Washington, D.C.—To help prevent hospitals in rural communities from permanently closing their doors, U.S. Senator Susan Collins introduced legislation today to allow nonprofit critical access hospitals undergoing Chapter 11 bankruptcy reorganizations to apply for forgivable loans under the Paycheck Protection Program. The PPP for Critical Access Hospitals Act mirrors language originally introduced by Representative Jared Golden that was included in the House-passed HEROES Act.
Senator Collins co-authored the Paycheck Protection Program (PPP), which provides forgivable loans to employers with fewer than 500 workers so that they can stay afloat and continue paying their employees. Hospitals are not prohibited from participating in the PPP, but those that have previously or are currently under bankruptcy protection have been unable to access PPP funds, due to an interpretation of underlying Small Business Administration 7(a) program rules.
Two institutions in Maine that would benefit from this bill are Penobscot Valley Hospital in Lincoln and Calais Regional Hospital. Both are in the midst of Chapter 11 proceedings, and both have suffered serious revenue shortfalls due to the cancellation or scaling back of elective procedures during the pandemic.
“Non-profit critical access hospitals like Calais Regional Hospital and Penobscot Valley Hospital are vitally important to the rural communities they serve, both as front line health care providers and as a source of good-paying jobs,” said Senator Collins. “These institutions need temporary financial assistance to weather sharp revenue decreases due to the cancellation and postponement of elective medical procedures during the pandemic. This targeted bill will expand the PPP to include these key employers to allow them to keep their doors open until they can resume normal operations once pandemic-related disruptions to their operations have passed.”
Penobscot Valley Hospital and Calais Regional Hospital are both critical access hospitals, a narrow designation for smaller facilities that provide front line care to patients in rural areas who would otherwise have to travel long distances to receive care.
Both facilities are also undergoing Chapter 11 bankruptcy reorganizations. SBA issued an interim final rule on April 24 stating that no bankrupt entities will receive PPP funds. Recognizing that critical access hospitals are essential to both public health and local economies in many rural areas across the country, Senator Collins, Representative Golden, and Senator Angus King sent a letter to SBA Administrator Jovita Carranza on May 1, urging her to amend her agency’s PPP rule to create a narrow exception allowing for applications from non-profit critical access hospitals in Chapter 11 bankruptcy status.