Hazel Hawkins Hospital

Hazel Hawkins Memorial Hospital officials last week obtained approval to seek a line of credit to potentially extend the struggling Hollister hospital’s financial survival while its efforts to find a viable partner are ongoing. 

On April 27, the San Benito Health Care District board of directors voted in favor of a potential line of credit, which will give the district—which oversees HHMH—some flexibility to address its cash needs, according to HHMH. The approval does not mean the hospital will immediately seek funding through a line of credit, but ensures it is available if needed. 

Also during the April 27 meeting, the district board was presented with an update on current hospital finances and suggestions on how to keep access to local healthcare intact for San Benito County residents. The district’s financial consultant, Seth R. Freeman of B. Riley Advisory Services, said while short-term stabilization efforts at HHMH have been effective, the latest projections show that cash on hand will again be “critical” in September. 

“Remaining independent requires hundreds of millions of dollars that the district does not have,” Freeman said. “You have limited working capital—on average, much lower than other California Critical Access Hospitals and that has been the case since 2019—add to this the Covid crisis which depleted your already limited cash reserves, and then the additional financial pressures that faced the district in 2022 and it’s a perfect storm of financial problems.”

The district board of directors in November 2022 adopted a resolution declaring a fiscal emergency for HHMH. The resolution would have allowed the hospital to declare bankruptcy before the end of the year, but HHMH leaders opted for cost-saving and short-term financing measures instead. 

The hospital may still have to file for bankruptcy, but the board would have to approve another resolution first, according to HHMH. 

Since November, the district has preserved $6.8 million of cash from revenue enhancing and cost saving operational enhancements, gained $1.1 million through the deferral of certain tax liabilities, obtained a $3 million no-interest loan from the State of California and received an approximately $900,000 advance of the district’s expected property tax receipts from San Benito County. 

Some of these efforts consist of advance payments that would normally be available later in the year, HHMH noted in a recent press release. “While the advances helped stabilize the district’s finances in the short term—following a November 2022 fiscal emergency declaration— they will not be available later in the year,” says the press release. 

For several months, the district has been conducting a search for potential partners or a buyer. That search has resulted in a number of interested parties coming forward, with negotiations ongoing, according to HHMH staff. 

A “last resort” option to extend HHMH’s survival is to reduce its service offerings if it cannot reduce expenses or find a viable partner, says the April 27 press release. 

“We feel the process of finding a transaction partner will likely take us until the end of summer,” said Mary Casillas, Interim CEO for Hazel Hawkins. “This means we need to find more money through cost savings, and most likely with the utilization of a line of credit. We need more time to get to the finish line.” 

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A staff member wrote, edited or posted this article, which may include information provided by one or more third parties.


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