Hazel Hawkins Memorial Hospital announced it is still looking for a partner to save the hospital from bankruptcy and closure.
“A strategic partner is the most promising way to keep healthcare local,” interim CEO Mary Casillas said. “We are working towards a sustainable solution for the district that will deliver for our employees, patients and the greater San Benito County.”
Recently Hazel Hawkins confirmed it had sign a non-disclosure agreement with an interested buyer.
The news release also states the hospital’s leaders have entered a second week of mediation with creditors and other interested parties in an effort to maintain access to healthcare for thousands of residents in San Benito County. It adds that the hospital is working to cut costs and shore up finances to avoid bankruptcy and the closure of a 115-year-old medical institution, serving a community of more than 60,000 residents.
“We’ve been in the process of taking a hard look at underperforming service lines and other areas where the hospital can cut expenses,” said Casillas. “We’ve made great strides since July and will continue to do all we can as we chart a new course for the healthcare district.”
According to the release, the healthcare district saw over 23,000 ER visits and about 80,000 clinic visits in 2022. According to the hospital, 745 employees and 41 active physicians were 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.
The release states the hospital has been contacted by a “handful organizations” and that it’s hosting site visits and meetings with potential partners. The release does not any organizations by name.
“Closing Hazel Hawkins would have a devastating impact on the community,” said Casillas. “Those seeking care might need to drive more than an hour away depending on traffic to seek help at the next nearest hospital. From an emergency standpoint, that’s unacceptable.”
The release said the small stand-alone rural hospitals across the state are struggling with the same issues and that several of these smaller hospitals facing similar financial burdens have shuttered, limiting access to critical care for nearby residents.
“Even during good times, rural hospitals contend with limited cash flow,” the release said. “During the pandemic the increases in staffing and supply costs to care for an influx of very sick patients stretched resources further. At Hazel Hawkins, these expenses skyrocketed during the height of the pandemic. The hospital was dealt another blow due to COVID when elective procedures, typically the profit center for most healthcare districts, came to a full stop. This, coupled with the fact that 75% of the hospital’s patients are insured by MediCal or Medicare, which offer low reimbursement rates combined with the decision by Medicare to take back $5 million in payments already made to the to the district, has made the past few years particularly difficult.”
Hazel Hawkins Timeline
On Nov. 4, the San Benito Health Care District, Hazel Hawkins’ governing board, declared a fiscal emergency, allowing the district to file for Chapter 9 bankruptcy. In that meeting, Chief Finance Officer Mark Robinson told its board of directors Nov. 4 that several factors led the hospital to need the option of filing for bankruptcy. Those factors which included an obligation to return over $12 million to the state this fiscal year, an Anthem Blue Cross reimbursement dispute and a delay in supplemental payments totaling $13 million due to the hospital from the state.
The hospital asked the county for a $10 million loan. On Dec. 15, the San Benito County Board of Supervisors approved a $2.24 million advancement to the hospital in property tax revenues but the hospital was due 50% of that amount by the end of the month regardless of the supervisor’s vote.
On Dec. 19, the hospital sent notices to its employees of possible mass layoffs and possible closure. According to the notice, the hospital said it has enough funds to operate until Feb. 18. The notice stated that the Worker Adjustment and Retraining Notification (WARN) Act can be extended or retracted if Hazel Hawkins is successful in finding funding. The hospital said it needed to come up with an additional $25 million to avoid bankruptcy.
On Dec. 28, Hazel Hawkins announced a new reimbursement agreement with Anthem Blue Cross. The new agreement took effect Jan. 1. BenitoLink has requested but not received more information on the agreement and how it will impact the hospital.
The hospital has been “out-of-network” for Anthem PPO members since Aug. 10, 2022. During negotiations, Hazel Hawkins said Anthem was refusing to “appropriately pay Hazel Hawkins Memorial Hospital for health care services.”
Anthem said it “offered reasonable increases that are in line with what other provider partners receive for the same services.”
Before the hospital declared a fiscal emergency, it terminated its contract with then-CEO Steve Hannah on Oct. 14. that included $360,563 in severance pay. Hannah’s contract expired June 30, 2025.
In an exclusive interview, Hannah told BenitoLink in July 2022 the hospital has until 2030 to make its current building capable of surviving an earthquake of 8.0 magnitude on the Richter scale. Hannah said the hospital needed to expand and is looking to build a new $250 million hospital. With board approval, the hospital also purchased the Oasis Fitness building at 190 Maple St. near the Hollister Post Office for $1.9 million in cash on April 20, 2022.
On Aug. 12, The California Nurses Association announced registered nurses at Hazel Hawkins were given a new four-year contract July 28 that included a 12.5% across-the-board wage increase, beginning with 3.5% in the first year of the new agreement.
On Jan. 17, Hazel Hawkins Memorial Hospital announced California Nurses Association members agreed to postpone their 3% pay increased for 90 days, in consideration of the hospital’s financial crisis. The release said the postponement can be extended.