‘Largest community fundraising campaign in county history’ nears finish line with Watsonville Community Hospital

Watsonville Community Hospital
(Via Dori Rose Inda)

Santa Cruz County staffers — including top county administrative officer Carlos Palacios — are helping with the complex transition from private to public for the hospital, as locals plan a celebration of the work. Meanwhile, Supervisor Zach Friend warns that the challenges aren’t over, just changing.

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County officials appeared to breathe a sigh of relief at the Santa Cruz County Board of Supervisors meeting Tuesday afternoon.

In light of the $1.6 million left to raise to acquire the Watsonville Community Hospital for a total of $67 million, they’ve started planning a celebration for what many called a “remarkable” fundraising campaign.

After the hospital declared bankruptcy in December and the Pajaro Valley Healthcare District Project’s bid was accepted by a bankruptcy court, the court set a deadline for closing the sale by Aug. 31. With that paperwork expected to be signed Aug. 31, the hospital would be publicly owned by the new Pajaro Valley Health Care District on Sept. 1.

State Sen. John Laird sponsored legislation to create the health care district earlier this year in order to save the hospital. Without time to hold elections for the board of districts, the county board of supervisors appointed five members to the board in March: John Friel, Jasmine Nájera, Tony Nuñez, Marcus Pimentel and Dr. Katherine Gabriel-Cox. In November, two of the five seats will go up for election.

At the board meeting, Supervisor Zach Friend was one of several to recognize the generous donations by individuals and organizations, and the hundreds of hours put in by county officials and community members.

Friend also put the next big challenges — financial and staffing ones that are getting increasing public attention — squarely into focus.

“It feels like the end, but it’s really just the end of the very beginning of not just a new era of public ownership, but of new challenges that will face the district moving forward,” he said. “So it’s really not an opportunity to rest and relax, but really an opportunity to show that this community could come together … and now needs to continue to come together to make sure that that hospital is viable long term.”

At the board meeting, the supervisors voted unanimously to approve updates from county staff about the transition and fundraising efforts. They also approved a $3 million loan to the health care district to fund a letter of credit required by land lessor Medical Properties Trust.

Lookout broke down some of the staff updates about fundraising and the transition.

When is the sale happening?

The purchase is expected to close early next week.

“We really are all waiting — anticipating Aug. 31,” said Mónica Morales, director of the Santa Cruz County Health Services Agency (HSA). “That would be the date that we will actually sign all the paperwork for the acquisition of the hospital.”

Then, the Watsonville Community Hospital would begin operating as a publicly owned district hospital on Sept. 1.

Has all the money been raised?

As of Aug. 19, a total of $61,338,351 had been committed to the purchase of the hospital.

In order to cover acquisition costs and operating capital costs, the district project’s goal has been to raise $67 million by the bankruptcy court deadline of Aug. 31. Kaiser Permanente, which has a working relationship with the hospital for services, closed much of the last gap when it pledged $4.5 million this week toward the purchase, bringing its total donation for the campaign to $7.5 million. With that multiyear pledge, county staff estimates that $1,681,649 is still needed to reach its goal. That current shortfall is not expected to hold up the sale.

Donations ranged from $5 from individuals up to as much as $25 million from the state of California. County officials say the effort is the “largest community fundraising campaign in county history.”

The district will need to continue fundraising past its purchase date, given how much transition is ahead for the struggling hospital, which lost almost $22 million in the past year.

How have County of Santa Cruz employees been involved?

The Pajaro Valley Health Care District board of directors doesn’t yet own the hospital or have its own staff. Consequently, the county entered an agreement with the district March 22 to provide interim legal and administrative services. The agreement specifies assistance through Sept. 30, and enables the county to request district payment once the district’s financial conditions are stable.

Employees including the county counsel are aiding the new district, and HSA staff are providing operational guidance.

The county employees also included Morales, HSA Assistant Director Tiffany Cantrell-Warren, County Administrative Officer Carlos Palacios, the assistant county administrative officer and staff, clerking staff, and county auditor and staff.

Palacios, who noted the “tremendous” community support in his introduction to Tuesday’s report, also talked about the amount of work county staff have put in.

“This has turned into more than a full time job for me and our other staff,” said Palacios. “We have a day job, but we’ve become full time staff employees including our county counsel, and our Health Services Agency, CAO staff and other agencies across the county as well.”

While the privately owned Watsonville Hospital Corporation staff continues to operate the hospital through the transition, many of the major financial and operational decisions are made in consultation with the Pajaro Valley Healthcare District Project, according to the asset purchase agreement entered into by the district project.

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FOR THE RECORD: This story has been update to reflect Kaiser Permanente’s total contribution to the Pajaro Valley Healthcare District campaign.
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