By Ana B. Ibarra | CalMatters
California hospitals in financial trouble will soon be able to apply for interest-free state loans, although key questions about the selection process aren’t yet resolved.
The Legislature on Thursday approved a bill that will allocate a one-time sum of $150 million from the general fund to aid hospitals that are facing severe financial distress and are at risk of closure, or that have closed but have a plan to reopen. The loans would have to be paid back within six years, although loans may be forgiven for hospitals that meet certain requirements. Gov. Gavin Newsom needs to sign the bill to enact the program.
Legislators and hospital administrators have acknowledged a loan program is only a stop-gap for a number of hospitals that for months have warned of their precarious fiscal situations. Legislators fast-tracked action following the closure of Madera Community Hospital at the start of this year, which left this San Joaquin Valley county of 160,000 people without a local emergency room.
Since then, another hospital, Beverly Hospital in the city of Montebello, has filed for bankruptcy.
“This bill, this money, will keep them (Beverly Hospital) open long enough to be able to perhaps sell, regroup, whatever, but they will keep their doors open,” Sen. Bob Archuleta, a Cerritos Democrat whose district includes Montebello, said on the Senate floor.
Loans under the new program would be available to nonprofit and public hospitals. Those that most likely need and could benefit are independent and rural hospitals, some of which were struggling even prior to the pandemic, and have had a difficult time managing cash flow after they stopped receiving federal COVID relief funds. Hospitals that apply will have to demonstrate need and viability to the California Department of Health Care Access and Information, which will oversee the program in conjunction with the state’s health department and the California Health Facilities Finance…
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