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California system eyes bankrupt hospital takeover

Salinas (Calif.) Valley Health and San Benito County have submitted a joint proposal to the San Benito Healthcare District to govern, operate and finance Hollister-based Hazel Hawkins Memorial Hospital, its skilled nursing facilities, and physician clinics.

The healthcare district has been soliciting proposals from buyers or future partners — to help secure access to services in a financially viable way — after declaring a fiscal state of emergency earlier this year. The district voted May 22 to file for Chapter 9 bankruptcy and tackle the "systemic challenges" Hazel Hawkins continues to face.

The letter of intent proposes that the healthcare district and San Benito County form a joint powers authority to capitalize, govern and oversee the management of Hazel Hawkins, and for Salinas Valley to operate the hospital, the district's rural clinics, skilled nursing facilities and other services developed by the JPA. 

Under conditions of the proposed JPA, Salinas Valley would:

  • Lead and manage all aspects of Hazel Hawkins; manage all employees and financial aspects of the organization, contracting and clinical program developments.
  • Confirm a three-year strategic plan with goals for an annual operating and capital budget.
  • Lead and manage physician development and facilitate the expansion of local services in the service area.
  • Oversee, manage and ensure quality of care at Hazel Hawkins.
  • Ensure compliance to all local, state and federal regulatory rules.

The City of Hollister and the City of San Juan would be offered the opportunity to participate in the JPA, which would be structured to include representation by each member. The JPA's governing board would include three to five additional members, such as physicians, healthcare experts and community members with needed skills.

"The county is hopeful that the hospital will receive this proposal favorably and will continue to work with the county and Salinas Valley Health," Ray Espinosa, San Benito County Administrator, said in a news release. "We believe that by working together, we can solve the hospital's difficulties without losing control or selling the facilities to a for-profit company."

The healthcare district has received one other letter of intent from American Advanced Management, a 10-hospital system based headquartered in Modesto, Calif. 

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