California Legislators Loan Out an Emergency $150 Million to Hospitals

California Legislators Loan $150 Million to Prevent Hospital Closures as Hospitals and medical centers grapple with the After-effects of the COVID-19 Pandemic.

• Lawmakers in California voted to loan $150 million to struggling medical centers.
• The loan is intended to prevent hospital closures.
• The closure of the only hospital in Madera County last December left a community of over 150,000 with no hospital within a half-hour drive.

Medical centers and primarily rural hospitals in California are struggling to stay afloat in the wake of the pandemic. Hospitals were flooded with COVID-19 patients during this time, and elective surgeries dried up. Later, rising inflation and labor costs posed threats. Given the circumstances, hospitals have been slow to recover.

The governor hopes that once the budget is completely drafted later in the year, more could be done for the cause.

Certain public hospitals, like those with a large patient population on government health insurance programs and non-profits, are on the priority list to receive the $150 million from the state in the form of interest-free loans.

Hospitals in California, particularly in the areas of Montebello, Hawkins, El Centro, and Visalia, are at great risk of closure. One of these hospitals has already declared bankruptcy, and to prevent closure, one is being acquired by a state university. Such hospitals make up approximately 20% of the 400 state hospitals at risk, according to a report paid for by the California Hospital Association.

The reason that hospitals in California are going through a budgetary crisis also rises from the fact that there has been an increase in the number of people who get their healthcare costs paid for by the government. Despite immigration status, all low-income adults were allowed to be put in state programs under emergency rules set by the program. Essentially, even though the number of people on the programs increased, what Medicaid paid the hospitals remained the same as before.

A Republican state senator named Shannon Grove has described the system as a pathway to bankruptcy. It should be kept in mind that for each dollar a hospital spent on the care of patients during the pandemic, Medicaid only paid less than 80 cents back.

It should also be noted that $150 million is not enough for healthcare providers in the state to combat the problem. The California Hospital Association has asked for a one-time payment of $1.5 billion to make headway against the problem, but with the state of California being in a projected $22.5 billion budget deficit, this seems unlikely.

However, bringing back taxes on private companies that administer the state’s Medicaid program and organizations that provide managed care may provide a solution to the problem, according to legislators. Events from the past show that the last time such a measure was enforced, the state was able to save over a billion dollars.

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