Imperial Valley Coalition for Sustainable Healthcare Facilities

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Applauding AB 2098 Help for Hospitals

Assemblymember Eduardo Garcia and Senator Steve Padilla continue to focus on health care and its financial situation. Assembly bill 2098 authored by Garcia has recently been approved in the Assembly and moves to the Senate for Padilla’s management of it.

The summary states, “Under existing law, the California Health Facilities Financing Authority Act (act) authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions, as defined, for financing or refinancing the acquisition, construction, or remodeling of health facilities. Under the act, the authority is authorized to issue revenue bonds to provide the funds for achieving these purposes. Existing law appropriates $40,000,000 to provide cash flow loans to non-designated public hospitals, as needed, due to the financial impacts of the COVID-19 public health emergency. Existing law requires the non-designated public hospitals participating in this loan program to repay and discharge the loan within 24 months of the date of the loan.

This bill would extend the repayment requirements for public hospitals participating in the loan program, by requiring those hospitals to begin monthly repayments on the loan 24 months after the date of the loan and discharge the loan within 72 months of the date of the loan, as prescribed. The bill would require the monthly payments to be amortized over the term of the loan, at 0% interest. By removing restrictions limiting the expenditure of moneys appropriated for purposes of these loans, the bill would make an appropriation.”

In essence loans from the State of California authorized due to COVID-19, if approved, would not need to be repaid within 24 months but within 72 months –so six years. Two questions come to mind.  The first is with the financial condition of the State of California with a projected $44.9 Billion shortfall or with proposed budget cuts to education, homelessness, and funding delays, can California afford this deferral of payment? The total budget for these COVID-related loans was $40 billion, but it is unclear how much was loaned.  It is interest-free, so with the inflation and decreasing value of the dollar, repayment of the any of $40 Billion loan will be certainly less than that amount.

The second question: Do our two local hospitals need this deferral to continue to operate? Assemblymember Garcia’s press release indicates a total loan of $17 million for the two hospitals.  PMHD borrowed $6.7 million and owes $3.8 million which is due in spring 2025.  Based on that, ECRMC borrowed about $10 million.  ECRMC’s financial reporting does not separate that debt from the larger bond debt. I am sure both would be grateful for the deferral.  This debt is separate from the distressed hospital loan for which each received $28 million in late 2023.

Looking at the April 2024 financials for both hospitals indicates that April was not a financially strong month for either hospital.  PMHD had a negative $1.095 million and ECRMC lost only $872 thousand.  The Year to Date provides a better picture of the ten months of the fiscal year.   PMHD’s YTD reflects $7.908 million against a projected budget of $2.649 million. ECRMC’s YTD is not as good but reflects improvement.  It is $15,763M against a negative budget of $3.641 million.  PMHD’s cash on hand increased from 94.6 days in March to 95.6 in April.  ECRMC’s cash on hand decreased from 52.02 days in March to 48.51 in April.  You may remember the Electronic Medical Records (EMR) provider will not allow implementation unless the cash on hand is at least 50 days.   PMHD has implemented the new system and the May 24, 2024 board report indicated they are still learning to navigate the system.  ECRMC has yet to implement and based on the stated 50-day Cash on Hand condition it is unlikely to do so in the remaining two months of the fiscal year.  

We have been critical of AB 918 authored by Garcia and Padilla, and we still find the bill greatly flawed.  We, however, applaud AB 2098 as championed by the District Hospital Leadership Forum and hope that the ever-tough Senate Finance Committee ignores the California deficit and progresses AB 2098 for Senate confirmation.

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