Healthcare Conglomerate Associates (HCCA) will continue to manage the Tulare Regional Medical Center — at least for now — after a hearing in bankruptcy court Thursday.
Due to the last-minute nature of the hearing, the judge, Hon. Rene Lastreto II, continued any decision to next week; should the contract be rejected, district officials claim a Fresno-based hospital is waiting to take over operations on an interim basis.
Mark Levinson, an attorney representing HCCA, stated that the hospital would continue to stay open and that employees would continue to be paid “on a rolling basis” at least until the next hearing on Thursday, October 19.
The company would also continue to pay critical vendors out of payments that came in to the hospital, but Levinson stated that the company would ensure that it would not pay itself or any of its affiliates, including Dr. Benny Benzeevi, the company’s CEO.
The statements are in contrast to claims in a declaration filed by Kevin Northcraft, the board’s chairman, which state officials with the company threatened to suspend or lay off the hospital’s employees on October 5 and October 9.
Levinson stated that HCCA had not paid itself with the district’s funds since May, and that any attempts for the company to pay itself to compensate for pre-bankruptcy debt would be “legal suicide.”
The two sides have been at a public impasse since the hospital board’s last regular board meeting on September 27, when Dr. Benny Benzeevi, CEO of HCCA, told the board that it had two options: take a loan out to pay HCCA, or close the hospital.
Riley Walter, a bankruptcy attorney representing the Tulare Local Healthcare District, the legal entity which owns the hospital, also requested that the company provide the district with multiple reports on the hospital’s financial position, which Lastreto ordered be provided “as soon as possible,” and at least before next week’s hearing.
Those reports included a ledger of any district cash sitting in HCCA’s bank accounts, a report listing receivables and their aging status, and report on “cash necessities,” such as upcoming payments to critical vendors.
Walter also requested that the company provide the district with a report of cash entering and exiting the district’s accounts on a daily basis, but Levinson stated such reports generally weren’t created by the company.
Walter had also requested that the company allowed representatives of the district access to financial records held at the hospital during the next week.
Levinson stated the access would be a distraction while HCCA continues to try to keep the hospital afloat; officials looking at documents would need someone to accompany them and supervise them, for example.
“We just don’t want them in there,” Levinson said. “Another week isn’t going to change anything.”
He conceded that access to the records was part of the company’s contract with the district, and that they would be willing to provide the district with access in at least a week, but he stated the hospital was too thinly staffed to allow access without causing a distraction.
Lastreto said that while it was within the district’s power to reject the hospital’s contract with HCCA, he didn’t see a clear alternative to their management — especially since the district had, itself, declared a fiscal emergency.
“How can the district take the position that they need to take over when they are in such dire financial straits?” Lastreto asked. “I’m left with no clear alternative.”
Walter countered with a claim that the district had an interim CEO, CFO, an alternative management company, and interim financing in waiting — ready to come in as soon as the contract was terminated.
In his declaration, Northcraft stated the same — and claimed that the specific management company would be a Fresno-based health care provider “of significant size.”
There are two major hospitals in Fresno: Community Regional Medical Center and St. Agnes Medical Center.
St. Agnes is owned by Michigan-based Trinity Health; Community Regional is owned by Fresno-based Community Medical Centers.
Northcraft’s filing did not state which, if either, could potentially partner with the hospital.
The hearing will continue on October 19 in Courtroom 13 of the US District Court, 2500 Tulare St, Fresno.