After more than a century of going it alone, Hazel Hawkins is looking for a suitor. And it may have found one right next door.
Early this year, Hollister’s public, non-profit community hospital sent requests for proposals to 10 major health care systems in the Bay Area and Central Coast, including Kaiser, Stanford, Dignity Health and UCSF.
Faced with rising costs, declining reimbursements and declining inpatient numbers, Hazel Hawkins leadership had decided a year ago it would need some kind of relationship with a bigger health care entity to ensure its long-term survival. The requests positioned the hospital as being open to a wide range of options, from outright sale to a variety of lease, affiliation or partnership arrangements.
After several months of conversations with possible partners, the search may have paid off.
The hospital told the Dispatch in an interview last week, and announced officially on April 30 that it has “begun negotiation with Salinas Valley Memorial Healthcare System for possible affiliation.”
The San Benito County Health Care District Board of Directors on April 26 approved an “exclusivity agreement” with the Salinas healthcare system, promising to hold off on any discussions with any other health care systems for 90 days, to give Salinas time to develop a detailed “affiliation” proposal.
Ken Underwood, chief executive officer for Hazel Hawkins, said the agreement is a good-faith gesture, “for us to demonstrate that there is a sincere interest in partnering with them —a period of time in which we would only negotiate with them.”
He added that the 90-day agreement doesn’t obligate the district in any way to accept a Salinas Valley Memorial proposal.
“To succeed, Hazel Hawkins Memorial Hospital is determined to be proactive and continually evaluate ways to contain costs, increase reimbursements, and develop new revenue,” Underwood said in a statement this week. “We intend to align or partner with a hospital or healthcare system to provide more specialists, create economies of scale and better streamline patient care services.”
On Thursday, May 3, at 7 p.m., the hospital scheduled the second of two town hall meetings on the hospital system’s future, in the Great Room on the second floor of the Support Services Building, 911 Sunset Drive.
Officials at both hospitals were cautious but also elated at the prospects of some kind of arrangement that could add patient services, improve revenues, identify cost-savings and give both hospitals more leverage in purchasing and health insurance negotiations.
“This is a time of collaboration and partnerships in health care and Salinas Valley Memorial Healthcare System is exploring all opportunities to better serve the health and wellness needs of families living in our region,” said Pete Delgado, president and CEO of the Salinas Valley Memorial Healthcare System, in a statement this week. “ We are in the early phase of discussing how we might be able to collaborate with Hazel Hawkins Memorial Hospital and look forward to those conversations in the weeks and months to come.”
“Talks like these are not uncommon,” Delgado said. He said Salinas Valley Memorial partnered with Community Hospital of the Monterey Peninsula, now known as Montage Health to offer residents in Monterey County the only Medicare Advantage Plan.”
“In the same spirit of collaboration, we are looking at opportunities where Salinas Valley Memorial and Hazel Hawkins can better serve the health care needs of our communities,” he said.
The conversation between the two public, non-profit community healthcare systems comes at a time when across the country, “hospitals are seeing a decline in inpatient volume for various reasons; innovations in the pharmaceutical industry have produced drugs that are keeping patients with chronic illness healthier, surgeries and procedures that once required inpatient care are now done on an outpatient basis, patients aren’t hospitalized for illnesses like they had been in the past and there is an ongoing focus on preventative care and wellness,” said Hazel Hawkins in a statement.
This has resulted in smaller hospitals are partnering with larger facilities to provide a broader array of services for their patients. Over the past few years in California alone, 17 district hospitals have affiliated or partnered with larger facilities or healthcare systems, according to the Hollister hospital.
“As healthcare changes, so does the business model of Hazel Hawkins Memorial Hospital and San Benito Health Care District to better serve our patients,” said the local hospital in a statement.
“As we begin negotiations, the San Benito Health Care District and Salinas Valley Memorial Healthcare System will evaluate and determine what opportunities are sustainable and beneficial for both entities to preserve and strengthen the health care services provided for our community,” Hazel Hawkins said in a statement.
Salinas Valley and Hazel Hawkins already reached agreement on two items.
Beginning last month, Hazel Hawkins employees enrolled in the hospital’s self-insured health insurance program will be able to receive some healthcare services in Salinas that are not offered in Hollister, and the hospital will receive a discount.
The two systems also began sharing some purchasing agreements, to save money by pooling purchases with some suppliers.