Distressed Hospital Loan Program.

AB 1923

California Bills

20250AB__192395AMD INTRODUCED 2026-02-12 AMENDED_ASSEMBLY 2026-03-26 AMENDED_ASSEMBLY 2026-04-23 AMENDED_ASSEMBLY 2026-05-20 AMENDED_SENATE 2026-07-02 2025 AB AMD Introduced by Assembly Member Soria (Principal coauthors: Assembly Members Gipson and Ransom) (Coauthors: Assembly Members Carrillo, Mark González, Haney, Harabedian, Michelle Rodriguez, and Rogers) LEAD_AUTHOR ASSEMBLY Soria PRINCIPAL_COAUTHOR ASSEMBLY Gipson PRINCIPAL_COAUTHOR ASSEMBLY Ransom COAUTHOR ASSEMBLY Carrillo COAUTHOR ASSEMBLY Mark González COAUTHOR ASSEMBLY Haney COAUTHOR ASSEMBLY Harabedian COAUTHOR ASSEMBLY Michelle Rodriguez COAUTHOR ASSEMBLY Rogers

An act to amend

Section of, and to amend, repeal, and add

Section of, the Health and Safety Code, relating to hospitals, and declaring the urgency thereof, to take effect immediately. hospitals, and declaring the urgency thereof, to take effect immediately Distressed Hospital Loan Program.

Existing law requires the Department of Health Care Access and Information to administer the Distressed Hospital Loan Program, until January 1, 2032, which provides loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital to prevent the closure of, or facilitate the reopening of, those hospitals.

Existing law requires the department to develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program, and authorizes the methodology for determining financial distress to consider the hospital’s prior and projected performance on financial metrics, including, among other things, the amount of cash on hand.

Existing law requires a hospital or a closed hospital applying for aid under this program to provide, among other things, the California Health Facilities Financing Authority and the department with financial information demonstrating the hospital’s need for financial assistance due to financial hardship.

This bill would, if an appropriation is made for this purpose, make any hospital, regardless of ownership type or system affiliation, eligible for state assistance under the program for awards provided on or after the effective date of this act, as specified, if the hospital, and its associated entities, if applicable, meets the applicable criteria for significant financial distress as established by the department and the authority.

The bill would, if an appropriation is made for this purpose, authorize the methodology for determining financial distress to additionally consider the hospital’s prior and projected performance on financial metrics that include, among other things, credit rating and debt capacity, and would also require the projections that determine financial distress to account for impacts of federal and state policy changes affecting hospital reimbursement or health care coverage, including, but not limited to, the federal One Big Beautiful Bill Act.</xhtml:p><xhtml:p> This bill would require the applicable criteria for a hospital to include the fiscal condition of the hospital, as specified, and would require the authority and the department to review financial reports from the hospital and consolidated financial statements from associated entities, if applicable.

The bill would limit the eligibility for a hospital with associated entities, as defined, to when the hospital’s associated entities are determined not to have capacity to provide sufficient financial resources to resolve the financial distress of the hospital.

The bill would place other limitations on loans to hospitals with associated entities, including deducting from the loan amount any amount paid out to investors, shareholders, and management companies in the last years.</xhtml:p>"?> Existing law requires the department to provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority.

Existing law requires the department to establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance. This bill would, if an appropriation is made for this purpose, require the evaluation for loan forgiveness incorporate projections of future financial performance in addition to a hospital’s point-in-time financial condition.

The bill would, if an appropriation is made for this purpose, in place of the current criteria, require the department to provide loan forgiveness to any participant of the program who received a loan award before the effective date of this act, as specified, if the department and authority determine the participant has demonstrated a good faith effort to comply with program requirements through January 1, 2026, and the financial projections demonstrate that the participant will become financially distressed as a result of loan repayments under the program or other outside factors, including, but not limited to, the impacts of the federal One Big Beautiful Bill Act.

This bill would extend the program through January 1, 2035. This bill would declare that it is to take effect immediately as an urgency statute. TWO_THIRDS NO YES NO YES YES NO NO NO NO NO The people of the State of California do enact as follows: <caml:Num>SECTION 1.</caml:Num><caml:Content><xhtml:p>The Legislature finds and declares all of the following:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>Hospitals are essential health care infrastructure.

Every year, California’s hospitals save countless lives, restore patients’ health, and provide livelihoods for hundreds of thousands of workers.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>Timely access to hospital care is critical to saving lives and preventing avoidable harm.

Hospital closures or significant reductions in services increase travel times, delay diagnosis and treatment, and heighten risks for patients experiencing time-sensitive medical conditions, including heart attack, stroke, sepsis, respiratory distress, and obstetric emergencies.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>Hospitals across the state are in severe financial distress. Nearly half of California hospitals are operating in the red.

Now, as a result of the looming impacts of the federal One Big Beautiful Bill Act (Public Law No. 119-21), many more hospitals face a precarious financial outlook.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>Hospitals experiencing financial distress disproportionately provide care to underserved communities, including Medi-Cal beneficiaries, uninsured patients, and patients with complex medical and social needs.

They play a vital role as safety net providers and are central to advancing health equity in California.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>Hospital closures and service reductions have significant ripple effects on communities, including job losses, reduced local economic activity, increased emergency medical transport times, and the loss of clinical training sites that are necessary to sustain the health care workforce.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>The state has a compelling interest in preserving access to hospital services where closures or service reductions would threaten the adequacy of health care access for a community, particularly for underserved and high-need populations.</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>The Distressed Hospital Loan Program administered by the Department of Health Care Access and Information has proven remarkably successful in addressing short-term liquidity challenges, covering extraordinary or unanticipated costs that otherwise jeopardized the continued operation of an otherwise viable hospital.

To date, the program has helped hospitals keep their doors open, and hospital to reopen entirely.</xhtml:p><xhtml:p>(h)<xhtml:span class="EnSpace"/>Notwithstanding the success of the program, there is an acute and growing need for a second round of loans. These needs are driven by the volatile economic and policy environment causing rising prices and falling reimbursement. Loans provided through the Distressed Hospital Loan Program will provide sustainability while promoting accountability.

They will support hospitals as they implement corrective action plans, pursue operational and financial restructuring, engage in affiliations or transactions, address facility or infrastructure needs, and stabilize services necessary to maintain patient access to care.</xhtml:p><xhtml:p>(i)<xhtml:span class="EnSpace"/>Providing loans through the Distressed Hospital Loan Program is essential to prevent avoidable hospital closures, reduces downstream costs to the state associated with delayed or higher cost care, and supports the efficient use of public resources.</xhtml:p><xhtml:p>(j)<xhtml:span class="EnSpace"/>It is therefore the intent of the Legislature to reinvigorate and strengthen the Distressed Hospital Loan Program administered by the Department of Health Care Access and Information in order to preserve essential hospital services, protect access to care for Californians, and promote the long-term stability of the state’s hospital delivery system.</xhtml:p></caml:Content></caml:BillSection><caml:BillSection id="id_B2AACD87-F672-41AA-9592-B330E881A851"><caml:Num>SEC. 2.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink:href="urn:caml:codes:HSC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'107.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'129380.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section of the <caml:DocName>Health and Safety Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_AA82FC97-8241-4160-B78E-2C502A281898"><caml:Num>129380.</caml:Num><caml:LawSectionVersion id="id_D1712F3E-B90B-4B6C-A0D1-C5D0B29AFAAF"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>This program shall be known, and may be cited, as the Distressed Hospital Loan Program.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>This

section shall become inoperative on July of the year an appropriation is made for the purpose of implementing the changes made by the bill that adds this subdivision, and repealed as of January 1, of the next year.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection><caml:BillSection id="id_9A4E978C-1883-4E5C-9C1B-9B790C02560D"><caml:Num>SEC. 3.</caml:Num><caml:ActionLine action="IS_ADDED" xlink:href="urn:caml:codes:HSC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'107.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'129380.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section is added to the <caml:DocName>Health and Safety Code</caml:DocName>, to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_4997B42F-F284-4213-93F2-0531B5CFD9E1"><caml:Num>129380.</caml:Num><caml:LawSectionVersion id="id_AA58DE73-2CFA-49A9-B2D6-5D66736312DE"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>This program shall be known, and may be cited, as the Distressed Hospital Loan Program.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>The purpose of the program also includes providing interest-free cashflow loans or other relief as authorized by this

chapter to any hospital, regardless of ownership type or system affiliation, if the hospital, and its associated entities, if applicable, meet the applicable criteria for significant financial distress as established by the department and the authority.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>This

definitions apply:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>“Authority” means the California Health Facilities Financing Authority.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>“Closed hospital” means a hospital that closed after January 1, 2022.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>“Department” means the Department of Health Care Access and Information.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>“Not-for-profit hospital” means the same as a general acute care hospital described in paragraph (1) of subdivision (

d) of

Section of the Government Code that is organized as a not-for-profit entity.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>“Program” means the Distressed Hospital Loan Program.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>“Public hospital” means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to

Article 7 (commencing with

Section 37600) of

Chapter of Part of Division of Title of the Government Code.</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>This

definitions apply:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>“Associated entities” means any affiliates, subsidiaries, or other entities that control, govern, or are financially responsible for the hospital or are subject to the control, governance, or financial control of the hospital, foreign or domestic.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>“Authority” means the California Health Facilities Financing Authority.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>“Closed hospital” means a hospital that closed after January 1, 2022.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>“Department” means the Department of Health Care Access and Information.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>“Not-for-profit hospital” means the same as a general acute care hospital described in paragraph (1) of subdivision (

d) of

Section of the Government Code that is organized as a not-for-profit entity.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>“Program” means the Distressed Hospital Loan Program.</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>“Public hospital” means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to

Article 7 (commencing with

Section 37600) of

Chapter of Part of Division of Title of the Government Code.</xhtml:p><xhtml:p>(h)<xhtml:span class="EnSpace"/>This

section shall become operative on July of the year an appropriation is made for the purpose of implementing the changes made by the bill that adds this section.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection><caml:BillSection id="id_C299FE7B-43EF-44B0-B091-901E5FD48614"><caml:Num>SEC. 6.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink:href="urn:caml:codes:HSC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'107.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'129383.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section of the <caml:DocName>Health and Safety Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_9BD3C0A7-296D-425D-BC34-55ED562A9B45"><caml:Num>129383.</caml:Num><caml:LawSectionVersion id="id_157F8784-3060-4363-A72C-C8E9CAC46B81"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program.</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>(A)<xhtml:span class="EnSpace"/>The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The methodology for determining financial distress may consider such factors as the hospital’s prior and projected performance on financial metrics, including the amount of cash on hand, and whether the hospital has, or is projected to experience, negative operating margins.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>The methodology shall also be used for identification and monitoring of hospitals at risk of financial distress.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospital’s need for financial assistance due to financial hardship.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospital’s governing body to regain financial viability and continue to operate.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Before issuing a loan under this chapter, the department shall review the plan submitted by an eligible hospital and make a determination that the plan is viable and there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate as a hospital.

The department shall not issue a loan award if the department is unable to make this determination.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>Not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>The department shall have the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals.

In making its determination, the department shall consider the impact of any changes to the hospital’s service delivery on access to necessary medical care, particularly for beneficiaries of the Medi-Cal program.</xhtml:p><xhtml:p>(h)<xhtml:span class="EnSpace"/>The department shall make the methodology publicly accessible on its internet website.</xhtml:p><xhtml:p>(i)<xhtml:span class="EnSpace"/>This

section shall become inoperative on July of the year an appropriation is made for the purpose of implementing the changes made by the bill that adds this subdivision, and repealed as of January 1, of the next year.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection><caml:BillSection id="id_D7CDC062-14BC-4239-A9DC-AF398E3A6486"><caml:Num>SEC. 7.</caml:Num><caml:ActionLine action="IS_ADDED" xlink:href="urn:caml:codes:HSC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'107.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'129383.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section is added to the <caml:DocName>Health and Safety Code</caml:DocName>, to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_B0A9551F-6FF7-49B0-B27E-31232DB5ED1C"><caml:Num>129383.</caml:Num><caml:LawSectionVersion id="id_4AB26D88-CFB4-48A3-9C29-9C04C082C73C"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program.</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>(A)<xhtml:span class="EnSpace"/>The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The methodology for determining financial distress may consider such factors as the hospital’s prior and projected performance on financial metrics, including the amount of cash on hand, credit rating, debt capacity, capital investment, reserves, investments, commercial prices, and whether the hospital has, or is projected to experience, negative operating margins.

Projections shall account for impacts of federal and state policy changes affecting hospital reimbursement or health care coverage, including, but not limited to, the federal One Big Beautiful Bill Act (Public Law No. 119-21).</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>(i)<xhtml:span class="EnSpace"/>The applicable criteria for a hospital shall include the fiscal condition of the hospital, including revenues, reserves, profits, credit rating, debt capacity, capital investment, commercial prices, and assets of the hospital and associated entities.

To assess the fiscal condition of the hospital, the authority and department shall review financial reports from the hospital and consolidated financial statements from associated entities, if applicable.</xhtml:p><xhtml:p>(ii)<xhtml:span class="EnSpace"/>A hospital with associated entities shall only be eligible for state assistance from the program if the hospital’s associated entities are determined not to have capacity to provide sufficient financial resources to resolve the financial distress of the hospital.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>The methodology shall also be used for identification and monitoring of hospitals at risk of financial distress.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospital’s need for financial assistance due to financial hardship.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>Hospitals with associated entities shall submit financial statements and consolidated financial statements with information on all associated entities for the authority and the department to determine the hospital’s need for financial assistance.

The required financial information shall include, but not be limited to, all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>A statement of financial position, including reserves and investments.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Audited annual financial statements for the last three years.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>If the hospital or any associated entity is a for-profit entity, financial disclosure to the authority and the department shall include payouts to investors, shareholders, and management companies, even if privately held.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>The amount paid out to investors, shareholders, and management companies in the last three years shall be deducted from any loan amount from the program, if issued.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospital’s governing body to regain financial viability and continue to operate.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Before issuing a loan under this chapter, the department shall review the plan submitted by an eligible hospital and make a determination that the plan is viable and there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate as a hospital.

The department shall not issue a loan award if the department is unable to make this determination.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>The department shall consider requiring conditions on the loans to maintain timely access to services in the affected community.

Conditions may include, but are not limited to, all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>Maintaining labor and delivery services, emergency services, and other services that the hospital currently provides.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Continued participation in Medi-Cal, Medi-Cal managed care, and county contracts.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>Required or maintaining community benefit and charity care.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>For awards provided under this

chapter before the effective date of the act that added paragraph (2), not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>For awards provided under this

chapter after the effective date of the act that added this paragraph, any hospital, regardless of ownership type or system affiliation, shall be eligible for state assistance under the program if the hospital meets the applicable criteria for significant financial distress as established by the department and the authority, and, if the hospital has associated entities, the requirements for eligibility to receive the loan pursuant to clause (

i) of subparagraph (

C) of paragraph (1) of subdivision (a).</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.</xhtml:p><xhtml:p>(h)<xhtml:span class="EnSpace"/>The department shall have the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals.

In making its determination, the department shall consider the impact of any changes to the hospital’s service delivery on access to necessary medical care, particularly for beneficiaries of the Medi-Cal program.</xhtml:p><xhtml:p>(i)<xhtml:span class="EnSpace"/>The department shall make the methodology publicly accessible on its internet website.</xhtml:p><xhtml:p>(j)<xhtml:span class="EnSpace"/>This

SECTION 1. Section of the Health and Safety Code is amended to read: 129384. (

a) Notwithstanding

Section of the Government Code, unless subdivision (

c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first months and shall discharge the loan within months of the date of the loan. (

b) Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this

chapter shall be Medi-Cal reimbursements due to the hospital from the State Department of Health Care Services. The department’s or authority’s recoupment of these cashflow loans shall not exceed percent of the hospital’s respective Medi-Cal checkwrite payments until the loan amount has been satisfied. In the event that a 20-percent withhold will not result in full repayment of the loan within a 72-month period, the department may extend the repayment term of the loan. (c)

(1) The department, in consultation with the authority, and upon approval of the Department of Finance, shall develop an application and approval process for loan forgiveness or modification of the terms of the loan, including a delay of the beginning of the loan repayment period or an extension of the 72-month loan repayment term, or both. The process shall include, but is not limited to, eligibility criteria for an applicant for loan forgiveness or modification, including which portion of a loan may be forgiven or modified.

(2) The department shall provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. The Department of Finance shall be authorized to approve any loan forgiveness and any modification of loan terms that would result in the extension of the payback period by more than one year.

(3) The department shall also establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.

(4) Before any action on a request for forgiveness or modification of any loan that would result in the extension of the payback period by more than one year, and again not later than days after final approval or denial of the forgiveness or modification, the department shall submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of the request and the subsequent action, including a

summary of the request and reason for the denial, approval, or modification. (

d) This

SEC. 2.

Section is added to the Health and Safety Code , to read: 129384. (

a) Notwithstanding

Section of the Government Code, unless subdivision (

c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first months and shall discharge the loan within months of the date of the loan. (

b) Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this

(2) The department shall provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. No later than two months after the effective date of the act that added subparagraphs (

A) and (B), the department shall provide loan forgiveness to any participant of the program who received a loan under this

chapter before the effective date of the act that added subparagraphs (

A) and (B), if the department and authority determine the participant meets both of the following: (

A) The participant has demonstrated a good faith effort to comply with program requirements through January 1, 2026. (

B) Financial projections demonstrate that the participant will become financially distressed as a result of loan repayments under the program or other outside factors, including, but not limited to, the impacts of the federal One Big Beautiful Bill Act (Public Law No. 119-21).

(3) Before any action on a request for forgiveness or modification of any loan that would result in the extension of the payback period by more than one year, and again not later than days after final approval or denial of the forgiveness or modification, the department shall submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of the request and the subsequent action, including a

summary of the request and reason for the denial, approval, or modification. (

d) This

section shall become operative on July of the year an appropriation is made for the purpose of implementing the changes made by the bill that adds this section.

SEC. 3.

Section of the Health and Safety Code is amended to read: 129387. This

chapter shall remain in effect only until January 1, 2035, and as of that date is repealed.

SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of

Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to prevent further hospital closures and reductions to health care access in vulnerable communities, it is necessary that this act take effect immediately.

Document details

Collection	California Bills
Citation	AB 1923
Date	2026-07-02
Type	bill
Language	en
Source	CA_BILL
Identifier	20250AB192395AMD