Kaweah Health Receives $48 Million in COVID-Relief Funding from FEMA

VISALIA, CA — Kaweah Health is pleased to announce the receipt of $48 million in one-time COVID-relief funding from the Federal Emergency Management Agency (FEMA). The funds are reimbursement for extraordinary expenses Kaweah Health incurred during the COVID-19 pandemic, largely for medical supplies, personal protective equipment, and contract labor.

Since the pandemic, Kaweah Health has steadily been working its way back toward financial strength and last fiscal year the health system actually generated a bottom-line profit for the first time in four years. The FEMA funds will largely be used to restore cash reserves, which the organization used to sustain patient care during the pandemic. Additionally, with management’s recommendation, Kaweah Health’s Board of Directors unanimously elected on Wednesday, Dec. 18 to increase employees’ 2024 401(k) plan match from 50% to the full 100% employer contribution. We anticipate funding the 401(k) plan match when the FEMA funds are received—most likely in early 2025.

Gary Herbst, CEO of Kaweah Health, expressed optimism about this development.

"The receipt of this FEMA funding is a strong boost to our organization. It allows us to honor our commitment to our employees and ensures that we can continue providing exceptional care to our community." Herbst also recognized those who made the funding possible. “I want to highlight the exceptional work of our finance team members, who provided extremely detailed documentation of our COVID-related costs, down to the individual patient level, and never gave up on our FEMA claim for funding. I also want to thank our local Congressmen Vince Fong and Jim Costa for their support and advocacy at the federal level.”

While Kaweah Health returned to profitability last year, 2024 saw the implementation of SB 525, which will ultimately increase the minimum wage for all California healthcare workers to $25 per hour, with no additional reimbursement to hospitals. As a result of the new law, local market competition increased significantly, leading Kaweah Health to raise its employees’ compensation by $32 million in 2024. The FEMA funds will do little to help offset these new labor costs, but there are long-term reimbursement increases on the way for Kaweah Health that will help.

In contrast to the FEMA funding, which is a one-time payment, there are two recently-approved enhancements to Medi-Cal (California’s version of Medicaid) reimbursement rates that will offer long-term benefits to Kaweah Health. More than 60% of residents in Kaweah Health’s service area are covered by the Medi-Cal program, which pays hospitals far less than the cost of providing care.

The first additional reimbursement is an increase in District Hospital Directed Payment funding, which will substantially raise Medi-Cal outpatient reimbursement rates, which have gone virtually unchanged for more than 30 years. This increase is only available to district hospitals and will improve access to care for many who often have a difficult time obtaining healthcare services. The second enhancement to reimbursement is the Managed Care Organization (MCO) tax, passed by voters via Proposition 35 in November, which will also increase Medi-Cal reimbursement rates for all California hospitals and ensure that funds intended to improve Medi-Cal reimbursement for hospitals, doctors and other providers cannot be used by California lawmakers to balance other state budget shortfalls.

The changes in Medi-Cal reimbursements together with the FEMA relief funds, mark a pivotal step in Kaweah Health's financial recovery plan, furthering the organization’s return to a strong, long-term financial standing.

“Kaweah Health has been the leading healthcare provider in Tulare and Kings counties since 1961,” said Herbst. “It isn’t easy to be an independent public hospital these days, but we take our responsibility to the community very seriously. The steps taken by our health system and our board, combined with these new reimbursement sources, will ensure that we continue to care for our community for a long time to come.”

Kaweah Health remains committed to serving the people of Tulare and Kings counties with high-quality health care services and looks forward to using this funding to strengthen its operations and community impact.

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About Kaweah Health
Kaweah Health, a publicly owned healthcare organization established in 1961, is the largest hospital in Tulare County, with services including a level III trauma center, rural health clinics, urgent care centers, a rehabilitation hospital, cancer center, long-term care facilities, and other specialty services. With more than 5,000 employees and a medical staff of about 670 professionals, Kaweah Health’s mission is to provide excellent and compassionate healthcare to the community, with a vision to be a world-class healthcare choice for life. For more information, visit KaweahHealth.org or follow Kaweah Health on Facebook, Instagram, or X.