An independent report commissioned by the County of San Benito has concluded that Hazel Hawkins Memorial Hospital (HHMH) did not need to file for bankruptcy as a course of action regarding its financial situation. Additionally, the findings stated that the hospital does not need to be sold to a for-profit provider to be successful.
Consulting firm ECG also recommended that the current hospital administration be overhauled. The report said that “as more taxpayer funds are needed to restore HHMH, a broader community-based governance option and new administrative leadership is required.
This is a crucial development in the ongoing debate over the path HHHM will take as the San Benito Health Care District (SBHCD) is currently in talks with American Advanced Management (AAM) to forge a “strategic partnership.”
The report, released on Sept. 29, was put together by ECG Management Consultants, a healthcare consulting firm with decades of experience.
“A community hospital in this growing market, with taxpayer support and relatively good facilities, can be successful and does not need to be in bankruptcy or be sold to a for-profit provider. A future path must be about growth of services, which inherently is about growth of the medical staff,” said the report.
SBHCD has improved financially since 2017, according to the report, as operating income improved by nearly $2 million from 2017-2023. Net income improved by more than $3 million in the same period. A path to financial stability would require a combination of continued outside funding and an increase in services the hospital provides.
One of the options ECG proposes to create more community involvement in the hospital’s affairs is the establishment of a Joint Powers Authority (JPA) between San Benito County, SBHCD and other local agencies.
A JPA is a legal entity that allows two or more public agencies to jointly exercise common powers. In the case of HHMH, a JPA could help the hospital out financially through a line of credit provided by San Benito County and local agencies.
The county is considering partnering with Salinas Valley Health to bring it on as a manager of the hospital in the case a JPA does take over HHMH.
On Oct. 16, Cecilia Montalvo, a consultant for San Benito County, encouraged the Hollister City Council during its regular meeting to consider submitting a non-binding letter of intent (LOI) to the county. An LOI submitted by the City of Hollister would initiate talks between the city and the county about potentially entering into a JPA.
“Healthcare is going to be an extremely important issue in this town as you continue to grow. I think having a seat at the table and bringing potential board members from this city to that JPA is an advantage for you,” Montalvo said.
The council showed apprehension about moving forward with an LOI at the time and asked the city attorney to look into the matter.
The California Nurses Association (CNA), which represents 150 nurses at HHMH, is encouraged by the ECG report.
“The nurses are super pleased to see that ECG Management concluded in the report that Hazel Hawkins does not need to be in bankruptcy or actually sold for a for profit provider. This is in the report and it’s a feeling of relief,” said Ariahnna Sanchez, a registered nurse working at HHMH.
CNA nurses have held rallies and informational town halls over the last several months to present their case that HHMH should not have filed for bankruptcy. Last month, researchers for CNA concluded that the hospital is in a good financial position based on the increases in executive compensation in 2022 and an infusion of money from a $ 10 million state loan for distressed hospitals.
HHMH contested those claims and is still engaged in ongoing bankruptcy proceedings.
CNA has been in a labor dispute with the hospital over nurses’ contracts, an issue Sanchez said had been used as a reason for HHMH’s bankruptcy filing.
“We feel a little bit vindicated that you know that this is happening and that these are facts. Management tried to blame the financial difficulties on the workers. Compensation packages of the employees of Hazel Hawkins and this report shows that is simply not true,” Sanchez said.
The ECG report paints a different picture than what HHMH has insisted is a fiscal emergency. As part of its Chapter 9 proceedings, this week HHHM received a separate report from a court-appointed ombudsman that brought some positive news regarding the hospital’s performance.
A Different View
HHMH stated in a media release on Oct. 17 that it received a report from Jerry Seelig, the Patient Care Ombudsman (PCO) appointed by the court. After weeks of investigation, the PCO concluded that the leadership of HHMH is strong and suitable to move the hospital forward, according to the Hollister hospital.
“The Interim CEO and Chief Responsible Officer [Mary Casillas] is qualified and an experienced professional,” said the media release, quoting the PCO report.
HHMH also stated that the PCO report indicated confidence in the operations and departmental leadership. This assessment is at odds with the ECG report, which suggested the hospital administration be replaced as a potential action taken by a future Joint Powers Authority.
The ECG report is making the rounds across the county, with a presentation made on Oct. 17 in front of the San Juan Bautista City Council. The San Benito County Board of Supervisors will be presented with the report at their Oct. 24 regular meeting.