Alarmed by the closure of a rural hospital earlier this year, California lawmakers voted in favor Thursday

loan

$150 million to struggling medical centers in hopes of avoiding a cascade of similar failures across the state.

Madera County’s only hospital closed in December, leaving the community of nearly 160,000 without a medical center within a 30-minute drive. The closure was a surprising reminder of the plight of many community hospitals in mostly rural areas of the country that struggled to stay open during the coronavirus pandemic.

Since then, hospitals in El Centro, Montebello, Hawkins and Visalia

revealed staggered all staggered

is about to collapse. A

Beverly Hospital in Montebello requested to file a report

bankruptcy

protection last month

and another

being

was taken over by a state university to avoid closure. A report paid last month by the California Hospital Assn.,

a trade association,

warned that 20% of more than 400 hospitals in the state were at risk of closing.

California lawmakers typically don’t approve new spending until June after months of debate and negotiations with the governor’s office. But the crisis is so serious that legislative leaders and Gov. Gavin Newsom agreed to go ahead and spend this money now, promising to do more later in the year when the budget runs out.

I don’t think people appreciate what’s going on there. I am very concerned,” said Carmela Coyle, president and chief executive of the

California

hospital association

an industrial trading group

.

The pandemic rocked hospitals across the country. While many were swamped with COVID-19 cases, patients

seek other care for other things

such as elective surgeries dried up. Since then, rising inflation and labor costs have made it difficult for hospitals to recover.

In California, the problem has been exacerbated by an increase in the number of people whose

grab them

health care costs

Are

paid

for

by the government. the

number of people enrolled in the state

Medicaid

program, known as Medi-Cal, rolls

increased dramatically during the pandemic, a combination of emergency regulations to make the program more accessible and a decision by Democrats to make all low-income adults eligible for the program, regardless of their immigration status.

While more people use Medi-Cal, how much Medi-Cal pays hospitals has remained the same. On average, for every dollar a hospital spends to care for someone, Medi-Cal reimburses 74 cents, Coyle said.

That’s a problem for hospitals like Kaweah Medical Center in Visalia, where most patients are on Medicare or Medi-Cal. Located in the heart of the San Joaquin Valley, the hospital serves a primarily agricultural community made up of low-income farm workers.

According to CEO Gary Herbst, the hospital would make a modest profit of about 3% each year before the pandemic. But since 2020, Herbst said, the hospital has lost $138 million. It has about $218 million in debt that a credit rating agency recently downgraded to junk status.

The hospital is expected to have at least 90 days of operating cash on hand at any given time. Before the pandemic, the lowest number ever was 110 days. At the end of March that was only 62 days. Herbst said the hospital lost $39 million in the first nine months of its fiscal year, or more than it lost last year

combined

.

Herbst said he hopes the hospital will break even next year due to various cost-cutting measures, including laying off about 200 people and cutting services. That includes reducing the number of Medi-Cal electives

Medicaid

Patients at 35% because, he said, with any of those procedures, we lose money.

If you were an outpatient surgeon doing 10 electives

[Medi-Cal]

surgeries a month, you can only do six now. And you have to put your other patients on a waiting list, Herbst said.

The state will provide the $150 million in the form of interest-free loans to non-profit or public hospitals that meet certain conditions. The state will prioritize loans for rural medical centers and for medical centers with a disproportionate number of patients on Medi-Cal, the joint state and federal health insurance program for the poor and disabled.

The $150 million probably won’t be enough to solve the problem. Autumn

CEO of Kaweah Health Medical Center in Visalia,

said his hospital needs a third of $50 million

Everything

the money

made

available to give it some breathing room.

At legislative hearings this week, lawmakers pledged

their intention

to provide more money in June, when the state budget runs out.

This is just a start. It’s antiseptic ointment on the cut. We haven’t even started the patch yet, said Senator Anna Caballero

(D-Salinas)

,

a democrat

whose precinct includes the Madera Community Hospital which has been closed.

But it’s unclear how much more the state could pay. The California Hospital Assn. has asked for a one-time payment of $1.5 billion. But California faces a $22.5 billion budget deficit, limiting the state’s ability to approve new spending.

One idea is to bring back a tax on managed care organizations, private companies that manage the Medi-Cal

State Medicaid

program. The load triggers more Medi-Cal

Medicaid

payments from the federal government. Last time it was in place, it saved the state $1.5 billion. The tax expired in 2020, but Newsom and some lawmakers want to bring it back.

The Newsom government says it intends to use some of that new tax money to increase payments to hospitals

Medi-Cal Medicaid

patients. But those increases wouldn’t happen until next year at the earliest.

Any business plan or business model that returns 74 cents on every dollar you spend is a path to bankruptcy, said Senator Shannon Grove (R-Bakersfield).