Watsonville Community Hospital has been awarded $10.6 million through California’s Distressed Hospital Small Grant Program, part of a state effort to help financially struggling hospitals avoid closure.
The funding was announced Friday as part of a $25 million statewide program created through Assembly Bill 108, emergency budget legislation approved in 2025. The program is administered by the California Department of Health Care Access and Information and provides one-time grants to nonprofit and public hospitals facing immediate financial distress.
To qualify, hospitals were required to meet several criteria, including having fewer than 10 days of cash on hand, demonstrating efforts to exhaust other financial options, and serving a patient population in which more than half of patients are covered by government insurance programs or are uninsured.
Watsonville Community Hospital CEO Stephen Gray said the grant will provide a critical financial bridge as the hospital works through ongoing fiscal challenges.
“The State’s award of $10.6 million in grant money to support Watsonville Community Hospital is a crucial funding bridge during a challenging financial period,” Gray said in a statement. “We are thankful to the leadership of Sen. John Laird and the support of the governor to take quick action to support community hospitals like our own.”
Gray said the funding will be used for operational expenses, including debt management, employee salaries and medical supplies.
“The grant is critically important to WCH as we continue to navigate fiscal challenges brought on by funding delays and cutbacks at the federal level,” Gray said.
State officials established the Distressed Hospital Small Grant Program to prevent hospital closures and preserve access to healthcare services in vulnerable communities.
Gray said hospital leaders remain focused on maintaining patient care despite financial pressures.
“Watsonville Community Hospital’s dedication to the health and well-being of those we serve is the compass that guides every decision we make, and a focus on patient care remains our highest priority,” he said.
Gray also thanked hospital employees, community members and Sen. John Laird for their support.
“We are grateful to the commitment of our healthcare team, the ongoing support of the Pajaro Valley community, and the unwavering advocacy Sen. Laird has provided,” Gray said.
Watsonville Community Hospital was purchased by the Pajaro Valley Healthcare District Project in 2022 after community leaders and local governments worked to prevent the facility’s closure. The hospital serves residents throughout the Pajaro Valley and surrounding areas.
