On April 19, 2023, Beverly Community Hospital Association, et al. (a Nonprofit Public Benefit Corporation) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. While under protection of the bankruptcy court, it struggled to avoid closure while hoping to find a buyer.
The hospital secured $13 million in financing to keep operating as it searched for a buyer. Hospital officials said rising costs outpacing government reimbursement rates were to blame for the situation.
More than 90 percent of Beverly’s patients rely on government programs such as Medi-Cal and Medicare. Dealing with the COVID-19 pandemic and the rising cost of labor left the hospital in the red since 2020.
Beverly had unsuccessfully attempted to merge with three systems. Hospital officials blamed the failed mergers on the review process by the California attorney general, according to a Los Angeles Times report.
Fortunately, last week the California Attorney General announced his conditional approval of the sale of Beverly Community Hospital to nonprofit American Healthcare Systems (AHS). Beverly provides critical medical services, including low-cost Medicare and Medi-Cal services, to the community of Montebello in Los Angeles County.
When the hospital filed for bankruptcy earlier this year, it led to a disruption in services such as pediatric care, gynecology, maternity services, and wound care. To help restore these essential services for patients, the California Department of Justice (DOJ) reported that it has for weeks worked actively with AHS and Beverly to put together a successful sale agreement with strong conditions that AHS has committed to fulfilling.
Under California law, the Attorney General has a statutory duty to review all non-profit healthcare facility transactions, including those that go through bankruptcy court. In his review of the potential sale of Beverly,
Under the Attorney General’s conditions, approved by the bankruptcy court, AHS has committed to:
– – Using commercially reasonable efforts to maintain all of Beverly’s current services, including an emergency room, accompanying medical surgical unit, cardiology, diagnostic imaging, laboratory services, and intensive care unit.
– – Ensuring continued access to Medi-Cal and Medicare for eligible patients. Over 75% of the patients served by Beverly are Medicare or Medi-Cal beneficiaries.
– – Using commercially reasonable efforts to reinstate services closed during bankruptcy including, obstetrics, gynecological, and maternity services, pediatrics, breast center, and wound and hyperbaric care.
– – Providing charity care and a notice of financial assistance policy.
– – Providing language access and deaf and hearing-impaired interpreter services.
– – Maintaining a Community Board, including to comment on compliance with conditions in the Annual Report to the Attorney General.
– – Maintaining medical staff in good standing and ensuring compliance with state staffing levels.
For further details of the approved agreement please download a copy of the Attorney General’s conditional approval.
DOJ’s Healthcare Rights and Access Section (HRA) works proactively to increase and protect the affordability, accessibility, and quality of healthcare in California. HRA’s attorneys monitor and contribute to various areas of the Attorney General’s healthcare work, including nonprofit healthcare transactions; consumer rights; anticompetitive consolidation in the healthcare market; anticompetitive drug pricing; privacy issues; civil rights, such as reproductive rights and LGBTQ healthcare-related rights; and public health work on tobacco, e-cigarettes, and other products.