You are rightly concerned that your son's hospitalization has prompted him to be retained. He should have received school during his hospitalization or "homebound" services.
I would definitely recommend talking to the school counselor, your child's advocate, about your concerns. It seems that his illness is impacting his education. He may qualify for extra assistance in school and be able to catch up to his grade level. If you are unable to contact the school counselor, call the administration in the school or the district to ask about meting his needs.