Existing law requires the Department of Health Care Access and Information to administer the Distressed Hospital Loan Program, until January 1, 2032, which provides loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital to prevent the closure of, or facilitate the reopening of, those hospitals. Existing law requires the department to develop a methodology to evaluate an at-risk hospital's potential eligibility for state assistance from the program, and authorizes the methodology for determining financial distress to consider the hospital's prior and projected performance on financial metrics, including, among other things, the amount of cash on hand. Existing law requires a hospital or a closed hospital applying for aid under this program to provide, among other things, the California Health Facilities Financing Authority and the department with financial information demonstrating the hospital's need for financial assistance due to financial hardship.
Existing law requires the department to provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. Existing law requires the department to establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.
This bill would, if an appropriation is made for this purpose, require the evaluation for loan forgiveness incorporate projections of future financial performance in addition to a hospital's point-in-time financial condition. The bill would, if an appropriation is made for this purpose, in place of the current criteria, require the department to provide loan forgiveness to any participant of the program who received a loan award before the effective date of this act, as specified, if the department and authority determine the participant has demonstrated a good faith effort to comply with program requirements through January 1, 2026, and the financial projections demonstrate that the participant will become financially distressed as a result of loan repayments under the program or other outside factors, including, but not limited to, the impacts of the federal One Big Beautiful Bill Act.
This bill would extend the program through January 1, 2035.
This bill would declare that it is to take effect immediately as an urgency statute.