Quick Take:

Three candidates are vying for two seats on the board of trustees for the newly formed Pajaro Valley Health Care District — the district that now owns and operates the Watsonville Community Hospital. The board is made up of five members; the three other seats will have elections in two years.

Election 2022: Santa Cruz County

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For the first time, Pajaro Valley residents will be voting to decide who will run the Watsonville Community Hospital.

After 20 years of for-profit ownership and financial troubles that eventually led it into bankruptcy last December, the hospital is now two months into operating under the ownership of the Pajaro Valley Health Care District.

Because the district’s board was formed under the urgent timeline to avoid bankruptcy and without time to hold an election for its five members, the Santa Cruz County Board of Supervisors appointed the board’s first five members in March.

On Tuesday, voters will cast their ballots for two of the board members who will have to make tough decisions. Those decisions include how to respond to staffing concerns, how to make the hospital financially stable, how to prevent CEO turnover and how to rebuild relationships with a community that has seen 20 different CEOs, broken promises and job uncertainty. The board’s three other seats will be up for election in two years.

Not only that, but board members have to manage everything else that comes with operating a hospital that employs 600 people and delivers 800 babies and provides emergency services to 30,000 patients a year.

The hospital serves a diverse region including the city of Watsonville, which is home to just under 53,000, and other Pajaro Valley communities including Corralitos, Freedom, La Selva Beach, Pajaro, Royal Oaks and Pajaro Dunes. There, the agricultural industry employs about 8,500 people while about 2,400 people work in the tourism industry, according to estimates from county officials.

Within the health care district’s boundaries — which were established in legislation that created the district in February — 42,286 registered voters reside in Santa Cruz County and 4,443 registered voters reside in Monterey County.

The area colored in pink is the Pajaro Valley Health Care District boundary.
The area colored in pink is the Pajaro Valley Health Care District boundary. The boundary was created in Senate Bill 418 — the bill that established the district. Credit: Via Santa Cruz County Local Agency Formation Commission

In November 2021, the community was shocked to hear the hospital would shut down unless someone purchased it.

Having seen the potential for bankruptcy months earlier, the County of Santa Cruz, the City of Watsonville, the Community Health Trust of the Pajaro Valley and Salud Para La Gente had already formed the Pajaro Valley Healthcare District Project — a nonprofit whose sole purpose was to purchase the hospital.

The nonprofit led a community fundraising campaign that raised over $65 million — including $25 million from the state — to successfully purchase the hospital on Aug. 31. The next day, CEO Steven Salyer, who was hired by the previous owners in July 2021, told Lookout about the hospital’s challenges and how he and the board plan to bring the hospital on track to financial stability.

Three candidates have decided they want to take on these challenges.

Jasmine Notanee Nájera, Marcus Pimentel and Joe Gallagher are competing for two seats on the board. Nájera and Pimentel are incumbents.

Pimentel is the budget manager for Santa Cruz County and lives in Monterey County. He’s also a board member of Salud Para La Gente — a local health care provider.

A Watsonville resident, Nájera was just appointed CEO of the Pajaro Valley Prevention and Student Assistance. She previously worked as a licensed clinical social worker for the Santa Cruz County Health Services Agency.

Gallagher is a retired physician who lives in Watsonville. He was on the Watsonville Community Hospital’s medical staff from 1986 to the end of 2019.

The candidates, who all have strong ties to the community and extensive professional backgrounds, agree the hospital faces major challenges. And they broadly agree on how to approach those challenges.

Staffing challenges

Part of the transfer of ownership and purchase agreement required that the health care district give job offers to every employee, and nurses say that they were promised that they would be able to keep their jobs. All employees were given offers, but many received offers with different shifts.

In early August, they were told they would have to go through a bidding process using seniority in order to be placed into new shifts. The decision involved changing the majority of part-time jobs to full-time jobs — which caused nurses to have to make significant lifestyle changes last-minute.

At that time, Roseann Farris, the chief nurse representative for the nurses union, told Lookout that it felt “like a slap in the face.”

Silvia Perez, a nurse in the neonatal intensive care unit, said nurses were looking forward to overcoming bankruptcy and going back to public ownership. She’s worked at the hospital for 31 years.

“But since the district took ownership of our community hospital, ongoing concerns continue regarding short staffing, recruitment and retention, and a lack of critical in-house physician specialty care,” she wrote to Lookout on Wednesday. “As sworn patient advocates, Watsonville nurses urge the district to listen to the frontline RNs and put safe staffing, patient care, and vital in-house specialist care first.”

Consultants working for the health care district said it was an essential cost-saving move that had to happen. The board members, including Nájera and Pimentel, agreed.

Pimentel, Gallagher and Nájera all agree that it was not an easy decision to make, and that it caused harm. They also all acknowledged that the hospital will need to continue to talk to the nurses union to come up with solutions for staffing.

In terms of broader solutions to improving staffing, Pimentel, and Nájera both suggested reducing the number of travel nurses and improving career pathways for Watsonville residents to enter the health care workforce.

Pimentel said he would bring the ratio of part-time jobs and full-time jobs closer to 25% part time and 75% full time. Moving the ratio from 70% part time down to about 10% part time was devastating for those nurses who had only weeks to make life adjustments such as finding elder and child care, he added.

Gallagher said that as a newcomer, he would need to do his own outreach to understand what nurses are experiencing.

He proposed that rather than the board moving forward with the rebid process in the way that it did, it could have gone to the union to ask members, “Can you help us with this process?”

20 CEOs in 20 years

In just over two decades, 20 different CEOs have run the Watsonville Community Hospital. Hospital employees have seen leadership come and go as the financial situation worsened. The district’s board members will be responsible for ensuring that administrative leadership becomes stable.

The candidates all emphasized the importance of establishing relationships, but didn’t propose clear actions.

“It takes a year to get your feet settled,” said Nájera. “The fact that Steven [Salyer] is here and took the job in the most difficult time … I have high hopes.”

Pimentel and Gallagher said they would establish clear expectations with the CEO.

“My goal is to have two, maybe three, maybe one in the next 20 years,” said Pimentel.

Gallagher said shifting the mindset from having a staff that serves the CEO to having a CEO that serves the staff creates better relationships.

More than $20 million in losses

In the fiscal year prior to the bankruptcy, the hospital had $22 million in losses and is expected to lose another $23 million in the current fiscal year.

Pimentel said he thinks there are three major steps the hospital needs to take — several of which are currently underway.

First, he said the hospital needs to implement the financial plan — which called for renegotiating contracts with insurance companies so the hospital is paid more for its services. Second, the hospital needs to buy the land the hospital sits on rather than continuing to pay rent — something board members are looking into.

Finally, he said, the hospital has to regain trust of the community and build partnerships and collaborations to generate revenue in such areas as behavioral health services, now in high demand.

Gallagher also stressed the need to do major community outreach as a way to remind people that Watsonville Community Hospital provides essential services to the community.

“I think the message is: We’re your hospital again,” he said.

He agreed with a major part of the district’s business plan — to renegotiate contracts with insurance companies. Gallagher also recommended the hospital increase the number of surgeries, which goes hand-in-hand with recruiting and retaining anesthesia staff.

Nájera said the hospital needs to set up a foundation arm, and is currently in talks with the Pajaro Valley Healthcare District Project. While it has already hired a grant writer, it needs to continue to develop a staff dedicated to fundraising.

Like Pimentel, she said the hospital must acquire the land to move toward financial stability.

More on the current board members

Current board members, in addition to Nájera and Pimentel, include Dr. Katherine (Katie) Gabriel-Cox, Jose A. (Tony) Nuñez and John Friel. Their seats will be up for election in two years.

Gabriel-Cox is an OB/GYN chief of the hospital and with Salud Para La Gente. She lives in Aptos. Also an Aptos resident, Friel is a former CEO of the hospital and has worked in multiple health care district hospitals. Nuñez, who lives in Watsonville, is news editor for alt-weekly Good Times.

Health care districts, similar to water or fire districts, are a form of local government. They are governed by a board of directors and are independent from city and county government.

After three years of reporting on public safety in Iowa, Hillary joins Lookout Santa Cruz with a curious eye toward the county’s education beat. At the Iowa City Press-Citizen, she focused on how local...