Board of Supervisors to consider financial assistance to hospital

While Hazel Hawkins is requesting a $10 million loan, supervisors say they were concerned they wouldn’t get that money back. 

Hazel Hawkins Memorial Hospital Interim CEO Mary Casillas and bankruptcy attorney Michael Sweet asked the San Benito County Board of Supervisors on Dec. 13 for a $10 million loan to delay filing Chapter 9 bankruptcy in order to consider all options to save the hospital. The board took the position that the loan either could not be secured or would only prolong the outcome.

The hospital has said it needs to come up with $25 million to avoid bankruptcy.

HHMH said in a news release it had 745 employees and 41 active physicians on staff in 2021, noting 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.

The supervisors were not convinced that it would be in the best interest of the county to approve a loan that would only “delay the inevitability,” said Supervisor Kollin Kosmicki, adding that he heard nothing in the presentation that laid out a business plan.

“Maybe bankruptcy is the best choice,” he suggested.

Hazel Hawkins Chief Finance Officer Mark Robinson told the hospital’s board of directors Nov. 4 that several factors led the hospital to prepare for filing for bankruptcy—which included returning over $12 million to the state this fiscal year, the Anthem Blue Cross reimbursement dispute and delayed supplemental payments totaling $13 million to the hospital from the state.

At first, Supervisor Bea Gonzales was in favor of moving forward with the $10 million loan, but after hearing comments from the other supervisors who were hesitant to act on the loan immediately, the board voted to delay consideration until next year, primarily because it would leave the county coffers drastically underfunded and could affect its own projects, Kosmicki said.

Midway through the long discussion, County Clerk, Auditor-Controller and Registrar of Voters Joe Paul Gonzalez offered another option: a financial maneuver approved by the California Constitution that the county has used once before to assist a school district during a momentary cash flow shortage. 

He proposed that the county advance the hospital $2.2 million—one year’s worth of property taxes—in December, to be repaid when taxes come due in April, at which time the county would keep the money rather than forward it to the hospital. 

According to the hospital’s financial forecast for December, 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 are revenues of $16.5 million and disbursements of $24.8 million for a $8.5 million shortfall.

The supervisors will return to chambers Dec. 15 to decide whether or not to approve the $2.2 million that might give the hospital at least one more month reprieve, according to Casillas. The $10 million request was moved to the Jan. 17 agenda to be considered by a board that will include three newly elected supervisors. 

Hazel Hawkins gave itself until Dec. 31 to file for bankruptcy if it can’t come up with additional funds. If the county approves the $2.2 million advance, Casillas said the money would help extend the deadline to file for bankruptcy until early January, but no further. She avoided saying the district would declare bankruptcy before Dec. 31.

The hospital district board voted unanimously Nov. 4 to give notice that it was declaring a fiscal emergency and adopted a resolution which declared that the financial state of the hospital jeopardizes the health, safety, or well-being of the residents of the district’s service area, absent the protections of Chapter 9 of the United States Bankruptcy Code. 


Related BenitoLink stories:

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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John Chadwell

John Chadwell is a freelance photojournalist. He has many years' experiences as a photojournalist, copywriter, ghostwriter, scriptwriter, and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer, having worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and graduate studies at USC Cinema School. John worked as a scriptwriting consultant, and his own script, "God's Club," was produced and released in 2016. He has also written eight novels, ranging from science fiction to true crime, which are sold on Amazon. To contact John Chadwell, send an email to: [email protected]