With Watsonville Community Hospital facing a financial crisis that could force it to close within a year, officials are considering cutting services in an effort to keep its doors open.
The Pajaro Valley Health Care District will host a community town hall Oct. 22 to discuss the hospital’s financial troubles, explain possible service reductions and gather public input.
The hospital has approximately eight days of cash on hand, and officials say that improving efficiency alone will not be enough to solve its financial problems.
Without significant changes, the hospital could close within six to 12 months, according to the district.
“We have to live within our means to keep our doors open,” Interim CEO Tim Moran said. “We want the community to hear directly from us about the challenges we face and what we propose to do about them. We also want to hear from you about what matters most.”
The announcement comes as the publicly owned hospital continues to struggle financially despite efforts to stabilize its operations since it was rescued from bankruptcy in 2022.
The hospital lost more than $24 million in 2025, when revenue fell roughly $35 million short of projections. Its 2026 budget anticipated another $5 million loss.
Hospital officials have warned that the financial situation is unsustainable without significant changes.
According to the district, hospital leaders are pursuing opportunities to increase revenue and establish partnerships, but those efforts could take months to produce results.
Officials also say that one-time funding and loans will not solve the underlying financial problems, and that looming state and federal policy changes are expected to further reduce revenue.
For four years, the hospital has worked with state officials and other partners to develop a long-term financial solution, but those efforts have not resulted in a commitment to the structural changes needed to stabilize operations, according to the district.
Hospital officials say they remain open to partnerships that could provide a sustainable financial future, but cannot afford to wait while the hospital continues losing money.
The district has not specified which services could be reduced or eliminated.
During the town hall, hospital leaders will explain the financial challenges and the reasons behind the proposed changes. Attendees will then have an opportunity to participate in small-group discussions and provide feedback.
Officials say they want to hear from residents about how potential service reductions should be implemented while preserving access to essential medical care.
“We are here to care for you,” Pajaro Valley Health Care District Board Chair Tony Nuñez said. “When you choose to use your local hospital, you help sustain essential healthcare services and protect access to care for our entire community.”
Watsonville Community Hospital is a 106-bed acute care facility serving residents of Santa Cruz, Monterey and San Benito counties. It employs approximately 650 people and works with more than 300 physicians.
The hospital provides emergency care, maternity services, surgery, diagnostic imaging and other medical services.
The Pajaro Valley Health Care District was formed in 2022 as part of an effort to save the hospital from closure and return it to public ownership.
The Oct. 22 town hall will be held from 5:30–6:30pm at Watsonville Civic Plaza. Translation services will be available.
For information, visit pvhcd.org
