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Watsonville Community Hospital CEO briefs Monterey County supervisors on turnaround, Measure N investments
Summary
Steven Gray, CEO of Watsonville Community Hospital and the Pajaro Valley Healthcare District, updated the Monterey County Board of Supervisors on the hospital’s recovery since 2022, Measure N-funded property reacquisition, infrastructure priorities and recent financial pressures including a 2024 cyberattack.
Steven Gray, CEO of Watsonville Community Hospital and the Pajaro Valley Healthcare District, told the Monterey County Board of Supervisors that the district has restored local ownership of the hospital, expanded services and is pursuing Measure N-funded facility investments.
Gray summarized the hospital’s recent history, saying the facility had been owned by a series of for-profit operators before the community and state officials supported creation of the Pajaro Valley Healthcare District through “Senate bill 4.18,” after which the district took over operations in September 2022. “We were able to bring that back into public and local ownership,” Gray said about purchasing the hospital property in October 2024 after drawing down the first series of bond funds in September.
He told supervisors the district used a March 2024 general obligation bond, Measure N, to finance property-related work; he said the bond required a two-thirds vote and the district received “over 68% of the vote.” Gray said Measure N proceeds may be used for attached property improvements (for example, HVAC, roofs and infrastructure) but not for mobile equipment such as beds, gurneys or computers, which the hospital foundation has supported.
Gray reviewed service and capacity changes since the district takeover: the cardiac catheterization lab was brought back online, recruitment added surgeons and gastroenterologists, primary care was started in January 2025 at the Coastal Healthcare clinic, and design work is underway to nearly double emergency-department capacity. He said Monterey County residents account for about 15% of the hospital’s patient population and estimated roughly 7,500 Monterey County residents live in areas the hospital classifies as among the least healthy census tracts.
On volume and staffing, Gray reported about 35,000 emergency-department visits in 2024, roughly 650 employees and about 300 physicians on medical staff. He said quality metrics have improved: the hospital’s Leapfrog Group grade moved from a D to a B under district management, and Gray said the organization expects to remain a B when the next grade is released and is pursuing further improvement toward an A.
Gray also detailed finances. He said the hospital’s operating loss was about $30,000,000 in 2022 but improved to a near break-even loss of roughly $100,000 in 2024. He warned of setbacks in 2025, telling the board the hospital suffered a cyberattack in 2024 that contributed to recent strain. Gray said cash-on-hand was extremely low when the district took over—about eight days—and advised that a financially healthy hospital typically maintains 150–200 days of cash on hand.
Looking ahead, Gray said Measure N funds will support replacing an aging MRI and adding a second CT scanner to double imaging capacity, and the district will continue to rely on the foundation for equipment and mobile items. “We have a very supportive community of our hospital throughout the Pajaro Valley,” Gray said, describing the hospital as a community resource for northern Monterey County and southern Santa Cruz County residents.
No board votes on hospital policy or funding were recorded during Gray’s presentation.
