We’re so close to saving Watsonville hospital; your help is crucial now

Watsonville Community Hospital
A community group has raised more than $59 million to save Watsonville Community Hospital but is still looking for $7.8 million more to acquire the bankrupt institution.
(Via Dori Rose Inda)

A group trying to save Watsonville Community Hospital has raised slightly more than $59 million in the past six months to acquire the bankrupt institution — one of only two hospitals in Santa Cruz County. The group still needs $7.8 million more and is looking for additional community help. Here, 19 local business leaders outline why the hospital is worth saving and why the business plan is solid.

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Watsonville Community Hospital provides essential medical services to our region and is at risk of closing.

It’s crucial that we — as a community — act to save our hospital and ensure it continues serving us.

To give you an idea of how valuable the hospital is, consider these facts: Every year, 800 babies are born in the hospital and 30,000 patients pass through the emergency room. The hospital employs 600 people and is one of only two hospitals in Santa Cruz County.

Without it, health care for all will suffer; Dominican Hospital will be flooded with patients and already-long wait times will increase.

The Watsonville Community Corporation has raised an impressive $59,200,000 in the past six months to save the hospital. We now need only $7.8 million more to reach the $67 million needed to acquire the hospital and make the necessary investments to turn it around.

This week, a generous foundation (which we cannot yet name) has agreed to provide a low-interest loan for any funds pledged by Friday. The loans won’t have to be paid back until the end of 2025.

We believe it is vital that local business leaders — like us — step up to ensure the hospital’s future. We are grateful to our local and state governments, health-focused nonprofits, medical establishment and other donors who have already contributed.

The hospital’s future is in our hands. We need just a bit more. A final push.

Many are rightly asking why, if the hospital failed as a for-profit institution, will it succeed as a nonprofit? Why should you support it if it has a history of trouble?

The answer is simple. The previous owners were focused on extracting profits rather than on the long-term viability of the hospital. They failed to invest in the equipment required to sustain profit-generating services like the cardiac catheterization lab (cath lab), where doctors use imaging to view arteries and blood flow to the heart to treat and diagnose cardiovascular disease. As a result, the cath lab lost accreditation and had to close. Previous management also did not keep on top of its insurance collections, taking in 50% less for its services than other hospitals statewide.

How could for-profit investors drop the ball on such central functions for any business?

It was because the hospital lacked continuity of management, with 20 CEOs having passed through the corner office in 21 years. No business succeeds without strong long-term management.

So how can the hospital be saved?

The proposal is to convert the hospital to a nonprofit entity run by a new management team — a team with experience running hospitals, committed to seeing through a multiyear turnaround plan developed by experts with extensive background in health care operations, finance and turnarounds. Rather than reporting to a board of directors appointed by out-of-state investors, the hospital’s management will be closely supervised by a board composed of locals with deep roots in our community.

The hospital has been in bankruptcy for a little over six months, and already we are seeing signs this turnaround is working.

First, the team managed to negotiate with the hospital’s landlord to lower the rent by 25%. The turnaround plan includes the reaccreditation of the once-profitable cath lab and investing in the infrastructure needed to improve insurance collections. Over 95% of all hospital services, inpatient and out, are covered by insurance, Medi-Cal/Medicare and commercial. Further, the new team is implementing measures to renegotiate insurance contracts using procedures that have yielded results for other hospitals in the state.

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Already, with the new normal amid the pandemic, the hospital is seeing patient visits return to near pre-pandemic levels. This combination — investing in revenue generation and greater revenue capture for services provided at market rates from rising patient visits — will provide a path forward toward the hospital reaching solvency and, eventually, profitability.

So, again, the financial turnaround of the hospital is within reach.

Now we just have to secure enough funding to save the hospital.

Luckily, we have had broad community support — local, county and state — from single $25 donations to a $25 million appropriation in the state budget. And there’s a whole host in between, including from health care providers — Blue Shield ($1 million), Kaiser Permanente ($3 million) Dominican Hospital ($300,000), Stanford Children’s Hospital ($1,084,000) and the Community Health Trust of the Pajaro Valley ($6 million) — to local agricultural giants like Driscoll’s, Inc. ($1.75 million, which then garnered an equal match) and Dobler & Sons ($100,000).

This support has come together quickly, and we are confident momentum is on our side to get the final $7.8 million.

Making sure Watsonville Community Hospital stays open is critical to our businesses, and we know it is to yours as well. Please join us in helping this vital community organization continue providing quality health services to the Pajaro Valley.

The authors are a group of Santa Cruz County leaders who represent a diverse group of businesses including agriculture, auto sales, property development, restaurants, and more. They share ties to the Pajaro Valley and a commitment to ensuring access to health care for their families, employees and customers. For information on how to help or donate, contact Celeste DeWald at celeste@pvhdp.org.

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