The two-hospital system, which is California’s largest healthcare district, reported a $165.1 million operating loss (-18.5% margin) for the fiscal year ending June 30, down from a $29.5 million loss (-3% margin) in the previous fiscal year. Operating losses continued in the second half of the year, according to The San Diego Union-Tribune.
“As a public institution, UC San Diego Health serves as an essential healthcare safety net for the region. If we allow any health system to fail, patient access will suffer, and our staff and facilities will feel the strain,” the system said in a statement shared with Becker’s. “Ensuring community-wide stability while planning for the future is the only way we can continue to deliver outstanding patient care, drive groundbreaking research and inspire the next generation of healthcare providers.”
Moody’s downgraded Palomar’s rating to “B2” from “Baa3” in October due to “very thin” cash balances and ongoing cash flow losses. The ratings agency said that prior financial challenges were exacerbated by a cyberattack on the system’s outpatient arm, Palomar Health Medical Group.
Shortly after the rating downgrade, Palomar laid off about 2% of its workforce, focusing on leadership and back-office roles, sparing clinical and patient-facing staff.
UC San Diego Health said Palomar is a long-time community partner and the $20 million loan reinforces its continued collaboration as the systems work to meet the expanding need for high-quality care in the region.
The financial aid is crucial as public universities, including Palomar, face instability with grant funding and potential Medi-Cal reimbursement cuts amid federal budget cuts, according to the Union-Tribune. Palomar recently told bond investors that it is halfway to its $150 million turnaround goal to stabilize its $700 million revenue bond debt.