CHA News

Governor Signs Distressed Hospital Loan Program Bill; HCAI to Host May 23 Webinar

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On May 15, Gov. Newsom signed Assembly Bill (AB) 112, which establishes the Distressed Hospital Loan Program. The bill appropriates $150 million for the loan program, which will provide interest-free cash-flow loans to qualifying not-for-profit and public hospitals in financial distress or to governmental entities representing a closed hospital to help reopen the closed hospital. 

Investor-owned hospitals, freestanding psychiatric inpatient hospitals, and hospitals that are part of a system of more than two hospitals are not currently eligible.  

Under AB 112, eligible hospitals can apply for loans through the Department of Health Care Access and Information (HCAI), which, in collaboration with the California Health Facilities Financing Authority (CHFFA), will establish an application process and a methodology for determining a hospital’s eligibility and the size of the loan. As part of the loan application process, hospitals will be required to demonstrate their financial distress and outline a viable plan for recovery. The bill also requires HCAI, in consultation with CHFFA, to develop a process and methodology for hospitals to seek forgiveness of loans awarded through the program.    

The legislation also mandates increased financial reporting for all hospitals and systems. 

HCAI has released a fact sheet and launched a web page that provides additional information on the Distressed Hospital Loan Program and also includes a tentative workflow schedule. It includes the intent to have a draft evaluation methodology for loan eligibility posted during the week of May 22 and loan applications will be able to be submitted sometime in June 2023.   

On May 23 at 2 p.m. (PT), HCAI is hosting a webinar on the program. The purpose is to allow hospitals to ask questions about and provide feedback on the draft methodology for determining eligibility for loans under the program. Non-hospital stakeholders are invited to attend but asked to defer to allow engagement with potentially eligible hospitals. Instructions for joining the webinar are below. 

Meeting ID: 271 379 685 53   
Passcode: 6teLkm   

Call in (audio only)   
(916) 535-0978,,54873487#    
Phone Conference ID: 548 734 87#

CHA will continue to monitor the development of the application and loan award methodology and will provide updates to the hospital field as they become available.