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After Michigan-based Insight Health withdrew its proposal to take over Hazel Hawkins Memorial Hospital, the San Benito Health Care District set about weighing its options.
Health care district spokesperson Marcus Young said the two organizations could still partner, adding that revisiting previous suitors’ proposals is also an option.
The health care district received letters of intent from American Advanced Management, Insight Health, San Benito Health Alliance-Ovation and San Benito County. (A summary of all the proposals is here.)
“Anything is possible,” Young said.
He said the health care district board will discuss options at its Aug. 28 meeting.
However, he said two of the five organizations that showed interest in the hospital are less likely to revisit their proposals.
American Advancement Management is a long shot, he said, because it has its “hands full” with the Madera Community Hospital, which it recently re-opened.
Sutter Health showed interest six months ago but quickly walked away. Young maintains it was “never an option.”
“That was proven to be a bizarre situation,” he said. “I don’t think that was ever really going to happen.”
San Benito County Supervisor Angela Curro disagreed and said the county’s consultant had conversations with Sutter officials who “were very interested in at least having conversations” about a potential partnership or bringing services that could complement the district.
“It’s not a dead topic,” she said. “If [the health care district] is interested we can facilitate that conversation with Sutter,” she said.
Also competing with Insight was San Benito County’s proposal to form a Joint Powers Authority, consisting of a 13-person board appointed by the county and hospital board to oversee Hazel Hawkins.
San Benito County Supervisor Kollin Kosmicki, who along with Curro were part of the Hazel Hawkins Hospital ad hoc committee, said the county has not had any discussion about the hospital since the announcement that Insight had backed out. He said he is pleased the potential sale fell through “because it was a bad deal for our community.”
“The health care district has repeatedly declined to explore a JPA model or the business plan put forth by a nationally renowned consulting firm, which recommends investing in a local physicians’ group as the foundation for future stability,” Kosmicki said.
He said a JPA wouldn’t necessarily require the county to financially invest in the hospital, “which is not in a position to do so, considering current budget challenges.” The county had offered to invest $5 million into the hospital as part of the JPA proposal and an additional $7 million to $10 million from public debt issued to the JPA.
The California Nurses Association, which has opposed the sale of the hospital, said it had “deep concerns” about the proposed transaction with Insight.
“We remain committed to keeping Hazel Hawkins Memorial Hospital a public acute-care hospital,” said Diane Beck, Hazel Hawkins registered nurse and chief nurse representative for California Nurses Association.
With the news that Insight was withdrawing from negotiations, Board of Directors President Bill Johnson left the door open for the hospital and Insight to “discuss other meaningful opportunities,” but provided no details. Young said potential collaborations with Insight could include recruitment of physicians.
Insight spokesperson Dayne Walling said the two entities could also work together on building or expanding specialty services such as neurosurgery, cardiology and pharmacy programs.
The move to pursue a deal with Insight was controversial, splitting the community roughly in half at the polls in November 2024. Measure X allowed the sale of the hospital and passed with 51.41% of the vote.
Walling confirmed that Insight pulled out of the deal, which would have allowed the company to purchase the hospitals’ equipment and lease the hospital building for five years with an option to purchase, because of changes to federal policies.
“Hazel Hawkins has one of the highest Medicaid populations among hospitals across the country,” he said. “The federal changes are likely to have a disproportionate impact on Hazel Hawkins.”
California’s version of the federal Medicaid program is known as Medi-Cal.
Asked if the voter-approved Measure X had a sunset clause, Marcus said that, technically, there is not.
In 2024, a revised capital fair market value assessment of the hospital done by HealthCare Appraisers estimated it is worth about between $59.3 million and $65.6 million, though some residents challenged those numbers.
The appraisal is lower than one done in 2014 by American Appraisal, which concluded the health care district was worth $74.2 million.
The Hazel Hawkins board voted to pursue bankruptcy in 2023 but a bankruptcy judge dismissed the filing last year. An appeals court upheld the bankruptcy court’s decision in March.
As of July, the health care district has a $31.1 million surplus, surpassing its budgeted $6.9 million in the black. Young said that equated to about 10 weeks of reserves.
“It’s fine as long as nothing catastrophic happens,” he said. “It’s more than the hospital has had in a very long time. The fact is you’re one catastrophic thing away from burning through that cash quickly.”
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