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-Editorial
Assemblyman Jeff Gonzalez (R-Indio) celebrated the inclusion of zero-interest loan extensions for financially distressed rural hospitals in the recently passed California state budget. The measure directly benefits El Centro Regional Medical Center and Palo Verde Hospital, serving communities in Assembly District 36.
The budget provision relieves non-designated public hospitals (NDPHs) struggling to meet repayment terms on previously issued state loans. Under the new plan, hospitals will begin making monthly payments 36 months after receiving the loan, with full repayment due within 24 months of starting payments. No interest will accrue during the life of the loan.
“This isn’t just about numbers on a page, it’s about survival,” Gonzalez said. “For rural communities like mine, these hospitals are lifelines. We’re talking about families who would otherwise have to drive hours just to see a doctor.”
Gonzalez emphasized the importance of securing financial assistance to ensure continued access to care for rural Californians. He thanked local healthcare workers and advocates for their role in highlighting the issue, saying, “Every Californian deserves healthcare within reach, no matter their ZIP code.”
According to Gonzalez, rural hospitals often face challenges such as limited medical staff, higher rates of chronic illness, and transportation barriers. The loan extensions are intended to provide short-term financial stability and keep essential health services accessible to underserved populations.
Senator Steve Padilla (D-San Diego) also released the following statement following the Legislature’s including two hospitals in his district in the extension of the Nondesignated Public Hospital Bridge Loan Program.
“In a time when our rural hospitals are facing financial hardship and potential closure, it is critical that the state step in to ensure all Californians have access to life-saving care. These hospitals are often the only source of healthcare for an entire community. Palo Verde Hospital is the only acute-care facility within a 100-mile radius, approximately a two-hour drive away – too far in case of an emergency. I am incredibly thankful to Governor Newsom, Treasurer Ma, and Senate Pro Tem McGuire for understanding the danger these communities face and working with my office to ensure these hospitals can stay open to provide life-saving care to this historically underserved region of our state.”
The Nondesignated Public Hospital Bridge Loan Program in California, established by SB 170 in September 2021 and expanded in June 2022 via the Budget Act, allows the California Health Facilities Financing Authority (CHFFA) to provide up to $40 million in zero-interest working capital loans to eligible nondesignated public hospitals (i.e., publicly owned or operated hospitals not affiliated with county or UC systems). These loans are designed to offset financial disruptions during the Medi‑Cal program transition from PRIME to the Quality Incentive Program (QIP), offering hospitals bridge funding secured by future Medi‑Cal reimbursements.
Recipients can borrow amounts specific to each hospital, ranging from several hundred thousand to nearly $4 million, under a 24‑month repayment term, with a modest 1% administrative fee (deducted upfront) and no interest or prepayment penalty. If full repayment isn’t accomplished in the two‑year window, CHFFA may recoup via an intercept of 20% of the hospital’s Medi‑Cal check‑write payments until satisfied. Subsequent legislation (AB 448 in 2025) even allows for extended repayment terms, up to 60 months, with a 36‑month deferred start, for hospitals unable to repay within the original period.