The Kentucky House voted Friday to create a loan program to provide struggling rural hospitals with cash transfusions lawmakers hope will spark a financial turnaround.
Hospitals in counties with fewer than 50,000 people would be eligible for the loans. More than 60 hospitals qualify under that definition, and more than a dozen are considered “vulnerable to closure,” said Republican Rep. Danny Bentley, the bill’s lead sponsor.
Those hospitals are an essential part of a community’s lifeblood, not only providing health care but serving as a key employer, he said.
“If they close the rural hospital on us, they’ll never reopen them,” Bentley said. “So we’ve got to be concerned.”
The bill cleared the House on an 80-0 vote and now goes to the Senate. Its cosponsors include House Speaker David Osborne, who said funding for the loan program could come from the issuance of bonds. The state economic development cabinet would administer the loan program.
The measure’s progress follows the recent announcement that Our Lady of Bellefonte Hospital in northeastern Kentucky will close later this year. The closure of the hospital, which serves a struggling region of Appalachia, will affect about 1,000 employees.
Under the bill, hospitals receiving the loans could use the money on facilities, staffing or to expand medical services. The economic development cabinet would determine the terms of each loan. Struggling hospitals seeking the loans would submit plans to accomplish a business turnaround.
Osborne said money for the loan program could become available as soon as this year if the bill becomes law. It has an emergency clause allowing it to take effect immediately upon the governor’s signature. It’s too soon to determine how much money might be needed, he said.
“It’s the goal to help turnarounds when turnarounds are possible,” Osborne told reporters. “That doesn’t mean that we can save every hospital that is failing, just like we can’t save every business that’s failing. But there are some, when given the opportunity, that can succeed and that’s our goal is to try to help those that can.”
The House recently passed another bill that would give the University of Louisville a $35 million loan to support its acquisition of Jewish Hospital and other KentuckyOne Health facilities in the state’s largest city. That measure is awaiting action in the Senate.
Osborne said Friday that work on crafting the rural hospital loan program was an outgrowth of discussions about the UofL-related measure.
“Several people expressed some concerns about what are we going to do about rural hospitals that were struggling so much,” the speaker said.
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The legislation is House Bill 387.