Distressed Hospital Funding Programs
Distressed Hospital Small Grant Program
The Distressed Hospital Small Grant Program was established through the Budget Act of 2025 (Assembly Bill 108). The legislation requires the Department of Health Care Access and Information (HCAI) to provide grants to hospitals in immediate and significant financial distress to help prevent closure of hospitals.
The legislation authorizes up to $25 million in one-time grant funding to implement the Small Grant Program. HCAI developed a program application and criteria to make grant awards to financially distressed hospitals seeking assistance. Hospitals applying for grant funds must meet specific criteria as of April 15, 2026, including, but not limited to, the following:
- The hospital has less than 10 days’ cash on hand, inclusive of all investments and liquid assets that can be used for operations, based on the internally prepared financial statements for the most recent closed month, and substantiated by the most recent available audited financial statements.
- The hospital has demonstrated best efforts to exhaust other financial options, including but not limited to, resolving outstanding revenue timing issues or requesting forgiveness or deferral of other short- and long-term debt.
- More than 50 percent of the hospital’s payer mix is composed of government payors and uninsured patients.
- The hospital must be a not-for-profit or public hospital.
- Any other criteria determined by HCAI, in consultation with the Department of Finance.
Small Grant Program Application
An applicant must submit a complete application to HCAI by email as a Portable Document Format (PDF) attachment to the following email address: dhsgp@hcai.ca.gov
Any additional documents required for the application must be included with the application at the time of submission, subject to the same deadline.
Applications must be received by 5:00 PM PDT on May 18, 2026.
Additional Information
The activities below outline the implementation deadlines required by HCAI to meet the requirements of AB 108, to process grant applications and make awards.
| Program Activities | Due Date |
| HCAI releases Distressed Hospital Small Grant Program Application | Monday, May 11 |
| Hospitals submit completed Small Grant Applications to HCAI | Monday, May 18 |
| HCAI releases Small Grant Award Determinations | Tuesday, May 26 |
Timeframe for Funding
Grant agreements will be prepared and executed with each selected hospital following the release of Small Grant Award Determinations, with grant funding distributed thereafter. Any unencumbered funds pursuant to this grant program will revert to the General Fund on June 30, 2026.
Evaluation Methodology
The grant application evaluation methodology will apply equally to all hospitals, and all applications will be reviewed in aggregate after the application deadline.
Hospitals may contact HCAI at dhsgp@hcai.ca.gov for assistance with the application process.
Distressed Hospital Loan Program
The Distressed Hospital Loan Program (Program) was established through Chapter 6, Statutes of 2023 (Assembly Bill 112). The legislation requires the Department of Health Care Access and Information (HCAI) and the California Health Facilities Financing Authority (CHFFA) to collaboratively develop the Distressed Hospital Loan Program to offer interest-free, working capital loans to non-profit and publicly-operated financially distressed hospitals, including hospitals that belong to integrated health care systems with no more than two separately licensed hospitals in California that are facing a risk of closure, while they implement turnaround strategies to regain financial viability.
HCAI will contract with CHFFA through an Inter-Agency Agreement to administer the loan program. HCAI and CHFFA are developing a loan application and criteria to make loans to financially distressed hospitals seeking assistance. Some details of the Program are as follows:
- The legislation authorizes up to $300 million in one-time funding to implement the Program, including administrative costs.
- Loans will be offered at zero-percent interest.
- Loans are repayable over 72-months, with an initial 18-month grace period at the beginning of the loan term.
- Lending parameters will be focused on financially distressed hospitals in areas where demand for services and service adequacy are of concern.
- The Program will sunset on December 31, 2031.
- Loans are secured using Medi-Cal checkwrite payments for participating hospitals.
The legislation also includes provisions for requiring hospitals to submit quarterly financial data to HCAI, for use in monitoring the financial health of hospitals throughout the state. This will enable HCAI to better prepare for and identify developing fiscal challenges at hospitals statewide.
Loan Awards Determination and Modification Status
| Facility Name | Loan Award | Award Date | Step 1 Loan Modification * | Step 2 Loan Modification ** |
| Chinese Hospital | $10,350,000 | 11/6/2023 | Yes | Pending |
| Dameron Hospital Association | $29,000,000 | 1/2/2024 | Yes | No *** |
| El Centro | $28,000,000 | 10/5/2023 | Yes | Yes |
| St. Rose Hospital | $17,650,000 | 12/6/2023 | Yes | Pending |
| Hazel Hawkins Memorial | $10,000,000 | 7/1/2024 | No | No *** |
| John C Fremont | $9,350,000 | 1/17/2024 | Yes | No *** |
| Kaweah Delta | $20,750,000 | 2/21/2024 | Yes | No *** |
| Madera Community Hospital | $57,000,000 | 6/13/2024 | Yes | No *** |
| Martin Luther King Jr. | $14,000,000 | 11/29/2023 | Yes | Yes |
| Palo Verde Hospital | $8,500,000 | 11/21/2023 | Yes | Pending |
| Pioneers Memorial Hospital | $28,000,000 | 10/30/2023 | Yes | No *** |
| Ridgecrest Regional Hospital | $5,500,000 | 11/29/2023 | Yes | No *** |
| San Gorgonio Memorial | $9,800,000 | 1/18/2024 | Yes | No *** |
| Sonoma Valley Hospital | $3,100,000 | 7/11/2024 | Yes | No *** |
| TriCity Medical Center | $33,200,000 | 11/29/2023 | Yes | Yes |
| Watsonville Hospital | $8,300,000 | 10/30/2023 | Yes | Yes |
** Step 2 Loan Modification provides forgiveness for the next succeeding 12 months of debt service from the DHLP loan.
*** The DHLP loan awardee may apply for a Step 2 Loan Modification (debt service forgiveness) in the future.
Additional Information
The list of activities below outlines the activities HCAI and CHFFA will undertake to meet the requirements of AB112 and open the Program for application submittals and loan issuance.
| Program Activities | Goal Completion Date | Owner |
|---|---|---|
| Interest survey distributed to all hospitals to inquire on interest for the Program | Week of May 15, 2023 | HCAI |
| Draft evaluation methodology posted online for Program applications | Week of May 22, 2023 | HCAI |
| Stakeholder webinar to receive feedback on draft evaluation methodology | Week of May 22, 2023 | HCAI |
| CHFFA Board meeting to approve authorizing loan administration | May 25, 2023 | CHFFA |
| Loan applications go live for submittal | June 2023 | CHFFA |
| Informational webinar about the Program to interested applicants | June 2023 | CHFFA |
| Optional Preliminary Application for Program Eligibility Submission Deadline | June 30, 2023 | CHFFA |
| Complete Applications Submission Deadline | July 31, 2023 | CHFFA |
| Release Loan Award Determinations | August 24, 2023 | HCAI |
Timeframe for Funding
Based on stakeholder responses, applications will be open until July 31 to allow adequate time for hospitals to provide all the information. If you would like to determine program eligibility, you are encouraged to send all information except the turnaround plan by June 30. If eligibility is determined, applicants must submit a turnaround plan by July 31. Applications received after June 30 must contain a turnaround plan. We will likely fund the loans two-three weeks after applications are awarded.
Evaluation Methodology
The application evaluation methodology will apply equally to all hospitals and all applications will be reviewed in aggregate after the application deadline.
Payor Mix
Please note that when completing the application, for payor mix, Medicare includes Medicare Fee-for-Service and Managed Care revenues, and Medi-Cal includes Medi-Cal Fee-for-Service and Managed Care revenues.
For assistance with the application process, you may contact HCAI at dhlp@hcai.ca.gov or CHFFA at chffa@treasurer.ca.gov and we will respond to your request.
Additional Resources
- CHFFA website
- Distressed Hospital Loan Program Fact Sheet
- DHLP Draft Evaluation Methodology Webinar Slides
- HCAI Press Release
Presentations
Distressed Hospital Loan Program – Application Technical Assistance Webinar Recording
Webinar: Distressed Hospital Loan Program Evaluation Methodology