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Pointing to uncertainty around the effects of federal legislation on funding for rural hospitals, the San Benito Health Care District announced Aug. 13 that Insight Health had withdrawn from negotiations on a proposed lease-to-purchase agreement for Hazel Hawkins Memorial Hospital.
According to a news release, Michigan-based Insight cited “unprecedented uncertainty stemming from the recently signed One Big Beautiful Bill Act (OBBBA)” as its main reason for withdrawing from negotiations.
In the release, the health care district suggested the legislation would cut $1.1 trillion from healthcare, with $137 billion in reductions projected to directly impact rural healthcare.
“While this is a disappointing turn in our journey with Insight Health, our commitment to protecting the future of Hazel Hawkins is unwavering,” said Bill Johnson, President of the District Board. “Weathering the coming storm of OBBBA will require the dedication, creativity, and collaboration of leadership, staff, physicians and our partners. We look forward to finding ways to discuss other meaningful opportunities with Insight as part of this ongoing effort.”
Hazel Hawkins Memorial Hospital CEO Mary Casillas said any agreement to take over the hospital needs to prioritize protecting the service lines while identifying ways to grow and expand.
“OBBBA has created a level of uncertainty for us here in San Benito County that we have never seen before,” she said. “While we have yet to fully understand OBBBA’s impact, we know it has affected the potential transaction with Insight and is having similar consequences for rural hospitals across California and the nation.”
The release said the health care district will now concentrate on strengthening its finances and developing new strategies to ensure its long-term viability.
According to the Center for Healthcare Quality and Payment Reform, 700 rural hospitals are in danger of closing, accounting for one-third of all rural hospitals. Of those, more than 300 are at immediate risk, the center said.
In November 2024, voters in San Benito County approved a ballot measure that authorized the district to pursue a lease (with a lessee option to purchase) of Hazel Hawkins with Insight Health or another qualified buyer for fair market value.
Insight recently received Medicare license approval from the Centers for Medicare & Medicaid Services for its Trumbull Hospital in Ohio, which has been closed since March. Insight unexpectedly closed two hospitals in that state seven months after it bought them from Steward Health, citing the inability to access funds from the former owner to continue to operate the facilities.
At one point, the health care district had four proposals to take over or operate the hospital including from American Advancement Management, the San Benito Health Alliance, and San Benito County.
The district opted to pursue a deal with Insight and began negotiations.
Six months ago, Sutter showed interest but the district questioned the authenticity of a letter expressing interest. Two days later, Sutter publicly declined to pursue a partnership.
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