The emergency budget action taken this week by the state Senate, Assembly, and Gov. Newsom holds the promise of pulling a small number of hospitals at imminent risk of closure back from the financial brink.
This rare measure is welcome news for those hospitals right on the edge of disaster while CHA continues to focus on the immediate assistance needed by dozens of more hospitals at risk of closure as well as those that have already reduced services just to stay in operation.
The Department of Health Care Access and Information (HCAI), in collaboration with the California Health Facilities Financing Authority, is now authorized to issue up to $150 million in interest-free loans to qualifying hospitals — either to prevent closure or to assist with reopening a recently closed hospital.
Criteria to qualify for these new loans will largely be developed by HCAI and are expected soon. Criteria explicitly exclude any hospital in a system with more than two hospitals, investor-owned hospitals, and freestanding inpatient psychiatric hospitals.
The hope is that these funds will prevent a small number of highly vulnerable hospitals from facing the same fate as Madera Community Hospital, which was forced to shutter earlier this year, or Beverly Hospital in Los Angeles, which filed for bankruptcy in late April, both of which could see aid from this loan program.
Additional state budget support — such as the $400 million per year for each of the next four years as proposed in the Senate’s budget blueprint — is needed to protect access to care in communities served by more than 200 hospitals that are losing money every day to care for patients.
Beyond this short-term relief, a sustainable and systemic solution will be needed to protect care for Medi-Cal patients throughout the state for years to come. Medi-Cal has grown to cover 40% of Californians, many of them low income and people of color, yet Medi-Cal rates for hospital services have not increased in over a decade and California today pays just 74 cents for every dollar it costs to provide hospital care for Medi-Cal patients.
The longstanding government shortfalls do a disservice to people living in the state’s most challenged communities, where access to care is already difficult and would simply be out of reach if this problem is not addressed.
As California continues to learn about the long-lasting and negative impact COVID-19 has wrought on the state’s health care system, the work must continue if we are to preserve critical hospital services in all communities — especially those that already face challenges in accessing care.