Gov. Gavin Newsom signs AB 112, the first distressed hospital loan fund, in 2023. He is pictured with, from left, Sen. Anna Cabellero, Assemblymember Eduardo Garcia, Assemblymember Esmeralda Soria and Assemblymember Jim Wood. Photo contributed

Assemblymember Esmeralda Soria (D-Fresno) has introduced legislation to inject another $300 million into California’s Distressed Hospital Loan Program, while broadening eligibility and creating defined standards for loan forgiveness.

Assembly Bill 1923 builds on AB 112, the 2023 law that established the program with $300 million in interest-free loans aimed at preventing the closure of hospitals and reopening facilities closed after Jan. 1, 2022.

The program played a key role in the reopening of Madera Community Hospital in March 2025 and has provided stabilization funding for other struggling facilities in the state.

Soria’s new proposal goes even further — in particular, for aid qualification requirements.

Under the original law, loans were limited to nonprofit and public hospitals and excluded facilities belonging to integrated health systems with more than two separately licensed facilities.

AB 1923 removes that restriction for future funding rounds.

Under the bill, any hospital “regardless of ownership type or system affiliation,” would be eligible for state assistance upon meeting criteria established by the Department of Health Care Access and Information.

That change opens the door for larger health networks — including those operating multiple licensed facilities — to apply for assistance.

It also reinforces that closed hospitals remain eligible to seek funding to reopen.

Soria said that renewed financial strain in the industry makes the expansion necessary.

“The risk of losing access to critical healthcare services for Californians has never been greater than right now,” Soria said in a statement. “A wave of hospital closures threatens the health and well-being of all Californians, especially those living in underserved rural areas throughout the Central Valley.”

The proposed bill also restructures how loan forgiveness would work.

Under AB 112, forgiveness decisions were largely left to department discretion; under the proposed bill, criteria will be set for hospitals that already received loans.

To qualify for forgiveness, hospitals would need to demonstrate a good-faith effort to comply with program requirements through Jan. 1, 2026, and provide financial projections that it would become distressed due to loan repayments or outside factors, including impacts from the federal “One Big Beautiful Bill Act.”

The new language also requires the department to consider projected future financial performance when evaluating forgiveness.

Hospitals that have received awards have not yet obtained forgiveness, according to legislative guidance. Most remain within their original repayment structure or have sought extensions under existing program terms.

The Department of Health Care Access and Information would need to confirm whether any forgiveness applications are being reviewed.

AB 1923 retains the program’s structure, including interest-free loans and financial oversight requirements, while replenishing funds that have been largely depleted.

If approved, the measure would create a new funding round, expanding eligibility and providing a clearer repayment route for hospitals at risk of closure.