”

The email was sent to Jonathan Hale, who organizes community members to paint crosswalks where there have been pedestrian-involved collisions.

The executive directive has yet to be released.

LAist submitted a public records request for drafts of the executive directive, but on Sept. 14, the mayor’s office responded saying it could not disclose any records.

“[The records] include drafts and/or deliberative process for which the public interest served in nondisclosure clearly outweighs the public interest served by the disclosure,” the office said.

The mayor’s office has not responded to requests for comment about the draft executive directive.

A new report commissioned by Olympics organizers estimates that the 2028 Games will generate at least $20 billion in economic output across Greater Los Angeles.

The analysis, prepared for LA28 by the nonprofit Los Angeles County Economic Development Corporation’s Institute for Applied Economics, looked at the economic effects of L.A. hosting the Olympics and Paralympics. It includes organizing committee spending, capital investments, publicly funded transportation and security investments, and tourism. 

In total, the report projects that new economic activity across Los Angeles, Orange, Riverside, San Bernardino and Ventura counties could total somewhere between $20.5 billion and $25.4 billion and add around 126,000 and 152,000 jobs to the economy.

A second less conservative methodology employed by the researchers estimates the overall economic output could be even higher, between $35.4 and $40.6 billion and up to 224,000 new jobs.

“ Together, they provide a responsible range, not an exaggerated promise,” Stephen Cheung, CEO of the Los Angeles County Economic Development Corporation, said at a news conference announcing the report on Tuesday. “ If we work together with intention, the Games can leave Los Angeles with more than unforgettable memories. They can leave us with stronger businesses, greater opportunities, and a more connected regional economy.”

Despite the 2028 Games being advertised as a "no-build" Olympics, the biggest chunk of spending laid out in the report is on capital projects, including the $2.6 billion L.A. Convention Center renovation, billions in LAX improvements, major transit projects like Metro ExpressLanes on the 105 Freeway, and venue renovations, such as upgrades to Rose Bowl Stadium.

The report also estimates that around $5.7 billion of LA28’s spending will be in the five county region. LA28 has a $7.1 billion budget and has pledged to keep 75% of its spending in the Greater L.A. area, and put 25% toward small businesses.

“ That economic impact is going to be felt far and wide and across Los Angeles, as well as the Southern California region,” LA28 CEO Reynold Hoover said Tuesday.

The report is the second economic analysis forecasting the effects of the 2028 Games to come out this month. A separate report submitted to the L.A. County Board of Supervisors in early September estimated that the Games would produce more than $13 billion in direct spending and a total economic output of $19.2 billion in Los Angeles County alone.

The same report also laid out the potential uneven distribution of economic benefits to the region, including limited benefits for Olympic venue sites that are not tourist destinations and parts of Los Angeles being excluded from the Games altogether.

HR&A Advisors, the consultant group that put the report together, identified Carson, Pomona, the City of Industry and Exposition Park as locations that are hosting Olympic events, but that could end up being “passthrough areas.”

“Although these areas may be active during the day, they may struggle to capture spending from visitors who pass through but do not spend money outside the venue,” the report states.

The county report also questioned what economic benefits will flow to parts of L.A. County that will be disconnected from Olympic and Paralympic activities, like Antelope Valley and Southeast Los Angeles.

Meanwhile, the analysis found that L.A.’s typical tourist destinations — including downtown L.A., Old Town Pasadena, downtown Long Beach and the Venice Boardwalk — can expect to be active areas for economic activity during summer 2028.

The Palisades and Eaton Fires last year destroyed thousands of homes in Los Angeles County. Thousands more were left standing, but choked with toxic fire residue.

On Tuesday, Gov. Gavin Newsom signed a package of bills that will make California the first state in the nation to establish smoke damage testing and cleaning standards for insurance companies.

Assembly Bills 1642 and 1795 will require insurers to test for smoke damage, cover the cost of cleaning contaminants, and keep paying for a homeowner’s alternative living expenses until the home is found safe to reoccupy.

The California Department of Toxic Substances Control will have until the end of 2028 to develop testing and cleaning standards for lead and asbestos, and until the end of 2029 to set rules for heavy metals and other pollutants.

Reaction to the bill

According to the state Department of Insurance, property owners filed 13,000 smoke damage claims for standing homes after the January 2025 fires. While insurers have covered testing and cleaning in many cases, other homeowners are still unable to return home as they battle with insurance companies over addressing smoke damage.

In a news release Tuesday, the governor and an author of one of the bills praised the changes to state law.

“These new protections will make insurer obligations clearer and give homeowners more financial flexibility when they need it most,” Newsom said.

Assemblymember John Harabedian said: “Science, not an insurance company’s opinions, will determine whether a home is safe.”

Insurance industry groups had opposed shifting rules and regulation away from the state Department of Insurance and to the Department of Toxic Substances Control.

Altadena residents pushed for change

Testing efforts by a group known as Eaton Fire Residents United found that lead, asbestos and heavy metals were still present in homes even after they were cleaned by professional remediation companies. Jane Lawton Potelle is the group’s executive director.

“California is leading the nation in how to recover safely after an urban wildfire,” she said in a news release about the laws’ passage.

Public health officials said smoke from the L.A. County fires was particularly toxic because it emanated from urban areas. The structures that burned often had lead paint and asbestos insulation.

The fires also destroyed cars, appliances and other human-made materials. This created more pollutants than smoke from fires in rural areas, which mainly burn through vegetation.

LAist covered the push to change smoke damage policies in a recent episode of our podcast Imperfect Paradise, which breaks down what these changes could mean for insurers, homeowners and how California adapts to climate change.

For years, California lawmakers and transit leaders have requested billions of dollars from the federal government to temporarily double L.A.’s bus fleet and support public transportation for the 2028 Olympics and Paralympics.

Those calls have grown increasingly desperate in recent months, with Los Angeles Metro saying time is running out to execute its plans.

Now, the transportation agency says that if it doesn’t get a guarantee that the money is secured by the end of the year, it won’t provide the extra buses. Instead, it would leave private Olympics organizing committee LA28 to come up with a new plan.

Metro staff laid out the timeline in a report submitted to the agency’s board that will be reviewed at a special meeting Wednesday.

“Transportation capacity cannot be procured overnight,” Metro wrote in a statement to LAist.

A looming funding deadline

If federal funds don’t materialize in time, LA28 could be left with a major logistical and financial challenge.

Metro, the countywide transportation agency, has thus far led planning for the enhanced bus service, which was seen as the cornerstone of the region’s strategy to get people around Los Angeles during the summer of 2028.

The board report outlines that Metro has, as of May, secured commitments from 28 transit agencies to loan or donate over 1,000 buses and more than 300 personnel to support the enhanced bus service.

In total, Metro has said it needs $2 billion from the federal government for the Games. Approximately half that appropriations request would be used to obtain, operate and maintain 1,750 buses — on top of its existing fleet — for the Olympics network.

Metro said that any additional buses it provides will depend on the amount of money it locks down. The agency told LAist that it needs to make decisions based on concrete funding well before the Games in order to secure the buses, operators and facilities.

LA28 also does not appear to be ready to pay for a temporary bus system, should federal funding never arrive. Its $7.1 billion budget does not include a line item for transit.

This in turn puts the city of L.A. at risk because Los Angeles is the financial backstop for the Games. L.A. and the state of California will cover cost overruns from the Olympics and Paralympics, should they occur.

LA28 CEO Reynold Hoover told LAist on Tuesday that he was not alarmed about Metro's impending deadline.

"[Metro CEO] Stephanie Wiggins and I are working really close together to work with the administration to find the funding," Hoover said. "I'm pretty confident that the administration and the Congress will find funding that Metro needs."

When asked if the Olympics could be put on without a supplementary bus system, Hoover told LAist that a bus program for the Olympics would be a part of the Games "one way or another in some scale or form."

What did Metro and LA28 agree to?

Metro can exit its role orchestrating the Olympics bus system according to a memorandum of understanding with LA28 outlining the parties’ obligations for the 2028 Games.

According to the agreement, approved by Metro’s board in March, Metro is not required to provide additional services beyond its status quo if it doesn’t secure supplementary funding for its enhanced bus service.

The September board report that will be the subject of Wednesday’s meeting outlines that without “funding certainty,” its agreement with LA28 will expire.

“The organizing committee will need to seek another delivery partner for spectator and workforce transportation,” the agency wrote in the board report.

This summer, lawmakers included $875 million for Olympics-related transportation needs in a spending bill that still needs to move through the appropriations process. According to the Metro report, that funding would be covered by rescinding money for passenger rail projects in other parts of the country, meaning it has an uphill battle passing through the legislature.

Jacie Prieto Lopez, an LA28 spokesperson, said in an emailed statement that Olympics organizers were working with Metro to “jointly engage key partners on Capitol Hill and the White House as appropriations and budget decisions are made.”