Information provided by San Benito Health Care District
The Board of Directors of the San Benito Health Care District (District) dba Hazel Hawkins Memorial Hospital (HHMH) will decide whether to file a Chapter 9 bankruptcy case at the next board meeting on May 22, 2023, at 5 PM. The agenda item and supporting documentation were noticed to the public on Tuesday, May 16, and can be viewed here https://www.hazelhawkins.com/documents/content/SBHCD-May-Board-Packet.pdf
Chapter 9 is a special chapter of the U.S. Bankruptcy Code that allows cities, hospital districts and other public entities to adjust their debts in a bankruptcy case. In a bankruptcy case, the District can continue operations without disruption, including caring for patients, operating its facilities, and making payroll.
The decision to put the Chapter 9 filing on the agenda is part of the hospital’s continued efforts to shore up finances ahead of a possible strategic partnership with a larger organization. The District has been in negotiations with key constituents, and will continue this process of finding a partner.
“Right now, we are at a point where we need to tackle a few items that have been systemically complicating our financial health that we have not been able to solve outside of bankruptcy,” said Mary Casillas, interim-CEO of Hazel Hawkins Memorial Hospital. “These include the District’s self-insured status for employee health care benefits as well as some vendor contracts which are not aligned with where we are today as an organization. Chapter 9 is a tool for us to address those issues more comprehensively to place the District in a healthier financial position for the long term.”
The November 2022 fiscal emergency declaration authorized a Chapter 9 filing but the District did not pursue bankruptcy at that time in favor of short-term financial stabilization efforts and creditor negotiations. Since then, the District achieved over $11 million in cost savings, loans and prepayments to support the District through the end of summer.
During the last board meeting, Seth Freeman, Managing Director for B. Riley Advisory Services, mentioned during his presentation to the board that “while much had been done to shore up finances, the efforts would fall short of saving the District as early as September of this year.”
“Our goal has always remained the same—to preserve health care in our community,” said Casillas. “Our primary objective is to find a partner and we only have a limited amount of time to do that. In the absence of that, we still need to restructure to maintain some level of independent operations. Either way, addressing our long-term liabilities in bankruptcy will serve our community’s interest in continued access to health care.”