Hospital rejects nurses' claims that bankruptcy filing was 'unnecessary'

Residents, nurses and local politicians gathered at a town hall meeting in Hollister, Calif., to voice their concerns about the future of Hazel Hawkins Memorial Hospital after the San Benito Health Care District's recent Chapter 9 bankruptcy filing,  reported July 11. 

Members of the California Nurses Association recently voted "no confidence" in both the Hazel Hawkins board and the administration and argued that the bankruptcy filing was a potentially catastrophic and unnecessary step in resolving the hospital's financial issues, according to the report. 

During the July 6 town hall meeting, Mike Rabourn, research lead for the California Nurses Association, argued that the financial health of the healthcare district is not as dire as it seems.

"Ultimately, what we found, in spite of all their tales of woe, when you look under the hood, the district is actually not doing so bad, especially in the last six months," Mr. Rabourn said, according to "As of May, it’s actually in quite a strong financial position according to their own financial reports. I think everybody is surprised that they are so aggressively pursuing this bankruptcy process when they’ve actually engineered quite a financial recovery since the fiscal emergency."

Mr. Rabourn argued that the hospital district is not financially insolvent — despite projections that it will run out of cash by November or December 2024 — and that it currently has more than 35 days cash on hand and recorded about $2 million in net income over the past 11 months.

He went on to describe the district as "profitable" and a "reasonably secure operation," pushing back against its plans to "eviscerate the labor contracts," according to Nurses had previously voiced their concerns about Hazel Hawkins' threats to invalidate union contracts and cut benefits, and the knock-on effect that would have on the economic health of the community.

A spokesperson for Hazel Hawkins told Becker's that Mr. Rabourn's argument did not paint the whole picture of the district's financial situation and that its approximate 35 days of cash on hand falls far short of the median 222 days cash on hand for all California critical access hospitals.  

The district said Mr. Rabourn's examination of its profit and loss statement through May 31 failed to take into account non-recurring items that have been so helpful this year, including:

  • $3.2 million in income related to the American Rescue Plan that was received in a prior year
  • $3 million in income that related to qualified improvement property payments from prior years
  • About $1 million that related to the settlement of the fiscal year end 2022 Medicare cost report

These adjustments equate to a net loss in the millions because they cannot be counted as ongoing cash flow, according to the district. 

"The factors that got us to this point are not going away," a spokesperson for the district told Becker's. "Inflation is still having a very real impact on our costs. Our patient mix is predominately Medi-Cal/Medicare with lower-than-average reimbursements than hospitals with greater numbers of private pay or private insurance. Costs of staffing have increased dramatically. Without a partner or buyer, we will continue to labor under these constraints. These are not problems that can be solved by one-time cost savings, one-time early payments or even a loan from the state."

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