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WATSONVILLE – The sprint is finished, but the marathon is just beginning.

That has been the mentality for Jasmine Nájera, a board member for the Pajaro Valley Health Care District, which has been the official owner of Watsonville Community Hospital for more than three weeks now.

The acquisition, announced Aug. 31, capped off an eight month dash that began shortly after the hospital’s previous owners declared bankruptcy in winter of 2021. The effort included fast tracked legislation from the state and “the largest fundraising campaign in the history of Santa Cruz County,” according to district officials, which raised $65.5 million from more than 450 donors to complete the purchase.

But when the district assumed ownership of the hospital on Sept. 1, it set its sights on a new and equally critical challenge – keeping the hospital open and financially viable.

Last month, a financial consultant for the district said the hospital lost $22 million in the fiscal year prior to bankruptcy and was projected to lose $23 million this year.

“This is going to be a challenge,” Nájera told the Sentinel last week. “None of us are thinking ‘oh great, the hard work is done.'”

So where will the hard work be happening, now and into the hospital’s future? The Sentinel spoke with Nájera and other hospital officials to find out.

Because the hospital is now considered a new business, one of the early areas of focus for hospital management is the renegotiation of all vendor contracts.

Watsonville Hospital CEO Steven Salyer told the Sentinel his staff will be reforming more than 650 contracts within the first 60 to 90 days of ownership, something he sees as an important opportunity to strengthen the hospital’s finances.

“This organization, for a very long time, was getting paid at the 25th percentile or less compared to other organizations around us or within the state,” Salyer said, sharing that his team’s goal is to receive median payment totals from each of the local providers.

If the effort is successful, Salyer said it could bring $11 million in additional revenues per year, adding that the renegotiation process is “looking very positive.”

However, the hospital also serves many elderly and low-income county residents that rely on Medi-Care and Medi-Cal insurance, which has fixed reimbursement rates often significantly below commercial payer levels. According to a release from the health care district, about 50% of the hospital’s patients rely on Medi-Cal and 30% on Medi-Care.

“That’s not going to change, this is the community that we serve,” Nájera said, both acknowledging the challenge and stressing the critical equitability role the hospital serves in the county.

Both she and Salyer expressed confidence that there are other meaningful revenue strategies to lean into, namely, an expansion of the hospital’s service line. Salyer said the hospital will operationalize a catheterization lab for cardiac treatment sometime in 2023 and is in the midst of discussions to bring a 21-bed in-patient psych unit to the hospital.

“That would be a major win for the county,” Salyer said. “That service line is needed throughout the state and (could) get many health care partners excited.”

Santa Cruz County Spokesperson Jason Hoppin also confirmed that raising revenue for the hospital through taxation avenues is currently off the table.

“While hospital districts have the authority to raise revenues to support hospital operations, there are no plans at this time to implement any tax,” Hoppin told the Sentinel. “Should one be considered in the future, it will be conversation between the PVHCD Board, Watsonville Community Hospital and the voters of the Pajaro Valley.”

While the health care district’s board worked with a consultant to develop a business plan that was implemented on day-one, Salyer said he has voiced a desire to form a new strategic planning committee to reconfigure the plan now that the board and the hospital staff can officially collaborate.

Salyer said he is committed to many of the initiatives already in place, but “as a new company, we’re going to go through that process again to create a unified plan that the board agrees with, the administration agrees with, providers who work here, and I even requested that we have frontline staff participate in the strategic planning process.”

In early August, the board announced that it would be moving many part-time nursing positions to full-time status in an effort to reduce costs and the number of traveling nurses, who can have up to triple the rate of a full-time employee, according to Salyer.

The decision drew a flurry of negative feedback from the nursing unit, many of whom had worked at the hospital for decades, saying the move would increase burnout among staff that needs time to recuperate from the physical and emotional demands of the job.

“One of the most important things for us is really taking care of our staff and ensuring they feel supported,” Nájera said of the strategic planning process, slated to begin in October. “We are very aware there’s quite a few nurses that are really upset with some of the decisions that had to be made. But we want to keep that open dialogue and create forums and town halls where we can get that input and have good dialogues back and forth.”

In addition to rebuilding staff morale, other strategic plan priorities Salyer mentioned include investment in local partnerships, such as school districts and philanthropic organizations, along with an emphasis on quality of care.

“We will be one of the best hospitals in a 100-mile radius when it comes to quality,” Salyer said. “With everything we’ve gone through, all the turmoil … our goal is to build stability, rebuild staff morale and really make physicians feel this is the best place for them to bring their patients in to work.”

Nájera also expressed optimism for the future, where the hospital goes beyond financial stability and emerges as one of the region’s premiere health care facilities.

“We deserve this here,” she said. “It’s a hospital that serves so many valuable, essential workers and really, we want to make people want to come here.”

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