Oroville Hospital, along with its parent corporation OroHealth, has filed for Chapter 11 bankruptcy protection as part of a strategy to secure its financial future. The voluntary petitions were submitted on December 8, 2023, in the U.S. Bankruptcy Court for the Eastern District of California, presided over by Judge Christopher M. Klein. The hospital’s management aims to facilitate a court-supervised transaction with a partner that can provide the necessary resources and expertise to support the institution’s ongoing mission.
In a statement regarding the filing, the hospital expressed optimism, stating, “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 management underscored that the goal is to ensure continued healthcare services for all stakeholders involved.
The announcement has raised concerns among local officials. Mayor Dave Pittman highlighted the emotional impact on employees and the community, stating, “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 as well as the people who depend on the hospital for care.” He emphasized the hospital’s critical role in maintaining community health and safety.
The financial difficulties facing Oroville Hospital are not new. On November 14, 2023, the hospital revealed plans to seek a partnership or sale to a larger healthcare organization to alleviate its pressing financial issues. Unfortunately, no partner or buyer has been secured thus far.
Earlier developments contributed to the hospital’s precarious situation. On October 1, 2023, Oroville Hospital received a notice of acceleration from United Missouri Bank, stating that nearly $200 million in bond principal and accrued interest was due immediately. This notice was linked to a $195,630,000 bond issued on February 1, 2019, intended to finance the construction of a new five-story facility. Unfortunately, that project has yet to open, having missed the original completion date of April 2022.
Financial challenges escalated further in December 2024, when the hospital agreed to pay $10.25 million to settle allegations of illegal kickbacks to physicians and false billing claims involving Medicare and Medi-Cal. This was followed by a lawsuit from Modern-Sundt, the construction firm involved in the hospital’s new tower project, seeking over $16 million in unpaid contractor fees.
Despite these challenges, the hospital’s leadership remains focused on maintaining operations during the Chapter 11 process. They have secured additional financing to ensure that services continue without disruption, stating, “Patient care remains our top priority and will be unaffected.” The hospital will continue to operate, supporting both employees and vendors while serving the community.
To guide the hospital through this transition, Oroville Hospital has engaged Cain Brothers, a division of KeyBanc Capital Markets, to assist in identifying a suitable affiliation partner. The law firm Hooper, Lundy & Bookman, P.C. is providing regulatory and transactional counsel, while Epiq Corporate Restructuring, LLC has been appointed as the claims agent for the Chapter 11 case.
For more information regarding the bankruptcy filing, Oroville Hospital has made available a dedicated contact via email at [email protected] and a website for updates on the situation. As this situation develops, the hospital’s commitment to patient care and community service remains a focal point for its management and local leaders alike.
