Bankruptcy Court Approves Sale of Watsonville Hospital to District Health Care Project – Santa Cruz Sentinel


WATSONVILLE — Watsonville’s pride and joy in its community hospital is here to stay.

Northern California Bankruptcy Court Judge Mary Elaine Hammond approved the sale of Watsonville Community Hospital to the Pajaro Valley Healthcare District Project, a consortium of government agencies and nonprofits, on Tuesday morning.

“It’s clear to me that many people have worked very hard to make this happen and I commend everyone for their hard work,” Hammond said after listening to remarks from attorneys representing debtors and the buyer. “There are a lot of people either affiliated with the Watsonville Community Hospital or needing care in the area or recognizing the need for care in this area…hoping that this will lead to the stabilization of health care and the hospital for a long time to come. ”

When the purchase is finalized, it will be the first time in 20 years that Watsonville Community Hospital will be owned and operated by the state.

“This hearing represents an important milestone,” said Watsonville Hospital Corp attorney Steve Golden. and its debtor affiliates. “The debtors have determined that the bidder has met all of the conditions set forth in the bidding procedures, including early enactment of legislation regarding (the formation of the district) and a good faith deposit of $4.5 million of dollars.”

Golden said the Pajaro Valley Health Care District Project was the only qualified bidder to identify itself before the bid deadline. Court filings through notifying agent Stretto indicate that as a result the auction was canceled earlier this month.

No objections were made to the sale other than informal, smaller complaints about invoices with debtors from companies such as CIGNA Healthcare – objections that can likely be resolved between the parties through negotiation before a subsequent hearing. March 23.

“Almost everything should be resolved by consensus, because in most cases the (relevant) bills,” Hammond said. “Nobody wants to come to court to talk about bills.”

Next steps

Mimi Hall, a registrant with the Pajaro Valley Health Care District Project, told the Sentinel on Tuesday that fundraising efforts have yielded a total of $20 million in confirmed and confident donations. Project attorney Jonathan Doolittle said an additional $20 million could be directed to the nonprofit if the legislative delegation so approves the request within the June 15 budget cycle. The request was made on behalf of the project through legislative consultants working with Senator John Laird’s office in conjunction with the California Nurses Association.

“It was sent to the Budget and Finance Review Committee last Friday and we are awaiting a hearing date. We are told it could be as early as March 3,” Doolittle said. “We are looking at other potential sources. funding that we could get more quickly.”

Previously, project consultants had informed leaders of Santa Cruz County, the City of Watsonville, Salud Para La Gente and the Pajaro Valley Community Health Trust that the expected request would be $15 million.

“This is really good news. We worked on the conservative $15 million end because we didn’t want to overestimate what we would get from the state and then end up in the jam,” Hall said. “You can ask for $15 million, but that doesn’t mean you’ll get it. It all depends on the budget process. Who knows what will happen?

Hall hopes at least $15 million will be pledged because of the “incredibly strong” support the district concept has received from legislative delegation. The delegation, among other parties, signed a statement of support which was attached to the agenda for the sale hearing.

“We owe a lot to the key partners who started out as initiators of the project,” Hall said. “Because we had government, philanthropic and health partners, everyone came to the table. (The effort) wouldn’t have caught the community’s attention without it.

Hall said the sale’s approval is a tipping point for the nonprofit. Now donors know the momentum will continue when project reps ask for funding or even connections – another important facet the buyer needs to have to create a smooth transition once the sale is finalized.

“We need $70 million,” Hall said, repeating a figure similar to one offered to the Monterey County Board of Supervisors in early February. “Our goal is really to make sure that we can close the sale knowing that we have … what we know we will need to run the hospital responsibly in the first year. We expect to break even at the end of 2023.”

Even the company that posted an operating deficit has become a partner to ensure there is no chance with the change when the sale is presumed to close on August 31.

“They’re making improvements that help us as a buyer,” Hall said. “Everyone we’ve worked with, including people in the company, is on the same page. This collaboration will greatly intensify in the coming weeks.

County Supervisor Greg Caput teased during a Mental Health Advisory Board meeting report last week that the Pajaro Valley Health Care District project is reaching out to other health systems more important to get help. Hall confirmed this, saying Dignity Health-Dominican donated $300,000 to the cause.

“Even if you don’t donate money, you can partner with us to find solutions,” Hall said. “A big part of success isn’t about money, it’s about great relationships and partnerships…We have to maintain positive relationships and keep working together.”

All of these interactions, some of which occur at weekly meetings, have been positive, the former Health Services Agency director said.

“This is one of the most collaborative counties I’ve ever worked in,” Hall said. “Maybe we wouldn’t think and behave this way if COVID hadn’t happened.”

As they continue to reach out to private donors, some of whom are beginning to design matching fund programs to be announced soon, Hall and his peers will work with the county to review applications and appoint five board members. of the Hospital District, as noted by Laird’s recent Senate Bill 418. Nominations are due March 4 and can be submitted at The members are to be named on March 22, according to a county statement issued on February 16.

“It’s exciting. We’re really happy,” she said.

The public can donate to the Health Care District Project mission beginning Tuesday afternoon at


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