Hazel Hawkins Memorial Hospital announced that it is withdrawing its Worker Adjustment and Retraining Notice (WARN) that was first issued in December, and then resent in February amid the organization’s financial crisis.
According to the news release, the WARN notice is meant to alert staff of an anticipated closure of the hospital.
“However, the San Benito Health Care District and Hazel Hawkins leadership has made significant progress in shoring up its finances since the issuance of the WARN notices,” the release said.
San Benito Health Care District is the governing board of the hospital. 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 the district had 23,594 emergency department visits; 2,319 hospital admissions; 42,981 outpatient visits; 83,679 clinic visits; and 439 infant deliveries.
“Since December, we have worked diligently to shore up the finances of the hospital and the efforts have proven successful,” said Hazel Hawkins Memorial Hospital interim CEO Mary Casillas.
According to the release, the District is beating its cash projections by more than $11 million between November 2022 and February 2023.
“By way of example, during that period, the district preserved $6.8 million in cash from revenue enhancing and cost saving operational enhancements, $1.1 million through the deferral of certain tax liabilities, obtained a $3 million, no-interest loan from the State of California, and received an approximately $900,000 advance of the district’s expected property tax receipts from the County of San Benito,” the release said.
It added that the district has extended the anticipated date by which it will run out of cash to late Summer 2023.
“The District continues its efforts to find a strategic partner or buyer and through its professional team, has been able to contact more than 100 potential partners from across the nation, which has resulted in over a dozen interested and qualified entities entering into nondisclosure agreements to conduct due diligence,” the release said.
The hospital said, as it also did in early March, that the district has received one letter of intent from a qualified entity and expects additional indications of interest in the coming weeks.
“Our efforts to implement a long-term stabilization strategy with a qualified partner present the most expedient and likely path to preserve the district’s health care facilities and operations for San Benito County,” Casillas said. “There is still much work to be done and we are a long way from the finish line. We will continue to need the help of the local community to preserve the future of healthcare in our community.”
Hazel Hawkins Timeline
On Nov. 4, 2022 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, 2023 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.
In March it announced it had extended its operational funds through “late summer.”
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