Salinas Valley Health signals it's open to exploring taking over management of San Benito County's hospital.

With their only hospital teetering on the brink of closure, the County of San Benito Board of Supervisors have been hoping for several months that one of the region’s closest hospital neighbors, Salinas Valley Health in Monterey County, would jump in to save it. SVH leaders initially expressed an interest in providing advice and technical support, but not wholesale takeover or buyout of Hazel Hawkins Memorial Hospital in Hollister.

Now it appears SVH is open to exploring taking an active role in taking over management of Hazel Hawkins and all other facilities within the San Benito Health Care District.

The County of San Benito and SVH signed a non-binding letter of intent on Oct. 26, proposing a possible joint powers authority “to capitalize, govern, and oversee the management of [Hazel Hawkins] and the new JPA,” with SVH operating the Hollister hospital, rural clinics and skilled nursing facilities. The letter was signed by SVH CEO Pete Delgado, and Ray Espinoza, San Benito’s county administrator.

“[SVH] looks forward to exploring all sustainable opportunities to support local healthcare delivery in San Benito County,” Delgado said in a written statement to the Weekly. “Our Board of Directors has approved a non-binding letter of intent to gather more information about what role Salinas Valley Health could play in future developments. As of yet there is no commitment—except to explore various positive outcomes for all involved.”

SVH was organized in 1947 as a Local Health Care District, under California law. Its board of directors is elected by voters who live in the district, which covers Salinas and unincorporated areas of Salinas as far north as Prunedale, west to Castroville and Moss Landing, and as far south as Gonzales. Hazel Hawkins is 32 miles northeast of SVH’s Salinas campus.

JPAs are a common way for “two or more public agencies to jointly exercise any power common to the contracting parties,” according to California code. They may or may not be geographically connected, but they can be connected by common interests.

In a press release sent out jointly by the County of San Benito and SVH, Delgado said his agency “recognizes that we are part of the larger healthcare ecosystem of Monterey, Santa Cruz and San Benito Counties.” Delgado also said SVH is “happy” to work with San Benito and Hazel Hawkins “in identifying potential opportunities to ensure Hazel Hawkins can continue providing life-saving care to the community.”

Under the letter of intent, it’s proposed that the County of San Benito and SVH enter into a management agreement whereby SVH would lead and manage all aspects of the hospital, including employees, financing, contracts and clinical programs. SVH would be expected to confirm a three-year strategic plan with goals for an annual operating and capital budget. SVH would also lead and manage physician development and the expansion of services to the community.

The County of San Benito, and possibly the cities of Hollister and San Juan Bautista if they choose to join the JPA, “would adopt new commercial and residential development impact fees and assessments, offering a new revenue stream for the hospital,” according to the press release.

Despite the willingness of the County of San Benito and SVH to explore the idea of a JPA and management contract, there’s a third party that has to be willing to join the collaborative: the San Benito Health Care District, which governs Hazel Hawkins.

Back in May, when that district’s board of directors voted to file for bankruptcy, the board seemed uninterested in suggestions by San Benito County supervisors that SVH come in to offer guidance or more.

“The County is hopeful that the hospital will receive this proposal favorably and will continue to work with the County and [SVH],” said Espinosa, the county’s administrator. “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.”

In August a small for-profit company based in Modesto, American Advanced Management, submitted a non-binding letter of intent to SBHCD to first lease, then purchase Hazel Hawkins. The SBHCD board voted 5-0 on Aug. 23 to negotiate with AAM.