Governor Newsom just signed Assembly Bill 112 – The California Health Facilities Financing Authority Act – into law. This is an emergency bill providing up to $150 million in zero-interest loans to nonprofit and public hospitals in danger of closing in the aftermath of the pandemic.

Assembly Bill 112 passed the California Assembly with a vote of 77-0 and the California Senate with a vote of 38-0.

This law takes effect immediately now that it has been passed and signed. “This new program will help hospitals in extreme financial distress get the assistance they need as quickly as possible,” said Newsom after signing on Monday. “My administration has been working closely with hospitals across the state, and we will continue to do all we can to ensure communities can continue to access the care and services they need without disruption.”

According to the Times of San Diego report, legislators fast-tracked action following the closure of Madera Community Hospital at the start of this year, which left this San Joaquin Valley county of 160,000 people without a local emergency room.

Other hospitals in financial trouble include Kaweah Health Medical Center in Visalia, El Centro Regional Medical Center in Imperial County, MLK Jr. Community Hospital in Los Angeles, Hazel Hawkins Memorial Hospital in Hollister, Sierra View Medical Center in Porterville and Mad River Community Hospital in Humboldt County.

Some of the hospitals were struggling prior to the pandemic, and have had a difficult time managing cash flow after they stopped receiving federal COVID relief funds.

This new law creates the Distressed Hospital Loan Program, until January 1, 2032. The purpose is to provide loans to not-for-profit hospitals and public hospitals that are in in significant financial distress or to governmental entities representing a closed hospital to prevent the closure or facilitate the reopening of a closed hospital.

The law requires the Department of Health Care Access and Information to administer the program and requires the department to enter into an interagency agreement with the authority to implement the program.

The law requires the department, in collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, to develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program.

This law also creates the Distressed Hospital Loan Program Fund, a continuously appropriated fund, for use by the department and the authority to administer the loan program. It would authorize both the authority and the department to recover administrative costs from the fund.

Republican Sen. Brian Jones of east San Diego County had urged Newsom to sign the legislation, saying, “The clock is ticking for distressed hospitals that are holding on by a financial shoestring.”