Kern LAFCO approves East Kern Healthcare District sphere of influence, annexation and MSR; protest hearing to follow

The Kern Local Agency Formation Commission on Sept. 17 approved a package of actions to expand the East Kern Healthcare District to encompass Ridgecrest and Ridgecrest Regional Hospital, clearing the way for a formal annexation process but preserving the public''s right to file protests.

The commission voted to approve the sphere of influence amendment for East Kern Healthcare District (agenda item 18-37), to approve annexation number 18-38 to bring roughly the area that includes Ridgecrest and the hospital into the district, and to adopt the municipal service review (agenda item 18-39). All three items passed by roll-call vote.

The measures are intended to let the nonprofit Ridgecrest Regional Hospital seek improved reimbursement and funding streams available to a district-operated hospital, while also providing a path for local residents in the annexation area to vote for district board members.

Executive Officer Mark Knox told the commission the request began in March 2023 after Ridgecrest Regional Hospital accumulated pandemic-era debt and sought mechanisms to stabilize its finances. Knox said district and hospital leaders arrived at an approach that would expand East Kern Healthcare District'which currently owns leased health-care properties and has limited staffing'to include Ridgecrest and the hospital facilities. He described a revised concept in which the hospital would retain facility ownership, the district would become the licensed operator and the hospital would operate services under a management agreement.

"This proposal does not fully resolve Ridgecrest Regional Hospital's financial challenges," Knox said, adding that the hospital has signed a funding agreement with the Navy and developed a financial turnaround plan included in the municipal service review.

The commission emphasized that approving the sphere of influence and MSR does not itself transfer ownership or make the hospital part of the district. Commissioner Flores said the action "is the beginning stages of a possible partnership" and that any annexation would include public notice and a protest process.

Hospital consultant and interim executive Thomas Hayes told commissioners that becoming a district hospital could unlock intergovernmental transfers and additional state and federal reimbursements, an estimate previously calculated at roughly $3.5 million to $4 million annually (an estimate from about 18 months earlier that participants said may change with recently enacted legislation). Hayes said the projected additional funds would be federal and state reimbursements (intergovernmental transfers), not private-insurer payments.

Several Ridgecrest residents and East Kern Healthcare District board members spoke during public comment. Jessica Rojas, an East Kern Healthcare District board member, said the district currently has no general manager and no part-time staff member and asked that the Commission allow local board members time to review materials. "As a board member, I would like to possibly have some of these votes tabled a little bit more until our board of directors are able to review this," Rojas said.

Others including Renee Westelusk and Sandra Van Scoter urged the commission to move forward, saying the hospital is in "dire straits" and that annexation offered the best chance to sustain services. Community activists from California City and Ridgecrest spoke in favor of the annexation as a partnership that could preserve emergency and ambulatory services.

Knox said there will be a formal protest hearing in Ridgecrest and that notices will be mailed to landowners and registered voters in the annexation area. Because the commission received opposition, it did not waive the protest hearing requirement under the Cortese-Knox-Hertzberg Act.

Actions recorded in the meeting package require further steps: if the annexation moves forward after the protest period, district and hospital leaders will negotiate the exact operating and management agreements and the district will seek state licensure to operate a hospital. Commissioners and speakers repeatedly noted that the hospital has not yet formally agreed to become part of the district and that any change in operational control would be a later, separate action.

The commission's approvals were conditioned on the executive officer's recommended provisions and did not increase local taxes; Knox and Hayes said neither the district nor the hospital is asking for additional property tax allocations at this time.

The commission directed staff to proceed with notices and the protest process; a hearing in Ridgecrest was noted for October as part of the annexation sequence.

Votes at a glance

- Agenda 18-37: Approve sphere of influence amendment to East Kern Healthcare District (motion passed, roll-call: Commissioner Ayone Aye; Commissioner Clark Yes; Commissioner Endicott Aye; Commissioner Flores Yes; Commissioner Fowler Yes; Commissioner Gonzales Yes; Commissioner McKibben Yes; Commissioner Saragosa Aye.)

- Agenda 18-38: Approve annexation number 18-38 to East Kern Healthcare District (motion passed; roll-call recorded as unanimous/"all ayes").

- Agenda 18-39: Adopt East Kern Healthcare District municipal service review (motion passed; roll-call recorded as unanimous/"all ayes").

Why it matters

If the hospital later becomes a district-operated facility and the district assumes provider agreements, the hospital may be eligible for additional intergovernmental reimbursement and grant funding not available to a nonprofit hospital. That revenue could materially affect the hospital's finances and service capacity for Ridgecrest and the Indian Wells Valley, which also supports nearby military operations.

What happens next

The commission's approvals start a formal process that includes mailed notices, a protest hearing in Ridgecrest and follow-up negotiations between the hospital and district on a management and licensing agreement. The public will have a chance to file protests before any annexation is finalized.

Sources: Kern LAFCO staff report and public comments at the Sept. 17 meeting.