(The Center Square) – A small handful of nonprofit hospitals in California would get some or all of a proposed $25 million bailout debated by state lawmakers on Tuesday.
Hospitals will have a chance to apply for those funds, according to agency officials who testified Tuesday morning before the state Senate Budget and Fiscal Review Committee. Legislators on both sides of the aisle voiced support for the funding bill, which the committee approved unanimously with an 18-0 vote. It now goes to the Senate floor.
“I know that both sides have spoken up about hoping we address distressed hospitals in some way with the budget that starts July 1,” Sen. John Laird, D-Santa Cruz, the committee chair, said at the outset of the meeting.
Lawmakers on the committee spoke about the urgency of passing a funding measure that would provide hospitals some relief, expressing concern that some hospitals wouldn’t make it until July 1 without immediate aid.
“This is a needed proposal,” Sen. Roger Niello, R-Fair Oaks, said during his opening remarks. “I’m happy to see the Democrats address distressed hospitals. There are those with severe cash issues that might not make it to receive help in 2026-27.”
The $25 million emergency expenditure would come from the state’s general fund, according to a California Department of Finance official who testified before the committee.
Department officials told the committee that hospitals must apply for the money, which would be awarded in the form of a grant. Hospitals would have to have less than 10 days’ worth of cash on hand and must demonstrate that they exhausted all other efforts to stay afloat.
Some lawmakers were concerned that the proposed $25 million cash infusion would not be enough for some hospitals to remain open and talked about even larger dollar figures. Questions went unanswered from Department of Finance and Legislative Analyst’s Office staffers about how the agency arrived at the $25 million amount. Neither agency was able to answer how many hospitals could qualify.
“While the Department of Health Care Access does collect certain financial data from hospitals, we can’t definitively say the number or which specific hospitals would be eligible,” Sonal Patel, assistant program budget manager for the Department of Finance, testified. “With respect to the dollar amount, the chair’s comments are accurate. We have less than two months left in this fiscal year, and the intention of these funds is just to provide a bridge so that hospitals can stay open until July 1.”
The stopgap funding measure isn’t lawmakers’ only effort to keep endangered hospitals open.
The Distressed Hospital Loan Program, which was created in 2023, provides interest-free loans to hospitals at risk of closing. According to the Department of Health Care Access and Information, that program gave $300 million to distressed hospitals in its first year. That includes $33.2 million to TriCity Medical Center in Oceanside, $29 million to the Dameron Hospital Association, $28 million to El Centro Regional Medical Center, $28 million to Pioneers Memorial Healthcare District and $20.75 million to Kaweah Delta Health Care District in Central California, among other recipients.
That loan program allows hospitals to repay the loans over 72 months, and it sunsets on Dec. 31, 2031.
According to a policy brief from California Health Policy Strategies, a consulting firm in Sacramento, hospitals getting money from the distressed hospital loan program are those without funds to operate.
