Sonoma Valley Hospital granted millions in no-interest government loan

The community hospital is one of 17 selected for money from California’s new Distressed Hospital Loan Program, but the facility’s finance chief says it isn’t at risk of closing.|

Distressed Hospital Loan Program recipients

Beverly Hospital (Montebello): $5 million

Chinese Hospital (San Francisco): $10.35 million

Dameron Hospital Association (Stockton): $29 million

El Centro Regional Medical Center (El Centro): $28 million

Hayward Sisters Hospital, dba St. Rose Hospital (Hayward): $17.65 million

Hazel Hawkins Memorial (Hollister): $10 million

John C. Fremont Health Care District (Mariposa): $9.35 million

Kaweah Delta Health Care District (Visalia): $20.75 million

Madera Community Hospital (Madera): $2 million

Martin Luther King Jr. Community Hospital (Los Angeles): $14 million

Palo Verde Hospital (Blythe): $8.5 million

Pioneers Memorial Health Care District (Brawley): $28 million

Ridgecrest Regional Hospital (Ridgecrest): $5.5 million

San Gorgonio Memorial Health Care District (Banning): $9.8 million

Sonoma Valley Hospital (Sonoma): $3.1 million

Tri-City Medical Center (Oceanside): $33.2 million

Watsonville Community Hospital (Watsonville): $8.3 million

Source: California Department of Health Care Access and Information

Sonoma Valley Hospital is one of 17 hospitals in the state and the only one in the North Bay chosen to receive millions of dollars in a no-interest loan under a new state program designed to help financially struggling hospitals, the community facility has announced.

The 75-bed Sonoma Valley Hospital has been awarded $3.1 million under the Distressed Hospital Loan Program, established earlier this year through state legislation and signed May 15 by Gov. Gavin Newsom.

In the case of Sonoma Valley Hospital, it is not at risk of closing, said Chief Financial Officer Benjamin Armfield. Rather, he noted, the funds will help the hospital emerge from long-term debt that has been exacerbated by the pandemic and rising interest rates that have “more than doubled over this last year.”

The 17 awardees for the $300 million program were chosen through criteria that included showing great financial need for the community, high risk of closing and demonstration of a well-developed turnaround plan, according to the California Department of Health Care Access and Information. The agency is administering the program jointly with the California Health Facilities Financing Authority. The program received 30 applications, according to the government entities.

The working capital loans are repayable over 72 months with an initial 18-month grace period, and awarded to nonprofit and publicly operated hospitals that are in “significant financial distress,” according to the California Department of Health Care Access and Information. Investor-owned hospitals, free-standing psychiatric inpatient hospitals, and hospitals that are part of a system of more than two hospitals were not eligible for the program.

Armfield said Sonoma Valley Hospital is expected to receive the $3.1 million within about 90 days. The hospital in its application had asked for between $5 million and $6 million, he noted.

Sonoma Valley Hospital met the community-need qualification for the program, Armfield said, based on its rural demographic, which consists of medically underserved populations and/or areas, distance to nearest alternative hospital, and a predominant payor mix of Medi-Cal/Medicare patients.

“Having this current long-term debt on our books has certainly constrained our ability to grow,” Armfield said. “By getting this funding, our plan is to reduce our interest-bearing debt, which should free up some additional capital for us to really move forward with some strategic initiatives that I think will further stabilize the hospital financially.”

For the turnaround portion of the application, the hospital detailed in its newly released five-year strategic plan four priorities, including making its financial future sustainable, Armfield said.

Among its initiatives are bringing specialties to the hospital that are currently lacking, including gastroenterology and cardiology, and expanding primary care and geriatric programs, he said.

Sonoma Valley Hospital’s leadership has been meeting with community members to determine the greatest needs and how they can best be met, Armfield said. The hospital has been able to add and extend some services because of its affiliation with UCSF Health that began in early 2018.

In the official announcement of the program Aug. 24, Newsom said: “In partnership with the legislature, we are working to keep the doors open so Californians can access critical care close to home.”

The Distressed Hospital Loan Program is set to expire Dec. 31, 2031, according to the state Department of Health Care Access and Information.

Cheryl Sarfaty covers tourism, hospitality, health care and employment. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.

Distressed Hospital Loan Program recipients

Beverly Hospital (Montebello): $5 million

Chinese Hospital (San Francisco): $10.35 million

Dameron Hospital Association (Stockton): $29 million

El Centro Regional Medical Center (El Centro): $28 million

Hayward Sisters Hospital, dba St. Rose Hospital (Hayward): $17.65 million

Hazel Hawkins Memorial (Hollister): $10 million

John C. Fremont Health Care District (Mariposa): $9.35 million

Kaweah Delta Health Care District (Visalia): $20.75 million

Madera Community Hospital (Madera): $2 million

Martin Luther King Jr. Community Hospital (Los Angeles): $14 million

Palo Verde Hospital (Blythe): $8.5 million

Pioneers Memorial Health Care District (Brawley): $28 million

Ridgecrest Regional Hospital (Ridgecrest): $5.5 million

San Gorgonio Memorial Health Care District (Banning): $9.8 million

Sonoma Valley Hospital (Sonoma): $3.1 million

Tri-City Medical Center (Oceanside): $33.2 million

Watsonville Community Hospital (Watsonville): $8.3 million

Source: California Department of Health Care Access and Information

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