Cal. Health & Safety Code § 124805

(a) The Legislature recognizes the need to strengthen, and in some cases salvage, rural hospitals to ensure that adequate access to services is provided to residents of rural areas as well as tourists and travelers who, at certain times, may outnumber the residents. Further, the Legislature recognizes that this will require a comprehensive approach. Therefore, the Legislature intends that:
1. (1) Expertise be provided to endangered rural hospitals to both of the following:
  1. (A) Carry out a strategic assessment of potential business and diversification of service opportunities.
  2. (B) Develop a specific plan of action when feasible.
2. (2) Access, when appropriate, be provided to special eligibility programs within the California Health Facilities Financing Authority.
3. (3) Short-term technical assistance be available on fiscal and program matters.
4. (4) The department continue to provide regulatory relief through program flexibility.
5. (5) Inpatient reimbursement limitations be modified so as not to single out rural hospitals for application.
6. (6) Reimbursement rates for outpatient services be set at a level that will provide incentives for rural hospitals to focus on the provision of outpatient services and that will reduce the financial losses incurred by the facilities in providing those services.
(b) The Legislature recognizes that for certain rural settings, an acute care hospital as defined in subdivision (a) of Section 1250 may no longer be cost-effective. Therefore, a rural alternative model that preserves the primary and emergency care systems must be identified, studied through demonstration projects, and developed as a new category of health facility.
(c) The Legislature recognizes that a rural alternative facility may not conform to what is now depicted in state or federal regulation. Therefore, to identify a model, implement demonstration projects, and establish the rural alternative hospital as a license category of health facility, a cooperative effort will be required between the department, the federal Health Care Financing Administration, and the health care industry. To this end, the Legislature intends that the department inform the federal Health Care Financing Administration of its interest in establishing the rural alternative hospital program and subsequently seek any necessary waivers.