State treasury, HCAI describe stopgap financing and loan modifications for distressed hospitals

California State Treasurer Fiona Ma and officials from the Department of Health Care Access and Information (HCAI) told the Assembly Budget Subcommittee No. 1 on Health that the state has delivered a complex mix of loans, grants and tax‑exempt bond financing to help hospitals facing financial distress, but that significant gaps remain.

At the hearing Treasurer Fiona Ma described a multi‑pronged state response that included $300 million set aside by the governor and Legislature for a Distressed Hospital Loan Program (DHLP), short‑term low‑interest loans, zero‑interest fire relief loans for facilities damaged in recent wildfires, and multiple bond financing and grant programs administered by the California Health Facilities Financing Authority (CHFFA). "Compared to 8%, we're offering these loans for about 2 to 3%," Ma said, explaining the competitive advantage of the state's loan terms. She added that the administration rolled out 16 different programs to support troubled hospitals.

HCAI Director Elizabeth Landsberg told the committee the DHLP used $300 million (split roughly equally between general fund and MCO tax proceeds) to provide working capital for hospitals implementing turnaround plans. Two hospitals that received DHLP assistance — Madera Community Hospital and Hazel Hawkins — have exited bankruptcy, and none of the other DHLP participants have filed for bankruptcy or closed since…