California hospital files for bankruptcy

A 106-bed hospital in Watsonville, Calif., and its parent company have filed for bankruptcy protection.

Watsonville (Calif.) Community Hospital and its parent company, Halsen Healthcare, filed for Chapter 11 bankruptcy Dec. 5. The hospital has between $10 million and $50 million in assets and liabilities within the same range, according to its bankruptcy petition signed by the hospital's chief restructuring officer. 

Documents filed in the case detail the goals of the bankruptcy filing, including keeping the hospital open, saving about 650 jobs and selling the hospital to a buyer that can support the healthcare needs of the community.

Hospital leaders said in the bankruptcy documents that they have negotiated a tentative agreement with the Pajaro Valley Healthcare District Project, and the nonprofit group has agreed to act as the stalking horse purchaser of the hospital. The group is made up of the County of Santa Cruz, the City of Watsonville, Community Health Trust of Pajaro Valley and Salud Para La Gente and was formed to explore the purchase of the hospital.

The hospital's CEO announced in November that the facility would close if a buyer wasn't secured by Jan. 28. He said the hospital is facing significant financial challenges, which were exacerbated by revenue losses during the COVID-19 pandemic. This year, the hospital has lost about $32.5 million, according to bankruptcy documents.

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