Watsonville Community Hospital now publicly owned; Pajaro Valley Health Care District set to take over from bankrupt private owners

Watsonville Community Hospital.
(Hillary Ojeda / Lookout Santa Cruz)

The Pajaro Valley Health Care District finalized the purchase of the Watsonville Community Hospital on Wednesday, concluding a race to create the district through legislation and then raise $67 million ahead of a bankruptcy court deadline of Aug. 31 to purchase the hospital. The transfer marks the end of a long period of private ownership, characterized by much management change and significant operating losses.

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Following the Watsonville Community Hospital’s declaration of bankruptcy in December, a historic effort to pass legislation to create a health care district and the “largest community fundraising campaign in county history,” the hospital will return to public hands Thursday after 20 years of for-profit ownership.

The Pajaro Valley Health Care District signed paperwork to purchase the hospital and will become the new owners at 12:01 a.m. Thursday, according to County of Santa Cruz spokesperson Jason Hoppin.

State Sen. John Laird celebrated the news Wednesday, acknowledging the wide-ranging contributions to ensure the hospital stays open. He was instrumental in the creation of the Pajaro Valley Health Care District by sponsoring the bill and advocating for it as the way forward to save the hospital.

“It is heartening to know that the purchase of Watsonville Hospital by the Pajaro Valley Health Care District has been finalized, ensuring this vital facility is entrusted to public hands,” he said in a statement. “Watsonville Hospital is a lifeline for the Pajaro Valley — from the beginning of life to the end, this facility will remain steady in its mission.”

He thanked the community, Gov. Gavin Newsom and the people of Watsonville for their efforts.

“I applaud the community for rallying together to make this happen — creating and funding an entire health care district in less than a year is a complex and difficult task,” he said. “For me, working on this has been challenging and time-consuming, but in the end unbelievably rewarding.”

Last week, Santa Cruz County officials announced that enough money had been raised to purchase the hospital and about $1.6 million was needed to fund operations. Through a massive community fundraising campaign involving both individuals and organizations, and a $25 million allocation from the state, more than $65 million had been raised as of Aug. 19.

The fundraising followed the private hospital’s filing for bankruptcy. As the major campaign to buy the hospital proceeded, the public learned more about the operating and financial issues that plagued its private owners, including a reported $22 million operating loss for 2021. As the new Pajaro Valley Health Care District officially takes possession of the hospital, it faces numerous management questions.

With enough money to purchase the hospital, the district finalized the purchase Wednesday.

The 106-bed hospital employs more than 620 people, including 200 physicians. Its staff provides care for about 30,000 patients that come through the emergency room and delivers 800 babies each year.

Monterey County Supervisor Luis Alejo also praised the community for the purchase.

“The sale of the Watsonville Community Hospital has just closed!! Great victory for my hometown of Watsonville & North Monterey County families!” he wrote on Twitter. “Back in the hands of the public!! Hard work still ahead, but let’s make this a success story!”

This is a developing story.