Hospital board moves toward private sale

The San Benito Health Care District board voted unanimously during a June 5 special meeting to walk away from San Benito County’s proposal of a Joint Powers Authority that would have kept Hazel Hawkins Memorial Hospital under public control. 

Now, Michigan-based Insight Foundation of America is the sole candidate in the running to partner with the embattled Hollister hospital.

A previous vote on the matter was halted at the last minute at a May 23 regular SBHCD board meeting, after some board members raised concerns over making a hasty decision at a pivotal juncture in the negotiation process. The board instead voted that day to consider the two proposals further, postponing a decision until after key issues were addressed.

“After reviewing the two options, receiving presentations, and asking clarifying questions of the proposers,the board has come to the conclusion that the best opportunity to ensure access to quality care in our county is to enter into a transaction with Insight,” said Board President Jeri Hernandez in a statement released immediately after the meeting on June 5. 

“Now is the time to come together and work to finalize an agreement that will secure continued operations of our hospital and clinics and plan for expansion of service lines to better serve the growing needs of this community,” Hernandez continued.

Insight also put out a media release in tandem with the district board announcing the decision.

“We’re honored by the opportunity to become part of your community and excited to be a

catalyst for expanding care and fiscal stabilization for Hazel Hawkins Memorial Hospital for generations to come. We’re grateful to the San Benito Health Care District Board of Directors

for allowing us to work with them to bring a new vision to life for Hazel Hawkins Memorial Hospital,” read part of a statement by Insight Health Systems founder Jawad Shah.

The board’s decision was met with disappointment from hospital nurses, who for months have criticized what they call a “bias” towards selling HHMH instead of creating a JPA with San Benito County. The California Nurses Association (CNA) put out its own statement on blasting the board.

“The San Benito County Health Care District board seems unable or unwilling to recognize that Hazel Hawkins is a valuable public asset that belongs to the people of the San Benito Health Care District,” Sonia Duran, a registered nurse at HHMH, said in the June 5 release. “While it is inconceivable to the nurses why the board is so clearly biased toward a private buyer, we want the public to understand that it will be up to the voters to decide the future of Hazel Hawkins Memorial Hospital.”

San Benito County District 2 Supervisor Kollin Kosmicki said in a phone interview on June 6 that the “writing was on the wall” regarding what he said was a predetermined decision by the district board.

“I don’t think they really ever gave serious thought to the concept of moving ahead with the JPA and keeping the hospital public, even though, overwhelmingly, the public is in favor of doing so,” Kosmicki said.

Kosmicki and Board of Supervisors Chair Angela Curro had been the public face of the county’s proposal, attending various district board meetings alongside county consultant Cecilia Montalvo to make their case for the JPA.

The county proposed to infuse the hospital district with $5 million at the outset, as well as a potential $7-12 million line of credit to grow HHMH. It would also create an operating governance board that would change the way the current district board operates. 

The prospect of a new governing structure for the district drew concerns from current board members. After a final review of the county’s proposal, the district board requested that a “trigger” be set in place giving it the power to dissolve the JPA at any time. 

Despite the county’s flexibility in that respect, the main issue was money, according to district financial consultant Richard Piel, Senior Managing Director for B. Riley.

“But as far as the number one issue, which was […] seeking an increase in the $5 million contribution by the county to $30 million, that response was a rejection of that request by the county,” Piel said during the June 5 meeting.

That $25 million increase in the county’s contribution was brought up by SBHCD director Devon Pack at a May 20 meeting where both Insight and San Benito County made their final pitches.

Kosmicki told the Free Lance on June 5 that the district board possibly misinterpreted the county’s JPA proposal as a buyout.

“This was really just a governance partnership, and we were willing to put up money to help them get more stabilized financially. But this was never an equity proposal on our part, and the question that they were proposing really indicated that they didn’t, either didn’t understand that, or that they were essentially […] making requests that they knew that we were never going to abide by,” Kosmicki said.

What’s Next

As the SBHCD moves forward with a potential deal with Insight, a detailed business plan is yet to materialize. According to its June 5 media release, “Insight Health System proposes to continue Hazel Hawkins Memorial Hospital in perpetuity,” and proposes to do this by turning HHMH into a non-for-profit hospital. 

Additionally, Insight will invest $50 million in a yet to be unveiled “capital expenditure budget” to invest in facilities and operations, according to Insight.

During a May 20 special meeting, Jawad Shah said that a business plan would not be developed until weeks after a deal is struck with the hospital, in order to do “strategic planning” and to “acclimate to the team.”

The organization also plans on creating a community advisory board made up of community members and elected officials, similar to what was first proposed by San Benito County’s JPA plan.

After the May 23 vote on continued negotiations was stopped, the district board outlined five “key terms” for Insight to meet in order to move forward with talks. These included a five-year lease agreement after which an outright sale of hospital assets could occur; no job cuts; maintaining existing services with potential room for expansion; and keeping the Hazel Hawkins name. Insight has agreed to those terms.

If a deal is finalized by the end of summer, the decision will have to be brought to the public for a vote on the Nov. 5 election ballot. Pack highlighted that fact during the June 5 meeting, addressing the public’s concerns over a perceived lack of transparency since the district announced a fiscal emergency in late 2022.

“There has been talk of many individuals who have expressed a lack of confidence in this board and a lack of confidence in that leadership. And in response to all that, what is more public and what is more transparent than a vote of the people of the County of San Benito?” Pack asked.

The board seats occupied by Hernandez, Vice President Bill Johnson and Treasurer Rick Shelton will also be up for reelection this November. A recall petition is currently circulating in the county to remove board secretary Josie Sanchez.

Kosmicki said that the public has lost trust in the board and it will use the upcoming elections and possible vote on a deal with Insight to make a statement.

“They haven’t seemed to care what the public thinks or says, and I think several of the hospital board members are going to pay for it in November. I’m confident that not only will this measure that will be put on the ballot for a sale be widely rejected, but I’m also fairly confident that there are current hospital board members that are going to lose their seats over this whole thing,” Kosmicki said.