County outlines proposal to govern Hazel Hawkins Memorial Hospital

Lea este articulo en español aquí. 

San Benito County hosted a presentation on its proposed Joint Powers Authority (JPA) to govern Hazel Hawkins Memorial Hospital in a Feb. 22 town hall. Consultants hired by the county covered topics such as the structure of the JPA, its finance plan and projections.

County Administrative Officer Ray Espinosa said the county has invested $500,000 into the JPA plan, which proposes a partnership with San Benito Health Care District, the hospital’s governing board, and other interested entities. 

Montalvo explained the structure of the JPA, saying day-to-day operations would be overseen by an appointed operating board which would include representatives from the county, health care district and members of the community.

“Hospitals are complicated places, it’s really good to have people like physicians on the board,” Montalvo said. “It’s good to have financial experts on your board and I would think the JPA would seek individuals in your community that might bring some of those skills to this new operating board.”

The public was invited to submit questions in writing after the presentation. One of the question that was asked was who was fiscally responsible for the hospital in the proposal.

San Benito County’s town hall on its proposed JPA. Photo by Noe Magaña.

San Benito County Supervisor Angela Curro, who is part of the Health Care/Hazel Hawkins Hospital ad hoc committee, said details still need to be negotiated with JPA members such as who is fiscally responsible but said the proposal states it would be the JPA. Montalvo said the agencies that are members of the JPA would not share responsibility for any debt incurred by the JPA as it would become its own agency.

When the county initially presented its JPA proposal, it included the cities of Hollister and San Juan Bautista as potential members, and Salinas Valley Memorial Healthcare Systems as the hospital manager. Montalvo said Salinas Valley can’t take the “prominent role” that was discussed but is still interested in partnering in clinical programs.

Curro also said the county is still in conversation with Hollister and San Juan Bautista.

“At this time they are still wanting more information about the financials,” she said. “There are more details they need to understand before, I believe, they can get on board.” 

According to healthcare management consultants ECG, there are two benefits the JPA would provide the hospital. The first is $29 million to $32 million in additional  capital in 2024-25, but the figure includes $10 million from the Distressed Hospital Loan that was announced in 2023 but has not been received, and $7 million from the Employee Retention Tax Credit. It also includes $5 million set aside from the county’s reserves. 

The second benefit is an investment of $119 million in the first 10 years, where the majority of the funding ($62.3 million) is focused on developing a medical group to address physician shortages. According to the presentation, the JPA would attempt to hire nine primary care professionals, nine surgical specialists and 10 medical specialists in the first six years. The JPA also proposes to invest $23.8 million in routine capital expenditures, $20 million in pension funding, and $10 million in electronic medical records technology. Montalvo also stated funds to retrofit the hospital to be seismic compliant by 2030 was not included as there is no current plan but acknowledged that owners of the hospital eventually had to address the state’s mandate.

San Benito County’s town hall on its propose JPA. Photo by Noe Magaña.

“It’s always a challenge to recruit and retain high quality physicians but we think that San Benito County and the city of Hollister are in a unique position in that it’s a great place to live, it’s a great town,” Brian Barnthouse with ECG said. “When you think about the affordability and the cost of living, Hollister, relative to say San Francisco, or San Jose or Monterey, it’s really affordable.”

Montalvo said some ways to attract professionals are incentives such as better working hours, bonuses and housing loans. She also said they had to target less experienced or recently out of residency doctors.

Barnthouse said the JPA proposal projects the hospital running at $14.6 million profit in year 10 compared to the consultant’s figure of a $7.8 million loss if the hospital were to continue unchanged. The projections also estimate operating cash for the hospital would increase in 10 years from the current $18.8 million to $103.3 million with the JPA compared to the consultant’s estimate of $3.6 million if unchanged.

County consultant Cecilia Montalvo with Founderwerk, Inc. said that a bankruptcy court judge is weighing a challenge by the nurses union to the hospital’s bankruptcy filing and that no ruling has been made.  

About 60 members of the public attended the town hall and the county provided Spanish translation. 

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