Senate Standing Committee on Budget and Fiscal Review

Review 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 Junior 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 $25,000,000 grant program at the Department of Healthcare Access and Information or HCAI to support grants to hospitals in immediate and significant financial distress.

In 2023, the legislature appropriated $150,000,000 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 QOF program and reductions in other programs at the federal level, it has put some hospitals right back in the financial crosshairs again. 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 1.

I know the Senate Democratic plan has $200,000,000 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 till July 1.

That is what this budget bill junior addresses. This bill additionally makes a technical change to ensure eligible low income seniors who've applied for property tax deferments receive their relief in 25-26. So that is where we are today. I am going to ask the vice chair if he has any opening comments. Then we're gonna go to the Department of Finance and we have the legislative analyst here for questions. And then we will move ahead.

Thank you very much. I just have about forty five minutes of prepared comments because this is a highly controversial proposal.

I was going to say it must be support support if you have forty five 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 2627.

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.

Alright. Thank you for your comments. And we'll go to other members after we hear the the, presentations. So let's go to the department of finance and and let me welcome Guadalupe Manriquez from the department of finance.

Thank you. Good morning chair Laird, vice chair Niello, 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 25,000,000 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 tech 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 ten 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 rule making exemptions to allow the department to expeditiously 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. Or do you wanna Okay.

Senator Durazo.

Thank you. Thank you very much. I just wanna ask about the 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 $25,000,000? So thank you.

You know, I'm sorry. Think about the answer for a second. A quorum walked in the room. So you please call the roll.

[Roll Call]

We have a quorum. Thank you for letting me interrupt. And if you would address Senator Durazo'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 ten days cash on hand.

And the department will establish a process pursuant to this bill's requirement so that eligible hospitals can apply and demonstrate their eligibility for the grant funds. While the Department of Health Care Access does not does collect certain financial data from hospitals, what we don't have is data as of April 15. So we can't definitively say the number or which specific hospitals would be eligible. But what we do know is based on data from 12/31 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.

Jason Constantouros for LAO. I just wanted to add, you know, again I it's I think it's a little hard to say at this point how many hospitals would sort of qualify or or really getting a sense of the what is the the the real need across all hospitals that that sort of will evolve over time. But I just for for some context, the the distressed hospital loan program which HCAI initially initiated in 2324 was 300,000,000 So this is a little less than 10% of that amount.

And that 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 is probably would serve more like a shorter term sort of, approach that would would sort of carry hospitals down for three months 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 a there's been a delay in approval of the hospital fee program in Medi Cal. That's a few billion dollars. So we're we're That's that's quite a bit of money. So But that that is a delay that the permit has reported that it's making progress towards getting that approved. So this could be somewhat of a timing issue to that.

There there are some there are some issues there that that that could mean that that, you know, maybe it is just a few months of of insecurity. But we are dealing with some uncertainty here given sort of the limited data. Yeah.

I mean, I'm I'm concerned about that because obviously, we don't want any any hospital to close down. And so between now and June, you know, if we don't have the information or, you know, would it take $30,000,000? Would it take 35?

I'm just looking at and asking about who 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 didn't have they couldn't stay open with 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 I'm a little concerned about I'm concerned about that and I definitely support wholeheartedly support.

I just wanna 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's services, in patient care.

Seventy five percent of their patients are uninsured are insured by Medi Cal. The highest 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'm, requesting $63,000,000 for Children's Hospital of Los Angeles, from our budget, this year. Thank you very much.

Senator Weber Pierson.

Thank you, chair. Really wanna, piggyback on what, Senator Durazo was just referring to because although I 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 the the figure Got it. That had to come from somewhere. And so, I know she, you know, asked about where that dollar figure came from.

I 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 our best assessment that twenty five 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 wanna 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 wanna 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 1? 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 1, we'll address those issues. And Senator Barrasso mentioned one. And so that's the sequence of this.

Just trying to get a very few hospitals to July 1 and then hope in the budget process we address things for all hospitals that might be distressed after July 1.

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 from a patient and the name of the hospitals, but that there was something done to say, okay, these are the entities. These are 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 means that somebody would have had to actually go and look and evaluate to say, of these 83, 85, who 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 25,000,000. Thank you.

Thank you. And let me add one thing to that and that is this. When I personally reached out to the administration six to eight months or 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. Then next in line and and I'm gonna add you Senator Cabaldon. 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 33,200,000 through the distressed hospital loan program and does remain responsible for repayment. So that's on their books. And, I think one one of the questions is just how we approach this as a state if our approach are we thinking that there have been a 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 if someone could answer that, I'd appreciate it.

Yes. So this program is given the immediacy of the needs. We are 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 the 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 financial stability. But in this case, given the immediacy that we wanna get these dollars out, we are designing or they are proposed as a grant.

Okay. So but are I don't know if you would really address my question of is there an evolving understanding that maybe the loan should become grants or or that that's where we're headed?

So I think that's the conversation we'll continue to have with the legislature as we finalize the 2026 budget.

Okay. Okay. And then my 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 as was, and counties as was referred to.

And so setting up the system so that we incentivize innovative partnerships and don't, you know, drive more hospitals not to do that or 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. You know, that should be an overarching goal.

So just, you know, 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 Cuevas.

Thank you, mister chair. And I 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 mister chair for that that explanation. I just wanna point out, that Martin Luther King Junior Community Hospital is one that punches well above its weight. It is a hospital designed for, you know, at best, you know, a 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 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 HR 1 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 30, August 1, going into the new year. And this means that a lot of our South LA 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 ten days of a cash on hand and that's kind of where our situation is.

Down at at MLK, we've gotta figure out a a process that includes our hospitals that are and historically been on the brink. I I appreciated the comment about the definition of distress hospitals and the partnership. So I have two other hospitals in my district that we are working now, on with HCAI and, Department of of Healthcare 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 in 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 I just hope that we continue to work through definitions. I too have a series of questions about how we arrived at the $25,000,000.

And 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 from, imminent closure.

So my question is, is the ten day threshold that's intended to limit funding only to hospitals in the most extreme financial distress? Does HCAI believe that waiting until a hospital has fewer than ten 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 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. To, again, designed to help those hospitals that are most severe and urgent distress. That was a metric that, we we think is reasonable. Acknowledge your comments about the broader hospital delivery system, and I think those are conversations that we're gonna continue to have with the legislature.

But at this time, this program is intended to really capture those hospitals that, will be will have challenges in the next, you know, two months, Weeks to 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 ten 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 is this 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 25,000,000, what are you doing to really do that assessment and to see where the needs are and how quickly intervention is gonna be required.

So I think one of the ways in which, HCAI 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't intended to necessarily inform immediate decision making 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 12/31 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 12/31 while it can potentially give us hints as to what 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 be part 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 wanna 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.

It is how do we how are we able to, 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.

Like, how do we actually have a system in place that is amer have an emergency assessment mechanism because we know we've just heard three other hospitals mentioned today. So, that are not the ones that the chair has talked about.

So I think that there there certainly is a need for 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 I there are kind of three points that your comments made me think about. The first is you asked, well there's the ten day threshold, the right threshold.

And I just want to emphasize that this 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 to necessarily weigh in on the issue.

But the trust hospital loan program had a bit more of, a comprehensive way of looking at dis distressed finances. It actually at the minimum used the thirty day cash on hand.

But if you even if you had more cash on hand, it would do a sort of a point system. And then looked at other, other ratios, other financial ratios too including your margins. And also looked at, you know, 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. HCAI did it does appear to have applied that a bit more in the in the more comprehensive program. And so again, there this does appear to be a bit narrow.

We're kind of getting at that that few months sort of issue here. But this isn't the last opportunity you'll have to to weigh in on it. So I just wanted to make that first point.

Second point is when we're thinking about hospital finances a an important part of this is not only to help assist them but what's the long term sort of turnaround plan?

I think this is a key lesson where 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 what are what are the underlying causes? So that'll 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, what 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 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 Maine such a short turnaround.

So in the short term 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 on counties.

But even on the robust hospital data, it's a lot of data. But it is in a ways, enough analysis. And so often you're coming to these hearings and you're asking what does all the data mean? I you want a little more concrete information.

So the legislature could fight 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.

No. I really really appreciate that. Appreciate that. And that's, you know, one of the 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 to have that assessment.

So your point, I think, is really well taken and important. And then I think we have to have to have a question of if not, like if that fuzz it funding was not adequate 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, is there can we add that data so that 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 was this enough even for the band aid solution? And then and what were some of the contributing factors?

How what are the strings, data strings tied to this money?

It's a sort of thing the legislature could think about.

Right. And you you really ask an analytical question. So we can get lots of data out there. But if it's not really being analyzed, that's really the next step is in understanding the underlying causes of hospital financial distress.

Again, our our But HNIP. Department is very well situated. They have a lot of that data. Our Department of Healthcare Services also is involved in ensuring access for low income people. So that that would be something that would we'd wanna 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

I guess my question is is that being asked as part of the 25,000,000 additional funds that are being requested now?

So as part of the eligibility criteria, we are asking for special 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 turn the ten day closure as well as other data. There is a provision in this bill that gives HCAI 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 those money that 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 HCAI 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 this is a trend. We're 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 a whole survey of questions, but one or two that gives us a good sense of 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 will, my question is hospitals receiving these funds, are they gonna 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 gonna 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 are have already closed about a dozen clinics in LA County.

Because of HR 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. Just wanna make sure that there is a requirement that basic care and health access is gonna 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 ten.

I would say yes. The contract between the state 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 Seyarto 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 are brought on by our regulations. Earthquake mandates that are pretty unrealistic and they're having a hospitals are pouring money into trying to meet the mandate so

and they're getting fined when they don't. And so that 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 finacial situations.

So I have heard from hospitals. 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 gonna collect 74¢ 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 400,000,000, in, new provider payments to Medi Cal, hospitals.

Like I said, 400,000,000. And the state has had a long term program, the hospital quality assurance fee program, which the Department of Healthcare 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 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've given all those issues. I think that's why we're having hospitals for going under.

And expansion of programs and and and things like that lead to cost. And 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's 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 not allow us to 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 those are this is an easy answer. Yeah, we have to approve this.

And, to the concerns of is that 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 gonna 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, and amongst people that would go there, and the lack of people that are insured that'll frankly, entrust their care to some of the hospitals that are heavily heavily impacted. And MLK was one of those.

And and the level one 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 cost. We need to stop. We need to be able to 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 horizon. And so all I see is bail out, bail out, bail out. Hopefully, this federal stuff will help. HR 1 had nothing to do with MLK going under.

They weren't even in existence back then. And is if I get this right, the Federal Government share of Medi Cal this year, the cut is adding $19 billion.

That would I think there is an increase. There is a projected increase in federal funding in the governor's budget. That that would be updated in May, of course. And it Yeah. It's largely driven by assumptions and getting more managed care payments to

There's $19 billion. That's hardly a cut. So thank you.

Thank you very much. Senator Choi and Senator Richardson's on deck.

Thank you, Chair. And my concern is largely addressed to Vice Senator Seyarto. There are many hospitals who are not in this dire financial distress.

So my assumption will 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 medical services are underpaid.

And if we keep on saying that we gotta find out the underlying causes, what are the underlying causes? I can say that the underpayment will be dramatically impacting negatively impacting hospitals when they are paid only, what, the 74%, 76% of the request.

So I think that's the address, the state policy. Why and 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 a large amount 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 gonna break.

It will continue this kind of emergency stopgap measure and the 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 Niello on deck.

Thank you, Mr. Chairman. First of all, when it's appropriate if anyone hasn't, noted the 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 we're gonna wait till you become diabetic to actually give you the medicine so then we can help heal you which ultimately is gonna 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 is 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 we're 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 gonna 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 gonna be put in dirt into this whole 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 solution that we could consist solutions that we could consider? Is it, eliminating the loans that hospitals have?

Is it saying that if hospitals meet these strike care three criterias? But I don't believe it's sufficient enough to say we're gonna wait till the next budget year.

And the reason why I say that is we are 6 months, 6-8 months out from the next budget year. And I can tell you, these hospitals, yes. Maybe ten days.

That that you might still be stuck in when the federal fiscal year is. The state one begins in six weeks or seven weeks.

Okay. Yeah. Well, my 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 gonna 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 gonna need a 100,000,000 or we're gonna need 200,000,000.

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 wanna 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 gonna 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 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 gonna be recommending,

what are the key, components so that we can go back to our hospitals and say, yes, we understand.

Yes, we're gonna have the information. And, yes, we're gonna 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 1. 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 1, 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 1.

It's important given some of the early questions in this hearing that we discuss whether that's enough. And there I don't wanna 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 in that will allow them to have the the loan forgiven.

So I think the real issue is is we will address these issues after we see the May 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 tell 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 till May revised and willing to wait till 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.

We'll wait til the public comment and then we'll do that. But thank you and we note your comments. Senator Niello and Senator Cabaldon is on deck.

The proposal before us, excuse me, this morning on the surface is very simple, imminently supportable and if that's all we were looking at, this hearing would have ended thirty minutes ago.

What we're seeing is number one, I think we're gonna 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 the amount I suppose.

But the 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 Seyarto, 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 more even playing field. Thank you.

Thank you very much, Mr. Vice Chair. We move to Senator Cabaldon and Senator Grove is on deck.

Thank you Mr. Chair. We're 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 is that that many members on this committee have raised is is the ten day threshold the right one? How would we know?

But I'm not gonna ask about it because I already know what the answer is gonna be and it's and this hearing's been profoundly disturbing. And we've been told simultaneously there's just there's so much data out there, so much to analyze.

And 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, starting with the Chair of the Senate Health Committee's questions. You know, okay. How how what's what's the what's the criteria here?

What's how do we figure this out? Well, we've made an assessment. Based on what? Why should we support this? What the administration believes it's appropriate?

It's been one long I said what I said hearing. The constitution reserves to the legislature the power 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 that 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 of 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 we have to have answers so that we can answer the I 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 $800,000,000, and we we can't afford that.

I can't say that because we've been given no no metrics, no no no milestones, no nothing for us to be able to say this is the right piece. And and, I have many distressed hospitals in my district including in the loan program.

So I associate with myself with all the remarks made by been made by every single Senator. But I just wanna urge the administration, to to to take this much more seriously so that we can do our job, of being able to make these 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. And the administration, especially 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're dealt with confidentiality. We can deal with that too. But as the the Chair was a exemplar of what the presentation by the administration should have been to give us exactly the at this hearing would have been over forty five 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 will allow us to highlight the choices that reinforce.

Mr. Chair, thank you.

Thank you very much. Senator Grove and Senator Reyes on deck.

Thank you. I applaud on my colleague's comments and, I would like to just give you my summation on this. It's their job. They can't answer those questions 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 gonna 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, is this this is not an end all solution? How long do you think this is gonna last? Hello, department.

Yeah. So the what.

Because the Chair is in a hurry.

Sure. K. So, you know, I have to say we have to get back to we have to work with your staff on getting the exact information you need. We did recently release a report on you.

Have the money that's in this bill. Although we are all gonna vote for it because it is a lifeline, how long is this lifeline gonna last? Is it even going to save the people who are in, a ten day time frame?

Yeah. You know, we weren't involved in the development of the proposal.

I didn't tell. What about you, ma'am? Is it gonna save the ten day hospital individuals?

That is the intent.

I know it's the intent. And is it going to save them?

We are that is the goal. So 25,000,000 one time in current year for hospitals that have ten day cash on hand. I would note to, 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 there are specific questions about what data.

We do have the some data related to, you know, the 16 hospitals that received loans through the distressed hospital loan program. So here, 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 a 120 to 60, 90day 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 in a ten 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 if this dollar amount is is, it's 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 price crisis on the ground.

I wanna guarantee that this money is gonna help those people that are in a ten 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 $30,000,000 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.

Just common sense. In your own thought process, do you think servicing a debt loan for $300,000,000 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, the bill before you?

Oh, no. I'm asking you a question about the bill before us is 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 $300,000,000 takes away some of their operating costs that would allow them to continue to provide services for the people that need services.

So the the $300,000,000 loan is, interest free? There's no

I'm not talking about 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 do serve our communities.

I'm not talking about 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 do serve our communities.

I wanna 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 a 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.

Yes or no? It's a simple question.

Proposition 35, there was and I can get you the figure, but, I think over one of $1.5 to $2 billion in because.

Has MediCal reimburse rates been increased in the last decade?

They have. Prop 35 provided, provider increases. So Okay. And I can get you those figures.

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 12/31 data is not even an ounce clear of what we are really facing.

Once this money goes out to get people within ten days, they only have a ten day cash flow. That's based on twelve thirty one data. Correct? Yes or no?

It would be based on new data as of April 15.

April 15. Okay. Thank you. That 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 15 is that the this money will cover the distress loans that we or the hospitals that are within a ten day time frame of cash flow. So payroll can still be met, bills can still be paid, and that's April 15 data.

Are you prepared and will you be prepared that when we do May revise that, that we are gonna address this situation? And is Medi Cal reimbursement rates on the table? Anytime you have a reimburse I don't care who you are.

You could be the best business mind in the world. And if you were If something costs you a $100 and you're getting $70 to cover that, you're on a path way 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 gonna like this.

Two months ago, we made $90,000,000 to Planned Parenthood, and we gave hospitals $25,000,000. 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 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 gonna have a bigger crisis than the oil crisis and the gas crisis, because we, and and I know you can't answer those questions and you can't answer my colleague's questions specifically my colleague from Los Angeles and, from, Sonoma.

No? Okay. Yep. You can't 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't deliver these dollars,

we delivered dollars just a few months ago, two months ago, if we don't deliver these dollars and in 30 days or 20 days from now deliver additional dollars, people aren't gonna 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 rated three.

I'm not ask I'm asking you AmeriVision questions right now. In the discussions that you're having to save the hospitals, are there discussions it's discussions at your level to increase medical rates in the next budget cycle? Yes or no? Are you having discussions?

Those are deliberative discussions and we'll be here having them.

Well, they don't usually announce what's in the May revise till they announce the May revise.

Thank you for trying to rescue them, Mr. Chair.

But that's true.

I appreciate it very much. But I'm just asking if there are formative discussions being being had at the executive level to fix this problem, a root cause. The root cause is reimbursement rates.

Bailing out, which we're gonna 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 what we're 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, medical 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 part of our ongoing discussions

That's all I wanted to know.

I'm having. In our Yeah. I mean, the system is very complicated, health care system and, you know, we we have our, very, thorough conversations in our subcommittee related to all the issues you just noted. So it's it's part of an ongoing conversation.

You could have answered that ten 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 part of the process, part of the deliberative process.

Thank you. LAO, are you having discussions? Yes. Thank you. Look at that.

Thank you, Mr. Chair.

Thank you. And Senator Reyes.

I wanna begin by saying hospitals are so important to our communities. They provide services to the very people that we represent. We'd 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 their an ambulance is taking them to a particular place. But all of our hospitals are taking care of our people.

So I wanna begin by saying that. We talk about medical reimbursement, talk about seismic. Medical 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's 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 15. When does that actually come out or that's already out?

So data is reported on a quarterly basis to HCAIs and it there is data lag just in any other data set that is common in state government. So they they would have collected the most recent quarter which would have ended on March 31.

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 ten 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 has been provided to to someone or to that's already been provided.

Will this information the fact that $25,000,000 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 where within ten days, of going under?

So consistent with any other grant program, the department will make their normal like, solicitations or requests for applications. So, given the hospital's touch with. Excuse me.

The department's 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 25,000,000, let's say it's three hospitals. So they each end up with whatever. 25 divided by three.

They each get 8,000,000. I'm sure it won't be 8,000,000 each but something similar to that. If they each get 8,000,000, do we know how long 8,000,000 would last for each of these hospitals?

We don't have Without knowing which hospitals would be selected Yeah. We know that there are there are.

Two or three?

The intent is yes. They will. And I think one thing that informs our informs our comfort with this level of funding is we know the distressed hospital loan program was a $300,000,000 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 20,000,000.

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 billion 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 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 hand to take care of their expenses, we'd be looking be looking at dozens of hospitals that would be eligible for funding.

That's that's frightening. That's frightening. If if we just say, how many of you are sixty days away from from from going under, dozens of hospitals would would qualify.

For the eligibility for the the 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 ins of insolvency. That was for 90 days.

30 applied, only 16 got the loans of, as you said for the 300 over four year four year period. And those 16 exhausted the money, which means that either the others didn't qualify or it was over over subscribed. And these are things that are extremely important.

So that's data that is available and and I hope that after the May revise when 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 be 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 request for additional funding for our hospitals to the tune of $300,000,000 Is that a dollar amount that without having to to share what the May revise is?

Is is that a dollar amount when you look at the number of hospitals that subscribed to the the loan which hopefully will be forgiven and then if again if we were to look at 60 days or less, we'd be looking at dozens of hospitals. Is 300,000,000 a number?

Because I know that is a number that has been shared by some of our colleagues. Is that a number that that, is going to be considered?

We don't have that analysis at this time.

Very good. And I do want to say HR 1 absolutely has something to do with the fact that we're having to deal with this. I heard the comment but we've had hearings about HR 1. HR 1 absolutely has something to do with this. We 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. And something that also we need to look at as we move forward with this. Thank you, Mr. Chair. I yield back.

Thank you very much. That completes our list. In a moment, I'm gonna 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 wanna say is 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 gonna 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 here.

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 that people are talking about whether 25,000,000 was enough.

If it's too much, it's gonna revert. If it's not enough, we'll come back and we will work on it. That and we will be having hearings, many between now and June 15 anyway. So there will be places to plug it in the process if that happens.

And as much as we are so anxious about distressed hospitals in general, This is really about a very small number and and a ten days 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 that 54 days.

And even if they're stressed and it gets down to forty days, they will still have cash to move ahead.

And our problem is 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 gonna 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 on everything that goes with it. And I'm increasingly nervous that the 200,000,000 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 gonna 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 California Hospital Association in support. Just wanna thank the committee for the discussion. I wanna thank the Senate for driving this discussion.

Also wanna 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 $300,000,000 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 an original distressed hospital loan program, we were 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 $63,000,000 budget request. We serve the hospital serves every county, in California.

It serves over 700,000 patients, children. We see the most complex kids and we they come from all all over California. We request your support. Thank you.

Thank you very much.

Good morning. Justin Garrett, California State Association of Counties, in support of the 25,000,000, 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 Cal 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 HR 1. 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?

So moved.

A motion by Senator Richardson. Is there is there any possible discussion that hasn't happened yet? Seeing none, will you please call the roll?

AB 108, the motion is due pass. [Roll Call]

We're missing, three. Yes. And so, that has enough votes. We will hold the roll open here for about ten minutes. I know Senator Weber Pierson said she would come back.

We'll look for the other two. It's clear it's gonna pass. I wanna thank everybody for their help in this hearing. With that, we'll stand in recess until people come in and we open the room. Please call the roll.

AB 108. The motion is due pass. [Roll Call]

We'll put it back on call. Thank you. Yeah. And we'll recess. On AB 108, please call the absent Member.

A B 108, the motion is due pass. [Roll Call]

So 18. This bill is out 18 to 0. Thanks everybody for their cooperation. The budget committee stands adjourned.