Hazel Hawkins announced it has the capability to sustain current operations “through late summer.” It had previously stated that it estimated to run out of operational funds in April.
According to the news release, this was a result of cost savings and negotiations with MediCal, Medicare and Anthem that have resulted in a better-than-expected cash position leading into the second quarter of 2023.
“The Herculean efforts by our team are finally catching up with the crisis,” said Hazel Hawkins interim CEO Mary Casillas. “What we are seeing now is the ability to sustain the current operations for the District through late summer.”
According to the release, the San Benito Health Care District leadership, which is the governing board of Hazel Hawkins Memorial Hospital, along with their consultants, have been looking for ways to better the cash position of the hospital and the district in an effort to stave off a possible bankruptcy filing. It adds that the efforts included receiving or scheduling near term payments from MediCal, Medicare and Anthem, and cost savings measures and reductions in staffing costs.
The hospital says the financial situation is still critical.
“We are not out of the woods yet, but we are in a much better position to complete a partnership agreement or sale by this fall,” said Casillas. “Though our cash position has improved dramatically over the past few weeks, we need more help. We hope that the community can see our progress and get behind our efforts to save access to quality healthcare for thousands of San Benito County residents.”
According to the hospital, the healthcare district saw over 23,000 ER visits and about 80,000 clinic visits in 2022. It has also stated 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 hospital also announced it has received its first confidential Letter of Interest (LOI) from a prospective partner/buyer, with several more organizations conducting ongoing due diligence activities.
“Our team has begun the process of reviewing the first LOI and we have been alerted that there may be more LOIs submitted in the coming weeks,” said Casillas. “The importance of finding the right partner or buyer is crucial for our community as it will pave the way to access to critical healthcare services here in San Benito County.”
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. That property is now for sale.
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.
In February, it confirmed it had signed a non-disclosure agreement with a potential buyer. Spokesperson Frankie Gallagher told BenitoLink a sale can take between six to nine months.