Capitola Aids Watsonville Community Hospital Purchase

In a special meeting Thursday, the Capitola City Council authorized a 60-day loan agreement for $5 million with the County of Santa Cruz to help close the purchase of Watsonville Community Hospital by a Pajaro Valley nonprofit. The vote was 5-0, contingent on the cities of Santa Cruz and Watsonville each putting up a $5 million 60-day loan.

After Watsonville Community Hospital filed for bankruptcy, Santa Cruz County faced the challenge of raising $67 million to buy the hospital operation from the out-of-town owner or see it close, leaving county residents with just one hospital with an emergency room. About 40% of emergency room visits are at Watsonville Community Hospital, which County Administrative Officer Carlos Palacios said is “critical to the overall medical system of the entire county.”

More than 400 donations came in, with state legislators agreeing to allocate $25 million from the historic budget surplus. However, due to a budget drafting error, the state is unable to release those funds before the Aug. 31 hospital sale date, Capitola City Manager Jamie Goldstein explained.

Palacios expected a budget amendment would make the $25 million available by mid-September.

So Palacios reached out to community partners to ask for a $5 million “bridge loan” until the budget error is rectified.

Partners Salud Para La Gente and Community Foundation Santa Cruz County have made commitments. Palacios was loath to get a private loan, because the fees would be more than $250,000.

“This entire project is an extraordinary testimony to the generosity of our community
and the strength of our region’s leaders,” said Susan True, CEO of the Community Foundation. “From Senator John Laird’s heroic work on Senate Bill 418 to establish the new health care district, to County Administrative Officer Carlos Palacios pulling together a team and resources, to Salud Para La Gente CEO Dori Rose Indra’s persistent work to keep all the pieces together, to Steven Salyer’s work to run the hospital, and so many more. It has taken many hands.”

Palacios said the hospital’s payor mix is 50% MediCal and 30% Medicare, and government reimburses less than private insurance. A new business plan maps out a turnaround in one year, and Palacios is confident that can happen based on Natividad Medical Center and Salinas Valley Memorial Hospital, as both have a balanced budget.

Jamine Najera, Joe Gallagher and Marcus Pimental are candidates for two seats on the Pajaro Valley Healthcare District Project board in the Nov. 8 election.

To donate, see www.cfscc.org/PajaroValleyHealth.