Watsonville Community Hospital is moving to shut down its maternity ward after the board that oversees the facility voted 3-2 on Wednesday, Oct. 28, to begin the closure process.

The hospital loses $86,000 a day and could close entirely within six to 12 months unless "something changes drastically," board chair Tony Nuñez said at an Oct. 22 public meeting, according to Monterey County NOW.

The closure would hit North Monterey County hard. The Watsonville hospital is the closest facility for roughly 6,500 North County residents, about 15 minutes closer than the next hospitals in Salinas, Monterey County NOW reported.

Board split on timing

The Pajaro Valley Health Care District (PVHCD) Board of Directors made the decision at a Wednesday night meeting attended by about 100 people, including staff, nurses and mothers who have given birth at the hospital, Santa Cruz Local reported.

Board president Nuñez and members Alexandra Friel and Emily Balli voted in favor. Members Marcus Pimentel and Joe Gallagher voted against.

"We don't have the luxury to wait or else we put the whole hospital and the whole system at risk," Pimentel said, according to Santa Cruz Local. He suggested the board could wait until a Nov. 11 special meeting to see whether Santa Cruz County voters adopt Measure E on Nov. 3. That measure is a countywide 0.5% sales tax hike that could bring revenue to the hospital.

The closure could take effect as early as March 2027, Santa Cruz Local reported. A second reading of the resolution must go before the board in the coming months. If finalized, the hospital must give the California Department of Public Health 120 days' notice, a legal requirement to allow patients and surrounding hospitals to prepare.

Deep financial hole

Interim CEO Tim Moran said the hospital has about six days of cash on hand and is about $13 million "in the hole" with vendors, Monterey County NOW reported. Vendors are requesting cash up front for equipment purchases.

The hospital lost $23 million in 2025, according to Monterey County NOW. Santa Cruz Local reported the hospital was more than $24 million in the red that year, citing a January board meeting. The 2025 losses stemmed from fewer patient visits, a late-2024 cyberattack, equipment failures and state and federal funding changes.

Labor and delivery and the neonatal intensive care unit (NICU) together lose about $10 million a year, hospital staff estimated. The NICU has been effectively shut down since July and would remain permanently closed. The two units accounted for $27,000 of the hospital's daily cash loss, Moran said at the Oct. 22 board meeting, according to Santa Cruz Local.

Closing labor and delivery could eliminate 85 jobs, the board said. Expecting mothers in the Pajaro Valley would need to travel to maternity wards in Salinas or Santa Cruz.

"This is not going to be safe for our patients and community," said Roseann Farris, a critical care charge nurse who has worked at the hospital for 30 years, according to Santa Cruz Local.

Medi-Cal cuts compound the crisis

About 85% of Watsonville Hospital's patients use Medi-Cal or Medicare, Santa Cruz Local reported. Federal and state cuts to those programs are compounding the hospital's losses.

On Jan. 1, 35,000 Monterey County Medi-Cal recipients considered to have "unsatisfactory immigration status" will shift to a less expensive state program called fee-for-service, which reimburses providers substantially less, Monterey County NOW reported. Michael Schrader, CEO of the Central California Alliance for Health, told the Monterey County Board of Supervisors on Oct. 20 that the shift "will have an impact on local safety net providers in Monterey County."

Nearly 178,000 people in Monterey County are on Medi-Cal, about 41% of the population, Monterey County NOW reported.

The hospital board planned to apply for a state distressed hospital grant on Oct. 28. KSBW reported the district planned to apply for a $26 million grant as a temporary solution. The hospital's 2026 budget is net positive so far, largely because of a previous one-time distressed hospital grant from the state, according to Santa Cruz Local.

The board's next special meeting is scheduled for Nov. 11.