.Watsonville Hospital Inches Closer to Deal

The push to raise final $6 million continues as deadline nears and uncertainty looms

The sale of Watsonville Community Hospital to a nonprofit that would bring local leadership to the 127-year-old institution after two decades of corporate ownership is entering its final stretch, with roughly $6 million still needed to close the deal.

In a meeting on Aug. 4, the Pajaro Valley Health Care District (PVHCD) heard a report that shows, among other things, that a recent $7 million donation by Community Foundation Santa Cruz County has brought the purchase within throwing distance of the $67 million goal.

Dozens of nurses spoke during the three-hour meeting, many of them expressing concern about their requirement to reapply for their positions, which frequently happens when a company or organization goes under new ownership.

“I am dismayed by this proposition,” said Louise Pearse, who says she has been a registered nurse at the hospital for 16 years. “This at a time when I have many choices in other places to work. The turnover that will surely happen will hamper our delicate transition to a district hospital, and I hope you will reconsider this abominable rebid.”

Registered nurse Roseann Farris said that during a rebid in 2013, some departments lost as much as 30% of their nurses that left to find different jobs.

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Much of the stress, she said, is that nurses can’t be certain about how their job will change. A part-time nurse, she explained, might be reassigned to a full-time position, or a day-shift nurse may be required to work night shifts.

This uncertainty can upend the work-life balance upon which they have come to depend, she said.

“You’re not going to know where you fall until you’re in there seeing what’s left,” Farris said.

The nurses also voiced their concerns about reported plans by the hospital to eliminate part-time nursing positions, and require all of them to work full-time.

But Cecilia Montalvo, a consultant hired to help PVHCD with the transition, said that those concerns are unfounded.

“I have never seen a version of any proposed schedule that eliminates part-time positions,” she said. “And I don’t think I will.”

Montalvo added that PVHCD is looking to reshape the hospital’s overtime for part-time employees, a cost that numbers in the millions.

The board also announced that a tentative plan to recruit Community Health Trust of Pajaro Valley as PVHCD’s philanthropic and fundraising arm has fallen through. The Health Trust, which formed in 1998 after the hospital was first sold to an out-of-state corporation, has contributed $6 million to help PVHCD complete the purchase of the hospital.

Board member Jasmine Najera said that finding a different partner will allow PVHCD to better have direct oversight over its fundraising efforts.

“We’re incredibly thankful to the Trust, and we’re disappointed that this didn’t work out,” she said. “This is the hospital. It’s a huge institution in our community, and we need to do what’s best for the hospital to make sure that we have a hospital moving forward and that we’re able to bring in the funding we need.”

Health Trust CEO Deandre James said the organization will continue to support the healthcare district in its efforts to keep the hospital open.

“We’re not going away,” James said. “It’s just in this particular venue it might be better to have both organizations go in another direction but also support each other.”

Board member Marcus Pimentel said that the hospital’s plans to look holistically at the entire community as PVHCD creates the new hospital means the two organizations could have slightly different visions for how fundraising would work.

“I can see this board and this foundation that we might form—that could really attract some major grants and some major donors to really make some significant community changes,” he said.

PVHCD—created solely to purchase and run the financially ailing hospital—became official last year after Sen. John Laird hammered through Senate Bill 418, in a whirlwind legislative feat that garnered rare unanimous concurrence in both the state Assembly and Senate.

The group’s precursor, the Pajaro Valley Healthcare District Project—composed of local health care, nonprofit and government leaders—wanted to bring local control to the hospital. It was sold in 1993 to Community Health Systems, which created a spinoff company called Quorum Health Corporation in 2016, which then sold the hospital to Los Angeles-based Halsen Healthcare in 2019. 

That company was ousted in 2021 after the hospital’s finances took a nose dive.

In its place, the board of directors installed Los Angeles-based Prospect Medical Holdings.

PVHCD will at first lease the building and property from Alabama-based Medical Properties Trust (MPT), which purchased it from Halsen.

Pimentel says the organization eventually hopes to change this arrangement.

“I think we all recognize that there is a huge value in the very near term in creating a pathway to acquire the land,” he said.

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