In response to the closure of a rural hospital and the precarious financial state of other medical centers, California legislators have approved a $150 million interest-free loan to assist struggling hospitals in the state.
The closure of Madera County’s only hospital has highlighted the challenges faced by rural community hospitals during the COVID-19 pandemic.
Other hospitals in El Centro, Montebello, Hawkins, and Visalia have faced bankruptcy or the threat of closure. A report by the California Hospital Association indicated that 20% of the state’s 400+ hospitals are at risk of shutting down.
The pandemic has significantly impacted hospital revenues, with elective surgeries declining and rising inflation and labor costs making recovery difficult.
In California, an increase in the number of people reliant on government-funded healthcare has compounded the problem. While the number of Medicaid recipients has grown, reimbursement rates have remained unchanged, leading to financial strain for hospitals with a large proportion of Medicaid or Medicare patients.
The $150 million in loans will be prioritized for rural medical centers and those with a high percentage of Medicaid patients. Lawmakers have expressed their intent to provide further financial support in June when the state budget is completed.