.Watsonville Hospital Considering Public Bond

The measure would help raise money to purchase the hospital

Plans to bring Watsonville Community Hospital—and the property on which it sits—into public ownership took a giant step forward Wednesday.

The Pajaro Valley Health Care District (PVHCD) Board of Directors approved a proposal to hire Isom Advisors, a municipal bond advisory firm that will help determine the feasibility of bringing a bond measure to the public next year to help raise money for the $40 million purchase.

If passed by voters, the bond would also fund a renovation of the emergency department and the second floor of the hospital.

Brief History

When Halsen Healthcare bought the hospital from Quorum Health Corporation in 2019, the company sold the property and building to Alabama-based Medical Properties Trust (MPT), and leased it from them in a sale/leaseback. 

The Health Care District is currently paying MPT more than $250,000 per month.

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The hospital’s Board of Directors ousted Halsen after the company was unable to pay its bills.

When the hospital announced it was facing imminent closure unless a buyer stepped forward, Pajaro Valley Health Care District Project did just that, having been formed in October 2021 for that very purpose.

PVHCD board member Tony Nuñez said that the board must consider all its options in protecting the long-term viability of the hospital.

“The bond measure is one of the most secure ways to have that financial stability for our community to ensure that we’re going to have a hospital within the Pajaro Valley and at the heart of the Central Coast,” he said. “We can’t overstate just how essential a bond measure would be to both financial stability in the short-term coming out of bankruptcy, but then also accomplishing all the goals we want to accomplish.”

The funds, Nuñez added, fit into the strategic plan and call for a much-needed reinvestment in the hospital.

“We’re not just asking for money,” he said. “We’re saying we have a plan of how we want to spend this money, and how we want to invest this money back into the hospital, which hasn’t been done in decades. It’s been disinvestment after disinvestment after disinvestment.” 

Meeting Needs

PVHCD Board chair, John Friel, said the influx of funds will be critical for the hospital and the community. The location, he said, is important for the community, which would otherwise have to travel long distances to receive emergency care.

“This hospital has been here for over 100 years and has served this community very well,” Friel said. “It’s just imperative that this hospital remains here.”

The bond will also help as the hospital seeks to replace out-of-date equipment and update its emergency department.

With more than 30,000 visits per year, Watsonville’s facility joins most others in its need to improve efficiency, Friel said. 

“It’s overcrowded, and we’d like to be able to process people through a lot quicker, reduce the waiting times and make it more comfortable for the patients that are in there,” he said.

Friel said that asking the community to approve a bond measure could be a risk in a financially uncertain time, but pointed out that the hospital has broad community support.

This is evidenced by Senate Bill 418, authored by Sen. John Laird, which Gov. Gavin Newsom signed into law just three weeks after it was introduced into the legislative process.

The bill officially created the Pajaro Valley Healthcare District (PVHCD), allowing the hospital to go into public ownership after years of corporate mismanagement.

MPT has indicated its willingness to sell the property, but it is unclear how much the asking price will be until negotiations occur.

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