To avoid medical facility closures, California legislators fast-tracking a loan program

By Ana B. Ibarra|CalMatters

California healthcare facilities in financial trouble will soon be able to look for interest-free state loans, although key concerns about the choice process aren't yet dealt with.

The Legislature on Thursday approved a costs that will allocate a one-time sum of $150 million from the basic fund to assist hospitals that are facing serious financial distress and are at risk of closure, or that have actually closed however have a strategy to resume. The loans would have to be repaid within 6 years, although loans may be forgiven for health centers that satisfy specific requirements. Gov. Gavin Newsom needs to sign the expense to enact the program.

Lawmakers and hospital administrators have acknowledged a loan program is just a stop-gap for a number of healthcare facilities that for months have actually warned of their precarious financial 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 individuals without a local emergency clinic.

Since then, another medical facility, Beverly Hospital in the city of Montebello, has filed for bankruptcy.

" This expense, this cash, will keep them (Beverly Hospital) open enough time to be able to maybe sell, regroup, whatever, however 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 readily available to public and nonprofit health centers. Those that more than likely need and might benefit are independent and rural hospitals, some of which were struggling even prior to the pandemic, and have had a challenging time managing cash flow after they stopped getting federal COVID relief funds. Health centers that use will need to show requirement and practicality to the California Department of Health Care Access and Information, which will manage the program in conjunction with the state's health department and the California Health Facilities Finance Authority, a funding program within the State Treasurer's Office.

Overview of the Madera Community Hospital sign and crest on the main buildings of the medical facility on Jan. 2, 2023. The sign was eliminated after the health center revealed its closure due to insolvency pressing the county into a state of emergency situation.
In hearings resulting in Thursday's vote, legislators asked why the state wasn't conducting its own analysis of medical facilities' present circumstance so that the Legislature knows precisely which hospitals remain in immediate need of relief.

" We don't understand how many medical facilities, we do not know which hospitals. We don't understand which locations those hospitals are (in), we don't know anything. And now we're asked to authorize $150 million to be administered without access to strategies, without access to the financial resources that would give us the proof to feel comfortable with this," stated Sen. Maria Elena Durazo, a Los Angeles Democrat, during a Senate spending plan committee hearing on Tuesday.

Much of the details offered to lawmakers has originated from the California Hospital Association, whose job is to lobby on behalf of healthcare facilities. According to a report commissioned by the association, 1 in 5 hospitals is at threat of closure, and half of California's health centers are losing cash. The report did not list which healthcare facilities are in instant threat. The association has actually likewise not recognized centers, keeping in mind that when a healthcare facility announces its financial difficulties it can too soon start to lose workers and patients.

Aside from the now-defunct Madera Community Hospital, at least 7 other medical facilities have openly spoken about their monetary difficulties, either through Op-Ed pieces, news reports, notifications on their website or communication to their personnel. These consist of Kaweah Health Medical Center in Visalia, El Centro Regional Medical Center in Imperial County, Beverly Hospital in Montebello, MLK Jr. Neighborhood Hospital in Los Angeles, Hazel Hawkins Memorial Hospital in Hollister, Sierra View Medical Center in Porterville and Mad River Community Hospital in Humboldt County.

Throughout today's hearings, lawmakers likewise questioned how the state developed the $150 million figure, considered that the state does not yet understand how many medical facilities need a loan or would certify.

" One hundred fifty million is something that we believe we can soak up at this time," said Erika Li, with the state's Department of Finance, throughout Tuesday's budget hearing. "Trying to deal with a concern throughout financial restrictions is constantly difficult because you're always stabilizing great deals of top priorities."

With eyes on the upcoming fiscal year, the California Hospital Association has asked the state for $1.5 billion in one-time relief, a tough request in a deficit year. But Senate Democrats remain in assistance, proposing that medical facilities get $400 million yearly for four years that would include conditions and requirements, according to their spending plan proposition that is to be completed this summertime.

A spokesperson for the California Hospital Association said the loan program is welcome news and assuring for health centers on the financial brink, but more state support is required. Specifically, the association has been advocating to increase compensations for services offered to patients covered by Medi-Cal, the health insurance program for low-income people, which covers about 15 million individuals in the state.

" Beyond this short-term relief, a systemic and sustainable service will be required to safeguard look after Medi-Cal clients throughout the state for many years to come," stated Jan Emerson-Shea, a representative for the California Hospital Association. "As California continues to reel from the negative and lasting effects COVID-19 has wrought on the state's health care system, the work must continue if we are to maintain critical medical facility services in all communities.

Looking for longer-term relief, Sen. Anna Caballero, a Merced Democrat whose district consists of Madera, is also pushing different legislation that requires the state to renew a tax on managed care organizations that expired last year. That cash would be used to increase Medi-Cal payments to health centers and other providers, assisting healthcare facilities that disproportionately serve low-income clients.

" Ensuring that our healthcare facilities stay open and able to serve clients has actually been priority number one for me this year. The medical facility closure in Madera and other looming closures would be devastating in both rural and metropolitan communities," Caballero stated in a statement following Thursday's vote. "To ensure correct oversight of public funds, I will continue to look for more openness and frankly more responsibility on healthcare facility operations to ensure California protects health care access for all."