Watsonville (Calif.) Community Hospital has started 2026 on solid financial ground following a “significant loss” in 2025 due to multiple factors.
“We are once again on the right track, caring for more patients in a high-quality way, and being good stewards of our community’s financial resources,” Stephen Gray, CEO of Watsonville Community Hospital, said in a March 25 statement shared with Becker’s. “However, the overall cash position of the hospital remains dire, due to a delay by the federal government in approving the latest Hospital Fee Program.”
Mr. Gray said that without the funding, which would have amounted to “millions of dollars starting late last year,” the hospital has increased its debt load.
The news comes after the hospital shared it was looking for a health system partner in December 2025, and was in talks with Chicago-based CommonSpirit Health, Sacramento, Calif.-based Sutter Health and San Francisco-based UCSF Health.
The board of directors for Pajaro Valley Health Care District, which owns Watsonville Community’s property, also voted in late August 2025 to find an outside healthcare provider to assume its daily management.
Watsonville Community was forced to dip into emergency funds due to an IT cyberattack in late 2024. A few years earlier, in 2021, it also lost $30 million, which nearly closed and left the facility bankrupt. The Pajaro Valley Health Care District purchased the facility in 2022, though the sale did not include its land and associated buildings.
“If the funding isn’t approved soon, our healthcare services may be in jeopardy,” Mr. Gray said in the most recent statement to Becker’s.
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