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At a special meeting June 5 the San Benito Health Care District Board of Directors unanimously approved moving forward with Insight Health Systems to eventually take over management of Hazel Hawkins Memorial Hospital.
The vote does not immediately approve the partnership, but directs hospital staff to continue negotiations with Insight, said Heidi A. Quinn, the board’s legal counsel, during the meeting.
A new proposal, modified from one the board considered on May 23, includes a five-year lease-to-own option. The previous deal called for an outright purchase by Insight of the hospital’s assets. Under the new proposal, the lease-to-own period would be followed by another five-year contractual obligation to ensure Insight continues to provide the hospital’s current services.
If the board authorizes the agreement, voters will decide in a Nov. 5 ballot measure whether to approve or deny the transfer of assets to Insight.
“Today’s decision is not final,” Director Devon Pack told BenitoLink. “Today’s decision is an opportunity for Insight to audition and to win over the public’s trust.”
During the meeting, Richard Peil, consultant for the district, said the health care district sent a counterproposal with five key modifications to Insight after a May 28 meeting of the board’s ad hoc committee dealing with the issue. Insight agreed to each of the district’s demands.
Pack said Insight agreed to:
- Drop its proposal to purchase the hospital immediately and instead enter a five-year lease-to-own deal
- Continue to provide all of the services now available at the hospital
- Keep the Hazel Hawkins name, or some version of it that includes the Insight brand
- Maintain 90% of the workforce positions currently at the hospital
- Accept a “first right of refusal” clause that would give the district an opportunity to buy back the hospital’s assets if Insight were to sell
BenitoLink asked for a copy of the agreement and Marcus Young, the health care district’s public information officer, said it is still being drafted.
Peil said the board has received verbal confirmation that Insight has accepted the board’s stipulations, and that over the past 24 hours, the board has received a first draft of the agreement “in written format.”
Next steps
Robert Miller, San Benito Health Care District’s legal counsel, said the district and Insight need to complete a term sheet, which will define the terms of the agreement, then work on finalizing the agreement that will be presented to the board for approval.
Pack emphasized the importance of putting the deal up for a countywide vote to gauge the public’s confidence in Insight’s ability to operate the hospital.
“I regard a public vote and a public forum as being the acid test of the qualities of a potential business partner,” Pack said. “And so if your concerns are with the leadership of the board or the leadership of this hospital, well, what better answer to those concerns than to putting it up to the 65,000 people of this county.”
The hospital’s leadership team was “not advised to continue conversations with the county about its JPA [joint powers authority proposal],” Young said. “However, the county and the district do have things they can and should be focusing on, including mental health and indigent care–two items that are part of the county’s responsibility to help the hospital pay for, but have historically been ignored by the county.”
San Benito County proposed the creation of a joint powers authority overseen by a nine to 13-person board, appointed by the county and the current hospital board, to manage the hospital.
At the June 5 meeting, Pack and Director Rick Shelton voiced concerns about the county’s proposal from San Benito County, which recommended that members of the JPA be appointed by the county and health care district, not elected by voters.
Shelton said he would prefer the board to be elected officials, and that he was worried about giving control to 13 people who would have the power to put the hospital in debt. He also expressed concern that a 13-member board would be hard to coordinate.
“I know how difficult it is to get three out of five together for emergency situations,” Shelton told BenitoLink. “And believe me that in the last 15 months, we’ve had a lot of emergencies.”
Pack said it would be difficult to herd 13 people for a meeting.
“Expanding to a body of 13 individuals for deliberations is most likely going to be moving in a level of a slower and more convoluted decision-making process, and that presents a hazard,” Pack said. “Especially if Hazel Hawkins comes into another financial crisis or is in another period of considerable austerity.”
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