Oroville Hospital and its parent company, OroHealth, have officially filed for voluntary Chapter 11 bankruptcy protection as of December 8, 2023, in the U.S. Bankruptcy Court for the Eastern District of California, Sacramento Division. This decision comes amid ongoing financial difficulties that have plagued the institution for years.
In a statement regarding the Chapter 11 filing, the hospital emphasized its commitment to ensuring a sustainable future. The statement read, “We believe this filing is an important step toward securing the hospital’s long-term future as a vital healthcare provider and employer in our community.” The goal is to facilitate a court-supervised transaction with a partner who possesses the necessary resources and experience to invest in the hospital, thereby preserving its mission for the community’s benefit.
The implications of this filing extend beyond financial numbers. Mayor Dave Pittman expressed significant concern for employees and community members who rely on the hospital for care. He stated, “When one of the city’s largest employers finds it necessary to take this path, the City Council and I are deeply concerned for the wellbeing of every employee whose job may be affected.” He further noted the hospital’s critical role in maintaining the health and stability of Oroville, asserting that the city stands ready to assist in any way that supports positive outcomes for all stakeholders involved.
The hospital’s financial woes are not new. On November 14, 2023, Oroville Hospital announced its search for a partnership or a sale to a larger healthcare entity to address its financial challenges. Despite these efforts, no partner or buyer has been secured thus far. Compounding these issues, on October 1, 2023, the hospital received a notice of acceleration demanding immediate payment of nearly $200 million related to a bond issued in February 2019. This bond was intended to finance the construction of a new five-story tower, which has yet to officially open.
Additionally, Oroville Hospital faced legal issues in December 2024, agreeing to a settlement of $10.25 million with the federal government and the State of California over allegations of illegal kickbacks and false billing claims submitted to Medicare and Medi-Cal. Further complicating matters, a lawsuit exceeding $16 million was filed by Modern-Sundt, the construction company responsible for the hospital’s tower, for unpaid contractor fees.
Despite these challenges, the hospital remains operational during the Chapter 11 process. They have assured the public that patient care will not be compromised. According to their statement, the bankruptcy filing will allow the hospital to maintain its focus on high-quality patient care while working to maximize stakeholder interests. The hospital has also secured additional financing to support operations, employee pay, and vendor obligations throughout the bankruptcy process.
To navigate the complexities of this situation, Oroville Hospital has enlisted the services of Cain Brothers, a division of KeyBanc Capital Markets, to advise on selecting an affiliation partner. The law firm of Hooper, Lundy & Bookman, P.C., will provide special healthcare regulatory and transactional counsel, while Epiq Corporate Restructuring, LLC, serves as the claims agent for the Chapter 11 case.
For those seeking more information about the bankruptcy filing, Oroville Hospital has directed inquiries to email [email protected] or visit their dedicated case website.
As the hospital works through this challenging period, its future will depend on securing a viable partnership that can stabilize its financial standing while continuing to serve the community it has supported for over six decades.
