Quick Take
Watsonville Community Hospital is receiving a $10.6 million state grant that will provide temporary financial relief. Watsonville is one of four California hospitals receiving additional state funding.
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Watsonville Community Hospital will receive $10.6 million from an emergency budget measure to support nonprofit and public hospitals “experiencing immediate and significant financial distress.”
Watsonville is one of four hospitals in California that will receive grants from the California Department of Health Care Access and Information (HCAI), according to a media release Friday. The funding comes from Assembly Bill 108, which allocated nearly $25 million to help the struggling hospitals.
The money is intended to help stabilize hospitals that would otherwise be unable to pay their debts before July 1. Hospitals selected to receive funding had fewer than 10 days’ cash on hand, have exhausted other financial options, and more than half of their patients must be enrolled in public programs, such as Medi-Cal or Medicaid, or are uninsured, according to the bill.
During the Watsonville hospital board’s monthly meeting Wednesday evening, CEO Stephen Gray said the facility has had “somewhere between six to eight days of cash on hand.” And roughly 85% of the hospital’s patients rely on Medi-Cal.
The three other hospitals that will receive state funding are: Palo Verde Hospital in Riverside County ($3 million), El Centro Regional Medical Center ($11 million) and Southern Inyo Healthcare District in Lone Pine ($400,000).
The $10.6 million grant is “a crucial funding bridge during a challenging financial period” as the hospital continues to navigate challenges caused by funding delays and changes at the federal level, said Gray in a written statement to Lookout.
Julie Peterson, the Watsonville hospital’s chief financial officer, said Wednesday the hospital could use a portion of the money for its backlog of payments to suppliers and “other operational needs.” Gray added the funding will also be used for debt management and staff salaries.
Hospital leadership, meanwhile, is also resuming its search for an external partner to help manage the facility’s day-to-day operations after a potential match fell through.
Hospital board chair Tony Nuñez told Lookout earlier this week that hospital leadership believed they were “very close” to presenting a formal proposal, but ultimately the potential match did not work out. He declined to share which healthcare provider, nor the reason why the potential partnership fell through.
Hospital leadership have already scheduled meetings with other potential partners in the coming weeks, said Nuñez.
Establishing a partnership with a large healthcare provider could also help improve the hospital’s balance sheet by allowing it to negotiate better rates with insurance companies and better prices for supplies, things that are harder to do as a small independent hospital, Gray previously told Lookout.
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FOR THE RECORD: This story was updated to include comments from Watsonville Community Hospital CEO Stephen Gray.
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