At a time when so many of your hospitals are struggling and cannot afford to absorb patients should a neighboring hospital be forced to close, the Distressed Hospital Loan Program could bring much-needed rapid financial relief for some that are on the very brink. The deadline — July 31 — is fast approaching but there’s still time to apply for this vital program. As of July 25, 16 hospitals have submitted applications, demonstrating the significant need for financial assistance.
Currently, $300 million in funding is available for hospitals — $150 million was originally allocated to the program in Assembly Bill 112; an additional $150 million was added to the 2023-24 state budget from the managed care organization tax. These interest-free cash-flow loans have the potential to be forgiven but are available only to qualifying nonprofit and public hospitals in financial distress or to governmental entities to help reopen a closed hospital.
With the application requests already totaling more than $385 million, the Department of Health Care Access and Information (HCAI) — which is administering the loan program — will have to prioritize recipients according to the criteria it has released.
The four primary areas of focus that HCAI is using when evaluating loan applications include:
- Profit/loss margin
- Turnaround plan
- Community need
Although no specific time frame for distributing the money has been given, the first of the $150 million in funds is expected to go out to hospitals sometime between late August and mid-September. The additional $150 million will be distributed in a future round of funding.
This loan program is the result of ongoing advocacy throughout the budget process and engagement with lawmakers, who recognize the importance of keeping hospitals open and able to serve patients. But we know that it is only a stopgap for a few hospitals, whose long-term financial situations won’t be fixed with a one-time loan. CHA will continue to press for additional relief to ensure that your hospitals can continue to provide lifesaving and life-changing care for all Californians.