Photo by Jenny Mendolla Arbizu.

Hazel Hawkins Memorial Hospital will receive a $10 million interest-free loan from the Department of Health Care Access and Information (HCAI) under the Distressed Hospital Loan Program. On Aug. 24, HCAI announced in a news release it awarded close to $300 million in no-interest loans to 17 struggling California healthcare facilities. 

The loan comes nearly 10 months after San Benito Health Care District, which oversees Hazel Hawkins, declared a fiscal emergency. 

Hazel Hawkins Memorial Hospital Chief Finance Officer Mark Robinson told its board of directors on Nov. 4, 2022, several factors led the hospital to file for bankruptcy, which included returning over $12 million to the state earlier in the year; a dispute with Anthem Blue Cross over reimbursements; and the delayed supplemental payments totaling $13 million to the hospital from the state. 

The hospital reached an agreement with Anthem Blue Cross on Jan. 1, but the terms of the agreement were not made public. 

Frankie Gallagher, director of marketing for the hospital, told BenitoLink the district has not yet received information from the California Health Facilities Finance Authority on when the funds will be received or how the loan documents or distribution of funds will be handled.  

“We don’t know if we will receive a lump sum or payments since we are in the Chapter 9 Bankruptcy process,” she said.   

Gallagher said the hospital did not have specifics regarding the impact of the loan to the hospital’s operating funds because there were several unknowns involved. She did not reply to BenitoLink’s inquiries about the cost of the hospital’s daily operations, its revenue, or how long the hospital would be able to operate with the new loans. 

According to the hospital’s financial audit, Hazel Hawkins had $147.3 million in operating expenses in 2022. This averages $12.75 million in expenses per month, an increase of over $5 million from 2021.

Gallagher said she did not know if these funds would affect a potential contract with American Advanced Inc. or any other partner or buyer, nor did she know if the timeframe for finding a partner or buyer would be affected.

“Once we know more of the particulars, we can better answer your questions,” she said. 

According to the HCAI, the loan program—established through Assembly Bill 112 and approved by Gov. Gavin Newsom on May 15— “offers interest-free, working capital loans to nonprofit and publicly operated financially distressed hospitals, including facilities that belong to integrated healthcare systems with less than three separately licensed hospital facilities.” 

The HCAI news release did not include information as to when hospitals would be receiving funds from the loan. In a statement, Hazel Hawkins said they expected to receive the funds in the coming weeks. 

The loans are repayable over 72 months, with an initial 18-month grace period at the beginning of the loan term, according to the news release. HCAI spokesperson Andrew DiLuccia told BenitoLink, “All loans from the Distressed Hospital Loan Program must be repaid by December 31, 2031,” and that currently, another round of funding is not in the works.

“My number one priority this year has been to ensure health access for residents and all Californians who desperately need hospital services,” said Senator Anna Caballero, who spearheaded the bill with Assemblyman Robert Rivas and Assemblywoman Esmeralda Soria, in a news release. 

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Jenny is a Hollister native who resides in her hometown with her husband and son. She attended Hollister schools, graduated from San Benito High School, and earned her bachelor’s degree in literature...