Watsonville Chips in $130K to Health District’s Push for Hospital Purchase

In a vote that was largely ceremonial, the Watsonville City Council unanimously approved giving $130,000 to the newly-formed Pajaro Valley Healthcare District to help the nonprofit purchase Watsonville Community Hospital’s operations.

The contribution from the cash-strapped municipality pales in comparison with those of other jurisdictions such as Santa Cruz ($5.5 million) and Monterey ($3M) counties and encapsulates why the PVHD was formed to bring WCH back into public ownership as it was before it was purchased by a corporation in the 1990s.

The hospital serves an area with disproportionately low household income and access to quality housing, transportation and healthcare, according to the California Healthy Places Index. Around 43% of the hospital’s gross revenue comes from the state Medi-Cal program, and 30% of its gross revenue comes from the federal Medicare program serving the elderly and disabled.

Because of this, WCH has struggled to adequately serve the Pajaro Valley over the course of two decades of private ownership.

The current hospital operators filed for Chapter 11 bankruptcy in December. The hospital remains open and offers a full range of medical services as it weaves its way through the bankruptcy court hearings.

PVHD, made up of the County of Santa Cruz, the City of Watsonville, Community Health Trust of Pajaro Valley and Salud Para La Gente, is the lead candidate of three that have shown interest in buying the hospital’s operations.

“If we had millions, we’d probably give millions,” Mayor Ari Parker said. “But we’ll wait and see what we can do.”

During Tuesday’s presentation to the council, Cecilia Montalvo, the director of the Cambria Community Health Care District and a founding board member of the PVHD, said the district needs to raise $39 million to close on the purchase of the hospital by Feb. 22.

Along with the commitments from the city and the two counties the hospital serves, the Community Health Trust, Kaiser Foundation Health Plan, Dominican Hospital and the Central Coast Alliance for Health have also chipped in, and Montalvo said PVHD is on pace to gather the funds needed for the purchase. 

In all, the district will need to raise close to $67 million to adequately fund the hospital’s operations, with the largest investment—an expected infusion of $15 million—coming from the state.

The district will also soon give people the opportunity to contribute individual donations, Montalvo said.

The breakneck pace of the creation, establishment and fund-gathering the PVHD has undergone since it first announced its plans to purchase the hospital last fall—when its chief executive told employees that the facility faced imminent closure—has been nothing short of spectacular, all councilmember said.

State Senator John Laird’s bill (Senate Bill 418) that sought to establish the PVHD passed unanimously in the Assembly and Senate and was signed by Gov. Gavin Newsom in less than a month, clearing the final hurdle on Friday.

Salud Para La Gente CEO Dori Rose Inda said the quick action by the state legislature was a “very powerful proclamation about the importance of our community.”

“It was a clear statement by the state that the Pajaro Valley, the residents who work here and live here, and the hospital that serves them, really are essential and important,” said Inda, who is also a founding member of the PVHD.

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