San Diego County approves $32 million loan to UC San Diego Health for psychiatric beds and crisis unit at East Campus

San Diego County supervisors unanimously approved an agreement on Sept. 24 to advance a partnership with University of California San Diego Health to add inpatient psychiatric capacity and a crisis stabilization unit at UCSD’s East Campus Medical Center.

County officials told the board the arrangement envisions an unsecured county loan of up to $32,000,000 to UCSD Health to fund facility improvements that would create about 30 dedicated psychiatric acute inpatient beds and a crisis stabilization unit (CSU) focused on Medi‑Cal beneficiaries. County and UCSD staff said the CSU would offer short‑term crisis care and the inpatient beds would provide 24‑hour intensive treatment for adults experiencing serious psychiatric crises.

The plan matters because county staff said it would create guaranteed Medi‑Cal beds in a market where capacity is uncertain and allow federal drawdowns for Medi‑Cal billable inpatient services. Caroline Smith, interim deputy chief administrative officer for the Health and Human Services Agency, said the initiative “brings together county departments to advance the ongoing transformation of the behavioral health continuum of care.” David Smith, the county’s chief information officer, summarized the financing terms in the board presentation: “The county will provide to UCSD Health an unsecured loan of up to $32,000,000.”

Nut graf: The board authorized staff to finalize and execute loan documents and related agreements after a presentation that emphasized the county’s need for more acute psychiatric capacity, the potential to draw down federal Medi‑Cal funds, and a timeline that county and UCSD officials said is intended to move rapidly through regents and regulatory approvals.

County staff described key terms and next steps. UCSD Health will use the funds to reconfigure existing space at East Campus; the loan would be repaid over 30 years with interest. Staff said UCSD is preparing a Proposition 1 state funding application and the county will support that application; any state funds awarded would reduce the county loan amount but the county‑UCSD project will proceed regardless of whether Proposition 1 funds are received. Staff provided an accelerated schedule in which final loan documents would be completed in October and UCSD would complete regents approvals by Oct. 31, followed by any required regulatory filings.

Joan Brocke, interim deputy chief administrative officer and chief financial officer, told the board using the general fund reserve for the loan would require a four‑fifths vote because the transaction would reduce the county’s reserve near the policy minimum. She said the board’s plan assumes replenishing the reserve over one to three years using current operating results, incremental general‑purpose revenue growth and any loan payments by UCSD.

Supporters from UCSD and community organizations told the board the beds and CSU would reduce emergency department burden and improve care continuity. Patty Mason, who spoke in favor on behalf of UCSD partners, said the effort “has required transformational partnership” and asked the board to support staff recommendations. Providers including representatives from 211 San Diego, Father Joe’s Villages and the city of San Diego highlighted expected benefits for people in crisis and for workforce training.

Several public commenters raised cost and oversight questions and cautioned that expanding capacity should not substitute for broader prevention efforts. Board members who sponsored the item said the partnership targets Medi‑Cal beneficiaries and is intended to fill an acute‑level bed shortage in the county; Supervisor Montgomery Stepp moved the staff recommendation and the motion passed unanimously.

The board’s approved action: execute an agreement with UCSD Health that includes an unsecured loan of up to $32,000,000 for facility improvements at East Campus to establish psychiatric acute inpatient beds and a CSU, and establish appropriations necessary to cover those costs. The staff presentation and staff recommended actions specified that the county would seek to support UCSD’s Proposition 1 application but would proceed with the project regardless of state awards.

What happens next: County and UCSD staff told the board they will finalize loan and related agreements, pursue regents review and any required regulatory approvals, and continue to pursue state funding to reduce the county’s exposure. Replenishment of reserves and loan repayment schedules were discussed as part of the county’s fiscal plan.

Action on the item passed by a unanimous vote of supervisors present: Joel Anderson — yes; Montgomery Stepp — yes; Jim Desmond — yes; Vice Chair Lawson Reimer — yes.

Ending: County staff and UCSD officials said they will move rapidly to finalize documents and pursue state funding; board members said expanding acute psychiatric capacity remains a priority while other behavioral health and housing efforts continue across the county.