May 5, 2026 · Budget Fiscal · 13,516 words · 21 speakers · 119 segments
Thank you. view will come to order. We are beginning as a subcommittee. We have seven members present. We need 10 for a quorum. So if you're within my voice and you're a member of the budget committee, please report to room 1200 in the swing space. The public comment will be heard after the presentation and discussion. And today we're going to hear Assembly Bill 108, which is a budget bill Jr., which amends the Budget Act of 2025 and take immediate actions that can't wait until we adopt the final budget in June. Specifically, this bill establishes a one-time $25 million grant program at the Department of Healthcare Access and Information, or HCI, to support grants to hospitals in immediate and significant financial distress. In 2023, the legislature appropriated $150 million available for loans to distressed hospitals. 17 distressed hospitals availed themselves of those loans in that year. Now that we have delays in the federal COAF program and reductions in other programs at the federal level, it has put some hospitals right back in the financial crosshairs again. And I know that both sides have spoken up about hoping that we address distressed hospitals in some way with the budget that starts in July 1st. I know the Senate Democratic plan has $200 million for distressed hospitals in it, And I have a letter from the Republican caucus in December that states their desire that distressed hospitals be addressed going forward. But a few of the hospitals might not make it until July 1st. That is what this budget bill, Jr. addresses. This bill additionally makes a technical change to ensure eligible low-income seniors who have applied for property tax deferments receive their relief in 2526. So that is where we are today. I am going to ask the vice chair if he has any opening comments. Then we're going to go to the Department of Finance, and we have the legislative analyst here for questions. and then we'll move ahead.
Thank you very much. I just have about 45 minutes of prepared comments
because this is a highly controversial proposal.
I was going to say it must be support, support if you have 45 minutes. So, no, just very briefly, this is a needed proposal. Happy to see the Senate Democrats addressing distressed hospitals and the plan for the upcoming budget year There are those with severe cash issues might not make it to receive perhaps help in 26 27 But I'm really looking forward to the May revise next week, which I'm sure we'll have more to talk about then. Thank you.
All right. Thank you for your comments. and we'll go to other members after we hear the presentations. So let's go to the Department of Finance and let me welcome Guadalupe Manriquez from the Department of Finance.
Thank you. Good morning, Chair Laird, Vice Chair Nilo, and members of the committee. Guadalupe Manriquez with the Department of Finance here to present on AB 108. As you nicely summarized, AB 108 includes $25 million one-time general fund for grants to hospitals in immediate and significant financial distress to help prevent the closure of these hospitals. This bill also makes a minor technical amendment. Given that this funding is intended to provide support in the short term for hospitals in significant financial distress, eligible hospitals must apply for a grant and have less than 10 days cash on hand, have demonstrated best efforts to exhaust all other financial options, have a payer mix composed of more than 50% government payers and uninsured patients, and be a not-for-profit hospital. The hospital grant program will be administered by the Department of Health Care Access and Information. This bill also provides contract and rulemaking exemptions to allow the department to expeditially get these dollars out the door. And with that, I conclude my presentation, and we are happy to respond to any questions. Thank you.
I know the LAO is here for questions, but do you have any comments you would like to make? Okay. Thank you very much. And just to members of the Budget Committee, we are one short of a quorum, so please report to Room 1200. I am going to bring this matter back to members of the committee. Are there any questions or comments? Senator Weber Pearson, and then I'll go to... Okay, Senator DeRosa. Okay, Senator DeRosa.
Thank you. Thank you very much. I just want to ask about to prevent the closures, is the amount sufficient to prevent closures? And how many hospitals currently meet the criteria that you've laid out? And how did you determine the $25 million?
So, thank you. You know, I'm sorry. Think about the answer for a second.
A quorum walked in the room, so will you please call the roll? senators laird here nilo here archuleta lakes pierre cabalden here choy yeah durasso here grove hurtado mcnurney here menjabar ocho abog perez reyes richardson seardo here smallwood cuevas We have a quorum. Thank you for letting me interrupt. And if you would address Senator Tarazzo's question.
Sanal Patel, Department of Finance. So with respect to your question of how many hospitals would be eligible, so as my colleague noted, eligible hospitals must meet certain criteria, including 10 days cash on hand. And the department will establish a process pursuant to this bill's requirements so that eligible hospitals can apply and demonstrate their eligibility for the grant funds While the Department of Health Care Access does collect certain financial data from hospitals what we don have is data as of April 15th So we can definitively say the number or which specific hospitals would be eligible. But what we do know is based on data from 1231 is that there are some hospitals that could meet this criteria. However, due to the volatility in revenue, daily cash flow streams, the bill itself would allow the department to make that assessment as applicants submit their applications for grant funding. And then with respect to the dollar amount, you know, the chair's comments are accurate. We have less than two months left in this fiscal year, and the intention of these funds is just to provide a bridge so that these hospitals can stay open until July 1. Therefore, based on the very stringent criteria for these hospitals, this amount seemed reasonable, but to the extent this is something that we can continue these conversations with the legislature.
Yes.
Jason Constanturo, Celio. I just wanted to add, you know, again, I think it's a little hard to say at this point how many hospitals would sort of qualify or really getting a sense of what is the real need across all hospitals that sort of will evolve over time. But I just, for some context, the Distressed Hospital Loan Program, which HKI initially initiated in 23-24, was $300 million. So this is a little less than 10% of that amount. And that amount stretched across about 16 hospitals and was really meant to carry them forward through quite a bit of time. So, you know, again, that just sort of gives you a sense that this really probably would serve more like a shorter-term sort of approach that would sort of carry hospitals down for a few months and then could be revisited as part of next year's budget cycle. The other thing to note, too, is some of the financial pressures that were noted, Like there's been a delay in approval of the hospital fee program and Medi-Cal. That's a few billion dollars. So that's quite a bit of money. But that is a delay that the department has reported that it's making progress towards getting that approved. So this could be somewhat of a timing issue, too. There are some issues there that could mean that maybe it is just a few months of insecurity. But we are dealing with some uncertainty here given sort of the limited data.
Yeah, I mean, I'm concerned about that because obviously we don't want any hospital to close down. And so between now and June, you know, if we don't have the information, would it take $30 million? Would it take $35 million? I'm just looking at and asking about who would fulfill that criteria so that we don't find ourselves even before June, within these two, three months, two months, with hospitals closing down because, you know, they couldn't stay open. They didn't have the resources to stay open. So that's my concern is are we doing enough, even in the short-term two months, are we doing enough to keep them from closing down so then we can actually get to something a little bit more stable. No? Okay. So I'm a little concerned about that, and I definitely support, wholeheartedly support. I just want to make another comment on a related but different item, which is our children's hospital, Los Angeles Children's Hospital. largest pediatric safety net provider serves children from across the state provides 17 of all California children services in patient care 75 of their patients are insured by Medi This hospital is the highest recipient of Medi-Cal supplemental payments. In other words, we're serving the poorest and the most seriously ill. The CHLA provides care to children from every county in California, and because highly specialized pediatric care is limited statewide, families in every part of the state rely on this hospital for complex care. So I am requesting $63 million for Children's Hospital of Los Angeles from our budget this year. Thank you very much.
Senator Weber Pearson.
Thank you, Chair. I really want to piggyback on what Senator Durazo was just referring to, because although I am very happy that we are addressing the needs of our hospitals, who we know have been in distress for a very long time, I am also concerned about the money, the figure, that had to come from somewhere. And so I know she asked about where that dollar figure came from. I don't think it just came out of the sky. I'm hoping that some data was looked at. And so I'm wondering if you can elaborate on that a little bit for me.
Yes. So this is our best assessment of what is needed at this time.
How did you come with that information? What data points were you using to say this is?
Yes. So unfortunately for something like this where hospital revenue is so volatile, we, again, made our best assessment that $25 million is what can substantiate hospitals to get them through the short term for the next few months. We, unfortunately, don't have much data to provide a more specific figure.
What data points did you use?
again it's very difficult to protect something like this. If I can jump in for a second because I think I might be able to provide a little more of an answer. And based on a look at hospitals across the state, we're fairly certain that two fit this and possibly a third. And they are in completely different parts of the state. And there was a calculated decision, I believe, to not name the hospitals in the bill because, A, they had to meet the criteria, and, B, you don't want to cause a run on their vendors by naming them and starting this before this bill is approved and they have the cash to pay those vendors. And so I think it is in the low single digits of those. and I want to draw a distinction because I've talked to a lot of you individually, and the distinction is people say, I have this distressed hospital, and my response is, will it run out of cash before July 1st? And generally the answer is no. And then that means that however much we hopefully put in the budget next year for distressed hospitals starting July 1st, we'll address those issues. And Senator Garazzo mentioned one. And so that's the sequence of this, just trying to get a very few hospitals to July 1st and then hope in the budget process we address. things for all hospitals that might be distressed after July 1st.
Right. Thank you for clarifying that because, you know, my hope was that we weren't just pulling a number out of the sky, that there was actually some evaluation that was done, not asking for specifics, excuse me, as far as location and the name of the hospitals, but that there was something done to say, okay, these are the entities, This is the number, right? When you have a report that came out by Public Citizen like a couple weeks ago stating that 83 hospitals are at risk. I don't know if those 83 meet these criteria or if it's a smaller number, which would mean that somebody would have had to actually go and look and evaluate to say of these 83, 85, two would actually not be able to survive at the end of this fiscal year. So that's really what I was looking for, to make sure that someone had actually done some work and not just picked a number out of the sky, because then we could end up here, you know, in a month trying to augment this $25 million. Thank you.
Thank you. And let me add one thing to that, and that is when I personally reached out to the administration six to eight weeks ago on this subject, there were a few more hospitals that were in this situation. But in one case, a county helped. In another case, UC helped. Another case, a third party stepped in. And if there hadn't been some of those emergency efforts, this might be six, seven, or eight, as opposed to two or three or something in that ballpark. Thank you.
Then next in line, and I'm going to add you, Senator Cobald. Next in line is Senator Blakespear.
Yes, thank you. I appreciate the chair clarifying and making more specific some of the details. So it does seem as if the goal of AB 108 is the same goal as the distressed hospital loan program. And so there are a number of other hospitals that are maybe not quite as acute but close. and they, including one in my district, Tri-City Medical Center in Oceanside, which received $33.2 million through the distressed hospital loan program and does remain responsible for repayment. So that's on their books. And I think one of the questions is just how we approach this as a state. If our approach, are we thinking that there have been a lot of calls for loan forgiveness for the hospitals, the distressed hospitals, who did access the DHLP program. But I'm just wondering if there is an evolving perspective from the administration about if distressed hospitals now are more appropriately treated as needing grant funding instead of repayable debt. So if someone could answer that, I'd appreciate it.
Yes, so this program is, given the immediacy of the needs, this program is designed as a grant program. So as you noted, the Distressed Hospital Loan Program, that is a loan program. There is a component of loan forgiveness that is embedded in that process. And we designed that program as a loan program because our goal at the time was to bring these hospitals to financial stability. BUT IN THIS CASE, GIVEN THE IMMEDIACY THAT WE WANT TO GET THESE DOLLARS OUT, WE ARE DESIGNING OR THEY ARE PROPOSED AS A GRANT. OKAY SO I DON KNOW IF YOU WOULD REALLY ADDRESS MY QUESTION OF IS THERE AN EVOLVING UNDERSTANDING THAT MAYBE THE LOANS SHOULD BECOME GRANTS OR THAT THAT WHERE WE HEADED But I don know if you would really address my question of is there an evolving understanding that maybe the loan should become grants or that that where we headed So I think that the conversation we continue to have with the legislature as we finalize the 2026 budget
Okay. Okay. And then just the last point is that, you know, we do, there are hospitals that are looking at innovative partnerships, and we see that with UC and counties as was referred to. And so setting up the system so that we incentivize innovative partnerships and don't drive more hospitals not to do that or penalize those who are seeking the innovative partnerships so that we can try to create, of course, as much success as possible and as few closures as possible. That should be an overarching goal. So just pointing out that it can disincentivize the partnerships when we do it this way. But I also, of course, understand the need to make sure that we don't have hospitals that are eminently closing before the end of the fiscal year. So with that, thank you. I'll yield back to the chair.
Thank you very much. Senator Smallwood-Clavis.
Thank you, Mr. Chair, and really appreciate the conversation. And I think I'm aligning and I'm getting some of the answers to the questions that I had. And thank you, Mr. Chair, for that explanation. that explanation. I just want to point out that Martin Luther King Jr. Community Hospital is one that punches well above its weight. It is a hospital designed for, you know, at best, you know, 100,000, 150,000 folks. They're getting almost half a million folks who are coming through that door, plus a year, provide some of the only maternal, particularly black maternal health services in the county. and we know it's a medically underserved community. About 87% of its emergency room visits are from Medi-Cal and uninsured patients. So, you know, this is a hospital that is anchoring our region, financially unstable, mainly because of HR1 is really devastated, what stability we had hoped that it would have through investments last year. And even though it's, you know, maybe not July 1, but it's probably July 30th, August 1st, going into the new year. And this means that a lot of our South L.A. residents are pregnant, women, our seniors, folks with chronic conditions, families without other options, will lose access to all care if we are not very careful about ensuring that this definition stretches to include those hospitals that are always on the margin. We've already seen what happens when hospital access disappears. MLK's predecessor, King Drew Hospital, closed in 2007. And the current MLK hospital is, again, we know facing financial pressure that continues to rise. So we have heard that, you know, we shouldn't see a hospital that's waiting for fewer than 10 days of a cash on hand, and that's kind of where our situation is. Down at MLK, we've got to figure out a process that includes our hospitals that are and historically been on the brink. I appreciated the comment about the definition of distressed hospitals and the partnership. So I have two other hospitals in my district that we are working now on with HKI and Department of Health Care Services who were distressed There was a partnership to save them but then when they actually got possession of the hospital and saw the books, the real numbers, the hospital is back on the brink of being distressed. That's 3,000 jobs that could be lost in Culver City alone if this hospital network is not supported. And so, again, you know, there are those who are within months of closure. There are those who are within six months, you know, to a year of closure. And there are those who we took from the brink but now are back there. So I just hope that we continue to work through definitions. I, too, have a series of questions about how we arrived at the $25 million. dollars, is that enough to sort of address more broadly, you know, how vulnerable these hospitals are and how do we keep more hospitals from falling into the distress column while we're keeping those from imminent closure? So my question is, is the 10-day threshold that's intended to limit funding only to hospitals in the most extreme financial distress, does H-Chi believe that waiting until the until a hospital has fewer than 10 days of operating cash is the main criteria for determining when we would intervene. Is that enough time to prevent closure? And more broadly, you know, is there sort of a rubric or formula that hospitals can use to kind of really determine how close they are to that threshold of distress?
Thank you for your question. So, again, I think given that this program is short-term in the current year to get us through the next two months, again, designed to help those hospitals that are most severe and urgent distress, that was a metric that we think is reasonable. Acknowledge your comments about the broader hospital delivery system, and I think those are conversations that we're going to continue to have with the legislature. But at this time, this program is intended to really capture those hospitals that will have challenges in the next, you know, two months, weeks to two months. So, again, this is a current year fix to the problem.
Okay. And so is there, just going back to assessment, because I hear that there will be apparently a reassessment to look at hospitals that are maybe, you know, beyond the 10-day. limit, but I'm curious just, you know, what are you sharing with centers that are facing some fiscal distress right now who do believe that they in a few months will be distressed? Is there, does this present a formula for how we will factor them into whatever the next request? Because as Senator Weber Pearson said, we'll come back here next month to kind of look at the next group of hospitals that have now approached that cliff. what are you doing in addition to asking for $25 million, what are you doing to really do that assessment and to see where the needs are and how quickly intervention is going to be required?
So I think one of the ways in which HKI does, they do collect quarterly data from hospitals on their financial status They collect information about assets revenues balance sheets That data does have a lag so it isn intended to necessarily inform immediate decision such as this program would. Therefore, there is a need to collect most recent data, and that's what the grant program requires of applicant hospitals. But they do collect quarterly data, and they publish that. So the last point-in-time data we have is 1231, as we mentioned earlier. And that data is best used for sort of year-over-year trends. So for those hospitals that we're seeing long-term financial distress, that's the kind of data that can be ascertained from that. But again, as my colleague has noted, the intent of this program is really to look at those hospitals who are in the most dire distress as of today and who are basically at risk of imminent shutdown. Unfortunately, the data as of 1231, while it can potentially give us hints as to who might be eligible, because revenue is very volatile, and you've mentioned, others have mentioned that it can change in month status. it's difficult to use that old data. So we don't have data like as of yesterday, for example, to make that assessment. And that would have to be part of any grant or program that the future budget includes so that we can have the most point in time data and address sort of the most urgent issues. So I think we do have some data that may inform some of the questions you are asking, but it will not always be the most point in time just given data lag. So that would be part of any grant program or any kind of program that we would want to put together in the future. It would be important for us to have that assessment,
especially because I don't know if some of these hospitals can wait a whole quarter. And I'm thinking about MLK Hospital in particular. How are we able to have that assessment and not have it be one where we're just coming special budget hearings to ask for additional funds? Because we've heard someone let us know that this hospital or that hospital is going into distress. How do we actually have a system in place that have an emergency assessment mechanism? because we know we've just heard three other hospitals mentioned today that are not the ones that the chair has talked about. So I think that there certainly is a need for a more immediate system.
Senator.
I'm wrapping up. No, that's not it. The legislative analyst had his hand to be recognized.
Okay, sure, please. I just wanted to offer some additional comments to your questions, and there are kind of three points that your comments made me think about. The first is you asked, well, you know, there's the 10-day threshold, the right threshold. And I just want to emphasize that this does appear to be designed to be a bit narrower. And, again, this is sort of an early action. This isn't the last opportunity you'll have to necessarily weigh in on the issue. But the distressed hospital loan program had a bit more of a comprehensive way of looking at distressed finances. It actually, at the minimum, used a 30-day cash on hand. But even if you had more cash on hand, it was sort of a point system. And then looked at other ratios, other financial ratios too, including your margins. It also looked at how important the hospital is in the community. Is it the only one there in the community? So there is a more holistic way to think about it. HKI does appear to have applied that a bit more in the more comprehensive program. And so, again, this does appear to be a bit narrower. We're kind of getting at that few-month sort of issue here. But this isn't the last opportunity you'll have to weigh in on it. So I just wanted to make that first point. Second point is, you know, when we're thinking about hospital finances, you know, an important part of this is, you know. not only to help assist them, but what's the long-term sort of turnaround plan? And I think this is a key lesson where the state's sort of learning still as we're implementing the Distress Hospital Loan Program. And I think a key question to keep an eye on is have the loans sort of helped contribute to the sort of long-term financial stability? And if hospitals are still struggling, you know, what are the underlying causes? So that will be something to sort of keep an eye on. And then the third point I just wanted to emphasize is that the hospitals that are in sort of financial distress, we're talking about today, is really before a lot of the effects of some of the recent changing landscape has come into place, some of the recent changes in HR1, some of the recent changes in the state sort of budget solutions. And that could put additional pressure, not just on hospitals, but also other kinds of providers like clinics or counties. And we've really emphasized sort of this year, you know, some of these issues might raise really long-term structural issues. It's just not reasonable to expect your ability to really grapple with all these in May in such a short turnaround. So in the short term, you know, one key area of focus could be to get to really improving the data we get. We get a lot of robust data on hospitals. Also, to some extent, clinics, a lot less so in counties. But even on the robust hospital data, it's a lot of data, but there isn't always enough analysis. And so often you're coming to these hearings and you're asking, you know, what does all the data mean? You want a little more concrete information. So the legislature could focus on ways to sort of improve the reporting process so that it has more up-to-date information and analysis. to help kind of inform decisions in the future. So those are kind of three areas you could think about as you're sort of thinking about this particular action.
Yeah, I really, really appreciate that. I appreciate that. And that's, you know, one of the challenges we have for hospitals that have previously received support, including safety net hospitals like MLK, was the funding enough. And I don't know because we don't have the data to show what happened with the funding that we gave and was it enough and have that assessment. So your point, I think, is really well taken and important. And then I think we also have to have a question of if not, like if that funding was not adequate, you know, how do we get a sense of what are the underlying factors that cause the hospitals to fall into distress? And I don't know, in this emergency spending, can we add that data so that, you know, as we talked about trends, we can sort of anticipate what might be coming? Is that part of what this sort of tranche of dollars can help us collect data on to understand what is actually happening in those hospitals? and, you know, was this enough even for the Band-Aid solution? And then, you know, and what were some of the contributing factors? What are the strings, data strings tied to this money?
Right, and you really ask an analytical question. So, you know, we can get lots of data out there, but if it's not really being analyzed, that's really the next step is understanding the underlying causes of hospital financial distress. It's the sort of thing the legislature could think about. But again, our HCI department is very well situated. They have a lot of that data. Our Department of Health Care Services also is involved in ensuring access for low-income people. So that would be something that we'd want to look at more to think about, not just do we have the data, but then what do we do with the data? How do we analyze it to answer the key questions that we need to know so we're making?
My question is is that being asked as part of the million additional funds that are being requested now So as part of the eligibility criteria we are asking for specified financial statements so that would include the last audited report as
well as internal recent month closed financial statements and that basically helps to verify the 10-day closure as well as other data. There is a provision in this bill that gives HCI flexibility to add any other criteria that they deem necessary. So one potential option could be that they would potentially explore, but also managing all that information against the succinct timeline in which they need to set up, establish, and get that money out the door. But they could potentially consider turnaround plans and things like that. So I think it's a little hard for us to define at this point what exactly they would require, because ultimately the goal of this funding is to get money out the door and prevent the closure. And H-Chi would want to enable eligible hospitals to do that as quickly as possible. And they will be collecting some data just to ensure eligibility for the program, too.
Yeah, I understand the expedient nature of this. But I also think it's incredibly important that we have data to determine how we prevent this from happening and also able to anticipate what other hospitals are going to be in a similar situation because indicators from this set of hospitals has shown us that this is a trend. We're seeing same things happening here, so we can expect that it may show up in these other hospitals that we also know are on the verge. So I'm hopeful that we can look at what not, you know, a whole survey of questions, but one or two that gives us a good sense of, you know, what is causing the overall distress and is this funding enough to fix the problem? And if not, what is needed and what's required? My last question is, hospitals receiving these funds, are they going to be required to maintain emergency services and avoid reduction in service? And I guess we will have an accounting, I'm assuming, of how these dollars are going to be spent specifically. We will have some sort of evaluative form that says exactly what these dollars were spent on. I'm very concerned about service cuts. We mentioned clinics. We have already closed about a dozen clinics in L.A. County because of H.R. 1. About 1,300 folks have been laid off already and more notices to come. And so if we are making these investments, I would hate to see an investment made and then have an emergency room closed or maternal health, the only maternal health ward in the region shut down. And just want to make sure that there is a requirement that basic care and health access is going to be possible at these hospitals.
If you can be brief, I have six more people in line, public comment, and everybody was promised we'd be out of here by 10.
I would say yes. The contract between the distaste and the hospital will lay out the terms of the requirement, including sort of service provision, maintenance, and other things. So yes, the intent of these dollars is to keep all services going through the end of the current year
Senator Ciarta and Senator Choi you're on deck. Thank you very much
As some of the other senators have brought up We have an issue not just with how do we throw everybody the lifeline to get them to July but also how big the lifeline needs to get them through the next year And one of the problems is our hospitals are not all the same. They're in different areas. They have different cost pressures. But some of the cost pressures that my colleague was referring to, I believe some of those are brought on by our regulations. earthquake mandates that are pretty unrealistic and hospitals are pouring money into trying to meet the mandate and they're getting fined when they don't. And so is that a cost pressure for the hospitals? Have you heard that?
We have heard concerns around seismic safety compliance, but we don't have any data in terms of how that ties back to the financial situation. So I have heard from hospitals that that's one of the cost pressures that is causing them to have problems. The other one is the Medi-Cal reimbursements.
They're reimbursed at 74%. And when you have labor costs that go up, but you're only going to collect 74 cents on the dollar to pay those labor costs, that's another cost pressure. Is that not true?
I note that the governor's budget does include roughly $400 million in new provider payments to Medi-Cal hospitals. Like I said, $400 million. and the state has had a long-term program, the Hospital Quality Assurance Fee Program, which the Department of Health Care Services is seeking federal approval, and that is estimated to result in $5.5 billion in support to hospitals. So there are existing payments that are trying to...
They're working their way through. ...that are addressing some of the concerns they're raising. And then other cost pressures include the energy and utility costs that have been driven up, basically by state policies. And so, you know, you've given all those issues. I think that's why we're having hospitals that are going under. And expansion of programs and things like that lead to costs. And when we mandate more costs, and they can't make up those costs in the patients that are coming in, we have a problem. Martin Luther King Hospital was brought up. Yeah, it went under in 2007. The reason it went under is because it was a level one trauma center, and they got people that were uninsured at all, and those are people that would still be uninsured today. That's where they got treated. That's where they got taken. Anybody that had insurance would not allow, as a medic, they would sign out AMA before they allowed us to transport them to that hospital. So they weren't getting people that were paying. They were getting all the people that weren't. And that's an example of a hospital that the state has to recognize that, you know what, those hospitals need that help if they're going to serve an indigent community or people that have the inability to pay. And so they can't be treated the same as another hospital that is suffering from the ill effects of these things that we've created in addition to. So, you know, this is an easy answer. yeah, we have to approve this. And to the concerns of is that enough? If it isn't enough, we'll just have to get another amount and approve that too because this problem is not going to go away until we address the underlying causes of why they're there in the first place and recognize that certain hospitals need different types of help because of where they are their reputation amongst people that would go there and the lack of people that are insured that will frankly entrust their care to some of the hospitals that are heavily heavily impacted And MLK was one of those. And the Level 1 Trauma Center program took a bunch of hospitals under, including Daniel Freeman Hospital, Martin Luther King Hospital, RFK Hospital, and that put additional pressures on the other hospitals. So that's what we have to address as a legislature. It's what we're doing to increase costs. We need to stop. We need to be able to help the hospitals that are providing that care to the most needy that can't pay. And then we have to try to help the hospitals in a different manner that are suffering from these cost pressures until we get those cost pressures down. And if that means doing some adjustments to mandates, then that's what it means we should be doing. But we are not doing that. I don't see any of that on the horizon. And so all I see is bailout, bailout, bailout. Hopefully this federal stuff will help. H.R. 1 had nothing to do with MLK going under. They weren't even in existence back then. And if I get this right, the federal government share of Medi-Cal this year, the cut is adding $19 billion.
I think there is a projected increase in federal funding in the governor's budget. That would be updated in May, of course. And it's largely driven by assumptions and getting more managed care payments.
It was $19 billion. That's hardly a cut. So thank you. Thank you very much, Senator Choi. And Senator Richardson is on deck.
Thank you, Chair. My concern is largely addressed by Senator Seattle. There are many hospitals who are not in this dire financial distress. So my assumption would be probably correct that these hospitals who are under financial experiencing financial distress is largely serving the patients who are dependent upon Medicare. And as it was mentioned that the Medicare services are underpaid. And if we keep on saying that we've got to find out the underlying causes, what are the underlying causes? I can say that the underpayment will be dramatically negatively impacting hospitals when they are paid only, what, 74%, 76% of the request. So I think that's the address, the state policy. Why aren't they cover enough funding for medical patient treatments? And then also we had, as a sanctuary state, we had a lot more medical patients, undocumented people who uses our medical services. And then that caused our deficit in the Medicare cost. And that cost also contributed to the deficit of the state budget. So this is all the chain event. And if we continue serving large amounts of undocumented people, and at the same time they are treated but they are not fully funded by the state, then this cycle is not going to break. It will continue this kind of emergency stopgap measure and one-time Band-Aid kind of aid. We are forced to support very reluctantly to save the hospitals to continue their service in their regions. But I think fundamentally we need to look at what is the real cause of underlying causes for this financial distress that certain hospitals are only experiencing. That's my point. If you're not coming back, that's fine.
Does that complete your comments, Senator?
Completed.
Thank you very much. Senator Richardson and Senator Nielo on deck.
Thank you, Mr. Chairman. First of all, when it's appropriate, if anyone hasn't noted a bill willing to or yet to move the bill, I'm prepared to do so. But I'd like to make a couple comments. One, this sounds a lot to me like an experience I've had where you go to the doctor and they tell you you're pre-diabetic. Your mother was diabetic. Your father was diabetic. You're pre-diabetic. But, oh, by the way, we can't give you the proper medication because you're not diabetic yet. So, oh, we're going to wait until you become diabetic to actually give you the medicine so then we can help heal you, which ultimately is going to cost a whole lot more. That's what this sounds like to me. This sounds like for hospitals, you know, certainly there's no dispute, as everyone has said, we need to pass this, which is why I'm prepared to make the motion. But I don't think we're dealing with the problem. It's like we're saying to the other hospitals, well, you're pre-diabetic, and in a month now you'll be diabetic and so we'll help you. And I don't think that that's fair. So what I'd like to suggest that we consider doing, listening to everyone, and I thank the people who mentioned MLK, which is also the hospital in my district. It puts us, what I'm hearing and I can say for myself, this puts us in a bad position because now all of our other hospitals are going to come to us and say, well, I'm pre-diabetic too. You know, I may not be 10 days, but I'm 20 days or I'm 30 days or I'm 40 days. And so we're all going to be put into this whole, you know, everyone is, well, we need help too. So my suggestion, what I hope the chair would consider, is maybe we could have a hearing within the next, you know, seven days, five days, whatever would be appropriate, but certainly timely. And answer the questions of what the members are asking. Where is the data? Where is the information on all of our hospitals? What are their situations? what would be a potential solutions that we could consider? Is it eliminating the loans that hospitals have? Is it saying that if hospitals meet these three criterias? But I don't believe it's sufficient enough to say we're going to wait until the next budget year. And the reason why I say that is we are six, eight months out from the next budget year. And I can tell you these hospitals yes maybe 10 days You might still be stuck in when the federal fiscal year is The state one begins in six weeks or seven weeks Okay. Well, my point, though, is we haven't established that this would go into effect, for example, in July or in August or whenever it would be. And I think that's part of the problem that we're hearing of the discussion. There's no communication about what about everybody else that's pre-diabetic? What are we going to do for those? So I would respectfully ask of the chair that we would consider doing a second hearing, answering the questions that members have asked, so that we're prepared to say, one, what are all the hospitals that should be considered? Two, what are the issues that they're facing? Is it the reimbursement? Is it the loan payments? What is it? And then number three, and others have said it, how much money do we need? And we should be able to have that discussion, know the information so we're prepared to move immediately and we're not just, okay, well, for the next budget we're going to need $100 million or we're going to need $200 million. That may not be enough. And I think people are looking for us to be responsible, to understand the issue, and to address it. and I don't feel that we have been provided the sufficient information to be told, what about everybody else that's pre-diabetic? And then my last thing is I just want to say that I do believe it's inherently unfair to present a program that is a grant for some hospitals and other hospitals received a loan. That's not right. I think the first thing we have to do is if we're going to start doing this, we need for any hospital that had an outstanding loan that needs to be addressed. Because otherwise, some are getting help, others are not, and it's just not. We have a responsibility to be fair. So I'm prepared to move the bill, but I would like to know from the chair if you would be willing to have us come back based upon the feedback that we're hearing and really get a handle on what are we going to be recommending, what are the key components so that we can go back to our hospitals and say, yes, we understand, yes, we're going to have the information, and yes, we're going to have a plan for starting July or whenever that is.
Let me respond. And first, this bill comes at a completely inopportune time in the budget process, and the time was not dictated by us. It was dictated by a few hospitals going under. and in the ideal world we would do this for the fiscal year starting July 1st. I'm sorry the chair of the health subcommittee isn't here yet because they have had some of these discussions in the subcommittee and she could report. But the important thing that is responsive to your question is we will have the May revise next week and we will be having hearings on the May revise. And I suspect the May revise will address this. And when it addresses it, it is very appropriate for the budget subcommittee to hear that recommendation against the questions that you raised. And I understand the discomfort that it causes with hospitals in your district. but right now it's if the hospital's not going under by July 1st, we intend, and you know we have talked about this among senators, and it is in the plan that we have proposed that there be a substantial amount for distressed hospitals starting July 1st It important given some of the early questions in this hearing that we discuss whether that enough And I don't want to bog us down by going into another subject, but I know that there's been a process since some of the hospitals have moved into forgiven status on the first thing. There is a process embedded in that to deal with that. And if they are, in fact, diabetic, that will allow them to have the loan forgiven. So I think the real issue is we will address these issues after we see them they revise, and they have been talked about in the subcommittee already.
Mr. Chair, thank you for that. My only request would be that the witnesses here are prepared to answer the questions that we've asked when that May revise comes out. They need to be able to tell us the data. They need to be able to tell us the status of all of our hospitals. They need to be able to tell us how many loans are outstanding, how many can be forgiven. They need to be prepared to answer those questions so we can move on policy. That's my only request. And I'm willing to wait until May revise and willing to wait until that hearing, and I'll certainly be present. But thank you for the willingness. Thank you for hearing and understanding. You know, we're dealing with, all of us are dealing with distressed hospitals, and this has to be a priority of this legislature. So I move the bill with that.
Well, we'll wait until the public comment, and then we will do that. But thank you, and we note your comments. Senator Niello and Senator Cabaldon is on deck.
The proposal before us this morning on the surface is very simple, imminently supportable, and if that's all we were looking at, this hearing would have ended 30 minutes ago. What we're seeing is, number one, I think we're going to find that there's probably more than just the two or three hospitals that we're initially thinking of that will meet these criteria. We might be surprised by that. That brings up the question of the amount, I suppose. But the importance is that we get the information out when we pass this, that we get the information out more broadly so that we will find out how many hospitals are threatened with actually going out of business by the end of this fiscal year. The other thing is the conversation, without going through all of it again, but I just point out, it begs the question of really a systemic problem, systemic in terms of the health of the hospitals and the health of the hospitals being negatively impacted by policies of the state, as Senator Ciardo pointed out. And that needs to be part of the discussion. But this also emphasizes, it puts an exclamation point on the fact that going into the next fiscal year, we really do need to have a formal proposal and formal money set aside to assist distressed hospitals and with grants, not with loans, to make it more fair, even playing field. Thank you.
Thank you very much, Mr. Vice Chair. We'll move to Senator Cobaldon, and Senator Grove is on deck.
Thank you, Mr. Chair. We 56 days away from the next fiscal year and therefore a hospital with 54 days of cash left is in imminent danger of closing A key policy issue before, that many members on this committee have raised, is the 10-day threshold the right one? How would we know? But I'm not going to ask about it because I already know what the answer is going to be, and this hearing has been profoundly disturbing. and we've been told simultaneously there's just there's so much data out there so much to analyze and you know it's there's no time to figure that all out don't worry your pretty little heads about it there's just it's just too much for anybody to understand in the next 56 days so we just need something simple now but then when asked like what's the data then I regard this what's the But starting with the chair of the Senate Health Committee's questions, you know, okay, how, what's the criteria here? How do we figure this out? Well, we've made an assessment. Based on what? Why should we support this? The administration believes it's appropriate. It's been one long, I said what I said, hearing. The Constitution reserves to the legislature the unique power to make appropriations. and this budget bill junior process is an extraordinary one. It is not the norm, and it is incumbent on this committee to be able to have real answers to the questions that are posed about the why and the evidence, that simply we believe what we believe, we said what we said, we assessed what we assessed and we can't tell you how, we used a Ouija board, all of those are unacceptable. We have to have the tool. And we look forward to continuing the conversation with the legislature that we are not having. We are not having a conversation. We're asking questions, fulfilling our constitutional role in this process, and getting zero answers, except from our own chair. That's completely unacceptable in our constitutional system. And I don't know if we need to start holding these hearings under oath, but we have to have answers so that we can answer the question. If I'm asked by my constituents, why did you vote for this? Our hospital has 12 days left. I can't say, well, if it was 12 days, that would have made this bill $800 million, and we can't afford that. I can't say that because we've been given no metrics, no milestones, no nothing for us to be able to say this is the right piece. And I have many distressed hospitals in my district, including in the loan program, so I associate myself with all the remarks that have been made by every single senator. But I just want to urge the administration to take this much more seriously so that we can do our job of being able to make an informed vote on this. I will vote for it today for the reasons that have been said. But this is no way to run a democracy in the administration, especially an agency for which information is in its name. please bring evidence, bring information where there are elements that you cannot share with us as the chair touched on for very good reasons. We're all adults. Many of us have been in private sector or local governments. We've dealt with confidentiality. We can deal with that too. But as the chair was an exemplar of what the presentation by the administration should have been to give us exactly the, at this hearing, would have been over 45 minutes ago. And so I would just encourage the administration to do that, this committee to continue to press to assure that we're able to make informed, well-reasoned decisions that will not solve the whole thing, but will be defensible for us and the Allow us to highlight the choices that we force. Mr. Chair, thank you.
Thank you very much. Senator Grove and Senator Reyes on deck.
Thank you. I applaud all my colleagues' comments, and I would like to just give you my summation on this. It's their job. They can't answer those questions until we get to the point of who in the room made the decision and took the little sticky note and put it on a whiteboard and said, this is what we're going to do to get us through this brief moment in time. Because I'll just start with the LAO, and then I'll get into the comment that I have. But on the LAO, this is not an end-all solution. How long do you think this is going to last? Hello, department. Yeah, so the question. Briefly, because the chair is in a hurry. Sure. So, you know, I have to say we have to get back to you. We have to work with your staff on getting the exact information you need. We did recently release a report on the money that's in this bill, although we are all going to vote for it because it is a lifeline. How long is this lifeline going to last? Is it even going to save the people who are in a 10-day time frame? Yeah, you know, we weren't involved in the development of this proposal. I didn't think so. What about you, ma'am? Is it going to save the 10-day hospital individuals? That is the intent.
I know it's the intent. Is it going to save them? We are, that is the goal. So $25 million one time in current year for hospitals that have 10-day cash on hand. I would note to the Senator's previous comments, we do have data. The department is not here with us to answer more granular questions on data, but I'm happy to take your questions and provide responses after if there are specific questions about what data. We do have some data related to the 16 hospitals that received loans through the Distress Hospital Loan Program. So we're here to present the bill at a high level, but happy to take more specific questions and respond back to the committee.
Is one of the things being considered that CDPH sometimes carries out these hospitals to 120 to 60 90-day payment terms, and they should pay their bills in 30 days like every other business in the state?
I'm not familiar with what you're noting, Senator, but I will take that question back.
And you'll find out if CDPH is paying in a 30-day or a 10-day time frame?
I will take that question back. Okay.
Do you know if there's anybody else that could be down here to answer our questions so that we could get out of this hearing?
What other questions do you have, Senator?
Well, obviously I'd like to know about the payment terms. I'd also like to know if this dollar amount is intended, and I see the well intent, but there's a lot of good intended things that come out of this building that don't solve the crisis on the ground. I want to guarantee that this money is going to help those people that are in a 10-day crunch. I also want to ask questions about policies that come out of this building, for instance, $25 minimum wage, the seismic issue that was addressed briefly. I have one hospital who is servicing a debt loan of $30 million every single month. The interest on it is just atrocious. If they weren't paying for that seismic remodel, which that building they fixed did not make it through the earthquake. The old building built with cinder blocks did, but this one has bathrooms tipped over. Nothing made it. So the seismic safety program, is that part of the cost increase that hospitals are facing?
As I indicated earlier, we have heard that seismic safety is an issue for hospitals. Common sense.
Just common sense. in your own thought process, do you think servicing a debt loan for $300 million is taking away from the care and delivery of care to certain hospitals when they have a certain amount of money to work with Is that common sense to think that that would be the issue So again is there a question about the bill before you Oh, no, I'm asking you a question about the bill before us. It's before us because of the hospitals having issues with the money that they expense out. Do you think, in your own expert opinion, that servicing a debt loan for a hospital for $300 million takes away some of their operating costs that would allow them to continue to provide services for the people that need services.
So the $300 million loan is interest-free? There's no...
I'm not talking about an interest-free loan. I'm talking about a loan that is being paid that the hospital and the community took out. This is separate. It's not... But I'm getting to the fact that we need this bill because hospitals don't have the resources to be able to serve our communities. I want to ask you about reimbursement rates for Medi-Cal. Medi-Cal reimbursement rates haven't been touched in years. The last time they were, they were swept. That was an MCO tax deal, and they were swept into the general fund budget, and providers are still not getting the money. Is that part of the problem that hospitals are facing because Medi-Cal reimbursement rates are less than 70% on the dollar?
So proposition 35, there was, and I can get you the figure, but I think over $1.5 to $2 billion in provider increases. Has Medicare reimbursement rates been increased in the last decade?
They have.
Prop 35 provided provider increases. Okay. And I can get you those figures.
And we're still in this situation. So I'm supporting the bill that goes forward, but I submit to you, the governor, the administration, and everybody in charge of this process, is that this 1231 data is not even an ounce clear of what we are really facing. Once this money goes out to get people within 10 days, they only have a 10-day cash flow. That's based on 1231 data, correct? Yes or no? It would be based on new data as of April 15th.
April 15th.
Okay, thank you. Thank you for that answer. I think that's the first clear answer that we've gotten all day. Just thank you for that. I'm being serious. Thank you for the answer. So the new data based on April 15th is that this money will cover the distressed loans that we are the hospitals that are within a 10-day time frame of cash flow. So payroll can still be met. Bills can still be paid. And that's April 15th data. Are you prepared and will you be prepared that when we do May revise that we are going to address this situation? And is Medi-Cal reimbursement rates on the table? Anytime you have a reimbursement, I don't care who you are, you could be the best business mind in the world, and if something costs you $100 and you're getting $70 to cover that, you're on a pathway to bankruptcy. And that's where our medical and our facilities are. Not to mention that policies come out of this building that increase the cost of that every day. And our priorities, and I know my colleagues aren't going to like this, two months ago we gave $90 million to Planned Parenthood, and we gave hospitals $25 million. And now we're coming back to give hospitals additional dollars because I submit to you that my colleagues, Senator Caballero, and I have been screaming about health care and the way that health care and hospitals are ran in this state and the requirements, whether either regulatory or policy-driven, in this state, it's putting our hospitals on the brink of disaster. And if it's not reversed immediately, we're going to have a bigger crisis than the oil crisis and the gas crisis because we – and I know you can't answer those questions, and you can't answer my colleague's question, specifically my colleague from Los Angeles and from Sonoma. No Okay You can answer those because if you did you would panic the public because the hospital and the health care delivery system in the state of California is on such a tight bubble that if they miss a payment from CDPH if we don deliver these dollars we delivered dollars just a few months ago two months ago if we don deliver these dollars and in 30 days or 20 days from now deliver additional dollars people aren going to have health care whether it's in Los Angeles, whether it's in Kern, whether it's in rural communities, because we have destroyed the health care system. We, this body, and this governor have done this, and we need a drastic fix, and part of that is making sure that we have adequate reimbursement rates on Medi-Cal. Is that part of your process? Are you guys even discussing that? Again, Proposition 35 included rate increases. I'm asking you in the discussions right now, in the discussions that you're having to save the hospitals, are there discussions at your level to increase Medi-Cal rates in the next budget cycle? Yes or no? Are you having discussions, ma'am?
Those are deliberative discussions, and we'll be here next time. So you're having them? Well, they don't usually announce what's in the May revise until they announce the May revise.
Thank you for trying to rescue them, Mr. Chair. I appreciate you very much. but I'm just asking if there are formative discussions being had at the executive level to fix this problem. A root cause. The root cause is reimbursement rates. Bailing out, which we're going to continue to do, millions upon millions of dollars to make sure that hospitals can still deliver care to all of our communities was what we'll do because that's what we're left in. But you, number one, are not providing answers that we're asking, and you're not even answering the question that's simple that says, you at the executive level that you are in, are any of you three at the table looking at me, or not looking at me, but facing me, are any of you three having discussions on the root cause analysis of, number one, seismic, you can't say that seismic is not drastically impacting our hospitals, and number two, Medi-Cal reimbursement rates that need to be increased. Are those conversations taking place? I'll start with you and then I'll end my conversation.
Yes, ma'am.
Yes or no. Are you having conversations?
I mean, those are a part of our ongoing discussions.
That's all I want to know. You're having discussions. Thank you.
Yeah, I mean, the system is very complicated, health care system. And, you know, we have our very thorough conversations in our subcommittee related to all the issues you just noted. So it's part of an ongoing conversation.
You could have answered that 10 minutes ago, and I could have already turned this mic back over. I asked you five different ways if you were having discussions. It's, again, part of the process, part of the deliberative process. LAO, are you having discussions?
Yes.
Thank you. Look at that.
Thank you, Mr. Chair. Thank you. And Senator Reyes.
I want to begin by saying hospitals are so important to our communities. They provide services to the very people that we represent. We want all of our constituents to receive the best possible care. We recognize from some of our colleagues that some hospitals are not the favorites when an ambulance is taking them to a particular place. But all of our hospitals are taking care of our people.
So I want to begin by saying that. We talk about Medi-Cal reimbursement, talk about seismic. Medi-Cal reimbursement, I would just ask that that be put on the table, that that be one of the discussions that is made if not immediately in the very short term On seismic that a difficult one because we want to make sure that our hospitals are a safe place for those who are coming in But I also recognize that that is a big problem for our hospitals I do hear from my hospitals that having to force them to do all the seismic retrofitting is causing serious financial problems for them Something that we have to look at and talk about at great length. It does concern me that we're talking about data from the end of last year. I do appreciate that now we're looking at data from April 15th. When does that actually come out or that's already out?
So data is reported on a quarterly basis to HKIs, and there is data lag just in any other data set that is common in state government. So they would have collected the most recent quarter, which would have ended on March 31st. they're currently verifying the data, cleaning it up, making it public, accessible, and ready. So there is a bit of a lag. Specific to this bill, it would require hospitals to submit the specified data demonstrating they have less than 10 days cash on hand, and that data must be as of April 15. So this would be a separate submission to the department to determine eligibility for this grant program.
Wonderful. And once this is passed, we know that there are two to three hospitals that already qualify because of information that's been provided to someone that's already been provided. Will this information, the fact that $25 million was authorized and signed by the governor, appropriated by the legislature, Is this information going to be provided to distressed hospitals who have shown signs that they may qualify but have not said we're within 10 days of going under?
So consistent with any other grant program, the department will make their normal solicitation, so a request for application. So given the department's touch point with hospitals already, they do have a means of reaching out to hospitals across the state.
Wonderful. And one of the questions was asked if this 25 million, let's say it's three hospitals, so they each end up with whatever, 25 divided by three?
Eight. They each get eight million. I'm sure it won't be eight million each, but something similar to that.
If they each get $8 million, do we know how long $8 million would last for each of these hospitals?
We don't have, without knowing which hospitals would be selected. We know that there are two or three. The intent is yes, they will. And I think one thing that informs our comfort with this level of funding is we know the distrust hospital loan program was a $300 million loan program over four years for 16 hospitals. The loans range from a couple of million to the mid tens of millions. So on average, each hospital received less than $20 million. That amount over four years, and again, this bill is only trying to solve for two months' worth of funding. we do think that $8-ish million would suffice to get them through the end of the current year.
Okay. And then the question was asked about loan forgiveness. That is something that absolutely needs to be on the table. We need to start looking at loan forgiveness for those hospitals, and I appreciate that some of them have already begun the process for loan forgiveness, something that we absolutely need to look at. I understand that if we were to say for those hospitals that have less than 60 days worth of cash on to take care of their expenses. We'd be looking at dozens of hospitals that would be eligible for funding. That's frightening. That's frightening. If we just say, how many of you are 60 days away from going under, dozens of hospitals would qualify. For the eligibility for the prior loans,
They looked at demonstrable risk of closure, 90 days or fewer cash on hand, negative operating margin over the preceding 12 months, high likelihood of insolvency. And that was for 90 days. 30 applied, only 16 got the loans, as you said, for the 300 over a four-year period. And those 16 exhausted the money, which means that either the others didn't qualify or it was oversubscribed.
And these are things that are extremely important. So that's data that is available. And I hope that after the May revise, when we do get together, especially with our health subcommittee hearings, that the data is available. because, as my colleagues have said, we need the information to make informed decisions because, yes, we'll vote on it because we all believe we have to take care of this. This is, somebody called it a Band-Aid approach. Whatever it is, we've got to stop the bleeding, and this is something absolutely necessary. But after May revise, we have to really give some thought to what we're doing and make our decisions be based upon data that is provided. We want informed decisions because we all will be asked, why did you vote for that when we had this other thing that needed additional funding? I do know that some of our colleagues in the Senate and the Assembly have made requests for additional funding for our hospitals to the tune of $300 million. Is that a dollar amount that, without having to share what the May revise is, is that a dollar amount when you look at the number of hospitals that subscribed to the loan, which hopefully will be forgiven? And then, again, if we were to look at 60 days or less, we'd be looking at dozens of hospitals. Is $300 million a number? Because I know that is a number that has been shared by some of our colleagues. Is that a number that is going to be considered?
We don't have that analysis at this time.
Very good. And I do want to say HR1 absolutely has something to do with the fact that we having to deal with this I heard the comment but we had hearings about H 1 H.R. 1 absolutely has something to do with this. We lost a whole lot of money. The MCO tax is another big issue. So we can't put blinders on and say it's all related to things happening here in the state. Things happening at the federal level have also caused us lots of problems that we are now having to deal with, and we're having to take benefits away from some of the very people who most need it, who are paying taxes, and that's our immigrant community, something that also we need to look at as we move forward with this. Thank you, Mr. Chair. I'll yield back. Thank you very much. That completes our list. In a moment, I'm going to go to public comment. We have members that need to leave, but I feel obligated to make a few comments after this debate. And the first thing I want to say is that it was the legislature that asked the administration to deal with this. And I imagine there's somebody sitting in an office thinking, well, that's the last time we're going to respond to the legislature. And that's very important. Additionally, finance has been doing its best, but a lot of this is in the purview of their departments, and their departments are not here yet. And I am aware from following a few particular distressed hospitals that when you get to this point, the department looks in the state administration and sees if there's any revenue due to the hospital and expedites the checks. I know that goes on now. We've been talking about loan forgiveness. It is truly embedded in the existing process. It is expected that if a hospital is struggling, they will get to the point of loan forgiveness. And this legislature, in a budget a year or two ago, initially strung out the repayment period dramatically to a number of years to be able to help the hospitals account in a good way for those outstanding loans. I know that people are talking about whether $25 million was enough. If it's too much, it's going to revert. If it's not enough, we'll come back and we will work on it. And we will be having hearings, many, between now and June 15th anyway. So there will be places to plug it in the process if that happens. And as much as we are so anxious about distress hospitals in general, this is really about a very small number. and a 10-day cash reserve is a precariousness for the hospital or less. And people were confused about the numbers because this is not like if there's a large number, it's not a rolling amount. Revenues still come in. If you have 54 days of cash on hand a lot of revenue will come in in that 54 days And even if they stressed and it gets down to 40 days they will still have cash to move ahead And our problem is we were trying to help with just a few hospitals and it's led to the larger discussion that we absolutely are having and need to have. And it's really clear that once we get the number that's in the May revise, we will have discussions about whether that's adequate, about who is there, about what their needs are, and address many of the concerns that came up in this hearing because they are real. They are real. And I have spent the last few days when people come up to me and say, what about my hospital? And I say, is it going to run out of cash next week? And they say, no. And it's like, well, that's not what we will be talking about in this bill. And yet it is what we will be talking about in the budget process and everything that goes with it. And I am increasingly nervous that the $200 million that the Senate put in its plan isn't enough. And so we are going to have to just deal with this when it comes in the May revise and have these continued discussions into next year. With that, we're going to move to public comment. And if you could just be as brief as possible, we'd appreciate it. But welcome to the committee. Thank you.
Good morning, Chair and members. Mark Farouk on behalf of the California Hospital Association in support. Just want to thank the committee for the discussion. Want to thank the Senate for driving this discussion. Also want to add that we look forward as the budget is coming together for additional funding for distressed hospitals. We are in support of a proposal submitted by members of the Senate and the Assembly for $300 million for the distressed hospital loan program. Thank you.
Thank you very much.
Good morning, Mr. Chair and members. Connie Delgado on behalf of the District Hospital Leadership Forum. These are the 33 district and municipal hospitals in the state. We can appreciate the conversations that were happening today. We would like to note that of the original distressed hospital loan program, nine of our hospitals were recipients of those loans, really indicative of the state of these hospitals. We are here in support, and we look forward to ongoing conversations with all stakeholders as we really grapple with this issue. Thank you very much.
Thank you very much.
Chairs and members, Marvin Pineda on behalf of Children's Hospital of Los Angeles here requesting your support for a one-time $63 million budget request. The hospital serves every county in California. It serves over 700,000 patients, children. We see the most complex kids and they come from all over California. We request your support. Thank you.
Thank you very much.
Morning. Justin Gareth California State Association of Counties in support of the million grant fund for hospitals Hospitals in our communities are under financial stress for a variety of factors especially in rural communities with a higher mix of Medi and Medicare patients And so we appreciate this funding for the most immediate need. Look forward to continuing conversations to really address the longer-term need, especially with public hospitals most greatly impacted by HR1. Thank you.
Thank you very much. That completes the people in line for public comment. It's back before the committee. Do I have a motion? A motion by Senator Richardson. Is there any possible discussion that hasn't happened yet? Seeing none, will you please call the roll. AB 108, the motion is to pass. Senator Laird? Aye. Laird, aye. Nilo?
Aye.
Nilo, aye. Archuleta? Aye. Archuleta, aye. Blakespeare?
Aye.
Blakespeare, aye. Cabaldon? Aye. Cabaldon, aye. Troy? Aye. Troy, aye. Dorosso? Aye. Dorosso, aye. Grove? Aye. Grove, aye. Hurtado? Aye. Portado, aye. McNerney? Aye. McNerney, aye. Manjabar? Ochoa Bog? Aye. Ochoa Bog, aye. Perez? Reyes? Aye. Reyes, aye. Richardson? Aye. Richardson, aye. Sayarto? Aye. Sayarto, aye. Smallwood Cuevas? Smallwood Cuevas, aye. Weber Pearson? We're missing three. Yes. And so that has enough votes. We will hold the roll open here for about 10 minutes. I know Senator Weber Pearson said she would come back. We'll look for the other two. It's clear it's going to pass. I want to thank everybody for their help in this hearing. With that, we'll stand in recess until people come in and we open the roll. Please call the roll. AB 108, the motion is to pass Senators Menjabar? Aye. Menjabar, aye. Perez? Aye. Perez, aye. Weber, Pearson? We'll put it back on call. Thank you. And we'll recess. On AB 108, please call the absent member. AB 108, the motion is due passed. Senator Weber Pearson? Aye. Weber Pearson, aye. So 18. This bill is out, 18 to 0. Thanks, everybody, for their cooperation. The Budget Committee stands adjourned. Thank you.