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Bill passes to create Pajaro Valley Health Care District

WATSONVILLE, Calif. (KION) UPDATE 6:31 p.m. 2/4/22: Governor Gavin Newsom has signed off on Senate Bill 418, allowing for the immediate creation of the Pajaro Valley Health Care District.

Supporters of this bill say the Pajaro Valley Health Care District is first in line to purchase the Watsonville Community Hospital, which was in danger of closing for good not too long ago.

“I want to thank Governor Newsom for signing this urgent and important piece of legislation that will help preserve access to healthcare services for Pajaro Valley residents,” said Senator John Laird. “The passage and approval of SB 418 reflects progress toward resolution on this critical issue and a pathway forward for Watsonville Community Hospital.”

If the bill didn't pass, people in south Santa Cruz County would have been forced to travel to Dominican Hospital, which is 20 minutes away from Watsonville Community Hospital.

The hospital has an agreement to stay open, regardless, through March 31, 2022, allowing time for PVHCD to take over.

UPDATE 10:47 a.m. 1/25/22: More funding has been agreed on for the purchase of the Watsonville Community Hospital by the Pajaro Valley Healthcare District Project.

This time the Santa Cruz County Board of Supervisors voted unanimously to push $5 million toward that purchase.

The county says the funding is contingent on PVHDP's successful bid for the hospital, which started initial bankruptcy filing in December.

County leaders said the hospital, under current private ownership, faces financial difficulties and is at risk of closing.

At this time the hospital remains open and offers a range of medical services to people living in South County.

ORIGINAL STORY:

Watsonville Community Hospital is on life support — however, it is one step closer to finding a buyer thanks to a bill that's making its way to the California Assembly Floor.

The hospital's current owners, Halsen Healthcare, filed for bankruptcy in December 2021, and the Pajaro Valley Healthcare District Project (PVHDP) is currently the primary bidder for the hospital.

"We only have two hospitals in Santa Cruz County," said Mimi Hall, the Chair for the PVHDP Board of Directors. "If we lose one, especially the one that serves our most vulnerable communities, it will have a severe critical impact on everybody."

The Pajaro Valley Healthcare District Project is a nonprofit formed by Santa Cruz County, the City of Watsonville, Community Health Trust of Pajaro Valley and Salud Para La Gente.

They are working to form their own healthcare district — which is a local government entity separate from cities and counties. But in order for that to happen, emergency legislation authored by State Sen. John Laird must pass through the California Senate.

Wednesday night, the bill, S.B. 418, unanimously passed in the Assembly Local Government Committee. It now goes to the Assembly floor, and then hopefully the Senate. The deadline to pass is February 14, 2022.

"If we don't have legislation passed by then, which it is a key benchmark in bankruptcy that the legislation moves ahead, we will not be a qualified bidder," said Hall. "And because this is a quick and an urgency kind of measure, it requires a two-thirds vote. So we hope that we have the support."

Hall says the hospital has been privately owned for over 20 years, but their healthcare district is looking to change that.

"When there is private equity ownership, you have to make money and you're also accountable to shareholders. In a public district hospital model, who you're accountable to is the community," said Hall. "So the services that you provide are the services that the board members, who are elected members of the public and stewards of the community, deem are the necessary services for the people that we serve."

The closest hospital, Dominican Hospital, is 20 minutes north, so many rely on Watsonville Community Hospital for their care.

"This hospital serves 50% Medi-Cal and another 30% Medicare. It is the hospital that serves our essential worker population, our farmworkers, and those who are monolingual non-English speakers," said Hall.

On Tuesday, PVHDP received a $3 million grant from the Central California Alliance for Health to help with the acquisition of the hospital. Hall says they're also seeking funds from other local public and private organizations to help with the acquisition.

"Most organizations don't put together a plan to buy a hospital in a number of weeks. We've really had to work at rapid speed without a whole lot of resources. We have a really small team. We're not a big health system, we're a brand new nonprofit organization. So what we're doing is we're seeking support for the acquisition for the capital cost of the acquisition," said Hall.

If S.B. 418 doesn't pass and the sale doesn't go through, the hospital will be at risk of closing.

"If the hospital closes even for one day, the license shares, the certifications, all of those have to be started from scratch. It's expensive and it's time-consuming. It's not easy. And in that time, the nurses, the physicians, the other staff, they're all going to find other jobs. It will be nearly impossible to open the hospital again," said Hall.

As part of the current agreement, Hall says the owners of the hospital have agreed to keep their doors open until March 31, 2022 to help give PVHDP time to take over.

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Lisa Principi

Lisa Principi is a reporter at KION News Channel 5/46.

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