The San Benito Health Care District board of directors, which oversees Hollister, Calif.-based Hazel Hawkins Memorial Hospital, on Nov. 4 granted a resolution to declare a fiscal emergency, according to BenitoLink.
The news comes three weeks after Hazel Hawkins fired its CEO after about two years in the job.
The resolution provides administrators the authority to file a Chapter 9 bankruptcy petition — which would allow the district to restructure its finances — when they deem appropriate.
The board said the district will not be able to pay its obligations within the next 60 days and that it is in the best interest of patients, creditors, taxpayers and staff to file the petition, according to the report. The board voted unanimously in favor of filing the Chapter 9 petition.
The decision clears the way for CFO Mark Robinson to file the Chapter 9 bankruptcy petition by Dec. 31 and to continue negotiations with creditors.
CMS said the hospital needs to repay the $5.2 million it was overpaid by the end of the year, according to BenitoLink. CMS is also decreasing the hospital's payments for inpatient and outpatient care for another $5.2 million.
Despite cost-cutting efforts, district officials said high inflation rates, decreasing reimbursements and the post-COVID-19 recovery have restricted cash flow and are "threatening the district's fiscal viability," according to the report.
The hospital does not expect to make cuts to services or staff in the near term.
Hazel Hawkins Memorial Hospital is a full service, 25-bed nonprofit hospital with about 578 staff and 136 physicians, according to its website.