Fresno-based Community Health System was a suitor for Madera hospital, board member reveals

Fresno-area health care giant Community Health System was one of two hospital operators that sought to acquire the financially distressed and now-closed Madera hospital, The Bee has learned.

Stell Manfredi, vice chair of the Madera Community Hospital board, in an interview with The Bee last week said only Trinity Health, owner and operator of Saint Agnes Medical Center, and Community Health System advanced their interest in acquiring the Madera hospital by providing a letter of intent. Madera hospital officials talked to eight or nine other entities, but they weren’t interested.

Community Health System is the new name of Community Medical Centers, the private, not-for-profit healthcare network based in Fresno that runs four hospitals and a cancer institute along with long-term care, outpatient and other healthcare facilities.

The letters of intent were meant to demonstrate what each hospital corporation would do in Madera and were followed by a “full-blown presentation” to the Madera Community Hospital board. Top officials from each of the two hospital corporations, including CHS Chief Executive Officer Craig Castro, also toured the Madera hospital facilities for about four hours each.

“After much deliberation, unanimously, unanimously, the board of trustees said, ‘We’d like to start negotiating with Trinity,’” Manfredi said. “We did not exclude anybody that wanted to sit down with us, and we are still not excluding anyone that wants to sit down with us.”

The deal with Trinity Health fell through in late December, and on Friday, Madera Community Hospital filed for Chapter 11 bankruptcy.

CHS didn’t respond last week to questions for this story. It wasn’t immediately clear where CHS would have pulled funding from to acquire the cash-strapped Madera hospital. Community Regional Medical Center — the downtown Fresno flagship hospital — is at risk of losing 90% of its acute care beds if its facilities are not brought into compliance with earthquake standards by 2030, a Bee investigation found.

CHS built two new patient towers at its Clovis hospital after those facilities had been planned for years to be built at the downtown campus in order to bring that hospital into state compliance. The towers in Clovis were part of a massive expansion that was funded, in part, with state and federal dollars generated by the downtown hospital for treating Medi-Cal and uninsured patients.

CHS hasn’t reached out again to the Madera hospital, “yet,” Manfredi said. He added that if the hospital corporation reached out to Madera hospital officials again, they “would immediately start a conversation with them.”

Manfredi wouldn’t disclose why the board went with Trinity Health over CHS.

Trinity Health made $15.4 million loan to Madera hospital

Manfredi also discussed the Madera hospital’s dealings with Trinity Health, including a $15.4 million loan that makes Trinity Health the largest creditor in the bankruptcy.

As the Madera hospital began its negotiations with Trinity Health in early 2022, Manfredi said, it became apparent that the process was going to take longer than anticipated. And the hospital was running out of money for payroll and to continue to operate.

“We told Trinity that we are either gonna have to stop this and declare insolvency,” or find another avenue, Manfredi said. “They said, ‘Well, we’ll lend you some money so we can get through the process.’”

The Madera hospital, he said, decided to borrow the $15.4 million with the expectation that a deal would be reached, and the loan would become Trinity Health’s own loan.

“They would have lent themselves the money to keep going,” and Trinity would have acquired the Madera hospital, Manfredi said. “They are not going to pay themselves back, that was just the cost of doing business, the cost of acquiring the hospital.”

Kelley Sanchez, a spokeswoman for Saint Agnes, told The Bee in an email that Trinity Health extended a line of credit in April that was drawn on until November, “at which time they reached the maximum.”

Manfredi said he didn’t want to blame anybody, but California Attorney General Rob Bonta approved the acquisition with conditions, and those conditions pushed Trinity away, causing the agreement to fall “apart at the last minute.” He said everybody thought the agreement was going to go through, otherwise, the Madera hospital wouldn’t have borrowed from Trinity.

Trinity, he said, was going to invest several millions of dollars in the Madera hospital.

But there are other hospital corporations like Adventist Health, Dignity Health and Sutter Health, Manfredi said, who remains hopeful. He said the Madera hospital board has one goal, and that is to get the Madera hospital reopened.

More recently, he said, there’s been talks with people in California and from out of state.

“The board of trustees and our current CEO (want) to get Madera open again, and it doesn’t matter if it’s our hospital, and we find a way to turn it around and we do a turnaround plan, or if it’s another hospital organization that takes it over,” he said. “We want the people of Madera to have the facilities of an acute hospital.”