Gov. Newsom signs bill to allocate $150 million to Distressed hospitals

SACRAMENTO – Governor Gavin Newsom, alongside members of the California Legislature, signed AB 112, creating a new $150 million Distressed Hospital Loan Program to provide zero-interest cash flow loans to nonprofit or public hospitals experiencing extreme financial distress. These loans will help these struggling hospitals remain in operation or assist in the reopening of recently closed hospitals.

“This new program will help hospitals in extreme financial distress get the assistance they need as quickly as possible,” said Governor Newsom. “My administration has been working closely with hospitals across the state, and we will continue to do all we can to ensure communities can continue to access the care and services they need without disruption.”

The Governor’s Office, California Health and Human Services Agency, and the Department of Health Care Access and Information (HCAI) worked closely with the California Health Facilities Financing Authority (CHFFA) and the California Legislature to develop this new loan program to assist hospitals in need in as little time as possible.

LEGISLATIVE LEADERS ON TODAY’S HOSPITAL BILL SIGNING 

• Assemblymember Soria: “I am grateful to the Governor for prioritizing state assistance so Madera Community Hospital, and other struggling hospitals, have access to emergency funding. Reopening Madera Community Hospital has been my top priority this year and today’s action gives me hope towards restoring emergency health care, labor and delivery services, and preventative care access that is critical to the community.”

Senator Caballero: “I am thankful for the swift, collaborative work of my Assembly and Senate colleagues along with the support and work of Governor Newsom and his team to ensure that our hospitals remain open and able to serve our residents. The closure of Madera Community Hospital has been catastrophic. Madera Community Hospital was financially unable to continue providing services and was forced to close three clinics in rural communities, along with their 160 bed hospital, and over 700 employees were laid off. Our health care system is in crisis. We need to work together to adequately fund our health care system so all Californians can receive the health care they need. We need to continue working to ensure that there is a process to evaluate the health care services provided to the community by our struggling hospitals, to analyze fiscal stability and oversight by hospital boards, and ensure that these hospitals have a viable plan to avoid bankruptcy. We have more work to do, though I want to thank Governor Newsom for responding quickly during a difficult budget year, to help us save a valuable community asset.”

KEY HOSPITAL PROGRAM DETAILS

• The new Distressed Hospital Loan Program will be administered by the Department of Health Care Access and Information (HCAI) in partnership with the California Health Facilities Financing Authority (CHFFA).

• HCAI will develop eligibility criteria for these loans, including factors like cash on hand, whether it is a small, rural, or critical access hospital, a hospital that serves a disproportionate share of Medi-Cal patients, if closure would significantly impact access to services in the region, etc.

• Qualifying hospitals would be required to submit a plan to HCAI and CHFFA detailing how the hospitals will return to financial viability and continue to operate long-term.

Loans disbursed through this new program may also be eligible for forgiveness under certain conditions, to be determined by HCAI.

The California Health and Human Services Agency, along with their departments, has been working with any community hospital that may be in financial distress. The Department of Health Care Services has been available to engage with any facility to ensure any Medi-Cal payments that can be advanced are advanced in order to provide the community hospital with additional funds to remain open. The Department of Managed Health Care has continued to engage with health plan partners to ensure payments are made timely to community hospitals. In the event a community hospital does close, the Department of Public Health works with the community hospital on its closure plan and ensures patients and community partners are aware of alternative providers in the community who are able to care for them, including behavioral health and primary care services.

ADDITIONAL EARLY ACTION BUDGET BILLS SIGNED

• AB 100 – Amends portions of the 2021 and 2022 Budget Acts, including changes to CalRecycle, California State Preschool Program, Program for All-Inclusive Care for the Elderly, Inmate Welfare Fund, and Office of Data and Innovation.

• AB 110 – Authorizes the California Department of Education (CDE) and Department of Social Services (DSS) to use available federal funds to provide temporary stipends to the California State Preschool Program and state-subsidized child care program providers. Also extends the waiver of family fees for state-subsidized child care programs and the California State Preschool Program from July 1, 2023, to September 30, 2023.

• AB 111 – Provides tax relief to Californians who had student loans or fees discharged as part of financial relief to individuals impacted by economic hardships from the COVID-19 Pandemic. Exempts from state income tax Community College fees discharged under the COVID-19 Emergency in taxable years 2022 through 2026. Clarifies that Higher Education Emergency Grant funds received by students in postsecondary education to support expenses and financial needs of students related to the COVID-19 Pandemic are not subject to state income tax in taxable years 2020 through 2027.

• AB 113 – Makes agreed upon changes to AB 2183 (Stone, 2022), which creates additional methods for California farmworkers to elect a collective bargaining representative, specifically as an alternative to polling place election.