Watsonville Community Hospital is considering closing its maternity department, including labor and delivery and neonatal intensive care services, as costs continue to exceed revenue.
The hospital has about 7 to 12 days of cash on hand, and a daily cash loss of $86,000, according to CEO Tim Moran.
The hospital is also $11.5 million in debt to suppliers and service providers, which has started to affect the hospital’s contracts. WCH still expects to close completely within 6 to 12 months if action is not taken to improve hospital finances.
These were the messages at an Oct. 22 town hall regarding the potential closure of labor and delivery and neonatal intensive care service lines at WCH.
Around 100 people attended the Pajaro Valley Health Care District-led meeting that shared the hospital’s financial situation and why service line closures are being considered, including a six-page FAQ distributed to attendees.
District Chair Tony Nuñez said the board has not finalized a date for a recommendation, but said the vote will happen at the healthcare district board meeting on Oct. 28 or Nov. 18.
Nuñez pointed to the cyberattack in late 2024—which knocked out billing and computer systems for weeks—H.R. 1 cuts and equipment breakdowns as reasons why the hospital’s growth has been stunted over the last 18 months. The hospital reported a nearly $23 million loss in 2025.
Moran said growth is limited by a lack of funding and financing, much of which resulted from the passage of H.R. 1, commonly known as One Big Beautiful Bill Act.
H.R. 1 is a federal law that changes federal spending for healthcare and welfare, which takes effect in waves until December 2028. Locally, there is a projected $200 million annual loss for the county and around 25,000 residents are expected to lose healthcare as a result, according to the California Coast Alliance for Health.
Patients will still receive care even if they can’t pay, Nuñez said.
Starting Jan. 1, 2027, Medi-Cal members with unsatisfactory immigration status (UIS) will be transferred to the State Fee-For-Service System (FFS), which pays less than the Central Coast Alliance for Health, the county’s main provider of Medi-Cal insurance. WCH has predicted an estimated revenue loss of $5.3 million annually resulting both from lost healthcare coverage and a transfer to FFS.
Staff estimates that labor and delivery and the NICU together lose approximately $10 million a year. Moran said the two service lines account for $27,000 of the daily cash loss.
Board member Joe Gallagher, a retired physician with obstetrics experience, voiced his concern over closing the proposed service lines. Gallagher provided his own research for participants to take home, which noted ways for the community to help and statistics around maternity services at WCH.
“I feel that the idea of closing obstetrics and having patients, pregnant moms, go to Dominican or Natividad represents an unacceptable risk,” Gallagher said.
Moran said the hospital will keep an obstetrician round-the-clock in case of gynecologic emergencies and emergency maternity care at the emergency department.
The hospital has made progress on many fronts, Nuñez said. Using Measure N bond money—a $116 million bond allowing the community to purchase WCH and make improvements—PVHCD has purchased the hospital, improved the hospital Leapfrog safety rating from a D to an A and replaced critical imaging equipment such as CT scanners.
A 20-minute period was devoted to breaking attendees into small groups to brainstorm priorities for the future. Discussions centered on what attendees would be concerned about if the hospital were to close and how PVHCD can support those who would be affected by the L&D closure.
Regarding hospital closure, participants raised concerns about possible loss of emergency departments, labor and delivery, imaging, rehabilitation and preventative services, including effects on stroke patients and high-risk emergencies. Labor and delivery concerns included safe ambulance transports, maternal and infant mortality, transportation costs, availability at neighboring hospitals and the loss of Mixtec and culturally-responsive services.
Participants also questioned whether closing women’s and children’s services would resolve the financial crisis and urged the hospital to consider financing avenues outside of federal and state dollars, such as an endowment or business partnership.
The hospital is filing for the Distressed Hospital Grant Program, which allocates up to $135.5 million for distressed hospital relief in California. It is also in the process of requesting charitable contributions and implementing internal changes that simplify patient referrals, which Nuñez said will add up.
“The board and the hospital team is not giving up on these service lines,” Nuñez said.
Should the recommendation to close service lines pass, the district will provide a 120-day notice of service line closure to the California Department of Public Health. The notice would not automatically close the unit in 120 days if the outlook changes.
Watsonville Community Hospital nurses will be hosting a town hall Saturday, Oct. 22, from 12:30-2pm at E.A. Hall Middle School.
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Syd Fluker is a California Local News Fellow. Visit fellowships.journalism.berkeley.edu/cafellows.
