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Bankrupt CA Hospital Shuts its Doors

News  |  By Doug Desjardins  
   January 23, 2017

Gardens Regional in Los Angeles closes after state officials and the potential buyer fail to reach an agreement on a requirement to provide charity care.

This story originally appeared in California Healthfax.

A Los Angeles-area safety net hospital began shutting down last week after state officials were unable to finalize a deal with a potential buyer.

Gardens Regional Hospital and Medical Center in Hawaiian Gardens began shutting down on January 18 after its proposed sale to Riverside-based Strategic Global Management Inc. fell through.

Strategic Global submitted a bid in August to purchase the assets of Gardens Regional Hospital, a 137-bed not-for profit acute care facility, for $19.5 million.

However, Strategic Global was apparently unable to meet the charity care provisions required by the state Attorney General as a condition of the sale.

Lawyers representing Strategic Global filed an emergency motion in U.S. Bankruptcy Court in Los Angeles to close the hospital, citing its "dwindling" cash on hand and no other buyers willing to acquire Gardens' assets as a going concern.

A Gardens Regional Hospital representative said the facility closed its emergency department at 7:00 a.m. on January 18, was no longer accepting new patients, and planned to shut down completely after its current patient base was discharged.

Officials from Strategic Global Management did not return calls seeking comment.

CA Healthcare District Files for Bankruptcy

A January 17 letter from the Los Angeles County Emergency Medical Services Agency notified emergency medical personnel in the area that Hawaiian Gardens would no longer be a receiving hospital for emergency transport.

Gardens Regional filed for bankruptcy in June 2016 and entered an acquisition agreement with Strategic Global in August. In its bankruptcy filing, the hospital cited several factors for its financial problems.

"Medi-cal and Medicare reduced their payment rates in the range of 2.9% to 10% in or after 2010, which whittled down our reimbursement revenues," the filing stated.

Court documents also stated that Gardens Regional needed to generate $119,474 per day in revenue to cover its operating costs but was only generating $91,830 per day.

The facility faced unanticipated operational costs, a decline in bariatric and other surgeries, and difficulties in implementing required changes to electronic health records and in managing patients' length of stay, according to the filing.

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