Steve Stark, then-CEO of Madera Community Hospital, oversees the reveal of new signage for owner American Advanced Management on Tuesday, March 18, 2025. The hospital was closed for more than two years. Screen shot via Madera Community Hospital social media

A bill aimed at easing the burden on distressed California hospitals is seeking another round of funding after unanimously passing the Assembly Health Committee with bipartisan support.

Assembly Bill 1923, introduced by Assemblywoman Esmeralda Soria (D-Fresno), builds off of Assembly Bill 112, which was signed by Governor Gavin Newsom in 2023. The bill established the Distressed Hospital Loan Program with $300 million in interest-free loans for distressed hospitals.

Soria advocated for the legislation following the closure of Madera Community Hospital, which reopened in March 2025 with assistance from the program.

The latest round of funding, Soria said, is needed as hospitals continue to face mounting financial pressures tied to federal health care cuts, including proposed reductions under the federal “One Big Beautiful Bill Act.”

“The risk of losing access to critical healthcare services for Californians has never been greater than right now,” Soria said. “Hospitals serving small and rural populations are facing a financial cliff right now, thanks to the largest federal healthcare cuts in history.”

AB 1923 would add $300 million in new funding to the program, whose existing funds have been largely depleted. The bill also broadens eligibility, clarifies loan forgiveness terms and ensures hospitals at risk of closure can participate in future funding rounds.

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, opening the door for any hospital — regardless of ownership type or system affiliation — to apply for assistance upon meeting criteria established by the Department of Health Care Access and Information.

The bill also restructures loan forgiveness. Under AB 112, forgiveness decisions were largely left to department discretion. Under AB 1923, defined criteria would be established: hospitals would need to demonstrate a good-faith effort to comply with program requirements through Jan. 1, 2026, and provide financial projections showing they would become distressed due to loan repayments or outside factors, including impacts from the “One Big Beautiful Bill Act.”

Hospital industry leaders say the program has been critical for facilities operating on thin margins.

“The DHLP has been a lifeline for hospitals on the financial brink,” said Carmela Coyle, president and CEO of the California Hospital Association. “We are grateful to Assemblymember Soria for her commitment to keeping hospitals open so they can continue to serve their communities and so Californians have peace of mind that hospital services will be there when they need them.”

Supporters warn that without renewed support, hospitals could close, services could be reduced and health care jobs across California could be placed in jeopardy. “No hospital in California should be allowed to close,” Coyle added.