A possible lifeline for California hospitals struggling to survive financially is on the way.
The California Legislature passed Senate Bill/Assembly Bill 112, sending it to Gov. Gavin Newsom for his signature.
The big picture: The law, which was introduced by the Assembly Committee on Budget, will create the Distressed Hospital Loan Program that is funded with $150 million to provide loans to not-for-profit and public hospitals in significant financial distress.
- The program will be run by the Department of Health Care Access and Information.
- Financially distressed hospitals will be required to provide more transparency about their financial condition and receive state verification of financial plans prior to any loan approval.
- Hospitals that receive the loan are required to begin repayment after 18 months and discharge the loan within six years.
- The program will sunset in 2032.
The backstory: The bill comes after the closure of Madera Community Hospital last year, which had to shut its doors after years of financial hardships in part due to the COVID-19 pandemic.
- Issues that Madera Community Hospital faced are hurting hospitals throughout the state: high costs for travel nurses and low Medi-Cal reimbursement rates.
Driving the news: AB 112 contains Assembly Bill 412, which was introduced by Asm. Esmeralda Soria (D–Fresno) earlier this year as part of her efforts to reopen Madera Community Hospital.
What they’re saying: “Reopening Madera Community Hospital has been my top priority this year,” Soria said. “That is why I introduced AB 412, to create the Distressed Hospital Loan Program to provide immediate financial assistance to help Madera Community Hospital reopen.”