CEO Message

A Hospital Closes and a Community Suffers 

This post has been archived and contains information that may be out of date.

California starts the new year with one fewer hospital. 

This week, Madera Community Hospital, the only general hospital in Madera County, cared for its last patient

The hospital’s bankruptcy and closure are devastating for Madera County. People who relied on the hospital for emergency care will now have to travel as far away as Fresno, nearly 30 miles from the city of Madera. Farm workers who received health care at the hospital’s rural clinic in Mendota (where the per capita income is less than $12,000) will lose access to basic medical services. Hundreds of health care workers must now find new jobs. 

And hospitals in surrounding communities — many of which are already above capacity — will now be inundated with patients from Madera, leading to longer wait times and additional strain on already-exhausted health care workers. 

Sadly, there could be more cases like this in the coming months and years. Madera is simply the latest victim of multiple financial calamities that continue to threaten hospitals throughout California.  

COVID-19 certainly took its toll, leading to $12 billion in losses for California hospitals, even after accounting for federal relief. And over the past two years, the cost of caring for patients has skyrocketed. Erik Swanson, senior vice president at the nationally renowned financial consulting firm Kaufman Hall, refers to this bleak financial reality as “primarily an expense story.” The numbers bear out his conclusion. Since 2019: 

  • Labor expenses have spiked 16%
  • Pharmaceutical costs have grown by 41%
  • Medical supply costs have jumped 19%

There are even more headwinds. Government health plans like Medicare and Medi-Cal pay far less than the cost of providing care in even the best of circumstances (the state has not increased certain Medi-Cal rates paid to hospitals for over a decade). Now, with inflation skyrocketing, the systemic lack of annual cost-of-living adjustments and no emergency financial relief from the state throughout the pandemic means even greater jeopardy for Californians. 

This is especially true in rural areas, where the American Hospital Association expects an increase in closures following the loss of federal relief funds that were keeping hospitals afloat and the unprecedented increases in the cost of caring for patients. 

Struggling hospitals in California have more limited options for a rescue than in other states. In many cases the best option for a troubled hospital to stay afloat is to partner with another hospital or system. But continued legislative efforts, driven by a perplexing desire to prohibit “consolidation” and an increasingly unrealistic and unworkable approval process through the Office of the Attorney General, have scared off would-be rescuers.  

Back in Madera County, it was just two years ago that Madera Community Hospital celebrated its 50th year serving the rural Central Valley, having been founded by a group of local leaders who saw a need for health care delivery closer than Fresno. 

Now that trip to Fresno or Merced for health care will again become reality for Madera County residents. And if state and federal leaders do not respond quickly to the crisis facing hospitals, even more Californians will find themselves without a local health care safety net when emergencies strike.