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Prompted by continued concerns for the future of healthcare in its community, leaders from the County of San Benito (COSB) have expanded on its proposal to the San Benito Healthcare District (SBHD) for the future governance, operation and financing
of Hazel Hawkins Memorial Hospital, its skilled nursing facilities and physician clinics. The
more detailed proposal was delivered to the SBHD board today and included an updated Letter of Intent (LOI), a draft Joint Powers of Authority (JPA) agreement, a potential timeline, financial projections and a business plan for achieving financial viability.
The County was able to elaborate on its proposal based on work completed by the nationally recognized healthcare consulting firm, ECG. The firm had been engaged to develop a strategic business plan that would restore the hospital to financial health and improve access to medical care. The foundation of the ECG business plan is the recruitment of 25 new physicians to the County. ECG’s previous work had documented that there is a shortage of over 50 physicians in San Benito County.
The business plan also demonstrated that if there was a more robust medical community that was fully dedicated to the hospital, the hospital could grow and remain financially successful into the future.
JPAs are authorized under California Government Code § 6500, et seq. and provide a
mechanism for one or more public agencies to jointly exercise powers in common to the
members. In the formation of the JPA, a specific purpose is established, which in this case would be focused on the operation and financing of healthcare services. JPAs have the authority to issue bonds or enter into contracts with outside agencies to ensure the fulfillment of stated goals.
Under this proposal, the JPA would be formed by the healthcare district and the County.
The JPA would have an expanded board that would include community members recruited based on their specific expertise. The assets and liabilities of the hospital would remain with the healthcare district but would be managed by the JPA.
The SBHD has been soliciting proposals from buyers or future partners for a little more than one year now. The non-binding updated LOI submitted today proposes that the SBHD and the COSB (1) form a Joint Powers Authority (“JPA”) to capitalize, govern and oversee the management of Hazel Hawkins Memorial Hospital (HHMH), the skilled nursing facilities and associated medical practices; and (2) seek partnerships with regional tertiary or academic hospitals to enhance services available locally.
The County’s previous JPA proposal was jointly submitted by COSB and Salinas Valley Health. Subsequently, Salinas Valley Health decided that they were not able to take on full management of SBHD’s facilities at this time.
The purpose of the JPA will be to:
- To foster and capitalize the further development of and expansion of a local healthcare system to deliver high quality healthcare services to the residents of the County and the District
- To ensure a sufficient foundation of local support and long-term financial stability
- To provide mechanisms for expanding access to care through the recruitment and building of a local sustainable group (>25) of medical providers.
- To maintain a locally operated health care delivery system focusing on a mission to serve the healthcare needs of our community versus equity shareholders.
- To establish a formal structure for business discussions and decision making leading to collaborative activities.
- To oversee the additional capitalization required by HHMH.
Locally controlled HHMH under the JPA will allow members of our community to determine how the healthcare needs of our community are met, which healthcare services we support and need and what investment meets the needs of our community versus a third party, particularly one that is based out of state.
“The County is very concerned that if our local hospital is sold to an unknown organization, we cannot be guaranteed that services will be available, or that the need for more physicians will be met. We would like to help the healthcare district maintain local control,” said Supervisor Angela Curro.The resubmission of the LOI by COSB does not preclude or discourage the submission of proposals from other organizations.
To date, the SBHD has received three other LOIs from prospective buyers or partners. A LOI was submitted by a small company headquartered in the Central Valley. The others are from an organization headquartered in Michigan and a local group
called the San Benito Health Alliance.
The County of San Benito intends to schedule a “Town Hall” meeting to talk with members of the community about the hospital proposal and the analysis completed by ECG.