By Ana B. Ibarra, CalMatters
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A shuttered Northern California hospital is getting a lifeline from Congress, but it doesn’t come with money to actually reopen and serve patients.
A new federal law will restore the “critical access” designation for Glenn Medical Center, the only hospital in Glenn County. As a result, once it reopens, the hospital qualifies for full Medicare reimbursement, a key source of revenue.
Separately, this week a California lawmaker introduced a bill to create state loans for struggling hospitals, which could help the facility find the money it needs to reopen.
For now, Glenn Medical Center says it needs $40 million to $50 million to restart operations and bring back staff.
Glenn Melnick, a health economist at the University of Southern California, says because a federal decision led to the hospital’s closure, it would make sense for the federal government to provide funds for the hospital’s reopening.
“In an ideal world this (congressional) bill would have restored their status and made them whole, right?” he said. “But failing that, you’re gonna have to look to the state.”
Regaining critical access status
The problem with Glenn Medical Center, according to the U.S. Centers for Medicare and Medicaid Services, was distance.
Critical access hospitals must be at least 35 miles from the next closest facility, and a review showed that Glenn Medical was only 32 miles from a hospital in Colusa County. Hospital officials appealed arguing that the hospital’s location had not changed since it qualified for the designation a quarter-century earlier, but their appeals were unsuccessful, and the hospital closed last fall.
A critical access designation brings hospitals regulatory flexibility and increased reimbursement for Medicare patients. Without the revenue that comes from having critical access status, operations at Glenn Medical would be unsustainable, hospital management previously told CalMatters.
The closure meant a county of 28,000 people no longer had a local emergency room.
Last fall, Democratic Sen. Adam Schiff and the late Republican Rep. Doug LaMalfa introduced efforts in Congress to restore Glenn Medical’s designation. The deal that was ultimately signed into law directs the federal health agency to waive the distance requirement for any critical access hospital that had this designation as of Jan. 1, 2024 and that received a notification of non-compliance before Jan. 1, 2026.
“Returning the (critical access) designation is a great step, but it doesn’t solve the problem,” said Matthew Beehler, a spokesperson for American Advanced Management, the company that owns and operates Glenn Medical Center.
“We’re trying to be realistic about how much money it will take to reopen because it will take significant recruitment efforts,” he said.
Distressed hospital loans 2.0
In Sacramento, a state bill now may pave the way for the financial help that Glenn Medical is seeking.
Assemblymember Esmeralda Soria, a Fresno Democrat, on Thursday introduced the sequel to a 2023 law that created the state’s Distressed Hospital Loan Program. That fund is out of money after distributing about $300 million to hospitals. Soria’s new proposal, Assembly Bill 1923, is seeking a new round of $300 million for struggling hospitals. If the bill makes it out of the Legislature and gains Gov. Gavin Newsom’s support, hospitals could then apply for the loans.
That previous loan program afforded then-closed Madera Community Hospital $57 million, allowing it to reopen in March of 2025. It’s the only hospital in Madera County.
American Advanced Management took over and reopened Madera Community; it also owns Glenn Medical.
“Realistically we would have to find funding from the state like Madera did,” American Advanced Management’s Beehler said. “As we’ve seen in Madera…we need to cover about a year’s worth of expenses before you get reimbursements.”
The ongoing challenges of rural hospitals
Glenn Medical’s bureaucratic challenges are unique, prompted by a reinterpretation of a longtime federal rule. But similar to many rural and community hospitals, it had been operating in the red for years. That precarious financial state makes these hospitals particularly vulnerable to any change.
“Here’s the thing, most of these rural hospitals are on a shoestring,” Melnick said. And especially independent hospitals, those that are not part of a larger health system, “they’re living year to year right now.”
The first round of loans to distressed hospitals pushed through in 2023 happened as several hospitals warned they were on the brink – which they said was the result of higher labor costs and low reimbursement rates. In announcing the bill, Soria said she is trying again in part because of the federal budget bill President Trump signed last year that makes sweeping cuts and changes to the country’s safety net programs.
That law, experts say, will starve hospitals in rural and underserved areas of tens of billions of dollars in the next decade. “Dozens of hospitals are facing a financial cliff right now, thanks to the largest federal health care cuts in history that arrived with this new federal administration in 2025,” Soria said.
In an attempt to cushion this blow, Congress created a $50 billion Rural Health Transformation Project. California will receive $233 million from that fund this year, with more expected over the next five years. But experts have noted that this federal project only makes up about third of the expected losses in rural areas. It’s not yet clear whether Glenn Medical could qualify for a piece of this money.
Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.