Quick Take
Friday's announcement that the Pajaro Valley Health Care District had purchased the 27-acre property and the building that's home to Watsonville Community Hospital clears the way for funds from March's Measure N to be used to improve the hospital building.
Ownership of the Watsonville Community Hospital building and surrounding land is back under local control. The Pajaro Valley Health Care District announced on Friday that it had purchased the 27-acre property for $40 million from an Alabama-based real estate investment firm with money from Measure N, a $116 million bond passed by county voters in March.
The purchase of the property from Alabama-based Medical Properties Trust — a real estate investment firm that acquires and leases hospital facilities — was the final threshold to pass for the hospital to be “truly owned by the community,” said Stephen Gray, CEO of the Pajaro Valley Health Care District and Watsonville Community Hospital.
Now, the hospital will be able to save $3 million a year in lease and insurance payments, and can redirect that money to invest in improving health care services.
In 2021, Halsen Healthcare, previous owner of Watsonville Community Hospital, filed for bankruptcy and almost caused the hospital to shut down. The Pajaro Valley Healthcare District Project — formed by local organizations, Santa Cruz County and the City of Watsonville — raised more than $60 million to purchase the hospital.
As the community was fundraising to purchase the hospital, Assembly Speaker Robert Rivas and state Sen. John Laird pushed forward Senate Bill 418, which created the Pajaro Valley Health Care District — making the hospital publicly owned.
The sale of the hospital didn’t include the building or land, but included a clause offering the Pajaro Valley Health Care District first right of refusal to acquire the property for $40 million. That provision was set to expire Dec. 31, 2025. After months of consideration, the Pajaro Valley Health Care District’s board voted in September to pursue the purchase.
The move will clear the way for funds from Measure N to be used to improve the hospital building.
“The fastest that we could finally become the owners of this hospital, the better that is for the hospital for the community,” board chair Tony Nuñez told Lookout in September. “As soon as we become the owners of the hospital, everything else that was included in the measure opens up.”
Nuñez said that although the district technically could have made improvements to the building under its lease agreement, the board preferred to own it outright prior to spending millions of dollars on projects that will include purchasing a new CT scanner and doubling the size of the hospital’s emergency department.
Not only is this a huge win for the healthcare district, the hospital, the foundation and every person who works there, Nuñez told Lookout on Friday, it’s also a big win for the community and people who believed the hospital could reach this milestone.
“I’m just blown away by the fact that we’re here faster than I thought we were going to be because the option was to purchase by the end of 2025 and we’re in October, or, I guess, now Nov. 1, 2024, and we’re the owners of the hospital,” said Nuñez.
A few of the next tasks for the hospital include bringing in more primary care providers to its clinics and improving access to preventative care in the community, where there’s a huge need for it, he said.
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