Legislature OKs Soria’s loan program for struggling hospitals

The program comes after Madera Community Hospital had to shut its doors over a COVID-affected financial collapse.

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.”

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