Riverside LAFCO accepts MSR on Palo Verde Healthcare District and directs county to lead successor-agency search

The Riverside Local Agency Formation Commission on Sept. 25 accepted a municipal service review of the Palo Verde Healthcare District that found the Blythe-area hospital near insolvency and directed county staff to lead a working group to identify a successor agency and near-term stabilization steps.

The MSR — prepared under Government Code Section 56430 and presented by LAFCO staff — concluded that Palo Verde Hospital had suspended surgical, inpatient and childbirth services earlier in 2025 and had reached a critically low cash position. Gary Thompson, LAFCO executive officer, summarized the district’s financial condition and the statutory determinations the commission must make. “The MSR process did not require LAFCOs to initiate any changes of organization based on any of the findings in the MSR,” Thompson said, adding that the commission must still adopt the determinations required by the code.

Why it matters: Palo Verde Hospital is the only acute-care hospital serving large parts of eastern Riverside County and adjacent desert communities. Riverside County emergency management data presented at the meeting showed the district’s service zone serves roughly 18,000 people and that emergency transports to alternative hospitals would add hours to travel times for high-acuity patients.

Staff findings and options

LAFCO staff and district officials told the commission the hospital had only days of operating cash on hand, had suspended multiple services in May 2025 and faced both revenue and operational problems, including billing and revenue-cycle breakdowns and turnover among finance staff. Lena Wade, general counsel for Palo Verde Healthcare District, said the district “recently sought authority to file chapter 9. We have not yet done so.” Michael Rose, interim chief financial officer for the district, said a Chapter 9 filing had become “the most probable option” given the…