When University of California San Diego Health leaders looked ahead, they saw a problem that couldn’t be solved simply by adding more patients or expanding existing programs.
“We don’t have any more capacity,” UC San Diego Health CEO Patty Maysent told Becker’s.
The academic health system’s flagship campuses in La Jolla and Hillcrest, Calif., are effectively full, even as demand for complex services such as cancer care, cardiovascular surgery and neurosurgery continues to climb. Meanwhile, public community health systems across the country are grappling with mounting financial pressures, workforce shortages and the need for greater specialty care access.
Those two realities helped shape an uncommon solution.
On July 1, University of California San Diego Health and Escondido, Calif.-based Palomar Health finalized a joint powers authority, creating a new health system called Palomar UC San Diego Health. Rather than pursuing a traditional acquisition or merger, the health systems established a new public entity designed to combine Palomar Health’s community hospitals with UC San Diego Health’s academic expertise while allowing both organizations to maintain separate licenses and medical staff.
“Palomar UC San Diego Health creates a new blueprint for healthcare in California,” Ms. Maysent said. “This new system, focused on North San Diego County, will grow and enhance healthcare services while offering increased access to advanced specialty care, close to home.”
Why a JPA, and not a straight acquisition
JPAs are relatively rare in healthcare but are commonly used by California public agencies to jointly operate services.
Unlike a traditional acquisition, the JPA creates an entirely new legal entity jointly governed by both organizations. Palomar Health’s assets and liabilities will move in two phases into the authority, while UC San Diego Health and Palomar Health each appoint three members to a six-person governing board.
The structure also preserves characteristics unique to public health districts that could be lost under a conventional acquisition.
“The JPA is primarily a public-to-public vehicle,” Ms. Maysent said. “Part of what we’re trying to solve is how a public university can partner with community public health systems that are struggling to support and sustain them without losing the unique value that the community health system brings.”
That includes preserving the district’s tax base, local governance and flexibility while leveraging the clinical, operational and financial capabilities of an academic medical center.
“All of the assets and debt from Palomar Health in this regard will move into this JPA, and then we govern it together,” she said. “The JPA allows us to bring the benefits that we have as a public university to this public health district to create a synergy that makes them more sustainable in the long term.”
The partnership also follows years of collaboration between the organizations. In March 2025, Palomar Health borrowed $20 million from UC San Diego Health to continue providing patient care. Later that year, the health systems entered exclusive discussions to create the JPA.
Under the new arrangement, former Palomar Health CEO Diane Hansen now serves as CEO of the JPA alongside oversight from Ms. Maysent and the joint governing board.
Cancer, cardiovascular care and access closer to home
The partnership addresses two different challenges with one strategy.
For Palomar Health, it brings expanded specialty care, operational support and financial expertise. For UC San Diego Health, it creates room to grow.
“The problem that UC San Diego Health was trying to solve is that we don’t have any more capacity,” Ms. Maysent said. “We’re really capacity constrained.”
She said demand for destination services continues to outpace available space across the health system’s existing campuses.
“The more we try to grow our destination services — whether it’s cancer, cardiothoracic surgery, neurosurgery, trauma or maternal-fetal medicine — we’re kind of landlocked in La Jolla.”
Rather than constructing entirely new hospitals, which Ms. Maysent described as difficult and expensive in California, the partnership enables UC San Diego Health to expand advanced clinical programs through Palomar Health’s existing facilities.
Among the first priorities is developing two shelled floors at Palomar Medical Center Escondido to expand cancer, cardiovascular and other specialty services.
UC San Diego Health’s Moores Cancer Center, an NCI-designated comprehensive cancer center, will partner with Palomar Health’s oncology teams to expand cancer care, including clinical trials. The organizations have already hired medical oncologists as part of the effort. Cardiovascular and cardiothoracic surgery services are also expected to expand early, with additional specialty programs planned afterward.
“Building that clinical program is going to be hugely important for the district to be stable,” Ms. Maysent said. “Financially, it’s about going through every lever we have and trying to manage the P&L — strategic pricing, revenue cycle, supply contracts, procurement, and things like that. What other opportunities do we have to drive more efficiency into the system? It’s really bringing us together to provide those synergies, which we think will help them sustain the impacts of HR1 and other challenges.”
A model for California?
Beyond operational efficiencies, Ms. Maysent believes patients will ultimately judge the partnership by one measure: whether they can access specialty care more quickly and closer to home.
“I think one of the biggest things you hear from patients is, ‘I have a GI problem, but I can’t get into my GI doctor for four months,'” she said.
As an academic medical center, UC San Diego Health has access to a steady pipeline of residents, fellows and subspecialists. The JPA allows those physicians to practice in North San Diego County, reducing travel for patients while increasing appointment availability.
UC San Diego Health is applying a different approach using a similar structure in California’s Imperial Valley. This partnership is a separate deal built on the same premise: a struggling public district hospital, an academic system with clinical infrastructure to offer and a legal structure designed to keep both sides intact rather than absorb one into the other.
Ms. Maysent said the shift shows up in her own job description.
Five years ago, stabilizing other health systems was not part of the CEO role at an academic medical center. Now, she said, it is central to keeping the whole system running while also recognizing that patients are living longer with more complex health conditions and caring for them in newly built hospitals is prohibitively expensive in California.
“Finding ways to stabilize the community health systems was not in our job description five years ago,” she said. “Now I think it’s essential.”
Ms. Maysent expects academic health systems will continue pursuing acquisitions and partnerships with financially challenged community hospitals as industry pressures intensify.
“Acquisitions are going to continue,” she said. “I think it’s going to get harder because of all the challenges in our industry to keep doing it, although I think it’s to the benefit of the communities where it happens that healthcare is sustained for them in a meaningful way.”
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