California governor signs bill to allocate $150M to struggling, closed hospitals

California Gov. Gavin Newsom signed legislation creating a $150 million loan program for financially distressed hospitals into law May 15. 

The California Assembly approved the Distressed Hospital Loan Program on May 4. It will provide zero-interest cash flow loans to nonprofit and public hospitals on the brink of closure or recently closed. Eligibility criteria are still being developed, though the program is expected to support the reopening of Madera (Calif.) Community Hospital, which shut its doors at the start of the year. 

The funds will be administered by the state's department of healthcare access and information, and the California Health Facilities Financing Authority. Hospitals must submit a plan to the agencies detailing how they plan to "return to financial viability and continue to operate long-term," Mr. Newsom's office said. Some loans disbursed through the program may be eligible for forgiveness. 

The California Hospital Association has also asked the governor for a one-time payment of $1.5 billion to be distributed to the most financially burdened facilities. In April, hospital leaders in California held a press conference in response to a Kaufman Hall report that found 1 in 5 hospitals in the state are at risk of closure. Leaders emphasize that these lifelines are a short-term fix. 

"The only sustainable fix here is an increase in [government] reimbursement rates," Carmela Coyle, president and CEO of the CHA said in April. 

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