Editor’s note: Marcus Young contacted BenitoLink to state he misspoke when he provided the Jan. 14 date. He clarified the judge did not provide an exact date of when he will have a ruling. The article appears as originally published. Lea este articulo en español aquí.
Six days after the Hazel Hawkins Memorial Hospital bankruptcy hearing ended, the hospital and public await the judge’s decision.
The hearing began Dec. 4., spurred by opposition to the bankruptcy filing from the California Nurses Association and National Union of Healthcare Workers. Judge Stephen L. Johnson will determine the hospital’s eligibility to receive bankruptcy protection.
Though the trial was set for five days, it ended a day earlier on Dec. 7, San Benito Health Care District Spokesperson Marcus Young said.
Young said he believes the judge should have a decision on Jan. 14.
Why is Hazel Hawkins filing for bankruptcy?
Before filing for bankruptcy, the district, which manages Hazel Hawkins Memorial Hospital, declared a fiscal emergency on Nov. 4, 2022. This was needed before the district could file for Chapter 9 bankruptcy.
According to a district news release, the bankruptcy would allow for a restructuring of the district’s finances.
The district could restructure its finances by adjusting contracts and revising agreements, Young said on Dec. 11. Any entity that holds a contract with the hospital, such as vendors, insurance companies or unions could see their contract revised.
Though the hospital’s management and board took “significant steps” to cut down expenses, inflation, shrinking reimbursements and the process of recovering from COVID-19 restricted the hospital’s cash flow.
The health care district filed for Chapter 9 bankruptcy on May 23 after saying it would be low on cash starting in early 2024 and run out of cash by September. The health care unions later filed an objection to the hospital’s filing arguing Hazel Hawkins does not qualify for bankruptcy.
The nurses union’s challenge, filed by Melvin R. Hurley, a managing director for global consulting firm Berkeley Research Group, argued that the hospital had a positive net working capital, which indicated that the hospital had “more than enough” to pay its current debts over the next 12-month period.
In court documents, the district described its ongoing financial woes as “skipping across the top of the water for years.”
The district also said it could not expand services to compete with larger Bay Area health care providers, which forced the district to rely on “a long and creative history of searching the couch cushions for one-off payments, government loans and payment advances to bridge gaps in net operating revenue.”
Hazel Hawkins Memorial Hospital is far from being the only hospital that is struggling financially. According to a report, 200 California hospitals are facing closure.
Cecilia Montalvo, a consultant San Benito County hired to look into the hospital’s finances, said Dec. 11 that the trial gives the county more time to work on a business plan for its Joint Powers Authority proposal, which would change the hospital’s management structure.
Montalvo said that plan would be made public in early January.
Both sides in the case are required to submit closing briefs by Dec. 15.
Court documents state that the district may move to exclude Hurley’s expert witness testimony. In turn, the unions can file an objection until Dec. 22.
The district must respond to the union’s objection by Jan. 5.
BenitoLink has requested court transcriptions of the Dec. 6 and 7 hearings.
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