Palo Verde Healthcare District files Chapter 9; LAFCO to consider dissolution steps in December

Riverside Local Agency Formation Commission staff told commissioners on Oct. 16 that they had received timely notice of a Chapter 9 bankruptcy filing by the Palo Verde Healthcare District and assembled the filing for review.

"We did receive that filing, and it was timely," Executive Officer Gary Thompson told the commission, adding that staff will monitor the bankruptcy court process and coordinate with county and stakeholder partners.

Thompson said there are two steps LAFCO can take now that would not dissolve the district immediately but would set the process in motion: open a public hearing to establish a zero sphere of influence for the district and issue a resolution declaring the commission's intent to dissolve the district. He recommended both items be brought back to the commission at its December meeting for formal action, while cautioning that final dissolution likely must wait until the bankruptcy court resolves actions related to the case.

"It looks like we're gonna have to wait until the bankruptcy court finalizes anything they're gonna do related to the bankruptcy and then the bankruptcy is discharged," Thompson said, explaining the timing constraints.

Two district representatives addressed the commission during public comment. Sandra Anaya, identified by the commission as the hospital CEO, thanked community partners and hospital staff and urged continued collaborative efforts to preserve services in Blythe.

"Your continued commitment and belief in our mission mean more than words can express," Anaya said, noting staff resilience and a desire to restore local physician services and access for residents.

Interim Chief Financial Officer Michael Rose said the district's cash position had improved slightly from earlier reports but remained precarious. "When I spoke last month, I warned that there were only 6 days of cash on hand at the time. As of today, there are 10 days of cash on hand due to an early advance of an IGT from IEHP," Rose said. He added that the district had filed a Chapter 9 petition on Sept. 30 "in an effort to keep the doors open, and continue to provide emergency care in Blythe."

Rose described steps the district has taken to preserve operations, including reworking patient claims and deferring nonessential vendor payments, but emphasized the approach was not sustainable without short-term support or a longer-term solution.

Commissioners asked whether LAFCO had received the required notice (staff said it had) and whether a municipal service review (MSR) might have identified fiscal stress earlier. Staff said LAFCO had accelerated an MSR for health districts after being alerted by the City of Blythe and that a prior scheduled MSR might have shown some financial signals, but the recent financial collapse manifested quickly.

By consensus, commissioners directed staff to return the two items—(1) a public hearing to consider establishing a zero sphere of influence and (2) a resolution of intent to dissolve—for formal consideration at the December meeting. Staff said the dissolution, if pursued, would likely have to wait for the bankruptcy process to play out.

No final dissolution vote was taken on Oct. 16; commissioners framed the actions discussed as preparatory steps and not a final determination on the future of the district or the hospital.