In response to the financial crisis at Hazel Hawkins Memorial Hospital, the San Benito County Board of Supervisors unanimously approved a resolution on Dec. 15 to advance $2.24 million to the hospital in property tax revenues, and in a separate motion, agreed to deny a $7.76 million loan in 2023, which is the remainder of the hospital’s original $10 million request from the county.
Technically, the resolution may not have been stated accurately as County Treasurer and Tax Collector Melinda Casillas told BenitoLink $1.1 of the $2.2 million would normally have been dispersed in December.
Casillas said the auditor usually distributes to the hospital district about 50% of the total estimated amount in late December, then distributes about 45% more in late April. She said the additional 5% is for any adjustment that occurred during the year and is dispersed in June.
The supervisors tacked on a 4% interest fee to the $1.1 million that will be distributed in January.
According to the hospital’s financial forecast for December, presented to the supervisors on Dec. 13, it would have revenues of $14.8 million and costs of $15.07 million, representing a $1.47 million shortfall. The forecast for January and February 2023 is $16.5 million in revenue and $24.8 million in disbursements for a shortfall of $8.5 million.
The hospital has also said it needs to come up with $25 million to avoid bankruptcy. Hazel Hawkins gave itself until Dec. 31 to file for bankruptcy if it can’t come up with additional funds.
The $2.24 million is actually 85% of the total property taxes that would be paid to the hospital, Casillas told the supervisors. This percentage is dictated by the California Constitution, she said. She told the board the hospital would have already received half of the $2.24 million by the end of December, so she advised the board to ask for the 4% interest to be added only on the second half.
She also told the board that under Section 6, Article 16 of the California Constitution, what the board was proposing to do in approving a temporary transfer of tax payment, was not allowed by the letter of the law.
“The temporary transfer is for those entities whose funds are in custody and are solely paid through the treasure profits,” she said. “This does not happen to be the case with Hazel Hawkins. However,” she added, “I think the intent of the temporary transfer, regardless of this language, and that we are going to be advancing 85% of property taxes, there is not necessarily a risk to the county. I think we’re okay.”
Supervisors Kollin Kosmicki and Dom Zanger said they would oppose any loan beyond the $2.24 million in 2023. (It was later clarified by Casillas that only $1.1 was being loaned.) The board will take on new members Mindy Sotelo and Angela Curro in January. Kosmicki reasoned that the new board would not be able to garner four votes, which was required because the loan would involve a budget adjustment. He said this was the case because he and Zanger had already declared they would vote against a loan.
He and Supervisor Bob Tiffany said Sotelo would have to recuse herself, though they didn’t specify the reason. Sotelo told BenitoLink that Tiffany and Kosmicki made those comments because her husband works at Hazel Hawkins.
According to the hospital, it had 745 employees and 41 active physicians on staff in 2021. It reported that last year it had 23,594 emergency department visits; 2,319 hospital admissions; 42,981 outpatient visits; 83,679 clinic visits; and 439 infant deliveries.
Kosmicki also said he wanted the resolution to deny the $7.8 million loan and prevent the county from having to hire a bankruptcy attorney or involve staff to devote time to it when it wasn’t necessary. Supervisors Tiffany, Peter Hernandez and Bea Gonzalez wanted the county to have the flexibility to continue working with the hospital to find other possible solutions, rather than a loan. The motion to deny the loan and allow the staff to continue working with the hospital passed unanimously.
After the meeting, Sotelo told BenitoLink and Mary Casillas, interim Hazel Hawkins CEO, she was upset that Kosmicki as well as Tiffany discounted her position and assumed she would recuse herself. She said that she had already written a letter to the state attorney general asking for a clarification of what she might be obligated to do. She told BenitoLink she will support helping the hospital. In the same conversation, Mary Casillas confirmed that selling the hospital is on the table as one of many possible solutions.
Just last June, then-CEO Steven Hannah said there were plans to build a second hospital on the north side of Hollister for $250 million and that the hospital had already purchased a building on Maple Street in order to move services to it. The building was reportedly purchased for over $2 million.
In public comments, several hospital medical staff and county residents asked the board to support the hospital and explained the dire consequences for those who depend on it for care, as well as employment, if it should close. Mary Casillas said at this time the hospital is responsible for all costs for transporting patients outside the county. She said if the hospital were to close those costs would be the county’s responsibility.
Former Hollister School District board member Rob Bernosky, who has spoken at hospital board meetings and written opinions in BenitoLink about the hospital staff, said, “The elephant in the room is, is it a sustainable hospital or not? What are the paths to sustainability, other than bailouts? All they’re asking you for is a bigger bilge pump while the leaks are still occurring.”
“What is the business model that would make the hospital work?” he asked.
“It’s just fishy. The hospital could either maintain itself or maybe you guys [supervisors] need to take it over,” he said. “Let’s bring the problem to the front. Why aren’t they addressing the very issues that got them into it? It’s not the government that’s putting them out of business. It’s their business model.”
“I have not heard a business plan,” Kosmicki said in agreement with Bernosky. “All I’ve heard is hope and hope is not a plan.”
Resident Elia Salinas said during public comment that even though she had received excellent care at the hospital, she questioned the hospital’s fiscal responsibility.
“You cannot put the burden on the community for the inattentiveness from the board of trustees,” she said. “They failed their duty. They were not looking at the financials. They failed the community. The Board of Supervisors is not abandoning the community. The board wants to help but let’s find out what happened.”
Related BenitoLink stories:
Board of Supervisors to consider financial assistance to hospital | BenitoLink
Hazel Hawkins seeking $10 million loan from County | BenitoLink
Nurses, resident ask Hazel Hawkins for transparency | BenitoLink
Hospital says three factors led to financial emergency | BenitoLink
Hazel Hawkins authorizes Chapter 9 bankruptcy filing | BenitoLink
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