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December 12, 2019
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Community discusses Watsonville hospital sale

WATSONVILLE — There was no doubt during a community forum Sunday that Watsonville Community Hospital will be sold.

It is still unclear, however, who the buyer will be.

Halsen Healthcare publicly announced its intention to buy the hospital from Tennessee-based Quorum Health Corporation in June, sparking concern it would remain under control of a profit-minded corporate entity. 

Quorum has been looking to sell WCH for “quite some time,” said PVCHT CEO DeAndre James.

Pajaro Valley Community Health Trust (PVCHT) is also making a bid to purchase the hospital and has until July 21 to make an offer. Under its contract with Watsonville Community Hospital, PVCHT has the right of first refusal, giving it a chance to purchase the hospital before other interested parties at the offered price.

The Sunday afternoon forum packed the Watsonville City Council chambers with a standing-room-only crowd of nurses, doctors and community members who came to hear updates on the impending sale and express their opinions.

It was the fear of continued corporate control that sparked the most discussion at the forum.

According to WCH Emergency Room nurse Roseann Farris, owners Community Health Services, and then Quorum Healthcare, was looking to improve profit margins when they slashed services throughout the hospital such as oncology, home healthcare and inpatient medical rehabilitation. They also outsourced the billing and coding department and reduced services in the cardiac catheterization lab.

All of this forces patients to seek services elsewhere, and leads to under-utilization of the hospital and loss of revenue, Farris said.

The hope, Farris said, is to return the hospital to its community roots.

“Is there a lot of work to be done? Absolutely,” she said. “Are there a lot of questions to be worked out? Absolutely. But would it be a benefit to the community? Absolutely.”

WCH nurse Quiché Rubalcava said that Community Health Systems closed 11 hospitals nationwide between 2014-18 in an attempt to maximize its profit margins.

“For-profit hospitals have an abysmal record,” he said.

Halsen CEO Dan Brothman has said the company would serve and be answerable to the community, and would never be a publicly-traded company.

Halsen Healthcare is a one-year-old organization formed to make the purchase. If the purchase goes through, it would be the group’s only hospital. The company said it plans to keep the hospital’s current staffing and salaries.

“Community hospitals are huge assets, and I understand everyone’s anxious,” Brothman said. “We are a California company with lots of experience. We will be answerable to Watsonville, not bosses in other states.”

It’s not clear whether the purchase is financially feasible for PVCHT, which was formed when the hospital was sold in 1998 to Community Health Systems. Quorum, a CHS spinoff, took over in 2016.

Purchasing the hospital would require finding the funds for the sale, in addition to covering all future operational costs. That’s a tall order in an era of rising health care costs and a rapidly changing health insurance industry, particularly in a low-income community with low Medi-Cal reimbursement rates.

“The health trust is a $17 million asset organization, and the sale is $45 million,” James said.

James said that he was restricted in what he could say about the impending sale by contractual confidentiality clauses. But he said it was not out of the question.

“It is very hard to do, but it is not impossible,” he said.

“It would take a lot of different things to happen in the community,” he said. “In a quick time frame everybody would have to roll up their sleeves and those individuals would have to come prepared to do a lot.”

Salud Para La Gente CEO Dori Rose Inda added that such a move would require a “significant commitment” from local healthcare partners.

“In my opinion, it does promise the ability to make sure community interests are always at the heart of the direction of the hospital,” she said.

Former PVCHT CEO Kathleen King said the community faces losing its hospital if the organization makes the purchase but is unable to meet expenses.

“We need to decide what is in the best interest of the community,” she said.

Quorum Health Corporation said that divesting the 106-bed hospital will net the corporation approximately $35 to $40 million, which will be used to repay outstanding principal on the loan it used to purchase Watsonville Hospital.

Watsonville City Councilwoman Rebecca Garcia said that she appreciates Halsen’s plan to create a local board consisting of doctors and nurses to help run the hospital.

“I hope that part of the plan comes to be,” she said. “In the end, it’s a business, and it will be run like a business.”

Watsonville Mayor Francisco Estrada told the crowd that Halsen officials have said they “would do their best not to make any cuts.”

“At the end of the day this is a private transaction, and the best we can do is continue to advocate for our hospital,” Estrada said.

WCH nurse Cassie McGinty said she was inspired by the number of people who attended the meeting, and said that whoever owns the hospital is not the most important question.

“I hope that the owner does right by the community,” she said. “All we can do is advocate and hope for the best.”


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