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December 12, 2019
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Watsonville hospital buyer to be known soon

Editor’s Note: To read the updated version of this story click here:

WATSONVILLE — The Watsonville community will soon know who the next owner of its hospital will be.

The Board of Directors of Pajaro Valley Community Health Trust is meeting tonight to decide whether to move forward on making the purchase, with a public announcement to follow shortly thereafter. The nonprofit has until Sunday to make a decision.

But Halsen Healthcare is also aiming to buy Watsonville Community Hospital, a proposal that has raised concern from some who hope to see it return to its community-owned roots.

While Halsen announced its intention to purchase the hospital early this year from Tennessee-based Quorum Health Corporation, PVCHT has the right of first refusal for the sale under a purchase agreement approved in 1998.

PVCHT can intervene in the sale, and then has 45 days to come up with 10 percent of the purchase price – about $4.5 million.

If approved, PVCHT would then have 270 days to finalize financing for the remainder, said PVCHT CEO DeAndre James.

If Halsen’s plan comes to fruition, it would happen through a financing method commonly used in similar transactions.

That’s according to Dan Brothman, CEO of Halsen Healthcare. That company hopes to purchase the hospital for approximately $45 million, and then sell the property to Medical Properties Trust, Inc (MPT) for $55 million.

Then, in a financial arrangement called a “full leaseback,” Halsen would pay MPT for the use of the property, while Halsen would control of the hospital’s operations, Brothman said.

The profit from the sale, he said, would be used for capital improvements on the hospital and recruiting and retaining personnel.

“Basically it’s a lease instead of a debt,” Brothman said. “It frees your money up to be able to do things that are important to the community.”

“Your focus needs to be on your employees,” he said. “They always have to be number one.”

The agreement with MPT comes with a 15-year contract and two 5-year extensions, Brothman said.

MPT is a Birmingham, Ala.-based company that describes itself as a “self-advised real estate investment trust formed to acquire and develop net-leased hospital facilities.”

It owns 264 medical facilities throughout the U.S., as well as in Germany, Italy, Spain and the United Kingdom, making it the second-largest non-governmental owner of hospital beds in the U.S.

The purchase of Watsonville Community Hospital will allow MPT to increase value for its shareholders, that company stated in a press release.

It’s not yet clear how much control, if any, MPT – a publicly traded company – will have over Watsonville Community Hospital.

For information, visit

Brothman has said that Halsen’s executive team has extensive experience managing hospitals. For information, visit

Salud Para la Gente CEO Dori Rose Inda said she was skeptical of newly-formed Halsen, and said she hopes that PVCHT will step in and make the purchase.

“We use good judgement in our everyday lives in where we invest our money and who we trust our healthcare to,” she said. “To ask the community to trust an entity with no track record and no documented accountability feels wrong.”

Inda said that the community has two paths it can follow with the new future ownership of the hospital.

For the first, Halsen, a small, newly-formed LLC would run a stand-alone hospital, which current trends show as a “path for failure.”

At the same time, a publicly traded company whose mission it is to increase value for shareholders would own the land and building.

On the second path, Inda said, the nonprofit Health Trust could work together with potential partners such as Salud Para la Gente, Kaiser Permanente and Sutter Health to help it manage and fund operations.

“Where you see hospitals in small areas succeed is where there are affiliations,” she said. “From my lens – Salud serves 27,000 people in the community – it is our mission to assure access to healthcare for them, and there is a very clear path to success that will benefit he community and sustain healthcare.”


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