San Benito County has submitted an expansion letter of intent to the San Benito Health District as it continues to push for the creation of a joint powers authority to operate Hazel Hawkins Memorial Hospital.
The revised LOI includes financial projections and business plans aimed at bringing the hospital to “financial viability.” The plan would prompt a review of the management structure of SBHCD and HHMH, while a public credit facility would stabilize the struggling hospital's financial crisis.
“The County was able to elaborate on its proposal based on work completed by ECG, a nationally recognized medical consulting firm,” a San Benito County press release states. “The company was working to develop a strategic business plan to restore the hospital's financial health and improve access to care.”
The new LOI is a more detailed summary of the proposal submitted to the San Benito Health District (SBHCD) last fall.
In October 2023, San Benito County received a report from healthcare consulting firm ECG Management Consultants that concluded that HHMH's May 2023 Chapter 9 bankruptcy filing is not necessary to improve its financial position. . The report also recommended against selling the hospital to a commercial operator.
The ECG also recommended an overhaul of the current hospital management and the creation of a Joint Powers Authority (JPA) to manage Hollister Hospital.
A JPA is a legal entity that allows two or more public authorities to jointly exercise common powers. In the case of HHMH, JPA is able to provide financial assistance to the hospital through lines of credit provided by San Benito County and local agencies.
Within days of the report's publication, the county formally submitted a letter of intent (LOI) to SBHCD seeking a JPA between San Benito County, SBHCD, and the Salinas Valley Health Department. The county also submitted this report to the Hollister City Council and the San Juan Bautista City Council to encourage her future participation in the JPA.
SBHCD approved the county's October LOI, opening the door to negotiations. Salinas Valley Health later pulled out because it was “unable to assume full management of SBHCD's facilities at this time,” according to a county press release.
The county's latest proposal includes a multi-phase business plan to revitalize HHMH and even expand its services without a private sale.
prefecture plan
ECG's business plan for HHMH outlines six “core strategies,” or steps, to keep the hospital afloat.
- JPA development
- Establishment of an operational governance committee
- investment of capital
- Creation of a physician group
- health system partnerships
- Growth of hospitals, skilled nursing facilities, and rural clinics
The initial strategies within the plan will result in significant changes to the governance of HHMH and SBHCD itself.
The JPA will be led by San Benito County, SBHCD, and other participating local governments. SBHCD maintains ownership of all assets associated with the hospital, skilled nursing facility, and rural clinic. It would also continue to collect all current and future tax revenue, according to the plan.
A “community-based” governance committee similar to nonprofit hospitals will also be created, and the current SBHCD committee will be completely replaced by a JPA-appointed board of directors. Board members would include county elected officials, but ECG recommends appointing non-elected members, such as physicians, to the board. ECG says these recommendations will make hospital operations more transparent to the community.
ECG also predicts that “free cash flow” for hospitals and districts would improve under such a JPA.
Under the plan, JPA will inject $10 million to $15 million into SBHCD, which will become a public financing facility. An additional $5 million will be “donated” and the entire amount will be covered by a $10 million needy hospital loan from the state.
The plan not only foresees financial stability, but also growth in HHMH's services.
“This business plan also demonstrated that with a stronger medical community committed to the hospital, the hospital can grow and continue to be financially successful into the future,” the release states. .
HHMH and the SBHCD administration have not yet commented on the new proposal.
The county's expansion LOI is one of four proposals being considered for the future of HHMH. The latest was announced last month in a joint proposal between San Benito Healthcare Alliance and Ovation Healthcare. Michigan-based Insight Foundation of America and Madera-based American Advanced Management also submitted his LOIs. SBHCD is still evaluating these offers.
If SBHCD decides to enter into a JPA with San Benito County, HHMH will no longer seek a private buyer and the hospital will be placed under public control. Even if the SBHCD moves to approve the proposal, it must still go to voters for final approval.
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