El Centro Regional seeks $40 million state loan to stay afloat, but will face competition
Imperial County’s largest hospital is seeking a $40 million state loan in its latest attempt to keep doors open.
But the El Centro Regional Medical Center will be forced to compete with other facilities across California that are also grappling with shaky finances: Requests to the $300 million emergency loan program already exceed the available funding.
Sixteen facilities have applied so far for the newly created Distressed Hospital Loan Program, which is offering the interest-free and potentially forgivable loans. Not-for-profit and public hospitals in California that are at risk of closure or experiencing financial distress — or those that have recently closed — are eligible and must apply by the end of July.
Already, more than $385 million has been requested across the state. The Madera Community Hospital, which shut down earlier this year but could reopen under new owners, has requested $80 million alone.
More applications could still come before the July 31 deadline, according to an official at the state Department of Health Care Access and Information, which is administering the program.
El Centro Regional board members voted to apply for the program late last month. CEO Pablo Velez, who took over the hospital in April, confirmed to inewsource last week that its application remains under review.
A city-owned, 161-bed facility, El Centro Regional has been struggling with rising costs and declining revenues since the COVID-19 pandemic. The hospital already received a separate $5 million loan from the state earlier this year, and its latest audit raised “substantial doubt” about whether it can continue operating because it lacked recurring income sufficient to meet operating costs and its debt payments.
Board members also delayed adopting a new budget, saying it needed to “confirm the applicability of the current budget” before passing a new spending plan. The latest proposed budget, set to be considered this week, projects a nearly $10 million net deficit.
The latest finance report showed El Centro Regional had fewer than 20 days cash on hand.
Hospital leaders have attributed the poor finances in part to large spending on travel nurses and a continued trend of county residents going elsewhere, primarily San Diego, for health services. Of those services that are performed in Imperial County, 80% is covered by public health insurance such as Medi-Cal and Medicare — both programs that reimburse hospitals less than the actual cost of providing care.
Officials have hinted at dire consequences if either of the two hospitals in Imperial County were to close. Pioneers Memorial in Brawley has also faced financial problems, though not as severe as that of El Centro Regional. Residents in the county, one of the poorest in the state, would be forced to travel some two hours away if those facilities weren’t available.
Other facilities across the state are struggling, too. A report commissioned by the California Hospital Association earlier this year found that one-in-five hospitals is at risk of closing. More than half are operating at a loss.
UC San Diego Health is temporarily managing El Centro Regional as lawmakers consider legislation from Assemblymember Eduardo Garcia, a Coachella Democrat, that would create a single health care district in the county to govern all the hospitals. Supporters say the new district would save money, deliver better services and keep hospitals open.
But Pioneers officials continue to oppose the bill as written and have raised concerns about voter representation and funding questions. The proposal would leave some cities in Imperial County without a board seat, the hospital said in a news release earlier this month, and may falsely assume that acquiring El Centro Regional is “feasible.”
Pioneers said while it supports the creation of a countywide district, it has improved its finances — yet still faces dissolution under the bill because of claims that El Centro Regional faces “imminent financial collapse.” Pioneers is also preparing to submit its own application for a state loan.
The state is expected to make lending decisions by August.