Hospital board puts measure on November ballot

San Benito County voters will decide on the potential sale of Hazel Hawkins Memorial Hospital this fall after the San Benito Health Care District unanimously voted to pose the question as a measure on the Nov. 5 ballot. 

It will compete with another, non-binding measure approved by San Benito County asking voters if they wish to keep the hospital under local control.

The approval of the SBHCD board’s measure was the next step after it voted to accept during a July 25 meeting Michigan-based Insight Foundation of America’s non-binding proposal to purchase the assets of the Hollister hospital. The definitive terms of the sale are yet to be determined, as the SBHCD will continue talks with Insight in order to firm up the numbers before the November election.

The resolution calls for voters to approve a measure to transfer 50% or more of the hospital’s assets to Insight with the option to buy them outright after a five-year lease. The proposed ballot measure would read:

“Without increasing taxes and to continue providing local access to life-saving emergency medical care, surgery, radiology, long-term care, advanced medical technology and treatments, mother/baby, clinic and physician services at Hazel Hawkins Memorial Hospital, shall the San Benito Health Care District’s measure be adopted to lease with an option to purchase, said hospital facilities and other District assets to non-profit Insight Health Foundation of California Inc. (or another qualified buyer) for fair market value as determined by an independent appraiser to ensure continued hospital services to the community?”

The measure’s language was modified by the SBHCD board to reflect Insight’s plans to create a nonprofit entity registered in California for the purpose of a transaction.

The Nov. 5 ballot will also see the seats of board president Jeri Hernandez, vice president Bill Johnson and treasurer Rick Shelton in contention. 

Johnson told the Free Lance after the July 25 meeting that he is still considering whether he will run for reelection. Shelton said he will not run. 

A recall effort is also underway to unseat secretary Josie Sanchez, whose term is up in 2026.

The hospital district board’s ballot measure came just days after the San Benito County Board of Supervisors voted to put its own, non-binding advisory measure on the ballot. The move is a last-ditch effort to inform voters of the county’s proposal to form a Joint Powers Agreement (JPA) and keep the hospital a public entity. The SBHCD board dropped negotiations with the county in early June, choosing instead to pursue a deal with Insight.

During a July 22 meeting, the county board of supervisors approved the language of the advisory measure, which reads:

“To keep Hazel Hawkins Hospital public and under local control, shall the County of San Benito establish an agreement with the San Benito Health Care District and other interested jurisdictions to form a partnership in the form of a Joint Powers Authority to operate the hospital?”

Hospital administration, in response to the county’s decision, said in a press release that the SBHCD had already determined that the JPA did not meet key criteria set by the board during the public negotiation process. The administration reiterated that the advisory measure is non-binding.

A major factor that led to the breakdown of negotiations was the hospital district board’s request that the county increase its financial contribution in the deal. The county’s JPA proposal planned to infuse the SBHCD with $5 million at the outset, and would then provide a potential $7-12 million line of credit to grow the hospital. It would also create an operating governance board that would change the way the current district board operates.

But the district board requested that the county commit to a $30 million contribution — a $25 million increase — a request that county officials refused.

Some residents spoke out against the deal with Insight during the July 25 meeting. Rob Bernosky, who is a member of a citizens group opposing the sale and is also behind the Sanchez recall efforts, said the board is not listening to constituents.

“So please, take the public into account, since this is a ballot measure. Again, I want to emphasize, if you folks could provide 25 people other than yourselves that are in favor of this sale please produce them here and have them talk or go on the news. Do something. But the public is adamantly against this and you’re wasting district resources,” Bernosky said.

Hazel Hawkins CEO Mary Casillas read off a list of Insight’s accomplishments during the meeting, and highlighted its experience in “turning around” distressed hospitals. She said that Insight met all the criteria laid out by the SBHCD in searching for a partner entity, including the cash to purchase the district assets. 

Casillas addressed the board outlining the next steps in the process.

“If we get voter approval we will continue to draft and finalize the language for the definitive terms […]. We hope to have that done prior to the election, but please note that those definitive terms will come back to this board for final approval in a public meeting,” Casillas said.

Next Steps

Now, Insight is set to close a lease-to-own deal on the rural hospital valued at between $59,330,000 and $65,575,000, according to a February 2024 appraisal done by HealthCare Appraisers. The final cash offer will be determined by the fair market value at the time the deal is closed.

The company runs six acute care hospitals, six surgery centers, 28 clinics and employs over 4,000 workers in Michigan and Illinois. Insight has plans to create a $50 million “capital expenditure plan” to invest in facilities and services at Hazel Hawkins.

However, the company has yet to produce a detailed business plan. Jawad Shah, CEO and founder of Insight, has previously said that a business plan would not be developed until after a deal is struck with the hospital in order to do “strategic planning” and to “acclimate to the team.”

Atif Bawahab, Insight’s Chief Strategy Officer, attended the July 25 SBHCD meeting alongside some of his staff. The Free Lance spoke to Bawahab after the meeting and asked his thoughts on the pushback on the deal from some community members.

“It’s very understandable and in some way insight has a history […] of operating in these distressed environments and what we’re seeing happen in terms of some of that financial distress that Hazel was suffering from prior is not unique just to this hospital or just this community […],” Bawahab said.

He added that while HHMH is different from other, more urban operations Insight manages, the issues were similar at the outset and Insight has steered them in the right direction.

“Humbly speaking, confidently speaking, we feel that we do kind of understand what this hospital needs in terms of flourishing more […], this is about taking that next step and going from something that’s good and now taking into something that’s great,” Bawahab said.