Kaweah Health paid more than $200 an hour for nurses during the worst of the pandemic’s upheaval. Pay rates have eased, but the Visalia, CA health system’s financial struggles persist.
High labor costs and financial losses have put Kaweah afoul of lenders, who demanded $18 million of its dwindling reserves as a guarantee for bondholders. To preserve cash, Kaweah closed a diabetes clinic and a nursing home that lost money. It hasn’t been enough to recover. Kaweah plans to ask the state for a loan. “We’ll get what we get,” Chief Executive Gary Herbst said.
Distressed hospitals are reporting they don’t have enough cash to satisfy lenders, which typically require borrowers to meet periodic profit and other financial targets, The Wall Street Journal reports. Lenders are demanding that hospitals hire consultants to help turn around their operations or set aside cash for repayment. Failures to meet such obligations to lenders can technically count as default, putting hospitals at risk of credit downgrades and higher interest rates. Read more.
