The Board Wants to Sell HHH and Sell it Fast
There is no doubt that Hazel Hawkins Hospital is difficult to run. The lack of practioners, especially specialists, causes many primary care physicians to refer patients out of county. A large number of patients are insured by Medicare and Medi-Cal, and those entities don't reimburse as much as private insurers do. Private insurers, i.e., Blue Cross/Anthem, do not reimburse as much as they should. Operating a public hospital is expensive.
The Hospital Administration is throwing its hands up and essentially saying "We don't know what to do, so let's sell it and make it someone else's problem. If the new owners screw it up or convert the hospital to merely a nursing home with an urgent care center, you can't blame us anymore!"
To be sure, no one caused this problem but the Adminsitration and the Board. They point to the government, the insurance companies, and to the unions. Yet, a private company whose mission it is to generate profits for its shareholders thinks they can do it! Or they want to end up owning HHH for pennies on the dollar.
So they are spending millions of dollars on financial advisors and legal firms (at least 3) to fast-track the sale. Because the public gets to vote on the sale, the hospital would probably spend another $500,000 (reimburse the County for the cost of conducting the election plus legal and other advisory fees) for a special election. In total, is this not millions of dollars that they could use to improve the hospital and keep it under local control? Where are they getting this money from if they are so broke they had to file for bankruptcy?
The hospital board and administration's behavior is seemingly that they have already selected one company, AAMG, to give Hazel Hawkins Hospital to. Give? Aren't they supposed to lease and then buy it? More on that later.
Even though they know that other proposals to save Hazel Hawkins Hospital for the benefit of our community are coming, the administration and board are seemingly pulling out all the stops to make AAMG the groom. It appears that the Board tailored the requirements to be a suitor so that only AAMG met them, and not alternatives such as simply hiring better management to run the Hazel Hawkins Hospital better than current managers.
The deal AAMG has on the table calls for quarterly lease payments to Hazel Hawkins Hospital, an amount to be determined. The Hospital gives them an option to purchase the hospital in 10 years, for an amount to be determined now. Meanwhile, we the public, are still paying off the $40 million general obligation bonds that expire in 2035. After all the cash flows are measured, the guess is that AAMG will be getting the hopsital for pennies on the dollar. Maybe not, but that is the risk we need to understand before voting in the special election. The letter of intent can be found by clicking here.
We recommend keeping San Benito County, us, the owners of Hazel Hawkins Hospital, and do whatever is necessary to keep it a robust hospital with many services. If we have to bring in a management company, so be it, but let's not give away this jewel.