LAFCO
Pajaro Valley Health Care District
Read the report at Local Agency Formation Commissions ↗
Pajaro Valley Health Care District
Service and Sphere of Influence Review
Adopted Version (November 5, 2025)
Local Agency Formation Commission of Santa Cruz County
701 Ocean Street, Room 318-D Santa Cruz, CA 95060
Website: www.santacruzlafco.org
Phone: (831) 454-2055
TABLE OF CONTENT
EXECUTIVE SUMMARY ................................................................................................ 2
Introduction .................................................................................................................. 2
Special Legislation ....................................................................................................... 2
Health Care Districts in California ................................................................................ 3
Governance Options .................................................................................................... 3
Key Findings ................................................................................................................ 6
Recommended Actions ................................................................................................ 7
DISTRICT OVERVIEW ................................................................................................... 9
History .......................................................................................................................... 9
Services and Operations .............................................................................................. 9
Population and Growth .............................................................................................. 10
FINANCES .................................................................................................................... 11
Revenues ................................................................................................................... 12
Expenditures .............................................................................................................. 12
Assets & Liabilities ..................................................................................................... 13
Net Position ................................................................................................................ 15
GOVERNANCE ............................................................................................................ 18
Local Accountability & Structure ................................................................................ 18
Challenges and Opportunities .................................................................................... 19
SPHERE OF INFLUENCE ............................................................................................ 24
Cortese-Knox-Hertzberg Act ...................................................................................... 24
Current Sphere Boundary .......................................................................................... 24
DISTRICT SUMMARY .................................................................................................. 27
SERVICE AND SPHERE REVIEW DETERMINATIONS .............................................. 28
Service Provision Determinations .............................................................................. 28
Sphere of Influence Determinations ........................................................................... 29
APPENDICES ............................................................................................................... 30
Appendix A: Formation Documents (Special Legislation) .......................................... 30
Appendix B: Community Health Needs Assessment (2023 Edition) .......................... 30
Appendix C: Financial Documents (2022 to 2025) ..................................................... 30
Pajaro Valley Health Care District –Administrative Draft Page 1 of 30
EXECUTIVE SUMMARY
Introduction
This Service and Sphere of Influence Review provides information about the services and
boundaries of the Pajaro Valley Health Care District. The report will be used by the Local
Agency Formation Commission to conduct its statutorily required review and update
process. The Cortese-Knox-Hertzberg Act requires that the Commission conduct periodic
reviews and updates of Spheres of Influence for all cities and districts in Santa Cruz
County (Government Code section 56425). It also requires LAFCO to conduct a review
of municipal services before adopting Sphere updates (Government Code section
56430). Finally, this report represents a significant milestone as it serves as the inaugural
service and sphere of influence review for the healthcare district.
The service review process does not require LAFCO to initiate changes of organization
based on service review conclusions or findings; it only requires that LAFCO make
determinations regarding the delivery of public services in accordance with Government
Code Section 56430. However, LAFCO, local agencies, and the public may subsequently
use the determinations and related analysis to consider whether to pursue changes in
service delivery, government organization, or spheres of influence.
Service and sphere reviews are informational documents and are generally exempt from
environmental review. LAFCO staff has conducted an environmental review of the
District’s existing sphere of influence pursuant to the California Environmental Quality Act
(CEQA) and determined that this report is exempt from CEQA. Such an exemption is due
to the fact that it can be seen with certainty that there is no possibility that the activity in
question may have a significant effect on the environment (Section 15061[b][3]).
Special Legislation
Senate Bill 418, signed into law on February 4, 2022, established the Pajaro Valley Health
Care District in direct response to the Watsonville Community Hospital filing Chapter 11
bankruptcy on December 21, 2021. The District was created to safeguard essential health
care services for the community by placing the hospital under a more accountable public
governance structure. Recognizing the importance of strong, impartial oversight, Senate
Bill 969 was enacted on July 1, 2022, and explicitly affirmed LAFCO’s pivotal role as the
independent authority charged with guiding and monitoring the District to ensure its
governance remains transparent, sustainable, and aligned with the public interest.
Under Senate Bill 969, LAFCO is tasked with establishing the District’s sphere of
influence within one year of formation and after conducting a comprehensive municipal
service review of health care delivery by December 31, 2025, and every five years
thereafter. The law also requires the District to provide annual reports to LAFCO in 2023
and 2024, ensuring that oversight remains active during the District’s formative years. In
fulfilling these responsibilities, LAFCO adopted the District’s inaugural sphere of influence
on January 4, 2023, designating the boundary as coterminous with the District’s service
area.
Through these statutory responsibilities and actions, LAFCO serves as something more
than a regulatory body. As another public, independent and neutral entity, LAFCO
provides accountability and transparency while also acting as a partner committed to the
Pajaro Valley Health Care District –Administrative Draft Page 2 of 30
District’s long-term success. By offering objective analysis, fostering public trust, and
ensuring stability, LAFCO helps create the conditions under which the District can remain
viable, effective, and focused on delivering reliable health care services to the community.
The District encompasses approximately 26,000 parcels within 108 square miles between
two counties: Santa Cruz County (79.5 square miles; 22,994 parcels; $16.7 billion in
assessed value) and Monterey County (26.6 square miles; 2,608 parcels; $0.85 billion in
assessed value). The current population within PVHCD’s entire service area is
approximately 92,500. An overview map is shown as Figure 1 on page 8.
Principal LAFCO
Since the District is in multiple counties, the principal county’s LAFCO has purview over
PVHCD. A “principal county” is the county that contains “the greater portion of the entire
assessed value, as shown on the last equalized assessment roll of the county or counties,
of all taxable property within a district or districts for which a change or organization or
reorganization is proposed” (Government Code Section 9002[k]). Under this criteria,
Santa Cruz LAFCO serves as the principal LAFCO for the Pajaro Valley Health Care
District. The principal LAFCO and its Commission are statutorily responsible for PVHCD’s
proposed boundary changes, sphere amendments, and service reviews. As the principal
LAFCO, Santa Cruz LAFCO has kept, and will continue to keep, Monterey LAFCO fully
informed of any actions involving the multi-county healthcare district.
Health Care Districts in California
Healthcare districts remain an essential part of California’s safety net system, particularly
for rural and underserved areas where private hospitals or large health systems are
absent. Today, the Association of California Healthcare Districts indicates that there are
76 healthcare districts statewide, a modest decline from the higher counts recorded a
decade ago. While the overall number has not changed dramatically, the stability of
healthcare districts that continue to operate hospitals has become a growing concern to
LAFCOs around the state. These districts often represent the sole provider of emergency
and acute care for their communities, yet they are disproportionately vulnerable to both
fiscal stress and service disruption. We are seeing first-hand their vulnerability deepening
by the recent changes in federal policy affecting Medicaid (Medi-Cal in California) and
Medicare that are expected to place additional financial and operational pressures on
healthcare districts statewide. Based on LAFCO’s understanding, Congress and the
Centers for Medicare & Medicaid Services (CMS) have advanced measures that tighten
Medicaid eligibility and verification, phased out some pandemic-era policy flexibilities, and
adjusted Medicare reimbursement rates. These actions are projected to reduce federal
matching funds, increase administrative workload for eligibility renewals, and shift
reimbursement timing and amounts for hospitals serving a high proportion of publicly
funded program patients.
California’s Department of Health Care Services has signaled that the State will work to
mitigate coverage losses, but the combination of federal reductions and the State’s
current budget constraints creates uncertainty. Healthcare districts, which already
operate on thin margins providing safety-net services, are especially vulnerable to
increased uncompensated care if Medi-Cal enrollment declines or renewals lapse.
Changes to Medicare payment rules, such as modifications to inpatient and physician fee
schedules, may further erode revenue stability and require budget adjustments to better
Pajaro Valley Health Care District –Administrative Draft Page 3 of 30
plan for the coming fiscal years. For the Pajaro Valley Health Care District and Watsonville
Community Hospital, these federal actions carry heightened risk. The Hospital serves a
disproportionately large Medi-Cal and uninsured patient population, so any decrease in
federal reimbursements could quickly translate into revenue shortfalls. The district may
face higher administrative costs to assist patients with renewals, potential service
reductions or deferred capital projects to balance budgets, and greater urgency to secure
operational partnerships or supplemental funding.
Across California, hospital-owning health care districts face mounting structural
challenges. Many operate on thin or negative margins and only a handful of days’ cash
on hand, leaving them unable to absorb revenue shocks or unexpected capital project
costs. Federal and state reimbursement pressures, particularly related to Medi-Cal and
Medicare, have eroded operating revenues. At the same time, workforce shortages and
rising labor expenses continue to strain already fragile budgets, while legacy debt, costly
lease arrangements, and aging infrastructure create additional ongoing financial burdens.
These combined factors have forced some districts to suspend services, pursue
bankruptcy, or seek dissolution. Recent cases have highlighted the seriousness of these
potential risks or outcomes. In Riverside County, LAFCO is actively overseeing the
potential dissolution of the Palo Verde Healthcare District after its hospital curtailed core
services due to cash flow and staffing problems. In Santa Cruz County, the Pajaro Valley
Health Care District was specifically created to acquire and move the Watsonville
Community Hospital out of bankruptcy in 2022. Despite initial stabilization efforts,
including voter approval of bond financing, the District continues to face exposure to
revenue losses, high operating costs, and the need for long-term and sustainable
management partnerships. These examples underscore both the fragility of hospital-
owned districts and the urgent need for coordinated effective solutions.
LAFCO’s role in this environment is both independent and supportive. By statute, LAFCO
must evaluate service feasibility and determine whether a district can remain a viable
public provider. Through service reviews and the authority to pursue reorganizations,
LAFCO serves as an impartial arbiter of fiscal and operational sustainability. At the same
time, this Commission recognizes that preserving essential access to health care is
paramount for residents of both counties. LAFCO’s approach therefore balances
objective oversight with proactive assistance, using its convening authority to bring
counties, health systems, state agencies, and local voters into the process of charting a
sustainable path forward.
For the Pajaro Valley Health Care District, this service and sphere review is meant to
provide a better understanding of the District’s purpose, disclose its current status as an
independent special district, and identify its ongoing challenges and opportunities.
Specifically, LAFCO will evaluate the District’s fiscal condition, governance capacity, and
service delivery model to determine whether it can remain viable in its current form.
Options may include pursuing new partnerships, secure additional revenue sources,
and/or considering possible governance options alternatives. In every scenario, LAFCO’s
priority remains the same - ensuring that the residents of the Pajaro Valley retain reliable
access to emergency and acute care services, while promoting fiscal responsibility and
long-term stability.
Pajaro Valley Health Care District –Administrative Draft Page 4 of 30
Governance Options
LAFCO is concerned that the Pajaro Valley Health Care District’s ongoing operating
deficits, declining revenues, and rising expenses indicate a pattern of fiscal instability that
threatens its long-term sustainability and legitimacy as a public entity. Continued shortfalls
suggest the District may lack sufficient financial resilience to meet its service and
operational obligations without the need for structural changes or external support. Based
on LAFCO’s analysis, the District has ended with an annual deficit in its first three years
of existence. A full review of PVHCD’s financial performance is analyzed in this report
(refer to page 11).
Given PVHCD’s ongoing fiscal and operational challenges, it is prudent for LAFCO to
evaluate the full range of governance options alternatives available to ensure the long-
term continuity of essential health services in the region. Under the Cortese-Knox-
Hertzberg Act, LAFCO’s role is not to dictate outcomes but to assess organizational
structures, identify viable alternatives, and safeguard the public’s interest in accessible
and sustainable healthcare delivery. The District has several potential pathways to
consider - from remaining a stand-alone governmental entity with internal fiscal
adjustments, to pursuing partnerships, consolidation, or even dissolution. It is important
to note that each alternative carries distinct implications for service continuity, financial
stability, and local accountability. By outlining these options, LAFCO provides a
framework for informed decision-making by the District, its constituents, and potential
partner agencies. Table 1 provides a summary of the potential governance options for
PVHCD’s consideration. The report includes a more detail discussion about each
identified option (refer to page 20).
Table 1: Potential Governance Options
Options Description LAFCO Action Requirement
Consideration of additional funding
1) Continue as an through voter-approval may be No; but may be used as a facilitator
Independent Special District required to continue as a stand- or resource
alone agency
Consideration of dissolution and
2) Reorganization with Yes; a change of organization will
concurrent annexation into a
Another Healthcare District require LAFCO approval
neighboring healthcare district
Consideration of a merger with
3) Consolidation with Yes; a change of organization will
neighboring healthcare district and
Another Healthcare District require LAFCO approval
creating a new healthcare district
Consideration of a transfer of partial Perhaps; if PVHCD transfers service
4) Transfer of Operations or
or full service responsibility to a responsibility then a mandatory
Sale to a Private Owner
private entity dissolution may be triggered
Consideration if assistance from
5) Enactment of Additional No; but may be used as a facilitator
State Legislature is needed to
Special Legislation or resource
address ongoing challenges
Consideration if there is extreme
6) Establishment of a insolvency; may help transfer No; but may be used as a facilitator
Receivership responsibilities if PVHCD is unable or resource
to operate on its own
Footnote: Options listed above are for discussion purposes only; PVHCD has full discretion to consider,
explore, and/or implement these and/or other potential options to address their ongoing challenges.
Pajaro Valley Health Care District –Administrative Draft Page 5 of 30
Key Findings
The following are key findings of the 2025 Service and Sphere of Influence Review for
the Pajaro Valley Health Care District:
1. The District provides services in two counties.
PVHCD encompasses 108 square miles in two separate counties and provides a
broad range of health care services to ensure the continued availability of critical
medical care within the Pajaro Valley community. Day-to-day operations are managed
by the Chief Executive Officer with 625 employees as of December 31, 2024. At the
center of the District’s operations is Watsonville Community Hospital, a full-service
acute care facility offering emergency services and other essential services and
programs. It is estimated that approximately 93,000 residents currently live within
PVHCD’s jurisdiction, mostly in the Watsonville area.
2. Santa Cruz LAFCO is the principal LAFCO for the district.
State law allows healthcare districts to be located within multiple counties as long as
the lands are contiguous. When multiple counties are involved, State law assigns
authority to the principal county’s LAFCO. Santa Cruz LAFCO is the principal LAFCO
for PVHCD. Santa Cruz LAFCO is statutorily responsible for any changes of
organization related to the District. In the event that a proposed boundary change
involves Monterey County, Santa Cruz LAFCO will coordinate with Monterey LAFCO
before, during, and after the process is completed.
3. The District is financially distressed.
PVHCD experienced a deficit in its first three years of existence since 2022. Financial
statements from 2022 to 2024 showed a loss of $30 million in 2022, $13.1 million in
2023, and $94,000 in 2024. While this has been a positive trend, LAFCO staff
believes that the negative operating margins may continue as the District struggles
with both anticipated and unexpected challenges it currently faces as a healthcare
district.
4. The District is complying with website requirements under State law.
Senate Bill 929 was signed into law in September 2018 and requires all independent
special districts to have and maintain a website by January 1, 2020. It outlines
minimum website data requirements agencies must provide including contact
information, financial reports, and meeting agendas/minutes. PVHCD maintains a
website and meets all the minimum requirements outlined in SB 929. LAFCO
recommends that the District continue to keep its website updated to ensure that their
information and latest news are easily accessible to its constituents and the public.
5. The District’s sphere of influence is coterminous with its jurisdictional limits.
In January 2023, the Commission adopted a multi-county sphere of influence for the
healthcare district in accordance with Senate Bill 418’s statutory deadline. PVHCD’s
initial multi-county sphere is coterminous with its jurisdictional boundary. It is
recommended that the sphere be amended to include 78 parcels within Santa Cruz
County currently unrepresented to ensure that a logical service provider is designated
for the entire southern portion of the county. It is important to note that a sphere
amendment does not automatically result in annexation. PVHCD must first indicate it
is willing and capable of adding additional territory into its service area and further
analysis would be required should annexation be considered in the foreseeable future.
Pajaro Valley Health Care District –Administrative Draft Page 6 of 30
Recommended Actions
Based on the analysis and findings in the 2025 Service and Sphere of Influence Review
for the Pajaro Valley Health Care District, the Executive Officer recommends that the
Commission:
1. Find that pursuant to Section 15061(b)(3) of the State CEQA Guidelines, LAFCO
determined that the sphere of influence review is not subject to the environmental
impact evaluation process because it can be seen with certainty that there is no
possibility that the activity in question may have a significant effect on the environment
and the activity is not subject to CEQA;
2. Determine, pursuant to Government Code Section 56425, the Local Agency
Formation Commission of Santa Cruz County is required to develop and determine a
sphere of influence for the Pajaro Valley Health Care District, and review and update,
as necessary;
3. Determine, pursuant to Government Code Section 56430, the Local Agency
Formation Commission of Santa Cruz County is required to conduct a service review
before, or in conjunction with an action to establish or update a sphere of influence;
and
4. Adopt the resolution (LAFCO No. 2025-14) approving the 2025 Service and Sphere
Review for the Pajaro Valley Health Care District with the following conditions:
a. Provide annual reports to LAFCO beyond the statutory requirements under SB
418. The 2025 and 2026 annual reports should be presented to LAFCO during a
regular public meeting for commission discussion and consideration. The annual
reports should be submitted to LAFCO no later than January 31, 2026 (2025
annual report) and January 31, 2027 (2026 annual report) respectively;
b. Coordination between the Pajaro Valley Health Care District and Santa Cruz
LAFCO to explore the identified options within the 2025 service review and any
other alternative actions. A status update should be provided to the commission
no later than April 1, 2026 (six month update) and November 4, 2026 (one year
update); and
c. Direct the Executive Officer to distribute a copy of the adopted service and sphere
review to the Pajaro Valley Health Care District and any other interested or affected
parties, including but not limited to Monterey LAFCO as the affected LAFCO, the
Counties of Monterey and Santa Cruz, Salinas Valley Health, Salud Para La Gente
and the Community Health Trust of the Pajaro Valley.
Pajaro Valley Health Care District –Administrative Draft Page 7 of 30
Figure 1: Vicinity Map
Pajaro Valley Health Care District –Administrative Draft Page 8 of 30
DISTRICT OVERVIEW
History
The Pajaro Valley Health Care District was created under special legislation (Senate Bill
418) on February 4, 2022 to provide adequate governmental oversight to the Watsonville
Community Hospital, which filed for Chapter 11 bankruptcy on December 21, 2021. A
subsequent bill, Senate Bill 969, was also signed into law on July 1, 2022 to clearly outline
LAFCO’s purview over the newly formed district. Appendix A provides a copy of the two
legislative bills. In addition to the Santa Cruz County, the District also serves a portion of
Monterey County, including Pajaro, Las Lomas, and Aromas. PVHCD operates pursuant
to the California Health Care District Law (Health & Safety Code Sections 32000 –
32498.9). The District’s service area encompasses 25,602 parcels within approximately
108 square miles: Santa Cruz County consists of 79.5 square miles (22,994 parcels) and
the remaining 28.6 square miles (2,608 parcels) are located in Monterey County.
Services and Operations
The Pajaro Valley Health Care District provides a broad range of health care services to
ensure the continued availability of critical medical care within the south Santa Cruz
County community. As of December 31, 2024, the day-to-day operations are managed
by the Chief Executive Officer along with a staff of 625 employees. At the center of the
District’s operations is Watsonville Community Hospital, a full-service acute care facility
offering emergency services, inpatient and surgical care, advanced cardiac and vascular
procedures, diagnostic imaging and laboratory services, maternity and pediatric care
(including newborn and Level II NICU services), pharmacy services, rehabilitation and
wound care, urology and vascular specialties, and programs addressing substance-use
treatment. These services collectively provide the Pajaro Valley region with essential,
locally accessible hospital-based care. PVHCD owns the Pajaro Valley Health Care
District Hospital Corporation also known as the Watsonville Community Hospital (the
“Hospital”).
The Hospital is a 501(c)(3) component unit of the District and operates a 106-bed acute
care hospital and other patient services. It is important to note that the District and the
Hospital were both created to purchase the operations and certain assets of the
Watsonville Community Hospital and to operate the hospital facility. The Hospital’s assets
were acquired in September of 2022. Hospital land and improvements (buildings) were
subsequently acquired in October of 2024. Appendix B provides a copy of the District’s
Community Health Needs Assessment, which is a community-level evaluation tool that
helps identify and prioritize local health challenges within Watsonville Community
Hospital’s service area.
In addition to hospital operations, the District invests in and supports community health
through strategic partnerships, grant programs, and initiatives identified in its Community
Health Needs Assessment. These efforts focus on improving access to primary care,
addressing chronic disease, and reducing barriers such as food insecurity and
transportation limitations. The District collaborates with community-based organizations,
including the Community Health Trust of Pajaro Valley, to promote prevention, wellness,
and equity-driven initiatives designed to improve long-term population health outcomes.
Pajaro Valley Health Care District –Administrative Draft Page 9 of 30
LAFCO staff recognizes that the District’s role extends beyond operating a hospital:
it functions as a public agency entrusted with stewarding a critical community asset. By
providing governance oversight, financial sustainability, and efficient service delivery, the
District ensures that health care services remain both accountable to the public and
responsive to the region’s diverse needs. LAFCO views these responsibilities as essential
to maintaining stability in the local health care system, and Santa Cruz LAFCO is
committed to supporting the District in its mission to deliver reliable, equitable, and
culturally competent care to the residents of the Pajaro Valley.
Population and Growth
Based on staff’s analysis, the population of PVHCD in 2025 is estimated to be 93,000.
The Association of Bay Area Governments (ABAG) and the Association of Monterey Bay
Area Governments (AMBAG) provide population projections for cities and counties in the
Coastal Region. Official growth projections are not available for special districts. In
general, the Coastal Region is anticipated to have slow growth over the next fifteen years.
Table 2 shows the anticipated population for each local agency within PVHCD. The
average rate of change within both counties is approximately 1.30%.
Population Projection
Based on the projections for the cities and counties within the District’s service area,
LAFCO staff was able to develop a population forecast for PVHCD. Staff increased the
District’s 2025 population amount by 1.30% each year. Under this assumption, LAFCO
staff projects that the entire population of PVHCD will be approximately 96,000 by 2040.
Table 2: Projected Population
Area 2025 2030 2035 2040 Average
City of Watsonville 55,187 56,829 58,332 59,743 2.78%
Monterey County
105,682 106,007 106,323 106,418 0.25%
(Unincorporated)
Santa Cruz County
137,896 139,105 140,356 141,645 0.86%
(Unincorporated)
Pajaro Valley
92,477 93,675 94,889 96,119 1.30%
Health Care District
Disadvantaged Unincorporated Communities
State law requires LAFCO to identify and describe all “disadvantaged unincorporated
communities” (DUCs) located within or contiguous to the existing spheres of influence of
cities and special districts that provide fire protection, sewer, and/or water services. DUCs
are defined as inhabited unincorporated areas within an annual median household
income that is 80% or less than the statewide annual median household income.
In 2025, the California statewide annual median household income was $109,266, and
80% of that is $87,413. LAFCO staff utilized the ArcGIS mapping program to locate
potential DUCs in Santa Cruz County. It is important to note that the Pajaro Valley Health
Care District is not subject to SB 244 because it does not provide water, sewer, or fire
service, and therefore, no further analysis is required.
Pajaro Valley Health Care District –Administrative Draft Page 10 of 30
FINANCES
This section will highlight the District’s financial performance during the most recent fiscal
years. 2024 is the latest audited financial statement available. LAFCO will evaluate
PVHCD’s financial health from 2022 to 2025. A comprehensive analysis of the District’s
financial performance during the past four years is shown in Table 4 on page 16. Table
5 on page 17 also provides an overview of the District’s assets and liabilities during the
past three fiscal years. Appendix C provides a copy of the financial documents used to
conduct LAFCO’s evaluation of the District’s fiscal health.
At the end of the 2024 calendar year, total revenue collected by PVHCD was
approximately $153.3 million, representing a 13% increase from the previous year
($135.1 million in 2023). Total expenses for the 2024 calendar year were approximately
$153.4 million, which increased from the previous year by 3% ($148.3 million in 2023).
The District has ended with an annual deficit in its first three years of existence, as shown
in Figure 2. While the 2025 budget expects to end with a marginal surplus for the first
time, LAFCO staff believes that this negative trend may continue as the District struggles
with the impact of both anticipated and unexpected challenges it currently faces as a
healthcare district.
Figure 2: Statement of Revenues & Expenditures
$180,000,000
$169,562,000
$168,189,000
$153,423,462
$160,000,000
$153,328,814
$148,276,570
$140,000,000 $135,114,963
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$45,064,039
$40,000,000
$34,118,581
$20,000,000
$-
Year 2022 Year 2023 Year 2024 Year 2025
(Audited) (Audited) (Audited) (Budget)
TOTAL REVENUE TOTAL EXPENDITURE
Pajaro Valley Health Care District –Administrative Draft Page 11 of 30
Revenues
PVHCD’s total revenues can be categorized into two budgetary groups: Operating
Revenue and Non-Operating Revenue. The District’s primary source of revenue is from
net patient services. In 2024, patient service revenues totaled approximately $142 million,
which represents 93% of the District’s entire revenue stream. Other revenue sources
include rental income ($1.1 million or 0.73%) and Interest Income ($373,424 or 0.24%).
Figure 3 provides a breakdown for each revenue stream.
Figure 3: Total Revenue (2024)
Other Operating Revenues
$8,845,371 (5.77%)
Rental Income
$1,120,665 (0.73%)
Interest Income
$373,424 (0.24%)
Net Patient Service Revenues
$142,092,210 (92.67%) District Tax Revenue
$897,144 (0.59%)
Expenditures
PVPCD’s total expenditures includes a number of different line items ranging from
Salaries & Wages to Repairs & Maintenance. Figure 4 shows that in 2024, Salaries &
Wages represent approximately 46% of the District’s entire operational expenses. The
remaining expenditures are based on the costs associated with operational tasks
including but not limited to utilities, rent, and contract labor.
Figure 4: Total Expenditure (FY 2023-24)
Salaries & Wages $70,669,317
Benefits $20,527,433
Purchased Services $12,927,822
Supplies $12,402,259
Other Operating Expenses $10,176,116
Medical Spec Fees $9,442,019
Contract Labor $5,278,300
Property Taxes & Insurance $3,215,445
Interest $2,705,874
Utilities $2,438,228
Repairs & Maintenance $1,516,915
Lease Cost & Rent $1,470,931
Depreciation & Amortization $652,803
$- $20,000,000 $40,000,000 $60,000,000 $80,000,000
Pajaro Valley Health Care District –Administrative Draft Page 12 of 30
Assets & Liabilities
District Assets
As of December 31, 2024, the District had approximately $95 million in total assets. This
represents an increase of approximately $30 million or 46% from 2023’s total assets of
$65 million. Total assets can be categorized into two types: Current Assets and Non-
Current Assets. Current assets are resources such as cash, receivables, and other items
expected to be used or converted within a year, while non-current assets are long-term
investments like land, buildings, and equipment that support a healthcare district’s
operations over multiple years. In 2024, current assets were approximately $37 million
and non-current assets were approximately $57 million. As shown in Figure 5, capital
assets represented 61% of total assets, with Capital Assets totaling $45 million or 48% of
the District’s entire asset amount. Figure 6 provides a detailed breakdown of the District’s
total assets in 2024.
Figure 5: Total Assets (2024)
Current Assets
$37,297,413 (39%)
Non-Current Assets
$57,217,178 (61%)
Figure 6: Total Assets (2024)
Capital Assets, Net of Accumulated Depreciation $45,096,317
Patient Accounts Receivable, Net of Allowances $24,997,555
Assets Limited As to Use, Net of Current Debt Service $11,702,888
Inventories $3,840,566
Cash & Cash Equivalents $3,703,331
Assets Limited As to Use $2,691,432
Prepaid Expenses & Other Current Assets $1,935,742
Lease Assets $417,973
Other Accounts Receivable $128,787
$- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000
Pajaro Valley Health Care District –Administrative Draft Page 13 of 30
District Liabilities
As of December 31, 2024, the District had approximately $99 million in total liabilities.
This represents an increase of approximately $31 million or 45% from 2023’s total
liabilities of $68 million. Total liabilities can be categorized into two types: Current
Liabilities and Non-Current Liabilities. Current liabilities are obligations a healthcare
district must pay within one year, such as accounts payable and short-term debt, while
non-current liabilities are longer-term obligations like bonds, leases, or pension liabilities
that extend beyond one year. As shown in Figure 7, Non-Current Liabilities represented
67% of total liabilities, with Debt Borrowing totaling $66 million or 66% of the District’s
entire liability amount. Figure 8 provides a detailed breakdown of the District’s total
liabilities in 2024.
Figure 7: Total Liabilities (2024)
Current Liabilities
$32,437,333 (33%)
Non-Current Liabilities
$66,264,204 (67%)
Figure 8: Total Liabilities (2024)
Debt Borrowings, Net of Current Maturities $65,846,228
Accounts Payable & Accrued Expenses $14,658,409
Accrued Payroll & Related Liabilities $7,234,385
Current Maturities of Debt Borrowings $6,289,901
Line of Credit $3,000,000
IBNR Self Funded Health Benefits $685,410
Estimated Third Part Payor Settlements $569,228
Lease Liabilities $417,976
$- $20,000,000 $40,000,000 $60,000,000
Pajaro Valley Health Care District –Administrative Draft Page 14 of 30
Net Position
Net position represents the District’s overall financial health by showing the difference
between what it owns (assets) and what it owes (liabilities). A positive net position means
the district has resources available for future services, while a negative net position
indicates financial strain. As of December 31, 2024, the total fund balance ended with
approximately negative $3.4 million. The following table highlights the net position from
2022 to 2025. As shown in the table below, the District’s net position has decreased over
the years. This consecutive negative balance is extremely concerning and leaves PVHCD
unprepared for any additional unintended expenses, major capital improvement projects,
or emergency contingency funds.
Table 3: Net Position
2022 2023 2024 2025
(Audited) (Audited) (Audited) (Budget)
Ending Balance $9,717,164 $(3,444,443) $(3,539,091) $(2,166,091)
Change from Previous Year ($) - $(13,161,607) $(94,648) $1,373,000
Pajaro Valley Health Care District –Administrative Draft Page 15 of 30
Table 4: Total Revenues & Expenditures
Year 2022 Year 2023 Year 2024 Year 2025
Year End = December 31
(Audited) (Audited) (Audited) (Budget)
REVENUE
Operating Revenues
Net Patient Service Revenues $ 33,308,250 $ 1 29,114,224 $ 1 42,092,210 $ 1 59,425,000
Other Operating Revenues $ 532,944 $ 5,367,526 $ 8,845,371 $ 1 0,137,000
Total Operating Revenues $ 33,841,194 $ 1 34,481,750 $ 1 50,937,581 $ 1 69,562,000
Non-Operating Revenues
Rental Income $ 277,387 $ 529,666 $ 1,120,665 $ -
Interest Income $ - $ 103,547 $ 373,424 $ -
District Tax Revenue $ - $ - $ 897,144 $ -
Total Non-Operating Revenues $ 277,387 $ 633,213 $ 2,391,233 $ -
TOTAL REVENUE $ 34,118,581 $ 1 35,114,963 $ 1 53,328,814 $ 1 69,562,000
EXPENDITURE
Operating Expenses
Salaries & Wages $ 17,381,952 $ 70,156,726 $ 70,669,317 $ 1 06,711,000
Benefits $ 6,100,838 $ 21,460,602 $ 20,527,433 $ -
Contract Labor $ 2,414,616 $ 6,931,655 $ 5,278,300 $ -
Supplies $ 3,688,032 $ 8,319,794 $ 12,402,259 $ 14,243,000
Medical Spec Fees $ 2,876,058 $ 7,751,461 $ 9,442,019 $ 12,452,000
Purchased Services $ 5,579,962 $ 13,458,807 $ 12,927,822 $ 12,774,000
Lease Cost & Rent $ 1,649,758 $ 1,914,944 $ 1,470,931 $ 4,911,000
Repairs & Maintenance $ 316,371 $ 1,359,867 $ 1,516,915 $ 1,577,000
Utilities $ 712,745 $ 2,466,097 $ 2,438,228 $ 2,409,000
Depreciation & Amortization $ 384,786 $ 1,979,831 $ 652,803 $ 1,850,000
Other Operating Expenses $ 2,906,562 $ 6,190,016 $ 10,176,116 $ 8,506,000
Property Taxes & Insurance $ 731,821 $ 2,444,845 $ 3,215,445 $ 2,459,000
Interest $ 320,538 $ 3,841,925 $ 2,705,874 $ 2 97,000
Total Operating Expenses $ 45,064,039 $ 1 48,276,570 $ 1 53,423,462 $ 1 68,189,000
Non-Operating Expenses
$ - $ - $ - $ -
Total NonOperating Expenses $ - $ - $ - $ -
TOTAL EXPENDITURE $ 45,064,039 $ 1 48,276,570 $ 1 53,423,462 $ 1 68,189,000
Surplus/(Deficit) $ ( 10,945,458) $ (13,161,607) $ ( 94,648) $ 1,373,000
NET POSITION
Gain from Acquisition of Hospital $ 20,662,622 $ - $ - $ -
Beginning of Year $ - $ 9,717,164 $ ( 3,444,443) $ ( 3,539,091)
End of Year $ 9,717,164 $ ( 3,444,443) $ ( 3,539,091) $ ( 2,166,091)
Table 5: Total Assets & Liabilities
Pajaro Valley Health Care District –Administrative Draft Page 16 of 30
Year 2022 Year 2023 Year 2024
Year End = December 31
(Audited) (Audited) (Audited)
ASSETS
Current Assets
Cash & Cash Equivalents $ 8 ,660,568 $ 6 ,639,515 $ 3 ,703,331
Assets Limited As to Use $ - $ - $ 2 ,691,432
Patient Accounts Receivable, Net of Allowances $ 21,266,511 $ 15,195,777 $ 24,997,555
Other Accounts Receivable $ 1 ,498,921 $ - $ 128,787
Inventories $ 2 ,158,403 $ 3 ,841,424 $ 3 ,840,566
Prepaid Expenses & Other Current Assets $ 2 ,510,580 $ 2 ,260,013 $ 1 ,935,742
Total Current Assets $ 36,094,983 $ 27,936,729 $ 37,297,413
Non-Current Assets
Assets Limited As to Use, Net of Current Debt Service $ - $ - $ 11,702,888
Capital Assets, Net of Accumulated Depreciation $ 3 ,015,808 $ 3 ,138,796 $ 45,096,317
Lease Assets $ 34,759,953 $ 33,549,419 $ 417,973
Total Non-Current Assets $ 37,775,761 $ 36,688,215 $ 57,217,178
TOTAL ASSETS $ 73,870,744 $ 64,624,944 $ 94,514,591
Deferred Outflows of Resources, Net of Inflows $ - $ - $ 647,855
TOTAL ASSETS & DEFERRED OUTFLOWS $ 73,870,744 $ 64,624,944 $ 95,162,446
LIABILITIES
Current Liabilities
Line of Credit $ - $ - $ 3 ,000,000
Current Maturities of Debt Borrowings $ 1 ,702,035 $ 3 ,120,987 $ 6 ,289,901
Accounts Payable & Accrued Expenses $ 6 ,922,004 $ 6 ,531,695 $ 14,658,409
Accrued Payroll & Related Liabilities $ 8 ,641,862 $ 9 ,014,485 $ 7 ,234,385
Estimated Third Part Payor Settlements $ 1 ,597,184 $ 728,871 $ 569,228
IBNR Self Funded Health Benefits $ 2 ,787,581 $ 1 ,706,135 $ 685,410
Total Current Liabilities $ 21,650,666 $ 21,102,173 $ 32,437,333
Non-Current Liabilities
Debt Borrowings, Net of Current Maturities $ 7 ,478,951 $ 12,408,100 $ 65,846,228
Lease Liabilities $ 35,023,963 $ 34,559,114 $ 417,976
Total Non-Current Liabilities $ 42,502,914 $ 46,967,214 $ 66,264,204
TOTAL LIABILITIES $ 64,153,580 $ 68,069,387 $ 98,701,537
NET POSITION
Invested In Capital Assets, Net of Related Debt $ 2 ,891,822 $ 3 ,138,796 $ 45,096,317
Restricted $ 2 ,600,000 $ 2 ,600,000 $ 14,394,320
Unrestricted $ 4 ,225,342 $ ( 9,183,239) $ ( 63,029,728)
Total Net Position $ 9 ,717,164 $ ( 3,444,443) $ ( 3,539,091)
TOTAL LIABILITIES & NET POSITION $ 73,870,744 $ 64,624,944 $ 95,162,446
Pajaro Valley Health Care District –Administrative Draft Page 17 of 30
GOVERNANCE
The Pajaro Valley Health Care District is governed by a five-member Board of Directors,
with four-year terms of office. The initial Board of Directors for the Pajaro Valley Health
Care District were appointed on March 22, 2022, by the Santa Cruz County Board of
Supervisors. This board was established to guide the new district in overseeing the
acquisition and operation of Watsonville Community Hospital. District boundaries include
areas around the Santa Cruz-Monterey County line, and its Sphere of Influence is
coterminous with the current boundaries. Currently, the at-large elections include voters
from both counties.
District-Based Elections
Pursuant to Health and Safety Code Section 32498.6, within five years from the date of
its first meeting, the Board is required to adopt a resolution to divide representation of the
district into zones and number the zones consecutively. The zones shall be effective for
the next district election after the resolution of the Board for which there is time to
implement the zones and elections within the zones. It is LAFCO’s understanding that the
District held its first board meeting on March 24, 2022; therefore, the zone-based election
process should be established by March 2027.
Local Accountability & Board Structure
The current Board is as follows:
Table 6: Board of Directors
Board Member Term of Office
Appointed: March 22, 2022
Jose (Tony) Nuñez, Chair
Term Ends: November 7, 2028
Appointed: March 22, 2022
Alexandra Friel
Term Ends: November 7, 2028
Appointed: March 22, 2022
Katherine (Katie) Gabriel-Cox
Term Ends: November 7, 2028
Appointed: November 8, 2022
Joe Gallagher
Term Ends: November 3, 2026
Appointed: November 8, 2022
Marcus Pimentel
Term Ends: November 3, 2026
Board meetings are typically held on the fourth Wednesday of the month at 5:00 pm.
These Board meetings are typically held at the Community Health Trust of Pajaro Valley
located on the District’s campus (Kathleen King Community Room - 85 Nielson Street,
Watsonville) which are open to the public. Public hearing notices are provided through
online posting. Based on LAFCO’s analysis, members of the public have the option to join
the meeting virtually or in-person.
Pajaro Valley Health Care District –Administrative Draft Page 18 of 30
Challenges and Opportunities
As previously stated, recent federal policy changes affecting Medicaid and Medicare are
expected to place additional financial and operational pressures on healthcare districts.
Based on LAFCO’s understanding, Congress and the Centers for Medicare & Medicaid
Services (CMS) have advanced measures that tighten Medicaid eligibility and verification,
phase out some pandemic-era policy flexibilities, and adjusted Medicare reimbursement
rates. These actions are projected to reduce federal matching funds, increase
administrative workload for eligibility renewals, and shift reimbursement timing and
amounts for hospitals serving a high proportion of publicly funded program patients. While
historically it has always been difficult to operate a healthcare district in California, the
recent changes have impacted all existing healthcare districts, especially those in rural
areas, immensely. The following section discusses current challenges and identifies
possible opportunities for PVHCD to review and consider.
Fiscal & Operational Concerns
The last two audits (2023 and 2024) included the auditor’s “going concerns” about the
District. LAFCO understands that an auditor’s “going concern” assessment is designed
to evaluate whether there is substantial doubt about an agency’s ability to continue
operating and meeting its financial obligations for at least one year beyond the date of its
financial statements. More importantly, the auditor’s role is not to make the initial
determination, but rather to review and evaluate the accuracy of management’s own
assessment and disclosures of such uncertainties. If management’s evaluation or
disclosures are determined to be insufficient, the auditor has the authority to issue a
modified audit opinion. The 2024 audit includes a statement from the auditor which
declares:
“The Hospital has reduced its annual losses since emerging from bankruptcy in
2022, however it suffered significant losses from operations in 2023 and has
experienced cash flow difficulties since the District acquired them in September
2022. The Combined unit also has only 9 days cash on hand and significant debt
obligations. These conditions raise substantial doubt about the Hospital’s ability
to continue as a going concern… The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. In view of these
matters, continuation as a going concern is dependent on continued operations
of the District and the Hospital, which in turn is dependent on the District’s and
the Hospital’s ability to increase collections, decrease expenses, and raise
additional capital… The Hospital was the victim of a cyberattack in November
2024. The attack levied a significant impact on operations and temporarily slowed
cash collections. Recovery efforts are ongoing. The District has Cyber Attack
insurance and is working closely with the insurer and related vendors.”
LAFCO has identified significant fiscal concerns regarding the Pajaro Valley Health Care
District and its operation of Watsonville Community Hospital. While the Hospital has
reduced its losses since emerging from bankruptcy in 2022, it continues to report
significant operating deficits and has experienced cash flow difficulties since the District
acquired it in September 2022. Collectively, the District and Hospital currently maintain
only nine days worth of cash on hand and carry substantial debt obligations. These
conditions, taken together, raise substantial doubt about the District’s ability to sustain
operations over the coming year, which is why the independent auditor noted their
Pajaro Valley Health Care District –Administrative Draft Page 19 of 30
concern with a formal going concern disclosure, underscoring the severity of the financial
risk. In addition to its financial difficulties, the District suffered a cyberattack in November
2024 that disrupted hospital operations and temporarily reduced cash collections. The
District maintains cyber insurance coverage and is actively working with its insurer and
recovery vendors, and has hardened its cyber security systems since the incident.
LAFCO is particularly concerned that the District’s long-term viability hinges on its ability
to simultaneously increase revenue collections, reduce expenses, and raise additional
capital - all while managing its existing debt obligations. Without immediate corrective
measures, the District’s limited liquidity and persistent losses may compromise its
capacity to meet payroll, vendor payments, and debt service. These conditions represent
a serious risk not only to the fiscal health of the District, but also to the continuity of critical
hospital services relied upon by residents throughout the region. In light of these
conditions, LAFCO recommends that the District take immediate steps to stabilize
operations. This includes preparing a detailed, near-term cash flow forecast; pursuing
bridge financing or other short-term liquidity options; and expediting efforts to improve
billing and collections. At the same time, the District should consider alternative
governmental options as it explores potential partners.
LAFCO Staff Recommendation: The District should continue providing annual reports
to LAFCO beyond the statutory requirements under SB 418. The 2025 and 2026 annual
reports should be presented to LAFCO during a regular public meeting for commission
discussion and consideration. The annual reports should be submitted to LAFCO no later
than January 31, 2026 and January 31, 2027 respectively.
Potential Governance Options
Given PVHCD’s ongoing fiscal and operational challenges, it is prudent for LAFCO to
evaluate the full range of governance options available to ensure the long-term continuity
of essential health services in the region. Under the Cortese-Knox-Hertzberg Act,
LAFCO’s role is not to dictate outcomes but to assess organizational structures, identify
viable alternatives, and safeguard the public’s interest in accessible and sustainable
healthcare delivery. The District has several potential pathways forward to continue
ensuring adequate services are provided to the community. It is important to note that
each alternative carries distinct implications for service continuity, financial stability, and
local accountability. By outlining these options, LAFCO provides a framework for informed
decision-making by the District, its constituents, and potential partner agencies.
1) Continue as an Independent Special District: PVHCD remains as a stand-alone
public entity but pursues internal remedies, including but not limited to: Tighter cost
control, management changes, service reductions, contract operations, targeted
revenue measures (special tax, assessments), or additional short-term borrowing.
LAFCO’s Role: LAFCO does not levy taxes, but it could explore the development of a
fiscal analysis under a special study (if directed by the commission) to evaluate the
viability of the public agency and to set policy expectations for ongoing oversight.
LAFCO’s findings and recommendations may encourage the need for voter-approved
revenue measures, but the outcome will ultimately depend on the voters.
Pajaro Valley Health Care District –Administrative Draft Page 20 of 30
2) Reorganization with Another Healthcare District: In this scenario, PVHCD is
dissolved, and its geography, responsibilities, and assets are transferred over to a
neighboring district.
LAFCO’s Role: Any change of organization (ex. dissolution, annexation,
consolidation) falls under LAFCO’s authority. A reorganization may be initiated by
PVHCD, the Counties of Santa Cruz and/or Monterey, or residents within PVHCD’s
jurisdictional boundary. This option would require an in-depth analysis of the benefit
and constraints involving such a significant change in governance.
3) Consolidation with Another Healthcare District: PVHCD and another neighboring
healthcare district would merge to create a new healthcare district. This step is similar
to a reorganization but rather than recommending dissolving PVHCD and concurrently
annexing the dissolved area into a successor agency, this option would merge the two
districts and create a brand new one.
LAFCO’s Role: Any change of organization (ex. dissolution, annexation,
consolidation) falls under LAFCO’s authority. Similar to a reorganization, consolidation
may be initiated by PVHCD, the Counties of Santa Cruz and/or Monterey, or residents
within PVHCD’s jurisdictional boundary. This option would also require an in-depth
analysis of the benefit and constraints involving such a significant change in
governance.
4) Transfer of Operations or Sale to a Private Owner/ Long-Term Lease or
Management Contract: PVHCD may transfer operation or ownership of the
hospital/clinical operations to a private operator or management company (sale, lease,
management agreement, joint venture). Watsonville Community Hospital’s history
shows that this path has been successful in the past but offers no reassurance to the
residents regarding sustainability and trust.
LAFCO’s Role: While LAFCO plays no role in the consideration of partnerships and/or
transfers of operation, Senate Bill 418 does include a clause that states:
“The district shall notify the Santa Cruz County local agency formation
commission if the district sells the Watsonville Community Hospital to another
entity or stops providing health care services at the facility. If the commission
receives notification…it shall order the dissolution of the district.”
Therefore, if PVHCD does explore some type of partnership that transfers over
healthcare services to another entity, then a mandatory dissolution may be triggered.
5) Enactment of Additional Special Legislation: Legislature-driven action can support
the District to determine a successor agency, identify additional funding, or restructure
existing governance. Previous special legislation (SB 418 that established PVHCD)
shows that legislative solutions are possible.
LAFCO’s Role: While LAFCOs prefer changes of organization, such as district
formations, to follow the guidelines under the Cortese-Knox-Hertzberg Act, the
Pajaro Valley Health Care District –Administrative Draft Page 21 of 30
Commission understands why PVHCD had to be created through special legislation
in 2022. That said, special legislation may be needed once again to help address the
ongoing challenges facing PVHCD. LAFCO may play a facilitator role in coordinating
with local, regional, and state leaders to explore special legislation.
6) Establishment of a Receivership: In extreme insolvency, courts or the state may
appoint a receiver, or the district may be subject to state agency oversight. While not
a common option, Santa Cruz County has seen a court receivership step in to help a
failing private water system (Big Basin Water Company) within the past year.
LAFCO’s Role: A court receiver is a neutral third party appointed by a judge to
temporarily take control of an organization’s operations, assets, and finances when it
is unable to manage them effectively on its own. The receiver’s primary duty is to act
in the best interest of creditors, stakeholders, and the public by stabilizing the entity,
preventing waste or misuse of assets, and developing a path forward. LAFCO could
play a facilitating or resource role under a potential receivership.
LAFCO Staff Recommendation: The District should coordinate with LAFCO to explore
the identified options and any other alternative actions. A status update should be
provided to the commission no later than April 1, 2026 (six month update) and
November 4, 2026 (one year update).
Website Requirements
Senate Bill 929 was signed into law in September 2018 and requires all independent
special districts to have and maintain a website by January 1, 2020. SB 929 identifies
several components that must be found within an agency’s website. Additionally, the
Special District Leadership Foundation (SDLF), an independent, non-profit organization
formed to promote good governance and best practices among California’s special
districts, has also outlined recommended website elements as part of its District
Transparency Certificate of Excellence. This program was created as an effort to promote
transparency in the operations and governance of special districts to the public.
LAFCO conducted a thorough review of the District’s website based on SB 929’s criteria
and the recommendations set by the SDLF. Table 7 on page 23 summarizes staff’s
findings on whether their website meets the statutory requirements. At present, PVHCD
does meet all the benchmarks. The District must provide a link or a copy of LAFCO’s
adopted service and sphere reviews for public access, including this edition once the
report has been adopted by the commission.
Pajaro Valley Health Care District –Administrative Draft Page 22 of 30
Table 7: Website Transparency
Website Components Status (Yes = √)
Required Items (SB 929 Criteria and SDLF Benchmarks)
1. Names and Contact Information of Board Members* √
2. Board Member Term Limits √
3. Names of Key Staff, including General Manager √
4. Contact Information for Staff √
5. Election/Appointment Procedure & Deadlines √
6. Board Meeting Schedule* √
7. Mission Statement √
8. Description of District's Services/Functions and Service Area √
9. Authorizing Statute/Enabling Act √
10. Adopted District Budgets* √
11. Financial Audits* √
12. Archive of Board Meeting Agendas & Minutes* √
13. Link to State Controller's Webpages for District's reported Board
√
Member and Staff Compensation
14. Link to State Controller's Webpages for District's reported Financial
√
Transaction Report
15. Reimbursement & Compensation Policy / Annual Policies √
16. Home Page Link to Agendas/Board Packets √
17. SB 272 - Compliance-Enterprise Catalogs √
18. Machine Readable/Searchable Agendas √
19. Recipients of Grant Funding or Assistance √
20. Link or Copies of LAFCO’s Service & Sphere Reviews √
Total Score (out of a possible 20) 20 (100%)
Pajaro Valley Health Care District –Administrative Draft Page 23 of 30
SPHERE OF INFLUENCE
Cortese-Knox-Hertzberg Act
City and special district spheres of influence define the probable physical boundaries and
service area of a local agency, as determined by the Commission (Government Code
Section 56076). The law requires that spheres be updated at least once every five years
either concurrently or subsequently in preparation of Municipal Service Reviews. Spheres
are determined and amended solely at the discretion of the Commission. In determining
the sphere of influence for each local agency, the Commission is required by Government
Code Section 56425(e) to consider certain factors, including:
➢ The present and planned uses in the area, including agricultural and open-space
lands;
➢ The present and probable need for public facilities and services in the area;
➢ The present capacity of public facilities and adequacy of public services that the
agency provides or is authorized to provide;
➢ The existence of any social or economic communities of interest in the area if the
commission determines that they are relevant to the agency; and
➢ For an update of a sphere of influence of a city or special district that provides
public facilities or services related to sewers, municipal and industrial water, or
structural fire protection, that occurs pursuant to subdivision (g) on or after July 1,
2012, the present and probable need for those public facilities and services of any
disadvantaged unincorporated communities within the existing sphere.
Current Sphere Boundary
Santa Cruz LAFCO adopted a multi-county sphere of influence for the District on January
4, 2023. PVHCD’s multi-county sphere is coterminous with its jurisdictional boundary, as
shown in Figure 9 on page 25.
Proposed Sphere Amendment
Senate Bill 418 defines the district's territory as all lands within the Pajaro Valley Unified
School District boundary, excluding lands north and west of a specific line. In general, the
boundary begins at the Pacific Ocean and the projected centerline of Aptos Beach Drive,
then follows a path using the centerlines of various roads including Rio Del Mar
Boulevard, Bonita Drive, Freedom Boulevard, Hames Road, Browns Valley Road, Hazel
Dell Road, Mount Madonna Road, and Gaffey Road before running northeasterly to the
Santa Cruz County line. While Santa Cruz LAFCO initially established a coterminous
sphere, further research shows that 78 parcels (designated as agricultural lands) were
excluded in the jurisdictional boundary – resulting in the development of an unrepresented
portion of Santa Cruz County, as shown in Figure 10 on page 26. Therefore, staff is
recommending that the sphere be amended to include the 78 parcels within Santa Cruz
County to ensure that a logical service provider is designated for the entire southern
portion of the county. It is important to note that a sphere amendment does not
automatically result in annexation. PVHCD must be willing and capable of adding
additional territory into its service area.
Pajaro Valley Health Care District –Administrative Draft Page 24 of 30
Figure 7: Current Sphere Map
Pajaro Valley Health Care District –Administrative Draft Page 25 of 30
Figure 8: Proposed Sphere Map
Pajaro Valley Health Care District –Administrative Draft Page 26 of 30
DISTRICT SUMMARY
Pajaro Valley Health Care District
Formation Health & Safety Code §32000 et seq. (Health Care District Law)
Governed by a five-member Board of Directors. Board members
Board of Trustees are elected to four-year terms with voters from Monterey and Santa
Cruz Counties.
Contact Person Stephen Gray, Chief Executive Officer
Employees 625 employees as of December 31, 2024
Owned: 45, 65, 75, 85 Nielson Street, Watsonville, CA 95076
Facilities
Leased/Operated: 99 Airport Boulevard, Freedom, CA 95076
1820 Main Street, Watsonville, CA 95076
PVHCD encompasses approximately 108 square miles between
District Area two counties: Santa Cruz County (79.5 square miles) and Monterey
County (26.6 square miles).
Sphere of The sphere boundary is coterminous with the District’s jurisdictional
Influence limits and includes lands from both counties.
Total Revenue = $169,562,000
2025 Budget Total Expenditure = $168,189,000
Projected Net Position (Beginning Balance) = $(3,539,091)
Mailing Address: 75 Nielson Street Watsonville CA 95076
Phone Number: 831-763-6040
Contact
Information
Email Address: info@pvhcd.org
Website: https://www.pvhcd.org/
Meetings are typically held on the fourth Wednesday of the month,
Public Meetings at 5:00 pm. These Board meetings are typically held at the District’s
administrative office in Watsonville and are open to the public.
Mission: We are the trusted, equitable healthcare partner and
provider our diverse families, friends, and neighbors deserve.
Mission Statement Vision: To be our community's champion and advocate for health
and wellness to improve the lives of our community for generations
to come.
Pajaro Valley Health Care District –Administrative Draft Page 27 of 30
SERVICE AND SPHERE REVIEW DETERMINATIONS
The following service and sphere review determinations fulfill the requirements outlined
in the Cortese-Knox-Hertzberg Act.
Service Provision Determinations
Government Code Section 56430 requires LAFCO to conduct a municipal service review
before, or in conjunction with, an action to establish or update a sphere boundary. Written
statements of determination must be prepared with respect to each of the following:
1. Growth and population projections for the affected area.
PVHCD encompasses 108 square miles. It is estimated that approximately 93,000
residents currently live within PVHCD’s jurisdiction, mostly in the Watsonville area.
LAFCO staff projects that the District’s population may reach 96,000 by 2040.
2. The location and characteristics of any disadvantaged unincorporated
communities within or contiguous to the sphere of influence.
PVHCD is not subject to SB 244 because it does not provide water, sewer, or fire
service.
3. Present and planned capacity of public facilities, adequacy of public services,
and infrastructure needs or deficiencies including needs or deficiencies related
to sewers, municipal and industrial water, and structural fire protection in any
disadvantaged, unincorporated communities within or contiguous to the sphere
of influence.
PVHCD provides a broad range of health care services to ensure the continued
availability of critical medical care within the community. Day-to-day operations are
managed by the Chief Executive Officer with a staff of 625 employees. At the center
of the District’s operations is Watsonville Community Hospital, a full-service acute care
facility offering emergency services, inpatient and surgical care, advanced cardiac and
other essential services.
4. Financial ability of agencies to provide services.
PVHCD’s primary source of revenue is from patient revenue. The District has
experienced consecutive annual deficits since inception (2022 to 2024). LAFCO staff
believes that this negative trend may continue unless the District can identify an
additional source of revenue or reduce its annual costs.
5. Status of, and opportunities for, shared facilities.
LAFCO encourages more collaborative efforts with neighboring districts and local
agencies within both Monterey and Santa Cruz Counties.
6. Accountability for community service needs, including governmental structure
and operational efficiencies.
The District currently has a website and meets the requirements under SB 929.
LAFCO encourages PVHCD to continue updating the website for more transparency.
7. Any other matter related to effective or efficient service delivery, as required by
commission policy.
No additional local LAFCO policies are specifically relevant to this service review.
Pajaro Valley Health Care District –Administrative Draft Page 28 of 30
Sphere of Influence Determinations
Government Code Section 56425 requires LAFCO to periodically review and update
spheres of influence in concert with conducting municipal service reviews. Spheres are
used as regional planning tools to discourage urban sprawl and encourage orderly
growth. Written statements of determination must be prepared with respect to each of the
following:
1. The present and planned land uses in the area, including agricultural and open-
space lands.
The present and planned land uses are based on the general plans from the County
and the City of Watsonville, which range from urban to rural uses. General plans
anticipate growth centered on existing urban areas and the maintenance of
agricultural production, rural residential uses, and environmental protection in rural
areas.
2. The present and probable need for public facilities and services in the area.
PVHCD has adopted a multi-year strategic plan to assess the community health needs
within its service area.
3. The present capacity of public facilities and adequacy of public services that
the agency provides or is authorized to provide.
The Watsonville Community Hospital is a public, non-profit community healthcare
provider; a 106-bed acute care facility serving Watsonville and the surrounding
culturally diverse tri-county area along California’s Central Coast. The hospital offers
a wide range of quality medical and surgical services including cardiac care,
diagnostic imaging, emergency services, maternity services, orthopedics, pediatrics,
rehabilitation services, robotic surgery, urology, vascular surgery, and wound care.
4. The existence of any social or economic communities of interest in the area if
the commission determines that they are relevant to the agency.
The District provides essential services to the Pajaro Valley. This is a social and
economic community of interest which is relevant to the provision of public services
provided by the Pajaro Valley Health Care District.
5. For an update of a sphere of influence of a city or special district that provides
public facilities or services related to sewers, municipal and industrial water, or
structural fire protection, that occurs pursuant to subdivision (g) on or after July
1, 2012, the present and probable need for those public facilities and services
of any disadvantaged unincorporated communities within the existing sphere
of influence.
The District does not provide services related to sewers, municipal and industrial
water, or structural fire protection. Therefore, this determination is not applicable.
Pajaro Valley Health Care District –Administrative Draft Page 29 of 30
APPENDICES
Appendix A: Formation Documents (Special Legislation)
Appendix B: Community Health Needs Assessment (2023 Edition)
Appendix C: Financial Documents (2022 to 2025)
Pajaro Valley Health Care District –Administrative Draft Page 30 of 30
APPENDIX A:
FORMATION DOCUMENTS
(SPECIAL LEGISLATION)
APPENDIX B:
COMMUNITY HEALTH
NEEDS ASSESSMENT
(2023 EDITION)
2023
COMMUNITY HEALTH
NEEDS ASSESSMENT
Watsonville Community Hospital Service Area
Pajaro Valley Healthcare District
Sponsored by
© December 2023 Prepared by
2023-0413-02 www.PRCCustomResearch.com
TABLE OF CONTENTS
INTRODUCTION 5
PROJECT OVERVIEW 6
Project Goals 6
Methodology 6
IRS FORM 990, SCHEDULE H COMPLIANCE 10
SUMMARY OF FINDINGS 11
Significant Health Needs of the Community 11
Summary Tables: Comparisons With Benchmark Data 13
COMMUNITY DESCRIPTION 20
POPULATION CHARACTERISTICS 21
Total Population 21
Age 22
Race & Ethnicity 24
Linguistic Isolation 25
SOCIAL DETERMINANTS OF HEALTH 26
Poverty 26
Education 28
Employment 29
Housing Burden 30
Key Informant Input: Social Determinants of Health 30
HEALTH STATUS 33
OVERALL HEALTH STATUS 34
MENTAL HEALTH 35
Mental Health Providers 35
Suicide 36
Key Informant Input: Mental Health 37
DEATH, DISEASE & CHRONIC CONDITIONS 39
CARDIOVASCULAR DISEASE 40
Heart Disease Deaths 40
Stroke Deaths 41
Blood Pressure & Cholesterol 41
Key Informant Input: Heart Disease & Stroke 42
CANCER 43
Age-Adjusted Cancer Deaths 43
Cancer Incidence 44
Cancer Screenings 45
Key Informant Input: Cancer 46
RESPIRATORY DISEASE 47
Lung Disease Deaths 47
COVID-19 (Coronavirus Disease) Deaths 48
Asthma Prevalence 48
COPD Prevalence 49
Key Informant Input: Respiratory Disease 49
COMMUNITY HEALTH NEEDS ASSESSMENT 2
INJURY & VIOLENCE 51
Unintentional Injury 51
Intentional Injury (Violence) 52
Key Informant Input: Injury & Violence 53
DIABETES 55
Prevalence of Diabetes 55
Key Informant Input: Diabetes 56
DISABLING CONDITIONS 58
Disability 58
Key Informant Input: Disabling Conditions 59
BIRTHS 60
BIRTH OUTCOMES & RISKS 61
Prenatal Care 61
Low-Weight Births 62
Infant Mortality 62
FAMILY PLANNING 63
Births to Adolescent Mothers 63
Key Informant Input: Infant Health & Family Planning 64
MODIFIABLE HEALTH RISKS 66
NUTRITION 67
Food Environment: Fast Food 67
Low Food Access 68
PHYSICAL ACTIVITY 69
Leisure-Time Physical Activity 69
Access to Physical Activity 70
WEIGHT STATUS 71
Obesity 72
Key Informant Input: Nutrition, Physical Activity & Weight 72
SUBSTANCE USE 74
Excessive Alcohol Use 74
Drug Overdose Deaths 75
Key Informant Input: Substance Use 75
TOBACCO USE 77
Cigarette Smoking Prevalence 77
Key Informant Input: Tobacco Use 78
SEXUAL HEALTH 79
HIV 79
Sexually Transmitted Infections (STIs) 80
Key Informant Input: Sexual Health 80
ACCESS TO HEALTH CARE 82
BARRIERS TO HEALTH CARE ACCESS 83
Lack of Health Insurance Coverage 83
Key Informant Input: Access to Health Care Services 84
PRIMARY CARE SERVICES 86
Primary Care Visits 86
Access to Primary Care 87
COMMUNITY HEALTH NEEDS ASSESSMENT 3
ORAL HEALTH 88
Dental Visits 88
Access to Dentists 89
Key Informant Input: Oral Health 89
LOCAL RESOURCES 91
HEALTH CARE RESOURCES & FACILITIES 92
Federally Qualified Health Centers (FQHCs) 92
Resources Available to Address Significant Health Needs 93
APPENDIX 97
EVALUATION OF PAST ACTIVITIES 98
COMMUNITY HEALTH NEEDS ASSESSMENT 4
INTRODUCTION
PROJECT OVERVIEW
Project Goals
This Community Health Needs Assessment is a systematic, data-driven approach to determining the health
status, behaviors, and needs of residents in the service area of Watsonville Community Hospital in
Watsonville, California. A Community Health Needs Assessment provides information so that communities
may identify issues of greatest concern and decide to commit resources to those areas, thereby making the
greatest possible impact on community health status.
This assessment was conducted on behalf of Watsonville Community Hospital by PRC, Inc., a nationally
recognized health care consulting firm with extensive experience conducting Community Health Needs
Assessments in hundreds of communities across the United States since 1994.
Methodology
Quantitative data input for this assessment includes secondary research (vital statistics and other existing
health-related data) that allows for comparison to benchmark data at the state and national levels.
Qualitative data input includes primary research among community leaders gathered through an Online Key
Informant Survey.
Community Defined for This Assessment
The study area for this effort (referred to as the “WCH Service Area” in this report) is the Pajaro Valley
Healthcare District, which includes ZIP Codes 95003, 95019, 95039, and 95076 in southern Santa Cruz
County and northern Monterey County in California. This community definition, determined based on the
residences of most recent patients of Watsonville Community Hospital, is illustrated in the following map.
Online Key Informant Survey
To solicit input from community key informants, those individuals who have a broad interest in the health of
the community, an Online Key Informant Survey also was implemented as part of this process. A list of
recommended participants was provided by Watsonville Community Hospital; this list included names and
contact information for physicians, public health representatives, other health professionals, social service
COMMUNITY HEALTH NEEDS ASSESSMENT 6
providers, and a variety of other community leaders. Potential participants were chosen because of their
ability to identify primary concerns of the populations with whom they work, as well as of the community
overall.
Key informants were contacted by email, introducing the purpose of the survey and providing a link to take
the survey online; reminder emails were sent as needed to increase participation. In all, 41 community
representatives took part in the Online Key Informant Survey, as outlined in the table that follows:
ONLINE KEY INFORMANT SURVEY PARTICIPATION
KEY INFORMANT TYPE NUMBER PARTICIPATING
Physicians 7
Public Health Representatives 5
Other Health Providers 10
Social Services Providers 2
Other Community Leaders 17
Through this process, input was gathered from individuals whose organizations work with low-income,
minority, or other medically underserved populations. Final participation included representatives of the
organizations outlined below.
▪ Central California Alliance for Health ▪ Monterey County Supervisor
▪ City of Watsonville ▪ Pajaro Valley Health Care District
▪ Coastal Health Partners ▪ Pajaro Valley Prevention and Student
Assistance
▪ Community Action Board
▪ Salud Para La Gente
▪ Community Bridges
▪ Santa Cruz Community Health Centers
▪ Community Bridges WIC Program
▪ Santa Cruz County Health Services Agency
▪ Community Health Trust of Pajaro Valley
▪ Santa Cruz County Office of Education
▪ County of Santa Cruz
▪ Santa Cruz County Public Health
▪ Dientes Community Dental Care
▪ Santa Cruz Health Information Organization
▪ Doctors on Duty
▪ Second Harvest Food Bank
▪ Elderday Adult Day Health Care
▪ United Way of Santa Cruz County
▪ Hospice of Santa Cruz County
▪ Watsonville Community Hospital
▪ Kaiser Permanente
▪ Watsonville Health Center
▪ Meals on Wheels, Santa Cruz
▪ Monterey County Public Health
In the online survey, key informants were asked to rate the degree to which various health issues are a
problem in their own community. Follow-up questions asked them to describe why they identify problem
areas as such and how these might better be addressed. Results of their ratings, as well as their verbatim
comments, are included throughout this report as they relate to the various other data presented.
COMMUNITY HEALTH NEEDS ASSESSMENT 7
Public Health, Vital Statistics & Other Data
A variety of existing (secondary) data sources was consulted to complement the research quality of this
Community Health Needs Assessment. Data for the Watsonville Community Hospital Service Area were
obtained from the following sources (specific citations are included with the graphs throughout this report):
▪ Center for Applied Research and Engagement Systems (CARES), University of Missouri
Extension, SparkMap (sparkmap.org)
▪ Centers for Disease Control & Prevention, Office of Infectious Disease, National Center for
HIV/AIDS, Viral Hepatitis, STD, and TB Prevention
▪ Centers for Disease Control & Prevention, Office of Public Health Science Services, National
Center for Health Statistics
▪ National Cancer Institute, State Cancer Profiles
▪ US Census Bureau, American Community Survey
▪ US Census Bureau, County Business Patterns
▪ US Census Bureau, Decennial Census
▪ US Department of Agriculture, Economic Research Service
▪ US Department of Health & Human Services
▪ US Department of Health & Human Services, Health Resources and Services Administration
(HRSA)
▪ US Department of Justice, Federal Bureau of Investigation
▪ US Department of Labor, Bureau of Labor Statistics
Note that ZIP Code-level data are not available for all measures; for these indicators, data is taken from
Santa Cruz County as a whole. Throughout this report, chart labels signify whether the data presented are
ZIP Code-level based (WCH Service Area) or county-level based (Santa Cruz County).
Benchmark Data
California and National Data
Where possible, state and national data are provided as an additional benchmark against which to compare
local findings.
Healthy People 2030
Healthy People provides 10-year, measurable public health objectives — and tools to help track
progress toward achieving them. Healthy People identifies public health priorities to help
individuals, organizations, and communities across the United States improve health and well-
being. Healthy People 2030, the initiative’s fifth iteration, builds on knowledge gained over the
first four decades.
The Healthy People 2030 framework was based on recommendations made by the Secretary’s
Advisory Committee on National Health Promotion and Disease Prevention Objectives for 2030. After
getting feedback from individuals and organizations and input from subject matter experts, the US
Department of Health and Human Services (HHS) approved the framework which helped guide the selection
of Healthy People 2030 objectives.
COMMUNITY HEALTH NEEDS ASSESSMENT 8
Determining Significance
For the purpose of this report, “significance” of secondary data indicators (which might be subject to
reporting error) is determined by a 15% variation from the comparative measure.
Information Gaps
While this assessment is quite comprehensive, it cannot measure all possible aspects of health in the
community, nor can it adequately represent all possible populations of interest. It must be recognized that
these information gaps might in some ways limit the ability to assess all of the community’s health needs. In
terms of content, this assessment was designed to provide a comprehensive and broad picture of the health
of the overall community. However, there are certainly medical conditions that are not specifically
addressed.
Public Comment
Watsonville Community Hospital will use its website as a tool to solicit public comments and ensure that
these comments are considered in the development of future CHNAs.
COMMUNITY HEALTH NEEDS ASSESSMENT 9
IRS FORM 990, SCHEDULE H COMPLIANCE
For nonprofit hospitals, a Community Health Needs Assessment (CHNA) also serves to satisfy certain
requirements of tax reporting, pursuant to provisions of the Patient Protection & Affordable Care Act of 2010.
To understand which elements of this report relate to those requested as part of hospitals’ reporting on IRS
Schedule H (Form 990), the following table cross-references related sections.
IRS FORM 990, SCHEDULE H (2022) See Report Page
Part V Section B Line 3a
6
A definition of the community served by the hospital facility
Part V Section B Line 3b
21
Demographics of the community
Part V Section B Line 3c
Existing health care facilities and resources within the community 92
that are available to respond to the health needs of the community
Part V Section B Line 3d
6
How data was obtained
Part V Section B Line 3e
11
The significant health needs of the community
Part V Section B Line 3f
Addressed
Primary and chronic disease needs and other health issues of
Throughout
uninsured persons, low-income persons, and minority groups
Part V Section B Line 3g
The process for identifying and prioritizing community health 12
needs and services to meet the community health needs
Part V Section B Line 3h
The process for consulting with persons 6
representing the community’s interests
Part V Section B Line 3i
The impact of any actions taken to address the significant health 98
needs identified in the hospital facility’s prior CHNA(s)
COMMUNITY HEALTH NEEDS ASSESSMENT 10
SUMMARY OF FINDINGS
Significant Health Needs of the Community
The following “Areas of Opportunity” represent the significant health needs of the community, based on the
information gathered through this Community Health Needs Assessment. From these data, opportunities for
health improvement exist in the Watsonville Community Hospital Service Area with regard to the following
health issues (see also the summary tables presented in the following section).
The Areas of Opportunity were determined after consideration of various criteria, including: standing in
comparison with benchmark data; the preponderance of significant findings within topic areas; the
magnitude of the issue in terms of the number of persons affected; and the potential health impact of a given
issue. These also take into account those issues of greatest concern to the community key informants giving
input to this process.
AREAS OF OPPORTUNITY IDENTIFIED THROUGH THIS ASSESSMENT
ACCESS TO HEALTH ▪ Primary Care Visits
CARE SERVICES ▪ Uninsured Children
▪ Leading Cause of Death
CANCER ▪ Colorectal Cancer Screening
▪ Prostate Cancer Incidence
DIABETES ▪ Key Informants: Diabetes ranked as a top concern.
HEART DISEASE
▪ Leading Cause of Death
& STROKE
INJURY & VIOLENCE ▪ Unintentional Injury Deaths
▪ Suicide Deaths
MENTAL HEALTH
▪ Key Informants: Mental Health ranked as a top concern.
NUTRITION, ▪ Low Food Access
PHYSICAL ACTIVITY ▪ Key Informants: Nutrition, Physical Activity & Weight ranked as
& WEIGHT a top concern.
ORAL HEALTH ▪ Access to Dentists
▪ Housing Burden
▪ Unemployment
SOCIAL DETERMINANTS
▪ Education Levels
OF HEALTH
▪ Key Informants: Social Determinants of Health ranked as a top
concern.
▪ Excessive Drinking
SUBSTANCE USE
▪ Drug Overdose Deaths
TOBACCO USE ▪ Cigarette Smoking
COMMUNITY HEALTH NEEDS ASSESSMENT 11
Community Feedback on Prioritization of Health Needs
Prioritization of the health needs identified in this assessment (“Areas of Opportunity” above) was
determined based on a prioritization exercise conducted among providers and other community leaders
(representing a cross-section of community-based agencies and organizations) as part of the Online Key
Informant Survey.
In this process, these key informants were asked to rate the severity of a variety of health issues in the
community. Insofar as these health issues were identified through the data above and/or were identified as
top concerns among key informants, their ranking of these issues informed the following priorities:
1. Social Determinants of Health
2. Diabetes
3. Mental Health
4. Nutrition, Physical Activity & Weight
5. Substance Use
6. Oral Health
7. Access to Health Care Services
8. Heart Disease & Stroke
9. Injury & Violence
10. Tobacco Use
11. Cancer
Hospital Implementation Strategy
Watsonville Community Hospital will use the information from this Community Health Needs Assessment to
develop an Implementation Strategy to address the significant health needs in the community. While the
hospital will likely not implement strategies for all of the health issues listed above, the results of this
prioritization exercise will be used to inform the development of the hospital’s action plan to guide
community health improvement efforts in the coming years.
COMMUNITY HEALTH NEEDS ASSESSMENT 12
Summary Tables:
Comparisons With Benchmark Data
The following tables provide an overview of indicators in the WCH Service Area, grouped by health topic.
Reading the Summary Tables
In the following tables, WCH Service Area results are shown in the larger, gray column. For indicators
Note that blank table cells
where ZIP-level based data results are not available, county-level based data (Santa Cruz County) results
in the tables that follow
signify that data are not are shown (marked as [COUNTY-LEVEL]).
available for that
indicator. The columns to the right of the WCH Service Area column provide comparisons between local data and
any available state and national findings, and Healthy People 2030 objectives. Symbols indicate whether the
WCH Service Area (or Santa Cruz County) compares favorably (B), unfavorably (h), or comparably (d) to
these external data.
COMMUNITY HEALTH NEEDS ASSESSMENT 13
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
SOCIAL DETERMINANTS vs. CA vs. US vs. HP2030
Area
Linguistically Isolated Population (Percent) 10.8 h h
7.4 4.0
Population in Poverty (Percent) 9.8 B B h
12.3 12.6 8.0
Children in Poverty (Percent) 12.7 B B h
16.2 17.1 8.0
No High School Diploma (Age 25+, Percent) 25.0 h h
15.8 11.1
Unemployment Rate (Age 16+, Percent) 5.0 h h
[COUNTY-LEVEL] 3.9 3.3
Housing Exceeds 30% of Income (Percent) 41.9 d h h
40.0 30.3 25.5
B d h
better similar worse
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
OVERALL HEALTH vs. CA vs. US vs. HP2030
Area
"Fair/Poor" Overall Health (Percent) 20.3 d h
17.3 16.1
B d h
better similar worse
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
ACCESS TO HEALTH CARE vs. CA vs. US vs. HP2030
Area
Uninsured (Adults 18-64, Percent) 9.8 d B h
9.8 12.1 7.6
Uninsured (Children 0-18, Percent) 4.1 h B B
3.4 5.3 7.6
Routine Checkup in Past Year (Percent) 60.5 d h
63.1 73.6
Primary Care Doctors per 100,000 104.1 B B
[COUNTY-LEVEL] 81.1 76.4
B d h
better similar worse
COMMUNITY HEALTH NEEDS ASSESSMENT 14
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
CANCER vs. CA vs. US vs. HP2030
Area
Cancer Deaths per 100,000 (Age-Adjusted) 124.9 d B d
[COUNTY-LEVEL] 134.5 149.4 122.7
Cancer Incidence per 100,000 (Age-Adjusted) 444.8 d d
[COUNTY-LEVEL] 394.7 442.3
Female Breast Cancer Incidence per 100,000 (Age-Adjusted) 139.1 d d
[COUNTY-LEVEL] 121.0 127.0
Prostate Cancer Incidence per 100,000 (Age-Adjusted) 118.5 h d
[COUNTY-LEVEL] 95.4 110.5
Colorectal Cancer Incidence per 100,000 (Age-Adjusted) 34.9 d d
[COUNTY-LEVEL] 33.5 36.5
Lung Cancer Incidence per 100,000 (Age-Adjusted) 34.7 d B
[COUNTY-LEVEL] 37.6 54.0
Breast Cancer Screening in Past 2 Years (Women 50-74, Percent) 71.5 d d d
69.6 78.2 80.5
Cervical Cancer Screening in Past 3 Years (Women 21-65, Percent) 81.2 d d d
80.7 82.8 84.3
Colorectal Cancer Screening (Age 50-75, Percent) 54.8 d h h
61.0 72.4 74.4
B d h
better similar worse
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
DIABETES vs. CA vs. US vs. HP2030
Area
Diabetes Prevalence (Percent) 8.4 d B
9.3 10.1
B d h
better similar worse
WCH WCH SERVICE AREA vs. BENCHMARKS
Service
DISABLING CONDITIONS vs. CA vs. US vs. HP2030
Area
Disability Prevalence (Percent) 11.9 d d
10.6 12.6
B d h
better similar worse
COMMUNITY HEALTH NEEDS ASSESSMENT 15
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
HEART DISEASE & STROKE vs. CA vs. US vs. HP2030
Area
Heart Disease Deaths per 100,000 (Age-Adjusted) 53.7 B B B
[COUNTY-LEVEL] 84.6 91.5 127.4
Stroke Deaths per 100,000 (Age-Adjusted) 30.6 B B d
[COUNTY-LEVEL] 37.6 37.6 33.4
High Blood Pressure Prevalence (Percent) 27.6 d B B
28.5 32.7 42.6
High Blood Cholesterol Prevalence (Percent) 33.7 d d
35.3 36.4
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
INFANT HEALTH & FAMILY PLANNING vs. CA vs. US vs. HP2030
Area
No Prenatal Care in First 6 Months (Percent of Births) 3.1 B B
[COUNTY-LEVEL] 3.7 6.1
Low Birthweight (Percent of Births) 5.8 B B
[COUNTY-LEVEL] 6.9 8.2
Infant Deaths per 1,000 Live Births 4.0 d B B
[COUNTY-LEVEL] 4.0 5.6 5.0
Teen Births per 1,000 Females 15-19 9.9 B B
[COUNTY-LEVEL] 15.6 19.3
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
INJURY & VIOLENCE vs. CA vs. US vs. HP2030
Area
Unintentional Injury Deaths per 100,000 (Age-Adjusted) 45.1 h d d
[COUNTY-LEVEL] 35.8 50.4 43.2
Motor Vehicle Crash Deaths per 100,000 (Age-Adjusted) 8.5 B B B
[COUNTY-LEVEL] 9.9 11.5 10.1
COMMUNITY HEALTH NEEDS ASSESSMENT 16
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
INJURY & VIOLENCE (continued) vs. CA vs. US vs. HP2030
Area
Homicide Deaths per 100,000 (Age-Adjusted) 3.2 B B B
[COUNTY-LEVEL] 5.1 6.4 5.5
Violent Crimes per 100,000 403.6 d d
[COUNTY-LEVEL] 440.5 416.0
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
MENTAL HEALTH vs. CA vs. US vs. HP2030
Area
Suicide Deaths per 100,000 (Age-Adjusted) 13.9 h d d
[COUNTY-LEVEL] 10.5 13.8 12.8
Mental Health Providers per 100,000 171.0 d d
174.7 155.8
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
NUTRITION, PHYSICAL ACTIVITY & WEIGHT vs. CA vs. US vs. HP2030
Area
Fast Food Restaurants per 100,000 69.4 B d
[COUNTY-LEVEL] 80.4 75.9
Population With Low Food Access (Percent) 26.9 h h
13.3 22.2
No Leisure-Time Physical Activity (Percent) 15.6 B B B
19.2 22.0 21.8
Recreation/Fitness Facilities per 100,000 17.7 B B
13.0 11.9
Obese (Percent) 26.1 d d B
26.0 29.0 36.0
B d h
better similar worse
COMMUNITY HEALTH NEEDS ASSESSMENT 17
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
ORAL HEALTH vs. CA vs. US vs. HP2030
Area
Dental Visit in Past Year (Percent) 57.5 d d B
62.3 64.8 45.0
Dentists per 100,000 32.3 h h
46.7 37.3
B d h
better similar worse
WCH
WCH SERVICE AREA vs. BENCHMARKS
Service
RESPIRATORY DISEASE vs. CA vs. US vs. HP2030
Area
Lung Disease Deaths per 100,000 (Age-Adjusted) 20.8 B B
[COUNTY-LEVEL] 30.5 39.1
COVID-19 Deaths per 100,000 100.6 B B
[COUNTY-LEVEL] 255.7 337.9
Asthma Prevalence (Percent) 9.8 d d
9.2 9.7
COPD Prevalence (Percent) 5.7 d d
5.3 6.4
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
SEXUAL HEALTH vs. CA vs. US vs. HP2030
Area
HIV Prevalence per 100,000 214.6 B B
[COUNTY-LEVEL] 406.0 379.7
Chlamydia Incidence per 100,000 275.2 B B
[COUNTY-LEVEL] 452.2 481.3
Gonorrhea Incidence per 100,000 78.0 B B
[COUNTY-LEVEL] 198.5 206.5
B d h
better similar worse
COMMUNITY HEALTH NEEDS ASSESSMENT 18
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
SUBSTANCE ABUSE vs. CA vs. US vs. HP2030
Area
Excessive Drinking (Percent) 22.4 h h
[COUNTY-LEVEL] 18.4 19.0
Drug Overdose Deaths per 100,000 (Age-Adjusted) 17.2 h B
[COUNTY-LEVEL] 14.5 22.4
B d h
better similar worse
WCH SERVICE AREA vs. BENCHMARKS
WCH
Service
TOBACCO USE vs. CA vs. US vs. HP2030
Area
Cigarette Smoking (Percent) 13.1 h d h
11.1 13.5 6.1
B d h
better similar worse
COMMUNITY HEALTH NEEDS ASSESSMENT 19
COMMUNITY
DESCRIPTION
POPULATION CHARACTERISTICS
Total Population
Data from the US Census Bureau reveal the following statistics for our community relative to size,
population, and density.
Total Population
(Estimated Population, 2020)
TOTAL TOTAL LAND AREA POPULATIONDENSITY
POPULATION (SQUAREMILES) (PER SQUARE MILE)
WCH Service Area 117,575 178.16 660
California 39,538,223 155,857.45 254
United States 331,449,281 3,533,018.38 94
Sources: US Census Bureau American Community Survey 5-year estimates.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Population Change
A significant positive or negative shift in total population over time impacts health care providers and the
utilization of community resources. The following chart and map illustrate the changes that have occurred in
the WCH Service Area between the 2010 and 2020 US Censuses.
Change in Total Population
(Percentage Change Between 2010 and 2020)
An increase of
1,930 people
6.1% 7.1%
1.7%
WCH Service Area California US
Sources: US Census Bureau Decennial Census (2010-2020).
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 21
Age
It is important to understand the age distribution of the population, as different age groups have unique
health needs that should be considered separately from others along the age spectrum.
Total Population by Age Groups
(2020)
Age 0-17 Age 18-64 Age 65+
59.3% 62.8% 61.1%
24.4%
22.0% 22.1%
16.3% 15.2% 16.8%
WCH Service Area California US
Sources: US Census Bureau American Community Survey 5-year estimates.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 22
Median Age
Note the median age of the Santa Cruz County population, relative to state and national medians.
COMMUNITY HEALTH NEEDS ASSESSMENT 23
S ources: UC
3 8 .5
S a n ta C ru z C o u n ty
S C ensus B ureau A m erican C om
enter for A pplied R esearch and E
M e d ia n A
( 2 0 1 7 - 2 0 2
3 7 .0
C a lifo rn ia
m unity S urvey 5-year estim ates.
ngagem ent S ystem s (C A R E S ), U niversity of M
g e
1 )
issouri E xtension. R etrieved N ovem
3 8 .4
U S
ber 2023 via S parkM ap (sparkm ap.org).
Race & Ethnicity
The following charts illustrate the racial and ethnic makeup of our community. “Race Alone” reflects those
who identify with a single race category — people who identify their origin as Hispanic, Latino, or Spanish
may be of any race.
COMMUNITY HEALTH NEEDS ASSESSMENT 24
S
3 9 .2
ources:
%
UC
T o t a l P o p u la t io n b y
( 2 0 2 0 )
W h ite B la c k D iv e rs e R
4 3 .1 % 4 1 .2 % 3 8 .5
1 7 .1 %
5 .7 %
0 .6 %
W C H S e rv ic e A re a C a lifo rn ia
S C ensus B ureau A m erican C om m unity S urvey 5-year estim ates.
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M
R a c e A
a c e s
%
1 4 .6 %
issouri E xtension. R
lo n e
M u ltip le R a c e s
6 1 .6 %
1 5 .8 % 1 2 .4 % 1 0 .2 %
U S
etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
Hispanic Population
(2020)
The Hispanic population
increased by 4,153 persons, or
6.1%, between 2010 and 2020.
61.5%
39.4%
18.7%
WCH Service Area California US
Sources: US Census Bureau American Community Survey 5-year estimates.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: People who identify their origin as Hispanic, Latino, or Spanish may be of any race.
Linguistic Isolation
This indicator reports the percentage of the population age 5 years and older who live in a home in which:
1) no person age 14 years or older speaks only English; or 2) no person age 14 years or older speaks a
non-English language but also speaks English “very well.”
COMMUNITY HEALTH NEEDS ASSESSMENT 25
S
N
ources:
otes:
L in g u is t ic a lly I s o la t e d P o p u la t io n
( 2 0 1 7 - 2 0 2 1 )
1 0 .8 %
7 .4 %
4 .0 %
W C H S e rv ic e A re a C a lifo rn ia U S
U S C ensus B ureau A m erican C om m unity S urvey 5-year estim ates.
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
T his indicator reports the percentage of the population age 5+ w ho live in a hom e in w hich no person age 14+ speaks only E nglish, or in w hich no person age 14+
speak a non-E nglish language and speak E nglish "very w ell."
SOCIAL DETERMINANTS OF HEALTH
ABOUT SOCIAL DETERMINANTS OF HEALTH
Social determinants of health (SDOH) are the conditions in the environments where people are born,
live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-
life outcomes and risks.
Social determinants of health (SDOH) have a major impact on people’s health, well-being, and quality
of life. Examples of SDOH include:
▪ Safe housing, transportation, and neighborhoods
▪ Racism, discrimination, and violence
▪ Education, job opportunities, and income
▪ Access to nutritious foods and physical activity opportunities
▪ Polluted air and water
▪ Language and literacy skills
SDOH also contribute to wide health disparities and inequities. For example, people who don't have
access to grocery stores with healthy foods are less likely to have good nutrition. That raises their risk
of health conditions like heart disease, diabetes, and obesity — and even lowers life expectancy
relative to people who do have access to healthy foods.
Just promoting healthy choices won't eliminate these and other health disparities. Instead, public
health organizations and their partners in sectors like education, transportation, and housing need to
take action to improve the conditions in people's environments.
− Healthy People 2030 (https://health.gov/healthypeople)
Poverty
Poverty is considered a key driver of health status. This indicator is relevant because poverty creates
barriers to accessing health services, healthy food, and other necessities that contribute to health status.
The following chart and maps outline the proportion of our population below the federal poverty threshold, as
well as the percentage of children in the WCH Service Area living in poverty, in comparison to state and
national proportions.
COMMUNITY HEALTH NEEDS ASSESSMENT 26
COMMUNITY HEALTH NEEDS ASSESSMENT 27
S ources:
P
11 ,5 0 4 3 ,7 5 6
to ta l c h ild re n
p e rs o n s
1 2 .7 %
9 .8 %
W C H S e rv ic e A re a
U S C ensus B ureau A m erican C om
C enter for A pplied R esearch and E
U S D epartm ent of H ealth and H um
e r c e n t o f P o p u la t io n in P o v e r t
( ) 2 0 1 7 -2 0 2 1
H e a lth y P e o p le 2 0 3 0 = 8 .0 % o r L o w e r
T o ta l P o p u la tio n C h ild re n
1 6 .2 %
1 2 .3 %
C a lifo rn ia
m unity S urvey 5-year estim ates.
ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N
an S ervices. H ealthy P eople 2030. https://health.gov/healthypeople
y
ovem
1 2 .6 %
U S
ber 2023 via S pa rkM
1 7 .1 %
ap (sparkm ap.org).
Education
Education levels are reflected in the proportion of our population age 25 and older without a high school
diploma. This indicator is relevant because educational attainment is linked to positive health outcomes.
Population With No High School Diploma
(Adults Age25 and Older, 2017-2021)
19,035 individuals
25.0%
15.8%
11.1%
WCH Service Area California US
Sources: US Census Bureau American Community Survey 5-year estimates.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 28
Employment
Changes in unemployment rates in Santa Cruz County over the past several years are outlined in the
following chart. This indicator is relevant because unemployment creates financial instability and barriers to
accessing insurance coverage, health services, healthy food, and other necessities that contribute to health
status.
Unemployment Rate
(Percent of Non-Institutionalized Population Age 16+ Unemployed, Not Seasonally-Adjusted)
Santa Cruz County California US
13.3%
12.0%
10.4%
9.7%
8.9%
7.5% 7.0% 6.9%
5.7%
5.0% 4.9% 5.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 December
2022
Sources: US Department of Labor, Bureau of Labor Statistics.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 29
Housing Burden
The following chart shows the housing burden in the WCH Service Area. This serves as a measure of
housing affordability and excessive shelter costs. The data also serve to aid in the development of housing
programs to meet the needs of people at different economic levels.
COMMUNITY HEALTH NEEDS ASSESSMENT 30
S ources:
H o u s in g C o s t s E x c e e d 3 0 P e r c e n t o f H o u s e h
( P e r c e n t o f H o u s e h o ld s ; 2 0 1 7 - 2 0 2 1 )
H e a lth y P e o p le 2 0 3 0 T a rg e t = 2 5 .5 % o r L o w e r
1 5 ,3 2 8 h o u se h o ld s
4 1 .9 % 4 0 .0 %
W C H S e rv ic e A re a C a lifo rn ia
U S C ensus B ureau, A m erican C om m unity S urvey, 5-year estim ates.
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem
U S D epartm ent of H ealth and H um an S ervices. H ealthy P eople 2030. https://health.gov/healthypeople
o ld I n c o m e
3 0 .3 %
U S
ber 2023 via S pa rkM ap (sparkm ap.org).
Key Informant Input: Social Determinants of Health
Key informants’ ratings of the severity of Social Determinants of Health as a concern in the WCH Service
Area are outlined below.
SN
S
ources:
otes:
o c
M
P e r c e
ia l D e t e r m in a n t s o f H e a lt h
( K e y In fo r m a n ts ; W
a jo r P ro b le m M o d e ra te P ro b le m
8 2 .5 %
2023 P R C O nline K ey Inform ant S urvey, P R C , Inc.
A sked of all respondents.
p
C
t
aH
io n
s a
S e
s o f
P r o b
r v ic e A
M in o r P
ler
e
ro
m
a , 2
b le m
in0
2
t3 h) e
N
C
o
o
P
m
ro b
m
le m
u
A
1 7
n it
t A
.5 %
y
ll
“Housing burden” reports
the percentage of the
households where
housing costs (rent or
mortgage costs) exceed
30% of total household
income.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Housing
Housing and income disparities. – Social Services Provider
Lack of housing for homeless population, lack of support from community leaders, TOO MUCH STIGMA. – Other
Health Provider
Housing costs, homelessness, poverty. – Other Health Provider
Not enough housing or shelter beds for individuals who are without. – Other Health Provider
Housing is a big problem in CA but especially for South County. If you do not have a home, how do you have
health. Education services are limited at Cabrillo, and UCSC does not provide services in South County. –
Community Leader
High cost of housing in our area, storm damage in Watsonville and Pajaro, fears of accessing services due to
immigration status. – Community Leader
Massive lack of affordable housing. Very low wages in the ag industry. Systemic racism. – Community Leader
There is little affordable housing options, which leads multiple families living in households together. – Social
Services Provider
High cost of living in economy driven by ag with seasonal work. – Other Health Provider
There is serious inequity between socioeconomic groups in our community. It is clear that people cannot attend
to their health properly if they are unhoused, hungry, facing eviction, have inadequate transportation, or live in an
environment filled with toxic chemicals. I am optimistic that CalAIM/Enhanced Care Management may be able to
address some of these issues for people in the Medi-Cal system with the most complex medical situations, but
the general inequity is a much more stubborn issue, especially related to housing costs and severely limited
affordable housing. – Community Leader
Housing costs (from the generations of political refusal to prioritize building housing and the re-use of entry level
housing stock for 2nd homes and vacation rentals), the federal designation that 95076 and surrounding zips are
rural (thereby lowering federal reimbursement rates), the reduction of services over two decades within the
Watsonville Community Hospital from corporate for-profit leadership. – Community Leader
Income/Poverty
Income and work drive a lot of our patients’ decisions when seeking treatments that may cost more money or will
require them to miss work for a period of time. – Physician
Low-income population. – Community Leader
Residents in South County tend to be of lower income, live in overcrowded housing, and don't have equitable
access to green space and recreation facilities. – Public Health Representative
Majority of patients I see are living in poverty and experience some type of SDOH. – Physician
Impact on Health
According to all of these metrics, Watsonville has been identified as one of the least "healthiest" communities in
the state of California. These social determinants of health have a massive impact on the success of people in
South Santa Cruz County and the progress in our community because our residents cannot focus on anything
else other than surviving. – Community Leader
SDH are the main determinant of morbidity, mortality and quality of life in our under-served communities. Elected
officials need to take responsibility for addressing the SDH, which when properly addressed, can improve the
health and well-being of our HPI quartile 1 and 2 communities. – Public Health Representative
South County is disproportionately impacted by social determinants. – Physician
Homelessness
Huge issue here. Homelessness. Food desert. Poor health literacy. Pesticides. – Physician
Health disparities are worse in Watsonville. Homelessness is a big issue statewide, and Watsonville is no
exception. We faired poorer in the pandemic with COVID-19 deaths (the number one cause of death in South
County), and eviction increased. South County also suffered through the floods, which were devasting. – Public
Health Representative Access to Care/Services
Accessing care, specialist care can take months to access. – Other Health Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 31
Built Environment
The Social Determinants are predictors of health. The built environment contributes and/or limits to the health of
the community. As an example, we don't have enough housing, and there is no real focus on building wealth
anymore. We keep talking about rental housing but not wealth building. Educational and certificated outcomes
post-high school need improvement. – Community Leader
Safe infrastructure. The recent Pajaro flood, with the levees breaking, is a prime example. Everyone has known
for years that those levees were in imminent danger of collapsing. But nobody took action to prevent the disaster.
This would have never happened with the levees in Los Gatos, for example. The lives of the poor brown people
are not valued the way those of wealthy white people in other areas of the county. There's systemic racism in this
country, and our county is sadly a heightened example of this injustices of our nation. We rely on farmworkers for
the food we need to survive. They are truly essential workers. But we have a system in place that allows their
continued exploitation by agricultural companies, landlords, and other elites in the area. Our county government
doesn't invest in the areas where these communities live. It's disgraceful. – Community Leader
Racism
Systemic racism and underinvestment in South County because it breeds inequity and lack of opportunity for our
young people. – Other Health Provider
The underlying historical racism plays a major factor in ZIP codes determining life span, adverse childhood
experiences, and social determinants of health. Lack of quality resources (i.e. it is vital for the local hospital to
have efficient technology and equipment). – Community Leader
Vulnerable Populations
Because this region is a major food production area, with a large population of migrant farmworker families,
where there are significant levels of exploitation, limited services, and limited investment in health and other
services. Many migrant families have limited knowledge of their rights and awareness of the limited social
services available to them. They live in fear of having their families separated and being deported. And powerful
agricultural companies have significant influence over elected officials and legislation. – Community Leader
Access to Care/Services
Accessing care, specialist care can take months to access – Other Health Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 32
HEALTH STATUS
OVERALL HEALTH STATUS
The following indicator provides a relevant measure of overall health status in the WCH Service Area, noting
The CDC’s Behavioral the prevalence of residents’ “fair” or “poor” health evaluations. While this measure is self-reported and a
Risk Factor Survey, from
subjective evaluation, it is an indicator which has proven to be highly predictive of health needs.
which these data are
derived, asked
respondents:
“Would you say that in Adults With “Fair” or “Poor” Overall Health
general your health is:
excellent, very good, (2021)
good, fair, or poor?”
20.3%
17.3% 16.1%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 34
MENTAL HEALTH
ABOUT MENTAL HEALTH & MENTAL DISORDERS
About half of all people in the United States will be diagnosed with a mental disorder at some point in
their lifetime. …Mental disorders affect people of all age and racial/ethnic groups, but some
populations are disproportionately affected. And estimates suggest that only half of all people with
mental disorders get the treatment they need.
In addition, mental health and physical health are closely connected. Mental disorders like depression
and anxiety can affect people’s ability to take part in healthy behaviors. Similarly, physical health
problems can make it harder for people to get treatment for mental disorders. Increasing screening
for mental disorders can help people get the treatment they need.
− Healthy People 2030 (https://health.gov/healthypeople)
Mental Health Providers
The data below show the number of mental health care providers in the WCH Service Area relative to the
Here, “mental health WCH Service Area population size (per 100,000 residents). This is compared to the rates found statewide
providers” includes
and nationally.
psychiatrists,
psychologists, clinical
social workers, and
counselors who Access to Mental Health Providers
specialize in mental
health care. (Number of Mental Health Providers per 100,000 Population, 2023)
Note that this indicator
only reflects providers
174.7
practicing in the WCH
Service Area and 171.0
residents in the WCH
Service Area; it does not
account for the potential
demand for services from
outside the area, nor the
potential availability of
providers in surrounding 201 155.8
areas. Mental Health Providers
WCH Service Area California US
Sources: Centers for Medicare and Medicaid Services, National Plan and Provider Enumeration System (NPPES).
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: This indicator reports the rate of the county population to the number of mental health providers including psychiatrists, psychologists, clinical social workers, and
counsellors that specialize in mental health care.
COMMUNITY HEALTH NEEDS ASSESSMENT 35
Suicide
The following reports the rate of death in Santa Cruz County due to intentional self-harm (suicide) in
comparison to statewide and national rates. Here, these rates are age-adjusted to account for age
differences among populations in this comparison. This measure is relevant as an indicator of poor mental
health.
Suicide: Age-Adjusted Mortality
(2016-2020 Annual Average Deaths per 100,000 Population)
Healthy People 2030 = 12.8 or Lower
13.9 13.8
10.5
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
AGE-ADJUSTED DEATH RATES
In order to compare mortality in the region with other localities (in this case, California and the United
States), it is necessary to look at rates of death — these are figures which represent the number of
deaths in relation to the population size (such as deaths per 100,000 population, as is used here).
Furthermore, in order to compare localities without undue bias toward younger or older populations,
the common convention is to adjust the data to some common baseline age distribution. Use of these
“age-adjusted” rates provides the most valuable means of gauging mortality against benchmark data,
as well as Healthy People 2030 objectives.
Note that deaths are coded using the Tenth Revision of the International Statistical Classification of
Diseases and Related Health Problems (ICD-10). Rates are per 100,000 population, age-adjusted to
the 2000 US Standard Population.
COMMUNITY HEALTH NEEDS ASSESSMENT 36
Key Informant Input: Mental Health
Key informants’ ratings of the severity of Mental Health as a concern in the WCH Service Area are outlined
below.
Perceptions of Mental Health as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
71.8% 25.6%
2.6%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
No mild to moderate mental health services. No long-term mental health location for patients, except in San Jose
or San Francisco. – Community Leader
Although more providers are screening for mental health disorders, autism and developmental delay, individuals
that are referred for further evaluation, diagnosis and treatment can wait months or years before being seen,
even when health care providers contact mental health services providers and the managed care plans
repeatedly regarding the referral. – Public Health Representative
Lack of services and stigma that comes with it. – Other Health Provider
Access to psychiatrists, access to counseling. Also, there is a great amount of stress in the patients I see related
to basic needs like food, housing, employment that impact mental health by worsening or exacerbating existing
conditions. I also see many kids who are not succeeding in school academically and have no normal outlets for
fun like sports or other after-school activities because families can't afford or don't have time to get kids there; as
a result, I see kids come home from school or spend entire summer/winter vacations lying around their house
instead of doing developmentally appropriate activities to engage and provide fun. This also can
worsen/exacerbate existing or predisposing conditions. finally, there is also a lot of familial strife that i see-
divorce, substance abuse, immigration issues, teen pregnancies, etc. that also contribute to mental health
concerns. – Physician
Lack of available resources such as outpatient and inpatient programs. – Other Health Provider
Psychiatric inpatients beds, children's crisis stabilization unit, housing and substance use. – Other Health
Provider
Access to care in a timely manner. – Other Health Provider
Not enough of anything, physical centers for adults and youth in crises. Providers trained to support mental
health within schools, community and within health care systems. Changing societal interaction and social media.
– Community Leader
Significantly limited availability of resources. – Physician
It is often difficult to access mental health services – not enough providers in the community. Many people with
mental health issues are unhoused and difficult to engage precisely because of their mental health issues, further
contributing to homelessness issues. Also, mental health issues of older adults are often undiagnosed,
misdiagnosed, and untreated. – Community Leader
Incidence/Prevalence
Increased volume. – Community Leader
Mental health has been declining since even before the pandemic. Loneliness and depression are big factors
and social media is contributing. – Public Health Representative
High rates of anxiety and depression. – Physician
COMMUNITY HEALTH NEEDS ASSESSMENT 37
Lack of Providers
Lack of physicians. – Other Health Provider
Not enough providers with clinical training and expertise. – Social Services Provider
Culturally Relevant Information
Culturally relevant information that de-stigmatizes mental health; lack of value in cultural best practices to
address mental health; ignoring the toll that financial hardships and fear that people are dealing with; responding
to those that speak up about mental health with "pull yourself up by the boot straps"; lack of empathy and
concern the depth that racism has with mental health. – Community Leader
Disease Management
It doesn’t exist. People are self-treating. – Physician
Follow Up/Support
Lack of ongoing continuum of care to support individuals on a recovery path. The county has only 38 residential
mental health beds that are not locked/inpatient units. There are extremely limited partial hospitalization or
intensive outpatient services to support people in the community. There is insufficient appropriate housing for
people experiencing homelessness and mental illness, and stigma and NIMBYism prevent development of more,
even if funds are available. And there is a workforce challenge that adversely impacts the services that do exist.
– Public Health Representative
Income/Poverty
I think the biggest challenges are multi-faceted and tie into low income, and lack of time to model well-being and
overall health. – Community Leader
Language Barrier
Depression and anxiety. Lack of bilingual behavioral health providers. – Other Health Provider
Prevention/Screenings
Prevention services and lack of licensed staff to serve their needs. – Public Health Representative
Social Norms/Community Attitude
The cultural norms in our largely Latino community discourage asking for help and knowing what depression and
other mental health issues feel like and are. Also, the availability of service providers for older adults and other
vulnerable populations. – Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 38
DEATH, DISEASE &
CHRONIC CONDITIONS
CARDIOVASCULAR DISEASE
Heart Disease Deaths
Heart disease is a leading cause of death in Santa Cruz County and throughout the United States. The chart
that follows illustrates how our (age-adjusted) mortality rate compares to rates in California and the US.
COMMUNITY HEALTH NEEDS ASSESSMENT 40
S
N
ources:
otes:
H e a r t D is e a s e : A g e - A d ju s t e d M o r t a lit y
( 2 0 1 6 - 2 0 2 0 A n n u a l A v e r a g e D e a th s p e r 1 0 0 ,0 0 0 P o p u la tio n )
H e a lth y P e o p le 2 0 3 0 = 1 2 7 .4 * o r L o w e r
9 1 .5
8 4 .6
5 3 .7
S a n ta C ru z C o u n ty C a lifo rn ia U S
C enters for D isease C ontrol and P revention, N ational V ital S tatistics S ystem . A ccessed via C D C W O N D E R .
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm
U S D epartm ent of H ealth and H um an S ervices. H ealthy P eople 2030. https://health.gov/healthypeople
D eaths are coded using the T enth R evision of the International S tatistical C lassification of D iseases and R elated H ealth P rob lem s (IC D -10).
R ates are per 100,000 population, age-adjusted to the 2000 U S S tandard P opulation.
*T he H ealthy P eople 2030 objective for coronary heart disease has been adjusted here to account for all diseases of the heart.
ap.org).
ABOUT HEART DISEASE & STROKE
Heart disease and stroke can result in poor quality of life, disability, and death. Though both diseases
are common, they can often be prevented by controlling risk factors like high blood pressure and high
cholesterol through treatment.
In addition, making sure people who experience a cardiovascular emergency — like stroke, heart
attack, or cardiac arrest — get timely recommended treatment can reduce their risk for long-term
disability and death. Teaching people to recognize symptoms is key to helping more people get the
treatment they need.
− Healthy People 2030 (https://health.gov/healthypeople)
Stroke Deaths
Stroke, a leading cause of death in Santa Cruz County and throughout the nation, shares many of the same
risk factors as heart disease. Outlined in the following chart is a comparison of stroke mortality locally,
statewide, and nationally.
COMMUNITY HEALTH NEEDS ASSESSMENT 41
S
N
ources:
otes:
CCUDR
S t r o k e : A g e - A d ju s t e d M o r t a lit y
( 2 0 1 6 - 2 0 2 0 A n n u a l A v e r a g e D e a th s p e r 1 0 0 ,0 0 0 P o p u la tio n )
H e a lth y P e o p le 2 0 3 0 = 3 3 .4 o r L o w e r
3 7 .6 3 7 .6
3 0 .6
S a n ta C ru z C o u n ty C a lifo rn ia U S
enters for D isease C ontrol and P revention, N ational V ital S tatistics S ystem . A ccessed via C D C W O N D E R .
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm
S D epartm ent of H ealth and H um an S ervices. H ealthy P eople 2030. https://health.gov/healthypeople
eaths are coded using the T enth R evision of the International S tatistical C lassification of D iseases and R elated H ealth P rob lem s (IC D -10).
ates are per 100,000 population, age-adjusted to the 2000 U S S tandard P opulation.
ap.org).
Blood Pressure & Cholesterol
The following chart illustrates the percentages of WCH Service Area adults who have been told that they
The CDC’s Behavioral have high blood pressure or high cholesterol, known risk factors for cardiovascular disease.
Risk Factor Survey
asked:
“Have you ever been told
by a doctor, nurse, or Prevalence of Prevalence of
other health professional
High Blood Pressure High Blood Cholesterol
that you have high blood
pressure?” (2021) (2021)
“Have you ever been told Healthy People 2030 = 42.6% or Lower
by a doctor, nurse, or
other health professional
that your cholesterol is
high?”
32.7% 33.7% 35.3% 36.4%
27.6% 28.5%
WCH Service Area California US WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap(sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Key Informant Input: Heart Disease & Stroke
Outlined below are key informants’ levels of concern for Heart Disease & Stroke as an issue in the WCH
Service Area.
Perceptions of Heart Disease &
Stroke as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
38.2% 58.8%
2.9%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Lifestyle
Eating and exercise absence. – Community Leader
Poor diet, lack of exercise, alcohol and unsafe neighborhoods. – Other Health Provider
Poor nutrition, low activity levels, smoking and alcohol and drug use. – Other Health Provider
Access to Care/Services
Complex heart and medical, access to specialty care and services. – Social Services Provider
No cardiology service at WCH, yet you’re planning a cath lab. We can’t even get a consultation. – Physician
There is no STEMI center in Watsonville. Need specialists like cardiologist and interventional cardiologist. Also
need Latino doctors to treat the community. – Public Health Representative
Incidence/Prevalence
The majority of people who attend our program have some kind of heart disease and/or have experienced
strokes. The prevalence of heart disease appears to be very high locally. – Community Leader
Population health assessment. – Other Health Provider
Aging Population
We have an aging community that is susceptible to heart disease and stroke because of cultural norms around
exercise and nutrition. – Community Leader
Co-Occurrences
Diabetes raises the risk for cardiovascular disease and stroke. – Community Leader
Disease Management
Although health care providers at FQHCs provide evidence based, best practice treatment recommendations to
patients to control blood pressure, cholesterol and prediabetes/diabetes, there is still reluctance among some
patients at increased risk for heart disease and stroke to follow health care provider recommendations for
treatment, even when Medi-Cal covers the cost of these treatments. Communities in the 1st and 2nd HPI
quartiles lack the time, money and immediate access to safe places to be physically active, resulting in sedentary
lifestyles and increased risk of heart disease and stress. – Public Health Representative
Lack of Providers
Fewer cardiologists and neurologists in the area affect access. Lower income or rural geography affect access to
healthier food, transportation, and assistance at home. – Physician
COMMUNITY HEALTH NEEDS ASSESSMENT 42
CANCER
ABOUT CANCER
Cancer is the second leading cause of death in the United States. …The cancer death rate has
declined in recent decades, but over 600,000 people still die from cancer each year in the United
States. Death rates are higher for some cancers and in some racial/ethnic minority groups. These
disparities are often linked to social determinants of health, including education, economic status, and
access to health care.
Interventions to promote evidence-based cancer screenings — such as screenings for lung, breast,
cervical, and colorectal cancer — can help reduce cancer deaths. Other effective prevention
strategies include programs that increase HPV vaccine use, prevent tobacco use and promote
quitting, and promote healthy eating and physical activity. In addition, effective targeted therapies and
personalized treatment are key to helping people with cancer live longer.
− Healthy People 2030 (https://health.gov/healthypeople)
Age-Adjusted Cancer Deaths
Cancer is a leading cause of death in Santa Cruz County and throughout the United States. Age-adjusted
cancer mortality rates are outlined below.
Cancer: Age-Adjusted Mortality
(2016-2021 Annual Average Deaths per 100,000 Population)
Healthy People 2030 = 122.7 or Lower
149.4
134.5
124.9
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
COMMUNITY HEALTH NEEDS ASSESSMENT 43
Cancer Incidence
“Incidence rate” or “case rate” is the number of newly diagnosed cases in a given population in a
given year, regardless of outcome. These rates are also age-adjusted. It is usually expressed as
cases per 100, 000 population per year.
It is important to identify leading cancers by site in order to better address them through targeted
intervention. The following chart illustrates Santa Cruz County incidence rates for leading cancer sites.
Cancer Incidence Rates by Site
(Annual Average Age-Adjusted Incidence per 100,000 Population, 2016-2020)
Santa Cruz County California US
444.8 442.3
394.7
139.1 121.0 127.0 118.5 110.5
95.4
54.0
34.9 33.5 36.5 34.7 37.6
All Sites Female Breast Cancer Prostate Cancer Colorectal Cancer Lung Cancer
Sources: State Cancer Profiles.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: This indicator reports the age adjusted incidence rate (cases per 100,000 population per year) of cancers, adjusted to 2000 US standard population age groups
(under age 1, 1-4, 5-9, ..., 80-84, 85 and older).
COMMUNITY HEALTH NEEDS ASSESSMENT 44
Cancer Screenings
FEMALE BREAST CANCER
The US Preventive Services Task Force (USPSTF) recommends biennial screening mammography
for women age 50 to 74 years.
CERVICAL CANCER
The US Preventive Services Task Force (USPSTF) recommends screening for cervical cancer every
3 years with cervical cytology alone in women age 21 to 29 years. For women age 30 to 65 years, the
USPSTF recommends screening every 3 years with cervical cytology alone, every 5 years with high-
risk human papillomavirus (hrHPV) testing alone, or every 5 years with hrHPV testing in combination
with cytology (cotesting). The USPSTF recommends against screening for cervical cancer in women
who have had a hysterectomy with removal of the cervix and do not have a history of a high-grade
precancerous lesion (i.e., cervical intraepithelial neoplasia [CIN] grade 2 or 3) or cervical cancer.
COLORECTAL CANCER
The US Preventive Services Task Force (USPSTF) recommends screening for colorectal cancer
starting at age 50 years and continuing until age 75 years.
− US Preventive Services Task Force, Agency for Healthcare Research and Quality, US Department of
Health & Human Services
Note that other organizations (e.g., American Cancer Society, American Academy of Family
Physicians, American College of Physicians, National Cancer Institute) may have slightly different
screening guidelines.
The following outlines the percentages of residents receiving these age-appropriate cancer screenings.
These are important preventive behaviors for early detection and treatment of health problems. Low
screening levels can highlight a lack of access to preventive care, a lack of health knowledge, or other
barriers.
Breast Cancer Screening Cervical Cancer Screening Colorectal Cancer Screening
(Women 50 to 74) (Women 21 to 65) (Adults 50 to 75)
Healthy People 2030 = 80.5% or Higher Healthy People 2030 = 84.3% or Higher Healthy People 2030 = 74.4% or Higher
78.2% 81.2% 80.7% 82.8%
71.5% 69.6% 72.4%
61.0%
54.8%
WCH California US WCH California US WCH California US
Service Area Service Area Service Area
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap(sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Each indicator is shown among the age group specified. Breast cancer screenings are mammograms among females age50-74 in the past 2 years. Cervical cancer screenings are
Pap smears among women 21-65 in the past 3 years. Colorectal cancer screenings include the percentage of population age 50-75 years who report having had 1) a fecal occult
blood test (FOBT) within the past year, 2) a sigmoidoscopy within the past 5 years and a FOBT within the past 3 years, or 3) a colonoscopy within the past 10 years.
COMMUNITY HEALTH NEEDS ASSESSMENT 45
Key Informant Input: Cancer
Key informants’ perceptions of Cancer as a local health concern are outlined below.
COMMUNITY HEALTH NEEDS ASSESSMENT 46
SN ources:
otes:
M
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( K e y In fo r m a n
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2023 P R C O nline K ey Inform ant S urvey, P R C , Inc.
A sked of all respondents.
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Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
Only access is in North County, which is already very impacted. – Other Health Provider
No availability in South County. – Physician
No hematology oncology access at all at Watsonville. Yet asked to admit these patients. – Physician
Most oncology services are not readily available in South County. – Other Health Provider
Environmental Contributors
We are surrounded by agriculture and pesticides are used. – Social Services Provider
Cancer rates in the Pajaro Valley, especially among youth, are disproportionately high because of various
reasons, including the use of harmful pesticides in the agriculture industry that is very prevalent in the region. –
Community Leader
Vulnerable Populations
The exploitation of migrant farmworkers is a significant issue in South County. Among this meta-issue,
farmworkers and their families are regularly exposed to high levels of dangerous pesticides, and as a result
cancer rates in the area are far higher than national averages, particularly among infants and children. Many
infants are born with health conditions and defects due to the contaminated environment they live in, including
cancer and conditions that develop into cancer. This is further exacerbated by the poorer levels of health care
many immigrant farmworker families have access to. This is one of the biggest, dirty secrets to the agricultural
sector, and because south Santa Cruz County and north Monterey County produce a significant amount of the
nation's food, this issue, including the resultant cancer rates and less than adequate treatment options and
quality of care available to the farmworkers in the area, deserves a lot of attention. The status quo is downright
shameful. – Community Leader
RESPIRATORY DISEASE
Lung Disease Deaths
The mortality rate for lung disease in Santa Cruz County is summarized below, in comparison with California
and national rates.
COMMUNITY HEALTH NEEDS ASSESSMENT 47
S
N
ources:
otes:
CCDR
L u n g D is e a s e : A g e - A d ju s t e d M o r t a lit y
( 2 0 1 6 - 2 0 2 0 A n n u a l A v e r a g e D e a th s p e r 1 0 0 ,0 0 0 P o p u la tio n )
3 9 .1
3 0 .5
2 0 .8
S a n ta C ru z C o u n ty C a lifo rn ia U S
enters for D isease C ontrol and P revention, N ational V ital S tatistics S ystem . A ccessed via C D C W O N D E R .
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm
eaths are coded using the T enth R evision of the International S tatistical C lassification of D iseases and R elated H ealth P rob lem s (IC D -10).
ates are per 100,000 population, age-adjusted to the 2000 U S S tandard P opulation.
ap.org).
ABOUT RESPIRATORY DISEASE
Respiratory diseases affect millions of people in the United States. …More than 25 million people in
the United States have asthma. Strategies to reduce environmental triggers and make sure people
get the right medications can help prevent hospital visits for asthma. In addition, more than 16 million
people in the United States have COPD (chronic obstructive pulmonary disease), which is a major
cause of death. Strategies to prevent the disease — like reducing air pollution and helping people quit
smoking — are key to reducing deaths from COPD.
− Healthy People 2030 (https://health.gov/healthypeople)
Note that this section also includes data relative to COVID-19 (coronavirus disease).
Note: Here, lung disease
reflects chronic lower
respiratory disease
deaths and includes
conditions such as
emphysema, chronic
bronchitis, and asthma.
COVID-19 (Coronavirus Disease) Deaths
The age-adjusted mortality rate for COVID-19 in Santa Cruz County is summarized below, in comparison
with California and national rates.
COMMUNITY HEALTH NEEDS ASSESSMENT 48
S
N
ources:
otes:
C O V I D - 1 9 : M o r t a lit y
( 2 0 2 2 D e a th s p e r 1 0 0 ,0 0 0 P o p u la tio n )
3 3 7 .9
2 5 5 .7
1 0 0 .6
S a n ta C ru z C o u n ty C a lifo rn ia U S
Johns H opkins U niversity. A ccessed via E S R I. A dditional data analysis by C A R E S . 2022.
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm
D eaths are coded using the T enth R evision of the International S tatistical C lassification of D iseases and R elated H ealth P rob lem s (IC D -10).
R ates are per 100,000 population.
ap.org).
Asthma Prevalence
The following chart shows the prevalence of asthma among WCH Service Area adults.
The CDC Behavioral Risk
Factor Surveillance
Survey asked
Prevalence of Asthma
respondents:
“Has a doctor, nurse, or (2021)
other health professional
ever told you that you
had asthma?”
“Do you still have
asthma?”
Prevalence includes
those responding “yes” to
both.
9.8% 9.2% 9.7%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: Includes those who have ever been diagnosed with asthma and report that they still have asthma.
COPD Prevalence
The following chart shows the prevalence of chronic obstructive pulmonary disease (COPD) among WCH
The CDC Behavioral Risk Service Area adults.
Factor Surveillance
Survey asked
respondents:
Prevalence of Chronic Obstructive Pulmonary Disease (COPD)
“Has a doctor, nurse, or
other health professional (2021)
ever told you that you
had COPD (chronic
obstructive pulmonary
disease), emphysema, or
chronic bronchitis?”
5.7% 5.3% 6.4%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: Includes those who have ever been diagnosed with chronic obstructive pulmonary disease (COPD), including emphysema and chronicbronchitis.
Key Informant Input: Respiratory Disease
The following outlines key informants’ perceptions of Respiratory Disease in our community.
Perceptions of Respiratory Diseases as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
22.2% 58.3% 16.7%
2.8%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Housing
Families live in crowded houses or attend day care and are exposed to a lot. Many parents don't/cant take off
work, so kids with mild illness go to school and day care and spread it to others. Families not always
knowledgeable on what to look out for, so mild illness can worsen before they decide to seek medical care. –
Physician
High rates due to multifamily housing, insufficient housing. – Physician
COMMUNITY HEALTH NEEDS ASSESSMENT 49
Access to Vaccines
COVID, RSV and flu are rising. We need to increase community's vaccination rate and access to COVID and flu
therapeutics. – Public Health Representative
Environmental Contributors
I am not positive, but it seems that we may have some contamination due to pesticides. – Social Services
Provider
Incidence/Prevalence
Death and illness. – Other Health Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 50
INJURY & VIOLENCE
ABOUT INJURY & VIOLENCE
INJURY ► In the United States, unintentional injuries are the leading cause of death in children,
adolescents, and adults younger than 45 years. …Many unintentional injuries are caused by motor
vehicle crashes and falls, and many intentional injuries involve gun violence and physical assaults.
Interventions to prevent different types of injuries are key to keeping people safe in their homes,
workplaces, and communities.
Drug overdoses are now the leading cause of injury deaths in the United States, and most overdoses
involve opioids. Interventions to change health care providers’ prescribing behaviors, distribute
naloxone to reverse overdoses, and provide medications for addiction treatment for people with
opioid use disorder can help reduce overdose deaths involving opioids.
VIOLENCE ► Almost 20,000 people die from homicide every year in the United States, and many
more people are injured by violence. …Many people in the United States experience physical
assaults, sexual violence, and gun-related injuries. Adolescents are especially at risk for experiencing
violence. Interventions to reduce violence are needed to keep people safe in their homes, schools,
workplaces, and communities.
Children who experience violence are at risk for long-term physical, behavioral, and mental health
problems. Strategies to protect children from violence can help improve their health and well-being
later in life.
− Healthy People 2030 (https://health.gov/healthypeople)
Unintentional Injury
Age-Adjusted Unintentional Injury Deaths
Unintentional injury is a leading cause of death. The chart that follows illustrates unintentional injury death
rates for Santa Cruz County, California, and the US.
Unintentional Injuries: Age-Adjusted Mortality
(2016-2020 Annual Average Deaths per 100,000 Population)
Healthy People 2030 = 43.2 or Lower
50.4
45.1
35.8
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
COMMUNITY HEALTH NEEDS ASSESSMENT 51
Age-Adjusted Motor Vehicle Crash Deaths
Motor vehicle crash deaths are preventable and are a cause of premature death. Mortality rates for motor
vehicle crash deaths are outlined below.
Motor Vehicle Crashes: Age-Adjusted Mortality
(2016-2020 Annual Average Deaths per 100,000 Population)
Healthy People 2030 = 10.1 or Lower
11.5
9.9
8.5
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
Intentional Injury (Violence)
Age-Adjusted Homicide Deaths
Homicide is a measure of community safety and a leading contributor to years of potential life lost. Homicide
RELATED ISSUE mortality rates for Santa Cruz County, California, and the US are shown in the following chart.
See also Mental Health
(Suicide) in the General
Health Status section of
this report. Homicide: Age-Adjusted Mortality
(2016-2020 Annual Average Deaths per 100,000 Population)
Healthy People 2030 = 5.5 or Lower
6.4
5.1
3.2
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
COMMUNITY HEALTH NEEDS ASSESSMENT 52
Violent Crime Rate
The following chart shows the rate of violent crime per 100,000 population in Santa Cruz County, California,
Violent crime is and the US.
composed of four
offenses (FBI Index
offenses): murder and Violent Crime
non-negligent
manslaughter; forcible (Reported Offenses per 100,000 Population, 2015-2017)
rape; robbery; and
aggravated assault.
440.5
Note that the quality of 416.0
403.6
crime data can vary
widely from location to
location, depending on
the consistency and
completeness of
reporting among various
jurisdictions.
Santa Cruz County California US
Sources: Federal Bureau of Investigation, FBI Uniform Crime Reports (UCR).
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: This indicator reports the rate of violent crime offenses reported by the sheriff's office or county police department per 100,000 residents. Violent crime includes
homicide, forcible rape, robbery, and aggravated assault.
Participation by law enforcement agencies in the UCR program is voluntary. Sub-state data do not necessarily represent an exhaustive list of crimes due to gaps in
reporting. Also, some institutions of higher education have their own police departments, which handle offenses occurring withincampus grounds; these offenses
are not included in the violent crime statistics but can be obtained from the Uniform Crime Reports Universities and Collegesdata tables.
Key Informant Input: Injury & Violence
Key informants’ perceptions of Injury & Violence in our community:
Perceptions of Injury & Violence as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
35.1% 40.5% 24.3%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Incidence/Prevalence
We have many traffic-related deaths, and we have a lot of violence that is upticking in our community. – Social
Services Provider
We have a prevalence of pedestrian/cyclist injuries, domestic violence, and youth violence is on the rise. –
Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 53
I see a lot of patients complain to me that their child is being bullied at school or there is concern for gang
violence. At Aptos High, there was a homicide a couple years ago, and a recent threat at the football game for
violence. In talking with colleagues at the county office of education, there have been increases in fights and
dangerous behaviors across the county. Often when I look at the local newspaper, there is a headline of a
stabbing or a hit-and-run or some other type of violent event. Also, a lot of homeless people walking around
downtown. – Physician
Behavioral Health
Suicide and youth mental health is important. We need to reduce the stigma and support our youth. – Public
Health Representative
Just no behavioral health to speak of. – Physician
Gang Violence
Gangs. Social pressures. Availability of guns. – Community Leader
Gangs and domestic violence continue to plague our community. I believe root causes include economic
hardships and lack of safe spaces for children and youth, recreational activities and family space for activities. –
Community Leader
Denial/Stigma
People are getting injured and not seeking services for whatever reasons, such as fear and stigma. – Other
Health Provider
Social Norms/Community Attitude
Injury and violence are significant issues in our community because of social norms that have been solidified
from decades of disinvestment and exclusion that have made finding success more difficult for some in our
community. This has created social issues that lead to violence and injuries happening more regularly than in
other communities. – Community Leader
Vulnerable Populations
Farmworkers experience sexual violence in fields. Also, violence and gang involvement is too high. Farmworkers
experience injuries from physical labor. – Physician
COMMUNITY HEALTH NEEDS ASSESSMENT 54
DIABETES
ABOUT DIABETES
More than 30 million people in the United States have diabetes. …Some racial/ethnic minorities are
more likely to have diabetes. And many people with diabetes don’t know they have it.
Poorly controlled or untreated diabetes can lead to leg or foot amputations, vision loss, and kidney
damage. But interventions to help people manage diabetes can help reduce the risk of complications.
In addition, strategies to help people who don’t have diabetes eat healthier, get physical activity, and
lose weight can help prevent new cases.
− Healthy People 2030 (https://health.gov/healthypeople)
Prevalence of Diabetes
Diabetes is a prevalent and long-lasting (chronic) health condition with a number of adverse health effects,
The CDC Behavioral Risk and it may indicate an unhealthy lifestyle. The prevalence of diabetes among WCH Service Area adults age
Factor Surveillance
20 and older is outlined below, compared to state and national prevalence levels.
Survey asked
respondents:
“Has a doctor, nurse, or
other health professional Prevalence of Diabetes
ever told you that you
had diabetes?” (Adults Age20 and Older; 2019)
8.4% 9.3% 10.1%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 55
Key Informant Input: Diabetes
The following are key informants’ ratings of Diabetes as a health concern in the WCH Service Area.
COMMUNITY HEALTH NEEDS ASSESSMENT 56
SN ources:
otes:
P e r c e p t io n
M a jo r P ro b le m
2023 P R C O nline K ey Inform
A sked of all respondents.
s o f D ia b e t e s a
( K e y In fo r m a n ts ; W
M o d e ra te P ro b le
7 6 .3 %
ant S urvey, P R C , Inc.
sC
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S
re or
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Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Awareness/Education
Need for more education and prevention. – Community Leader
The biggest challenges are education and access to healthy foods and preventative measures they can take to
reduce the chances of becoming diabetic, as well as receiving care. – Community Leader
Accessible information, medication, safe exercise, and culturally appropriate nutrition education. – Physician
Lack of knowledge, lack of access to testing and medication, cost barriers, poor nutrition, food deserts and low
activity rates. – Other Health Provider
Education and access to affordable medication. – Other Health Provider
Education, supporting a healthy lifestyle and eating habit changes. Individuals cannot afford some of the
healthier foods and are not educated on the long-term damages of their choices. – Other Health Provider
Poor understanding by community leaders of the root causes of overweight, obesity and diabetes, and
insufficient commitment by leaders to take responsibility for the root causes. Poorer communities lack money,
time and immediate access to safe spaces to be active compared to wealthy communities, thus contributing to
the root causes and inequities in morbidity and mortality when it comes to diabetes. – Public Health
Representative
Education regarding disease progression, diet. Income related access or lack of healthier foods. – Physician
Since diabetes is a significant problem in the Latino population, there doesn't appear to be enough information in
the community about diabetes care and cultural issues, e.g., how to prepare and eat healthy Mexican/Latino
foods, in general, and on a limited income, in particular. The long-term effects of DMII are great and cause a
huge amount of disability, trauma, and expense. A more culturally appropriate and motivating education is
needed in the whole community. – Community Leader
Access to Affordable Healthy Food
The lack of access to healthy foods and safe places to recreate. Long working hours prevent individuals from
accessing healthcare services during traditional business hours. Lack of health insurance or limited coverage to
purchase necessary medications and testing supplies. – Public Health Representative
Access to healthy foods at low costs, cultural diet high in carbs, knowledge of and willingness to make early
lifestyle changes and obesity. – Other Health Provider
Access to nutritious food, education, and support. – Other Health Provider
Options for healthy eating and outdoor access for physical movement. – Social Services Provider
Lack of healthy options and routine checkups. Prices in medications. – Other Health Provider
Access to affordable healthy foods and knowing how to prepare cultural foods. – Public Health Representative
Healthy food desserts in neighborhoods, access to low-cost healthy nourishment, motivation for physical and
active lifestyles. – Community Leader
Access to Care/Services
The lack of an effective diabetes health center. The lack of public health approach to the prevention diagnosis
and treatment of diabetes. – Community Leader
Timely access to care and regular follow-up. – Other Health Provider
Access to diagnosis. – Community Leader
Affordable Medications/Supplies
Being able to afford/access medications. Having time and resources to shop for healthy food and exercise,
understanding recommendations of the doctors, not enough primary care doctors to care for these patients. –
Physician
Access to testing supplies at a reasonable price. Access to healthy food choices. Time for physical activity and
support for weight loss. – Physician
Disease Management
Not prioritizing their own care, not following treatment protocols and social determinants. – Other Health Provider
Management, health literacy and access to preventive care. – Physician
Built Environment
Access to safe physical activity, reliance on cheap, convenience foods and obesity. – Community Leader
Culturally Relevant Information
Culturally relevant information on remedies to prevent or mitigate diabetes. – Community Leader
Housing
Housing costs deplete all available income for farmworkers and low-wage earners that are unable to afford the
"time" to cook their own food and fall to low cost, high-sugar and fat options, soda, chips, fast food, etc. –
Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 57
DISABLING CONDITIONS
ABOUT DISABILITY & HEALTH
Studies have found that people with disabilities are less likely to get preventive health care services
they need to stay healthy. Strategies to make health care more affordable for people with disabilities
are key to improving their health.
In addition, people with disabilities may have trouble finding a job, going to school, or getting around
outside their homes. And they may experience daily stress related to these challenges. Efforts to
make homes, schools, workplaces, and public places easier to access can help improve quality of life
and overall well-being for people with disabilities.
− Healthy People 2030 (https://health.gov/healthypeople)
Disability
The following represents the percentage of the total civilian, non-institutionalized population in the WCH
Service Area with a disability. This indicator is relevant because disabled individuals may comprise a
Disability data come from
the US Census Bureau’s vulnerable population that requires targeted services and outreach.
American Community
Survey (ACS), Survey of
Income and Program
Participation (SIPP), and Population With Any Disability
Current Population
(CivilianNon‐Institutionalized Residents; 2017-2021)
Survey (CPS). All three
surveys ask about six
disability types: hearing
difficulty, vision difficulty,
cognitive difficulty,
ambulatory difficulty, self-
care difficulty, and
independent-living
difficulty.
Respondents who report
any one of the six
disability types are
considered to have a
disability.
11.9% 10.6% 12.6%
WCH Service Area California US
Sources: US Census Bureau, American Community Survey.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 58
Key Informant Input: Disabling Conditions
Key informants’ perceptions of Disabling Conditions are outlined below.
COMMUNITY HEALTH NEEDS ASSESSMENT 59
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Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
They exist, with few resources to support. – Physician
Not enough supports for those who are physically disabled, sidewalks and infrastructure limitations for those in
wheelchairs. – Social Services Provider
Santa Cruz County has very limited access to care, especially for those who require home, or residential/board
and care support. As our population ages, we are seeing more people experiencing a nexus of cognitive decline,
medical complications, behavioral health complications, and homelessness, and they are cycling through the
emergency room or crisis unit because the appropriate level/type of care does not exist. – Public Health
Representative
Vulnerable Populations
Undocumented, indigenous language speakers, newly arrived immigrants, homeless youth, and adults cannot
navigate systems to access services. – Community Leader
They are significant issues because the majority of residents in the region are blue-collar workers who are
constantly dealing with chronic pain and loss of vision and hearing. At the same time, they do not make enough
money to seek or afford care to address these issues and take simple steps to correct them. – Community
Leader
Affordable Care/Services
Many of the individuals residing in the community cannot afford vision and dental services. Left unmanaged, both
vision and dental lead to other health issues or are an indicator of health issues. The other issue within the
community is lack of mobility due to sedentary lifestyles. – Other Health Provider
Awareness/Education
Level of education affects what people know about resources available, treatment options and a degree of
assertiveness in requesting evaluation or assistance. – Physician
Co-Occurrences
Many folks experience chronic pain, contributes to mental health issues, disruption in work and economic
instability. – Physician
Aging Population
Caring for our senior community, more needs to be done to ensure our senior community are engaged and
active. – Community Leader
Impact on Caregivers/Families
Poor health affects the family as a whole. – Other Health Provider
BIRTHS
BIRTH OUTCOMES & RISKS
ABOUT INFANT HEALTH
Keeping infants healthy starts with making sure women get high-quality care during pregnancy and
improving women’s health in general. After birth, strategies that focus on increasing breastfeeding
rates and promoting vaccinations and developmental screenings are key to improving infants’ health.
Interventions that encourage safe sleep practices and correct use of car seats can also help keep
infants safe.
The infant mortality rate in the United States is higher than in other high-income countries, and there
are major disparities by race/ethnicity. Addressing social determinants of health is critical for reducing
these disparities.
− Healthy People 2030 (https://health.gov/healthypeople)
Prenatal Care
This indicator reports the percentage of Santa Cruz County women who did not receive prenatal care during
Early and continuous the first six months of pregnancy. This indicator can signify a lack of access to preventive care, a lack of
prenatal care is the best
health knowledge, or other barriers to services.
assurance of maternal
and infant health.
Lack of Prenatal Carein the First Six Months of Pregnancy
(Percentage of Live Births, 2017-2019)
6.1%
3.1% 3.7%
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER. Centers for Disease Control and Prevention,
Wide‐Ranging Online Data for Epidemiologic Research.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Note: This indicator reports the percentage of women who did not obtain prenatal care before theirseventh month of pregnancy (if at all).
COMMUNITY HEALTH NEEDS ASSESSMENT 61
Low-Weight Births
Largely a result of receiving poor or inadequate prenatal care, many low-weight births and the consequent
Low birthweight babies, health problems are preventable. The following chart illustrates the percent of total births that are low birth
those who weigh less weight.
than 2,500 grams (5
pounds, 8 ounces) at
birth, are much more Low-Weight Births
prone to illness and
neonatal death than are (Percent of Live Births, 2014-2020)
babies of normal
birthweight.
5.8% 6.9% 8.2%
Santa Cruz County California US
Sources: University of Wisconsin Population Health Institute, County Health Rankings.
Note: This indicator reports the percentage of total births that are low birth weight (Under 2500g).
Infant Mortality
The following chart shows the number of infant deaths per 1,000 live births in Santa Cruz County. High
Infant mortality includes infant mortality can highlight broader issues relating to health care access and maternal/child health.
the death of a child
before his/her first
birthday, expressed as
Infant Mortality Rate
the number of such
deaths per 1,000 live (Annual Average Infant Deaths per 1,000 Live Births, 2014-2020)
births.
Healthy People 2030 = 5.0 or Lower
5.6
4.0 4.0
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Infant deaths include deaths of children under 1 year old.
COMMUNITY HEALTH NEEDS ASSESSMENT 62
FAMILY PLANNING
ABOUT FAMILY PLANNING
Nearly half of pregnancies in the United States are unintended, and unintended pregnancy is linked to
many negative outcomes for both women and infants. …Unintended pregnancy is linked to outcomes
like preterm birth and postpartum depression. Interventions to increase use of birth control are critical
for preventing unintended pregnancies. Birth control and family planning services can also help
increase the length of time between pregnancies, which can improve health for women and their
infants.
Adolescents are at especially high risk for unintended pregnancy. Although teen pregnancy and birth
rates have gone down in recent years, close to 200,000 babies are born to teen mothers every year
in the United States. Linking adolescents to youth-friendly health care services can help prevent
pregnancy and sexually transmitted infections in this age group.
− Healthy People 2030 (https://health.gov/healthypeople)
Births to Adolescent Mothers
The following chart outlines the teen birth rate in Santa Cruz County, compared to rates statewide and
Here, teen births include nationally. In many cases, teen parents have unique health and social needs. High rates of teen pregnancy
births to women ages
might also indicate a prevalence of unsafe sexual behavior.
15 to 19 years old,
expressed as a rate per
1,000 female population
in this age cohort. Teen Birth Rate
(Births to Adolescents Age15-19 per 1,000 Females Age15-19, 2014-2020)
19.3
15.6
9.9
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 63
Key Informant Input: Infant Health & Family Planning
Key informants’ perceptions of Infant Health & Family Planning as a community health issue are outlined
below.
Perceptions of Infant Health &
Family Planning as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
34.3% 42.9% 22.9%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Awareness/Education
Education. Social and family influences. – Community Leader
Culturally Relevant Information
Culturally relevant information and continued support from prenatal to birth. – Community Leader
Cost of Housing
The majority of child-bearing adults now reside in and around the 95076 ZIP code, as the 95060 and surrounding
ZIP codes are now one of the highest cost/least affordable housing in the United States. Due to the
systematically under-invested health care systems in the 95076 and surrounding areas, there are not adequate
resources and care options to even match what is in the 95060 ZIP codes. Those 95060 resources are now (like
Sutter Maternity Center and Dominican) turning into boutique service providers, as traffic patterns can make for a
50-minute commute from the South Santa Cruz County. – Community Leader
High Birth Rate
The birth rate is now again rising in South County. – Public Health Representative
Income/Poverty
Because of low wages and high cost of living, many families are not able to afford the prenatal care or family
planning care and services that is needed to get their kids on the right path to health. – Community Leader
Lack of Family Planning
Family planning is not done with planning at all. There is no wraparound health planning for pregnant women. –
Community Leader
Vulnerable Populations
Because this region is a major food production area, with a large population of migrant farmworker families,
where there are significant levels of exploitation, limited services, and limited investment in health and other
services. Many migrant families have limited knowledge of their rights and awareness of the limited social
services available to them. They live in fear of having their families separated and being deported. And powerful
agricultural companies have significant influence over elected officials and legislation. – Community Leader
Prenatal Care
Prenatal care. – Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 64
Female Reproductive Care
Female reproductive health access. – Community Leader
Early Childhood Development
Lack of quality, affordable and accessible early childhood development for all communities. What we see are the
consequences of lack of ECD, including poor and delayed academic performance and achievement among our
students, up to and including high school students, which impacts their opportunities for higher education and
lifelong earning potential. – Public Health Representative
COMMUNITY HEALTH NEEDS ASSESSMENT 65
MODIFIABLE
HEALTH RISKS
NUTRITION
Food Environment: Fast Food
The following shows the prevalence of fast food restaurants in Santa Cruz County, expressed as a number
per 100,000 residents. This indicator provides a measure of healthy food access and environmental
influences on dietary behavior.
COMMUNITY HEALTH NEEDS ASSESSMENT 67
S ources: UC
F a s t F o o d R e s
( N u m b e r o f F a s t F o o d R e s ta u r a n ts p
8 0 .4
6 9 .4
S a n ta C ru z C o u n ty C a lifo rn ia
S C ensus B ureau, C ounty B usiness P atterns. A dditional data analysis by C A R E
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M
t a u r a n t s
e r 1 0 0 ,0 0 0 P o p u la tio n , 2 0 2
7 5 .9
U S
S .issouri
E xtension. R etrieved N ovem ber 2023 via S pa rkM
0 )
ap (sparkm ap.org).
ABOUT NUTRITION & HEALTHY EATING
Many people in the United States don’t eat a healthy diet. …People who eat too many unhealthy
foods — like foods high in saturated fat and added sugars — are at increased risk for obesity, heart
disease, type 2 diabetes, and other health problems. Strategies and interventions to help people
choose healthy foods can help reduce their risk of chronic diseases and improve their overall health.
Some people don’t have the information they need to choose healthy foods. Other people don’t have
access to healthy foods or can’t afford to buy enough food. Public health interventions that focus on
helping everyone get healthy foods are key to reducing food insecurity and hunger and improving
health.
− Healthy People 2030 (https://health.gov/healthypeople)
Here, fast food
restaurants are defined
as limited-service
establishments primarily
engaged in providing
food services (except
snack and nonalcoholic
beverage bars) where
patrons generally order or
select items and pay
before eating.
Low Food Access
The following chart shows US Department of Agriculture data determining the percentage of WCH Service
Area residents found to have low food access, meaning that they do not live near a supermarket or large
grocery store.
COMMUNITY HEALTH NEEDS ASSESSMENT 68
S
N
( P
ources:
otes:
e
P o p u la t io n W it h L o w F o o d A c c e s s
r c e n t o f P o p u la tio n F a r F r o m a S u p e r m a r k e t o r L a r g e G r o c e r y S to r e , 2 0 1 9 )
3 1 ,1 0 2
in d iv id u a ls h a v e lo w
fo o d a c c e ss
2 6 .9 %
2 2 .2 %
1 3 .3 %
W C H S e rv ic e A re a C a lifo rn ia U S
U S D epartm ent of A griculture, E conom ic R esearch S ervice, U S D A -F ood A ccess R esearch A tlas (F A R A ).
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
Low food access is defined as living m ore than 1 m ile from the nearest superm arket, supercenter, or large grocery store for u rban census tracts, and 10 m iles for
rural ones.
Low food access is
defined as living more
than 1 mile from the
nearest supermarket,
supercenter, or large
grocery store (or 10 miles
in rural areas).
PHYSICAL ACTIVITY
ABOUT PHYSICAL ACTIVITY
Physical activity can help prevent disease, disability, injury, and premature death. The Physical
Activity Guidelines for Americans lays out how much physical activity children, adolescents, and
adults need to get health benefits. Although most people don’t get the recommended amount of
physical activity, it can be especially hard for older adults and people with chronic diseases or
disabilities.
Strategies that make it safer and easier to get active — like providing access to community facilities
and programs — can help people get more physical activity. Strategies to promote physical activity at
home, at school, and at childcare centers can also increase activity in children and adolescents.
− Healthy People 2030 (https://health.gov/healthypeople)
Leisure-Time Physical Activity
Below is the percentage of WCH Service Area adults age 20 and older who report no leisure-time physical
Leisure-time physical activity in the past month. This measure is important as an indicator of risk for significant health issues such
activity includes any
as obesity or poor cardiovascular health.
physical activities or
exercises (such as
running, calisthenics,
golf, gardening, walking,
No Leisure-Time Physical Activity in the Past Month
etc.) which take place
outside of one’s line of (Adults Age20 and Older, 2019)
work.
Healthy People 2030 = 21.8% or Lower
22.0%
19.2%
15.6%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
COMMUNITY HEALTH NEEDS ASSESSMENT 69
Access to Physical Activity
The following chart shows the number of recreation/fitness facilities for every 100,000 population in the
WCH Service Area. This is relevant as an indicator of the built environment’s support for physical activity
and other healthy behaviors.
COMMUNITY HEALTH NEEDS ASSESSMENT 70
S
N
ources:
otes:
(
P o p u la t io n W it h R e c r e a t io n & F it n e s s F a c ilit y A c c e s s
N u m b e r o f R e c r e a tio n & F itn e s s F a c ilitie s p e r 1 0 0 ,0 0 0 P o p u la tio n , 2 0 2 0 )
1 7 .7
1 3 .0
1 1 .9
W C H S e rv ic e A re a C a lifo rn ia U S
U S C ensus B ureau, C ounty B usiness P atterns. A dditional data analysis by C A R E S .
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
R ecreation and fitness facilities include establishm ents engaged in operating facilities w hich offer “exercise and other active physical fitness conditioning or
recreational sports activities." E xam ples include athletic clubs, gym nasium s, dance centers, tennis clubs, and sw im m ing pools.
Here, recreation/fitness
facilities include
establishments engaged
in operating facilities
which offer “exercise and
other active physical
fitness conditioning or
recreational sports
activities.”
Examples include athletic
clubs, gymnasiums,
dance centers, tennis
clubs, and swimming
pools.
WEIGHT STATUS
ABOUT OVERWEIGHT & OBESITY
Obesity is linked to many serious health problems, including type 2 diabetes, heart disease, stroke,
and some types of cancer. Some racial/ethnic groups are more likely to have obesity, which
increases their risk of chronic diseases.
Culturally appropriate programs and policies that help people eat nutritious foods within their calorie
needs can reduce overweight and obesity. Public health interventions that make it easier for people to
be more physically active can also help them maintain a healthy weight.
− Healthy People 2030 (https://health.gov/healthypeople)
Body Mass Index (BMI), which describes relative weight for height, is significantly correlated with total
body fat content. The BMI should be used to assess overweight and obesity and to monitor changes
in body weight. In addition, measurements of body weight alone can be used to determine efficacy of
weight loss therapy. BMI is calculated as weight (kg)/height squared (m2). To estimate BMI using
pounds and inches, use: [weight (pounds)/height squared (inches2)] x 703.
In this report, overweight is defined as a BMI of 25.0 to 29.9 kg/m2 and obesity as a BMI ≥30 kg/m2.
The rationale behind these definitions is based on epidemiological data that show increases in
mortality with BMIs above 25 kg/m2. The increase in mortality, however, tends to be modest until a
BMI of 30 kg/m2 is reached. For persons with a BMI ≥30 kg/m2, mortality rates from all causes, and
especially from cardiovascular disease, are generally increased by 50 to 100 percent above that of
persons with BMIs in the range of 20 to 25 kg/m2.
− Clinical Guidelines on the Identification, Evaluation, and Treatment of Overweight and Obesity in
Adults: The Evidence Report. National Institutes of Health. National Heart, Lung, and Blood Institute in
Cooperation With The National Institute of Diabetes and Digestive and Kidney Diseases. September
1998.
CLASSIFICATION OF OVERWEIGHT AND OBESITY BY BMI BMI (kg/m2)
Underweight <18.5
Healthy Weight 18.5 – 24.9
Overweight 25.0 – 29.9
Obese ≥30.0
Source: Clinical Guidelines on the Identification, Evaluation, and Treatment of Overweight and Obesity in Adults: The Evidence
Report. National Institutes of Health. National Heart, Lung, and Blood Institute in Cooperation With The National Institute of
Diabetes and Digestive and Kidney Diseases. September 1998.
COMMUNITY HEALTH NEEDS ASSESSMENT 71
Obesity
Outlined below is the percentage of WCH Service Area adults age 20 and older who are obese, indicating
“Obese” includes that they might lead an unhealthy lifestyle and be at risk for adverse health issues.
respondents with a BMI
value ≥30.0.
Prevalence of Obesity
(Adults Age20 and Older With a Body Mass Index ≥ 30.0, 2019)
Healthy People 2030 = 36.0% or Lower
29.0%
26.1% 26.0%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: The definition of obesity is having a body mass index (BMI), a ratio of weight to height (kilograms divided by meters squared),greater than or equal to 30.0.
Key Informant Input:
Nutrition, Physical Activity & Weight
Key informants’ ratings of Nutrition, Physical Activity & Weight as a community health issue are illustrated
below.
Perceptions of Nutrition,
Physical Activity & Weight as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
63.2% 34.2%
2.6%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
COMMUNITY HEALTH NEEDS ASSESSMENT 72
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Awareness/Education
There is a lack of education about nutrition, physical activity, and weight and a lack of open and public recreation
facilities. There are also societal norms that make obtaining this education and engaging in physical activity
extremely challenging for younger generations. – Community Leader
There is a huge divide in health literacy between socioeconomic groups. A great deal more community education
is needed to change the culture around health promotion. We should look at some of the health promotion
strategies used in the UK for educating the general population – simple, easy-to-understand messages that are
repeated everywhere (Eat your five a day, Every Mind Matters, Scroll Free September, etc.). – Community
Leader
Consistent, reliable and accessible education. More time on working for income for basic needs, less
discretionary income or time for exercise and community activities. – Physician
Knowledge about healthy foods, knowing how to prepare, being able to afford healthy foods, having time/money
to join gym or sign kids up for sports, knowledge about early childhood nutrition related to excess bottle use and
early introduction of junk foods. – Physician
Lack of early education about nutrition. Consumption of cheap/fast food. Gyms being too expensive for low-
income residents. – Other Health Provider
Built Environment
Incomplete streets. Lack of grocery stores. Transportation. – Public Health Representative
We need more open spaces for the community to access physical activity. We need to do better as a community
to motivate the community to practice healthy behaviors. – Community Leader
Lack of safe places to play and be active, stress due to poor living conditions and high cost of living, reliance on
high-calorie and inexpensive foods. – Community Leader
Not enough outdoor locations for exercise. Food is expensive, and there are not enough healthy food options.
Too many fast food restaurants. – Social Services Provider
Lack of safe spaces, culturally relevant information in these areas, and lack of sensitivity to cultural lens when it
comes to viewing the meaning of "healthy." – Community Leader
Nutrition
Poor food choices due to food prices. – Other Health Provider
Communities continue to have easy access to unhealthy foods, including fast food restaurants and highly
processed foods in retail grocery stores. HPI quartile 1 and 2 communities with highest risk of overweight and
chronic disease have the fewest resources to live physically active lives. – Public Health Representative
Obesity
There is a stark equity gap between the children in South County and their counterparts in Santa Cruz cities with
regards to BMI in our K-12th grade students. – Community Leader
Nonexistent, wild obesity rates and poverty. – Physician
Access to Affordable Healthy Food
Access to healthy food that is affordable and safe space for physical activity. – Physician
Income/Poverty
In a low-income and low-education community, people often have to work multiple jobs in order to maintain a
living income. This leads to very little time dedicated to focusing on personal well-being, such as time to exercise,
cook fresh meals, and learn about better choices. On a more systemic level, the food supply system in this
country sets most people up for failure when trying to maintain a healthy weight. – Physician
Lifestyle
Screen time, food deserts, lack of information about healthy habits. – Other Health Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 73
SUBSTANCE USE
Excessive Alcohol Use
The following illustrates the prevalence of excessive drinking in Santa Cruz County, as well as statewide and
nationally. Excessive drinking is linked to significant health issues, such as cirrhosis, certain cancers, and
untreated mental/behavioral health issues.
COMMUNITY HEALTH NEEDS ASSESSMENT 74
S
N
ources:
otes:
E n g a g e in E x c e s s iv e D r in k in g
( 2 0 2 0 )
2 2 .4 %
1 9 .0 % 1 8 .4 %
S a n ta C ru z C o u n ty C a lifo rn ia U S
C enters for D isease C ontrol and P revention, B ehavioral R isk F actor S urveillance S ystem . A ccessed via C ounty H ealth R ankings.
C enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
E xcessive drinking is defined as the percentage of the population w ho report at least one binge drinking episode involving five or m ore drinks for m en and four or
m ore for w om en over the past 30 days, or heavy drinking involving m ore than tw o drinks per day for m en and m ore than one per day for w om en, over the sam e
tim e period.
ABOUT DRUG & ALCOHOL USE
Substance use disorders can involve illicit drugs, prescription drugs, or alcohol. Opioid use disorders
have become especially problematic in recent years. Substance use disorders are linked to many
health problems, and overdoses can lead to emergency department visits and deaths.
Effective treatments for substance use disorders are available, but very few people get the treatment
they need. Strategies to prevent substance use — especially in adolescents — and help people get
treatment can reduce drug and alcohol misuse, related health problems, and deaths.
− Healthy People 2030 (https://health.gov/healthypeople)
Excessive drinking includes heavy and/or binge drinking:
HEAVY DRINKING ► men reporting 2+ alcoholic drinks per day or women reporting 1+ alcoholic drink
per day in the month preceding the interview.
BINGE DRINKING ► men reporting 5+ alcoholic drinks or women reporting 4+ alcoholic drinks on any
single occasion during the past month.
Drug Overdose Deaths
The chart that follows illustrates age-adjusted death rates attributed to drug overdoses (all substances,
excluding alcohol) for Santa Cruz County, California, and the US.
Drug Overdoses: Age-Adjusted Mortality
(2016-2020 Annual Average Deaths per 100,000 Population)
22.4
17.2
14.5
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Vital Statistics System. Accessed via CDC WONDER.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Deaths are coded using the Tenth Revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10).
Rates are per 100,000 population, age-adjusted to the 2000 US Standard Population.
Key Informant Input: Substance Use
Note the following perceptions regarding Substance Use in the community among key informants taking part
in an online survey.
Perceptions of Substance Use as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
48.6% 48.6%
2.7%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
There needs to be a wider variety of substance use treatment options in the community. The available resources
don't fit the needs of many people, especially younger people of high school or college age. – Community Leader
Don’t know. Maybe safe injection sites. Poverty. Racism. – Community Leader
Lack of available and affordable programs. – Other Health Provider
Access to treatment. – Other Health Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 75
Incidence/Prevalence
I don't think anyone can solve this one. Why does it seem that most of my patients use methamphetamines? –
Physician
Substance use, fentanyl crisis. – Public Health Representative
Awareness/Education
I think the greatest barrier is residents are unaware what the problems are and where they can access services.
– Community Leader
Denial/Stigma
The stigma that comes with asking for help and admitting that someone might have an issue. – Community
Leader
Disease Management
Patients do not seek out treatment, limited ability in primary care to provide these services. – Physician
Funding
Limitations with funding streams, stigma, asking for help and peer pressure to continue to use. Limited
programs/services. – Social Services Provider
Most Problematic Substances
Note below which substances key informants (who rated this as a “major problem”) identified as causing the
most problems in the WCH Service Area.
SUBSTANCES VIEWED AS
MOST PROBLEMATIC IN THE COMMUNITY
(Among Key Informants Rating Substance Use as a “Major Problem”)
ALCOHOL 36.4%
METHAMPHETAMINE OR OTHER AMPHETAMINES 27.3%
HEROIN OR OTHER OPIOIDS 27.3%
PRESCRIPTION MEDICATIONS 6.0%
MARIJUANA 3.0%
COMMUNITY HEALTH NEEDS ASSESSMENT 76
TOBACCO USE
ABOUT TOBACCO USE
Most deaths and diseases from tobacco use in the United States are caused by cigarettes. Smoking
harms nearly every organ in the body and increases the risk of heart disease, stroke, lung diseases,
and many types of cancer. Although smoking is widespread, it’s more common in certain groups,
including men, American Indians/Alaska Natives, people with behavioral health conditions, LGBT
people, and people with lower incomes and education levels.
Several evidence-based strategies can help prevent and reduce tobacco use and exposure to
secondhand smoke. These include smoke-free policies, price increases, and health education
campaigns that target large audiences. Methods like counseling and medication can also help people
stop using tobacco.
− Healthy People 2030 (https://health.gov/healthypeople)
Cigarette Smoking Prevalence
Tobacco use is linked to the two major leading causes of death: cancer and cardiovascular disease. Note
The CDC Behavioral Risk below the prevalence of cigarette smoking in our community.
Factor Surveillance
Survey asked
respondents:
Prevalence of Cigarette Smoking
“Have you smoked at
least 100 cigarettes in (2021)
your entire life?”
Healthy People 2030 = 6.1% or Lower
“Do you now smoke
cigarettes every day,
some days, or not at all?”
Cigarette smoking
prevalence includes
those who report having
smoked at least 100
cigarettes in their lifetime
and who currently smoke
every day or on some
days.
13.1% 11.1% 13.5%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
Notes: Includes those who report having smoked at least 100 cigarettes in their lifetime and currently smoke cigarettes every day oron some days.
COMMUNITY HEALTH NEEDS ASSESSMENT 77
Key Informant Input: Tobacco Use
Below are key informants’ ratings of Tobacco Use as a community health concern.
COMMUNITY HEALTH NEEDS ASSESSMENT 78
SN ources:
otes:
P e
M
2
r c e p t io n s o f T o b a c c o
( K e y In fo r m a n
a jo r P ro b le m M o d e ra te P
2 .9 %
2023 P R C O nline K ey Inform ant S urvey, P R C , Inc.
A sked of all respondents.
U s e
ts ; W
ro b le m
4 2 .9 %
aC sH a
S e
Pr
M
v
r o b le m in
ic e A r e a , 2
in o r P ro b le m
t
0 2
h3 e) C
N
2
o m
o P ro
8 .6 %
m
b le
u
m
n
A
it y
t A ll
5.7%
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
E-Cigarettes
Vaping has become an epidemic. – Other Health Provider
Incidence/Prevalence
Perhaps I should have selected "moderate problem" instead. – Community Leader
Social Norms/Community Attitude
Socially accepted. – Other Health Provider
Teen/Young Adult Usage
With vaping, it seems that more youth are using tobacco. – Social Services Provider
SEXUAL HEALTH
ABOUT HIV & SEXUALLY TRANSMITTED INFECTIONS
Although many sexually transmitted infections (STIs) are preventable, there are more than 20 million
estimated new cases in the United States each year — and rates are increasing. In addition, more
than 1.2 million people in the United States are living with HIV (human immunodeficiency virus).
Adolescents, young adults, and men who have sex with men are at higher risk of getting STIs. And
people who have an STI may be at higher risk of getting HIV. Promoting behaviors like condom use
can help prevent STIs.
Strategies to increase screening and testing for STIs can assess people’s risk of getting an STI and
help people with STIs get treatment, improving their health and making it less likely that STIs will
spread to others. Getting treated for an STI other than HIV can help prevent complications from the
STI but doesn’t prevent HIV from spreading.
− Healthy People 2030 (https://health.gov/healthypeople)
HIV
The following chart outlines the prevalence of HIV in our county, expressed as a rate per 100,000
population. This indicator is relevant because HIV is a life-threatening communicable disease that
disproportionately affects minority populations and may also indicate the prevalence of unsafe sex practices.
HIV Prevalence
(Number of Persons With HIV per 100,000 Population, 2020)
406.0
379.7
214.6
Santa Cruz County California US
Sources: Centers for Disease Control and Prevention, National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
COMMUNITY HEALTH NEEDS ASSESSMENT 79
Sexually Transmitted Infections (STIs)
Chlamydia & Gonorrhea
Chlamydia and gonorrhea are reportable health conditions that might indicate unsafe sexual practices in the
community. Incidence rates for these sexually transmitted diseases are shown in the following chart.
Chlamydia & Gonorrhea Incidence
(Incidence Rate per 100,000 Population, 2020)
Santa Cruz County California US
481.3
452.2
275.2
198.5 206.5
78.0
Chlamydia Gonorrhea
Sources: Centers for Disease Control and Prevention, National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Key Informant Input: Sexual Health
Key informants’ ratings of Sexual Health as a community health concern are shown in the following chart.
Perceptions of Sexual Health as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
25.8% 41.9% 32.3%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Incidence/Prevalence
We recently learned that chlamydia in school-age children was on the rise in South County from Co. Santa Cruz
Communicable Disease Unit. – Community Leader
Higher rates of STIs. – Physician
We are experiencing rising rates of sexually transmitted infections, particularly syphilis and congenital syphilis,
and recurring Mpox infections. As a nation, women's reproductive rights have been reduced. – Public Health
Representative
COMMUNITY HEALTH NEEDS ASSESSMENT 80
Syphilis and Mpox are rising. – Public Health Representative
Awareness/Education
We need to promote better sexual health choices and education. – Social Services Provider
Lack of education. – Other Health Provider
Social Norms/Community Attitude
Societal norms and lack of education. – Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 81
ACCESS TO
HEALTH CARE
BARRIERS TO HEALTH CARE ACCESS
ABOUT HEALTH CARE ACCESS
Many people in the United States don’t get the health care services they need. …People without
insurance are less likely to have a primary care provider, and they may not be able to afford the
health care services and medications they need. Strategies to increase insurance coverage rates are
critical for making sure more people get important health care services, like preventive care and
treatment for chronic illnesses.
Sometimes people don’t get recommended health care services, like cancer screenings, because
they don’t have a primary care provider. Other times, it’s because they live too far away from health
care providers who offer them. Interventions to increase access to health care professionals and
improve communication — in person or remotely — can help more people get the care they need.
− Healthy People 2030 (https://health.gov/healthypeople)
Lack of Health Insurance Coverage
Health insurance coverage is a critical component of health care access and a key driver of health status.
Here, lack of health The following chart shows the latest figures for the prevalence of uninsured adults (age 18 to 64 years) and
insurance coverage of uninsured children (under the age of 19) in the WCH Service Area.
reflects respondents age
18 to 64 (thus excluding
the Medicare population)
who have no type of
Uninsured Population
insurance coverage for
health care services – (2021)
neither private insurance
Healthy People 2030 Target = 7.6%
nor government-
sponsored plans.
Children (0-18) Adults (18-64)
9.8% 9.8% 12.1%
4.1% 3.4% 5.3%
WCH Service Area California US
Sources: US Census Bureau, Small Area Health Insurance Estimates.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
US Department of Health and Human Services. Healthy People 2030. https://health.gov/healthypeople
COMMUNITY HEALTH NEEDS ASSESSMENT 83
Key Informant Input: Access to Health Care Services
Key informants’ ratings of Access to Health Care Services as a problem in the WCH Service Area is outlined
below.
Perceptions of Access to
Health Care Services as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
42.5% 45.0% 10.0%
2.5%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
The majority of residents in South Santa Cruz County have to leave the area to get most services. – Community
Leader
Not enough services available for the community and some restrictions in regard to medical coverage. – Other
Health Provider
The biggest issue is the safety and well-being of community members if they access care at WCH. Services are
woefully inadequate – no in-person cardiology; critical care weekdays only; no in-person GI a majority of the
time; limited access to PCPs and specialists in the community to support these services; and massive pressure
from the ER to admit patients who are too sick to be there or who have issues thar cannot be managed there
(which can lead to, and has led to, unnecessary DEATHS). – Physician
Better access to SDOH, behavioral health, and enhanced care management and community support. – Other
Health Provider
Lack of Providers
A significant issue is the limited access to health care services, particularly for residents in rural and underserved
areas. The shortage of health care professionals, including primary care physicians and specialists, is
exacerbated by doctors' hesitancy to work in this region. The high cost of living in California and lower
reimbursement rates for services in South Santa Cruz County make it less attractive, leading to staffing
shortages. These challenges underscore the urgent need for innovative solutions, improved infrastructure, and
increased incentives to attract health care professionals and ensure access to health care. Solutions can include
direct or indirect employment of physicians by the health care district, student loan forgiveness, working with
lenders to assist physicians with home purchases, and including physicians in discussions about strategic plans
and heeding their advice since they are, in fact, the most likely to understand the needs of the community they
serve. – Physician
Patient safety at WCH given lack of access to specialty care. – Physician
Not enough primary care doctors. Not enough specialty care doctors. Not enough psychiatrists. – Community
Leader
Limited specialty medical providers available in health insurance networks. No dental care or dental specialty
care is available to majority of low income Medi-Cal recipients. – Other Health Provider
Need more specialists, especially those willing to see Medi-Cal recipients. – Other Health Provider
Vulnerable Populations
Hesitancy around accessing services due to immigration status; ability to access services due to language
barriers, transportation. Also, few primary care providers, long wait times for appointments. Difficult to recruit
doctors. High rates of uninsured and underinsured. – Physician
COMMUNITY HEALTH NEEDS ASSESSMENT 84
Chronic systematic barriers that over decades created barriers that limit largely Latino populations in the south
Santa Cruz and northern Monterey County's from having basic access to primary care and specialty care
services. The investments in health care have typically been in and around the 95060 ZIP code by private and
county health agencies. The "Santa Cruz County Health Improvement Partnership" had been led largely by
northern Santa Cruz area health providers, and due to the "corporate ownership" of the Watsonville Community
Hospital and their decision NOT to be a part of this partnership nor the Santa Cruz County emergency
management council. As recently as during COVID-19, even the progressive leadership within the Santa Cruz
County Health Agency through implicit bias redirected health outreach efforts and marketing to be targeted to
and tailored for English-speaking populations and to the unhoused (even through the unhoused are less than 1%
of county's population). – Community Leader
Existing systems are not accessible to the most vulnerable, including undocumented, indigenous language
speakers, homeless adults and youth and newly arrived immigrants. – Community Leader
Access to Care for Uninsured/Underinsured
Many are uninsured and make low wages. – Community Leader
Access to Vaccines
So COVID-19 emergency ended, there is less access to vaccines, especially for those that are homebound.
People also do not feel vaccines are important – need a trusted person in the community to share importance.
Also, a lot of people did not go to the doctor during the COVID-19 pandemic, so there are a lot of people who
have delayed care for routine health maintenance. – Public Health Representative
Income/Poverty
The biggest challenge in accessing health care services in our community is due to economic burdens, language
barriers, historical racism, which has deepened mistrust in receiving adequate healthcare and lack of quality
health care services. – Community Leader
Behavioral Health
Access to mental health. – Community Leader
Transportation
Transportation to/from clinics/health care settings. – Social Services Provider
COMMUNITY HEALTH NEEDS ASSESSMENT 85
PRIMARY CARE SERVICES
ABOUT PREVENTIVE CARE
Getting preventive care reduces the risk for diseases, disabilities, and death — yet millions of people
in the United States don’t get recommended preventive health care services.
Children need regular well-child and dental visits to track their development and find health problems
early, when they’re usually easier to treat. Services like screenings, dental check-ups, and
vaccinations are key to keeping people of all ages healthy. But for a variety of reasons, many people
don’t get the preventive care they need. Barriers include cost, not having a primary care provider,
living too far from providers, and lack of awareness about recommended preventive services.
Teaching people about the importance of preventive care is key to making sure more people get
recommended services. Law and policy changes can also help more people access these critical
services.
− Healthy People 2030 (https://health.gov/healthypeople)
Primary Care Visits
The following chart reports the percentage of WCH Service Area adults who visited a doctor for a routine
checkup in the past year.
Primary Care Visit in the Past Year
(2021)
73.6%
63.1%
60.5%
WCH Service Area California US
Sources: Centers for Disease Control and Prevention, Behavioral Risk Factor Surveillance System. Accessed via the PLACES Data Portal.
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: This indicator reports the number and percentage of adults age18 and older with one or more visits to a doctor for routine checkup within the past one year.
COMMUNITY HEALTH NEEDS ASSESSMENT 86
Access to Primary Care
The following indicator outlines the number of primary care physicians per 100,000 population in Santa Cruz
County. Having adequate primary care practitioners contributes to access to preventive care.
COMMUNITY HEALTH NEEDS ASSESSMENT 87
S
N
ources:
otes:
CCDM
A c c e s s t o P r im a r y C a r e
( N u m b e r o f P r im a r y C a r e P h y s ic ia n s p e r 1 0 0 ,0 0 0 P o p u la tio n , 2 0 2 0 )
1 0 4 .1
8 1 .1
7 6 .4
2 8 1 P rim a ry C a re
P h y sic ia n s
S a n ta C ru z C o u n ty C a lifo rn ia U S
enters for M edicare and M edicaid S ervices, N ational P lan and P rovider E num eration S ystem (N P P E S ).
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM ap (sparkm ap.org).
octors classified as "prim ary care physicians" by the A M A include:G eneral F am ily M edicine M D s and D O s, G eneral P ractice M D s and D O s, G eneral Internal
edicine M D s, and G eneral P ediatrics M D s. P hysicians age 75 and over and physicians practicing sub-specialties w ithin the listed specialties are excluded.
Doctors classified as
“primary care physicians”
by the AMA include:
general family medicine
MDs and DOs, general
practice MDs and DOs,
general internal medicine
MDs and general
pediatrics MDs.
Physicians age 75 and
over and physicians
practicing subspecialties
within the listed
specialties are excluded.
Note that this indicator
takes into account only
primary care physicians.
It does not reflect primary
care access available
through advanced
practice providers, such
as physician assistants or
nurse practitioners.
ORAL HEALTH
Dental Visits
The following chart shows the percentage of WCH Service Area adults age 18 and older who have visited a
dentist or dental clinic in the past year.
COMMUNITY HEALTH NEEDS ASSESSMENT 88
S ources: CCU
V is it e d a D e n t is t o r D e n t a l C lin ic in t h e P a s t Y e a r
( 2 0 2 0 )
H e a lth y P e o p le 2 0 3 0 T a rg e t = 4 5 .0 % o r H ig h e r
6 4 .8 %
6 2 .3 %
5 7 .5 %
W C H S e rv ic e A re a C a lifo rn ia U S
enters for D isease C ontrol and P revention, B ehavioral R isk F actor S urveillance S ystem . A ccessed via the P LA C E S D ata P ortal.
enter for A pplied R esearch and E ngagem ent S ystem s (C A R E S ), U niversity of M issouri E xtension. R etrieved N ovem ber 2023 via S pa rkM
S D epartm ent of H ealth and H um an S ervices. H ealthy P eople 2030. https://health.gov/healthypeople
ap (sparkm ap.org).
ABOUT ORAL HEALTH
Tooth decay is the most common chronic disease in children and adults in the United States.
…Regular preventive dental care can catch problems early, when they’re usually easier to treat. But
many people don’t get the care they need, often because they can’t afford it. Untreated oral health
problems can cause pain and disability and are linked to other diseases.
Strategies to help people access dental services can help prevent problems like tooth decay, gum
disease, and tooth loss. Individual-level interventions like topical fluorides and community-level
interventions like community water fluoridation can also help improve oral health. In addition, teaching
people how to take care of their teeth and gums can help prevent oral health problems.
− Healthy People 2030 (https://health.gov/healthypeople)
Access to Dentists
The following chart outlines the number of dentists for every 100,000 residents in the WCH Service Area.
This indicator includes all
dentists — qualified as
having a doctorate in Access to Dentists
dental surgery (DDS) or
dental medicine (DMD), (Number of Dentists per 100,000 Population, 2023)
who are licensed by the
state to practice dentistry
and who are practicing 46.7
within the scope of that
license.
37.3
32.3
38 Dentists
WCH Service Area California US
Sources: Centers for Medicare and Medicaid Services, National Plan and Provider Enumeration System (NPPES).
Center for Applied Research and Engagement Systems (CARES), University of Missouri Extension. Retrieved November 2023 via SparkMap (sparkmap.org).
Notes: This indicator reports the number of dentists per 100,000 population. This indicator includes all dentists —qualified as having a doctorate in dental surgery (DDS)
or dental medicine (DMD) —who are licensed by the state to practice dentistry and who are practicing within the scope of that license.
Key Informant Input: Oral Health
Key informants’ perceptions of Oral Health are outlined below.
Perceptions of Oral Health as a Problem in the Community
(Key Informants; WCH Service Area, 2023)
Major Problem Moderate Problem Minor Problem No Problem At All
44.1% 35.3% 17.6%
2.9%
Sources: 2023 PRC Online Key Informant Survey, PRC, Inc.
Notes: Asked of all respondents.
Top Concerns
Among those rating this issue as a “major problem,” reasons related to the following:
Access to Care/Services
Only one of three Medi-Cal patients in SC County are able to access the dentist. There are no specialty providers
offering services to Medi-Cal patients outside of Dientes. Sugar-sweetened beverages are too available,
especially to youth. – Other Health Provider
Many of the older adults in our program have serious oral health issues that have not been treated for many
years. Many of them are missing all or most of their teeth, leading us to believe that they have not had good oral
health care most of their lives. The care they can receive through Medi-Cal at Western Dental appears to be
substandard much of the time. – Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 89
I believe it is a major problem because children drop off from seeing their dental providers around the age of 9,
and adult teeth may come into a compromised mouth or, worse, start out with untreated decay. – Community
Leader
Many folks need access to dental care, and there aren’t enough facilities/providers. – Physician
Incidence/Prevalence
There are a lot of cavities in the children I see, many kids have been traumatized by painful dental work, many
parents are concerned about needing sedation or even general anesthesia to complete dental work for their
child, many lost days of work and school. – Physician
Poor hygiene. – Other Health Provider
Nutrition
Bottle use, high consumption of sugar-sweetened beverages. – Community Leader
Children with high level of decay on primary teeth. Sugary sweets at a young age. – Other Health Provider
Affordable Care/Services
Oral health is not highly prioritized when it's not included in primary health benefits and out-of-pocket expenses.
– Community Leader
Awareness/Education
A lack of education about the importance of good oral health and a lack of resources to obtain the care. –
Community Leader
COMMUNITY HEALTH NEEDS ASSESSMENT 90
LOCAL RESOURCES
HEALTH CARE RESOURCES & FACILITIES
Federally Qualified Health Centers (FQHCs)
The following map details Federally Qualified Health Centers (FQHCs) within the WCH Service Area.
FQHCs are community
assets that provide health
care to vulnerable
populations; they receive
federal funding to
promote access to
ambulatory care in areas
designated as medically
underserved.
COMMUNITY HEALTH NEEDS ASSESSMENT 92
Resources Available
to Address Significant Health Needs
The following represent potential measures and resources (such as programs, organizations, and facilities in
the community) identified by key informants as available to address the significant health needs identified in
this report. This list only reflects input from participants in the Online Key Informant Survey and should not
be considered to be exhaustive nor an all-inclusive list of available resources.
Access to Health Care Services Cancer
211 Santa Cruz County Brown Berets
CAB Center for Farmworker Families
Carelon Community Bridges
Central Coast Alliance Managed Medical Esperanza Community Farms
Chief of Staff Jacob’s Heart
City of Watsonville Kaiser
Clinica Del Valle Del Pajaro PAMF/Sutter
Coastal Health Partners Salud Para La Gente
Community Health Trust United Farm Workers
County Behavioral Health Watsonville Community Hospital
County Clinics
County HSA Watsonville Clinic
Diabetes
County of Santa Cruz
County Public Health Nurse
CalAIM
Dientes
Central California Alliance for Health
Doctor's Offices
City and County Health Department
Elderday Adult Day Health Care
Clinica de Salud
Encompass Community Services
Community Bridges
Enhance Care Management
Community Gardens
Faith-Based Networks
Community Health Trust
Food Bank
Community Health Workers
Homeless Network
County of Santa Cruz Health Services
Homeless Persons Health Project
County Public Health Nutrition Services
Hospitals
Diabetes Health Center
Insurance
Diabetic Support Groups
Kaiser
Dietitians
Loaves and Fishes
Doctor's Offices
Lucile Packard
Enhance Care Management
Pajaro Valley Healthcare District
Farmer's Market
Pajaro Valley Prevention and Student
Federally Qualified Health Centers
Assistance
Food Bank
Pajaro Valley Unified School District
Health Trust Diabetes Center
PAMF/Sutter
Homeless Persons Health Project
Salud Para La Gente
Hospitals
Santa Cruz Community Health
Kaiser
Second Harvest Food Bank
LPCH Endocrinology
South County Non-Profit Health Coalition
Pajaro Valley Health Trust
Watsonville Community Hospital
Pajaro Valley Unified School District
Watsonville Health Center
PAMF/Sutter
WIC
ParkRx
Public TV and Radio
COMMUNITY HEALTH NEEDS ASSESSMENT 93
Salud Para La Gente La Manzana
Santa Cruz Community Health Salud Para La Gente
School System Santa Cruz Community Foundation
Second Harvest Food Bank United Way
Stanford Watsonville Community Hospital
Watsonville Community Hospital Watsonville Health Center
Watsonville Health Center WIC
WIC
Injury & Violence
Disabling Conditions
Churches
Community Action Board City of Watsonville
Community Bridges Community Bridges
County Clinics County Office of Education
Montecito Manor Digital NEST
Recuperative Care Center Food Bank
Salud Para La Gente Hospitals
Watsonville Community Hospital Jovenes SANOS
Monarch Services
Outreach Counselors
Heart Disease & Stroke
Pajaro Valley Prevention and Student
Assistance
American Heart Association
Pajaro Valley Unified School District
CalAIM
Police Activities League
Community Health Workers
Police Department
Community Health Trust of Pajaro Valley
School System
County Nutrition Case Management Program
Watsonville Community Hospital
Dientes
Watsonville Police Department
Doctor's Offices
Youth Center
Dominican's Acute Rehab Unit
Dominican Hospital
Encompass Community Services Mental Health
Enhance Care Management
Federally Qualified Health Centers Central California Alliance for Health
Loaves and Fishes Community Action Board
PAMF/Sutter Community Bridges
Parks and Recreation Community Health Trust
Public TV and Radio County Behavioral Health
Salud Para La Gente County Clinics
Santa Cruz Community Health County Mental Health Services
Stroke Center - Cabrillo College County Outpatient Services
Watsonville Community Hospital Doctor's Offices
WIC Early Head Start
Encompass Community Services
Head Start
Infant Health & Family Planning HSA County Behavioral Health Services
Jovenes SANOS
Community Bridges
Kaiser
County HSA Watsonville Clinic
Mobile Emergency Response Team
Doctor's Offices
National Alliance on Mental Illness
Family Resource Collective
Pajaro Valley Prevention and Student
First 5 of Santa Cruz County
Assistance
Hospitals
Pajaro Valley Unified School District
Infant/Planning Services
ParkRx
COMMUNITY HEALTH NEEDS ASSESSMENT 94
Salud Para La Gente Second Harvest Food Bank
Santa Cruz County Behavioral Health Western Dental
Santa Cruz County Mental Health Resources WIC
Santa Cruz County Office of Education
Santa Cruz County Soquel
Respiratory Diseases
School System
Second Harvest Food Bank
Community Providers
Telecare
County Clinics
Watsonville Community Hospital
County Health Services Agency
Doctor's Offices
Dominican Hospital
Nutrition, Physical Activity, & Weight
Hospitals
City and County Health Department Kaiser
City of Watsonville Salud Para La Gente
Community Health Trust of Pajaro Valley Vaccines
County Health Services Agency Watsonville Community Hospital
County Nutrition Case Management Program
Diabetes Health Center
Sexual Health
Doctor's Offices
Doctors on Duty
Access Support Network
Food Bank
Care Teams
Friends of Santa Cruz Parks
Community Providers
Friends of Watsonville Parks
County Clinics
Health Centers
County Office of Education
Life Lab
County Public Health
Loaves and Fishes
County-Sponsored Sexual Health Education
Pajaro Valley Unified School District
Doctors on Duty
ParkRx
Dominican Hospital
Parks and Recreation
Federally Qualified Health Centers
Safe Routes to Schools Program
Pajaro Valley Prevention and Student
Salud Para La Gente Assistance
Salud Y Carino Pajaro Valley Unified School District
School System Planned Parenthood
Second Harvest Food Bank Salud Para La Gente
Stanford School System
Teen Kitchen Project Watsonville Community Hospital
Watsonville Community Hospital
Watsonville Parks and Community Services
Social Determinants of Health
WIC
YMCA
CAB
Youth Sports Leagues
Cabrillo
Catholic Charities
Center for Farmworker Health
Oral Health
CHISPA
Big Smile City of Watsonville
Central California Alliance for Health Community Action Board
County Clinics Community Action Network
Dental Offices Community Based Organizations
Diabetes Health Center Community Bridges
Dientes Community Health Trust of Pajaro Valley
Oral Health Access Coalition County Health Services Agency
Salud Para La Gente County Human Services Department
COMMUNITY HEALTH NEEDS ASSESSMENT 95
County of Santa Cruz
Doctor's Offices
Encompass Community Services
Family Resource Collective
Food Bank
Health and Human Services
Housing Element
Housing Matters
La Manzana
Loaves and Fishes
National Alliance on Mental Illness
Non-Profits and Faith-Based Groups
Pajaro Rescue Mission
Pajaro Valley Prevention and Student
Assistance
Pajaro Valley Shelter Services
Pajaro Valley Unified School District
Public Health Department
Raices Y Carino
Salud Para La Gente
Salvation Army
Santa Cruz County Health Department
Second Harvest Food Bank
South County Triage Group
UCSC
United Way
Watsonville Community Hospital
Watsonville Law Center
WIC
Substance Use
County Clinics
County of Santa Cruz
Elevate Addiction Services
Encompass Community Services
Janus
Pajaro Valley Prevention and Student
Assistance
Salud Para La Gente
Santa Cruz County Behavioral Health
Tobacco Use
County Clinics
Pajaro Valley Prevention and Student
Assistance
COMMUNITY HEALTH NEEDS ASSESSMENT 96
APPENDIX
EVALUATION OF PAST ACTIVITIES
Watsonville Community Hospital gained not-for-profit status in 2022; as such, this is the first Community
Health Needs Assessment completed pursuant to IRS regulations. Watsonville Community Hospital will
evaluate actions taken to address the needs identified in this assessment from this point forward.
COMMUNITY HEALTH NEEDS ASSESSMENT 98
APPENDIX C:
FINANCIAL DOCUMENTS
(2022 TO 2025)
Consolidated 2025 Budget
In Thousands (000's) Sept YTD Annualized 2025 Base 2025 Initiatives 2025 Budget
Inpatient Revenue 375,444 386,947 16,599 4 03,546
Outpatient Revenue 746,495 735,692 39,177 7 74,870
Total Gross Patient Revenue 1,121,939 1,122,639 55,777 1,178,416
Deductions from Revenue 961,727 961,809 43,168 1,004,977
Provision for Bad Debt 14,590 14,010 4 14,014
Collectible Patient Revenue 1 45,622 1 46,821 12,604 159,425
Other Revenue 8,316 7,973 600 10,137
Total Net Revenue 1 53,938 1 54,794 13,204 169,562
Salaries, Wages & Benefits 96,010 102,643 4,068 1 06,711
Medical Specialist Fees 9,354 9,713 1,211 12,452
Supplies 12,555 13,042 1,201 14,243
Repairs & Maintenance 1,561 1,577 - 1,577
Utilities 2,400 2,494 ( 85) 2,409
Purchased Services 12,110 12,524 250 12,774
Lease Cost & Rent 1,529 4,587 324 4,911
Property Tax & Insurance 3,199 2,459 - 2,459
Other Expenses 10,132 8,457 49 8,506
Total Operating Expenses 1 48,849 1 57,496 7,017 166,042
EBITDA 5,089 ( 2,702) 6,187 3,520
Depreciation & Amortization 258 1,569 281 1,850
Interest/Financed Leases 3,654 297 - 297
Net Operating Income/Loss 1,178 ( 4,569) 5,906 1,373
Audited Financial Statements
and Other Financial Information
PAJARO VALLEY
HEALTH CARE DISTRICT
December 31, 2024
Pajaro Valley Health Care District
Audited Financial Statements and Other Financial Information
Table of Contents
Report of Independent Auditors .................................................................................................................... 1
Management’s Discussion and Analysis ...................................................................................................... 3
Audited Financial Statements
Combined Statements of Net Position ...................................................................................................... 7
Combined Statements of Revenues, Expenses and Changes in Net Position ........................................... 8
Combined Statements of Cash Flows ....................................................................................................... 9
Notes to Financial Statements ................................................................................................................. 11
Supplemental Combining Financial Statements
Combining Statement of Net Position .................................................................................................... 26
Combining Statement of Revenues, Expenses and Changes in Net Position ......................................... 27
Independent Auditor’s Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ........................................................... 28
Schedule of Findings and Questioned Costs ............................................................................................... 30
JWT & Associates, LLP
Advisory Assurance Tax
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Report of Independent Auditors
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
Opinion
We have audited the accompanying combined financial statements of Pajaro Valley Health Care District (the
District) and Pajaro Valley Health Care District Hospital Corporation dba Watsonville Community Hospital (the
Hospital), collectively referred to as the “Combined Unit,” as of December 31, 2024 and 2023, which comprise
the combined statements of net position as of December 31, 2024 and 2023, and the related combined statements
of revenues, expenses, and changes in net position, and cash flows for the years then ended, and the related notes
to the combined financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial positions of the business-type activities and the discretely presented component unit of the District, as of
December 31, 2024 and 2023, and the respective changes in financial position, and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America.
Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Financial Statements section of our report. We are required to be independent of the District, and to meet our
other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern
for twelve months beyond the financial statement date, including any currently known information that may raise
substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee
that an audit conducted in accordance with generally accepted auditing standards will always detect a material
1
misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the District’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, and certain internal control-related matters that we
identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis be presented to supplement the basic financial statements. Such information is the responsibility of
management and, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries, the
basic financial statements, and other knowledge we obtained during our audits of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Emphasis of Matter – Going Concern
The accompanying financial statements have been prepared assuming that the District will continue as a going
concern. As discussed in Note 12 to the financial statements, the Hospital has reduced the annual losses
since emerging from bankruptcy in 2022, however there is only 9 days cash on hand and significant liabilities
that, if went unpaid, would cause significant challenges for the District. These conditions raise substantial doubt
about the District’s ability to continue as a going concern. Management’s plans regarding these matters are also
described in Note 10 and in the Management’s Discussion and Analysis. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified
with respect to this matter.
JWT & Associates, LLP
Fresno, California
May 28, 2025
2
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2024
Management of the Pajaro Valley Health Care District (the District) has prepared this annual discussion and
analysis in order to provide an overview of performance for the fiscal year ended December 31, 2024, in
accordance with the Governmental Accounting Standards Board Statement No. 34, Basic Financials Statements;
Management’s Discussion and Analysis for State and Local Governments. The District wholly owns the Pajaro
Valley Health Care District Hospital Corporation dba Watsonville Community Hospital (the Hospital). Together
they are referenced as the Combined Unit. The intent of this document is to provide additional information on the
Combined Unit’s financial performance as a whole and a prospective look at revenue, operating expenses, and
capital development plans. This discussion should be reviewed in conjunction with the audited financial
statements for the fiscal year ended December 31, 2024, and accompanying notes to the financial statements to
enhance one’s understanding of the Combined Unit’s financial performance.
Introduction
The Combined Unit offers readers of our financial statements this narrative overview and analysis of our financial
activities for the year ended December 31, 2024. We encourage readers to consider the information presented here
in conjunction with the Combined Unit’s financial statements, including the notes thereto.
The Combined Unit is governed by a five-member elected board of directors. Day-to-day operations are managed
by the Chief Executive Officer. The Combined Unit employed 625 employees on December 31, 2024, and had
monthly payroll of approximately $5.9M, not including benefits.
Required Financial Statements
The Combined Unit’s financial statements offer short-term and long-term information about its activities. The
statement of net position includes all of the Combined Unit’s assets and liabilities at December 31, 2024 and
provides information about the nature and amounts of investments in resources (assets) and the obligations to
Combined Unit creditors (liabilities). The statement of net position also provides the basis for evaluating the capital
structure of the Combined Unit and assessing the liquidity and financial flexibility of the Combined Unit.
All revenue and expenses for the years ended December 31, 2024, and 2023 are accounted for in the statement of
revenue, expenses, and changes in net position. The statement can be used to determine whether the Combined
Unit has successfully recovered all its costs through its patient service revenue and other revenue sources. Revenue
and expenses are reported on an accrual basis, which means the related cash could be received or paid in a
subsequent period.
The final required statement is the statement of cash flows. This statement reports cash receipts, cash payments
and net changes in cash resulting from operations, investing and financial activities for the years ended December
31, 2024, and 2023. They also provide answers to such questions as where cash came from, what cash was used
for and what the change in the cash balance was during the reporting period.
3
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2024
Financial Analysis of the Combined Unit
The Combined Unit’s net position, the difference between assets and liabilities, is a way to measure financial
health or financial position. Over time, sustained increases or decreases in the Combined Unit’s net position are
one indicator of whether its financial health is improving or deteriorating. However, other nonfinancial factors
such as changes in economic conditions, population growth and new or revised government regulations and
legislation should also be considered. In 2024, the Combined Unit’s net position decreased by approximately
$95K.
Financial Summary
• Total assets ended at $95.2 million being largely comprised of net patient AR ($25M) and real property
assets ($45M). Total cash and cash equivalents at year end were $18.1 million (see the Statements of
Cash Flows for changes) which includes the restricted bond funds ($14.4M).
• Current assets ended at $37.3M compared to current liabilities which ended at $32.4M. The current ratio
for this year was 1.15.
• Net operating revenues were $150.9M and operating expenses were $153.4M. There was non operating
income of $2.4M.
• The decrease in net position was $95k. See footnotes for more information.
Items Affecting Operations
The challenges facing the Combined Unit this fiscal period were largely similar, although varying in degree of
intensity, to those issues facing the health care industry in general and for rural health care facilities in particular.
Where the immediate environment and circumstances uniquely influence the Combined Unit, these areas are also
highlighted in the discussion below:
• Reimbursement: Medicare and Medi-Cal programs continue to reimburse the Hospital at rates that are
less than the cost to provide services to patients.
• Labor: Physician positions continue to be difficult to recruit in rural areas. Physician groups are
demanding higher rates and subsidies. We lost three physician groups in 2024 (Hospitalist and two
Radiology groups). Soliciting new groups, negotiating contracts and onboarding them onto the medical
staff is time consuming (4 to 6+ months). Additionally, securing interim coverage is expensive.
• The Hospital emerged from bankruptcy and was purchased by The District on September 1, 2022, with
limited working capital. The District continues to work to stabilize operations.
• The District has secured multiple funding sources to address the cashflow challenges. The District has
also applied to new inter-governmental transfer programs for 2025-26.
4
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2024
Items Affecting Operations (continued)
• The Hospital renegotiated all major payor contracts to improve reimbursement. As of December 31,
2023, all were implemented. As contracts expire, the Hospital has been successful in renegotiating new
terms.
• The Hospital faces challenges recruiting staff due to the high cost of living in the area and thus relies on
contracted resources to supplement staffing. These resources come at a slightly higher cost.
• The Hospital employs staff from 5 different unions that have resulted in protracted negotiations. As of
12/31/24, three contracts were expired and in negotiations. Updated contracts were all subsequently
ratified in Q1 2025.
• The Hospital was the victim of a cyber attack in November 2024. The attack levied a significant impact
on operations and temporarily slowed cash collections. Recovery efforts are ongoing. The District has
Cyber Attack insurance and is working closely with the insurer and related vendors. The Hospital’s
Accounts Payable backlog has increased, causing the need for more payment plans with vendors. The
Hospital is implementing growth strategies and securing additional funding, along with expense
reduction efforts.
• The District received $1.0 million in loan forgiveness from the County of Santa Cruz in exchange for
supporting the County’s Pediatric Stabilization unit while they build a new facility.
In summary, the external environment continues to challenge rural healthcare providers in particular, with
continuing declines in reimbursement, increases in uncompensated care and ongoing cash constraints. The
Combined Unit strives to improve relationships within our community through collaboration with community
leaders and service groups, outreach to neighboring healthcare facilities, improving access to care and recruitment
of quality medical providers.
The Combined Unit’s employees continue to work to find ways to improve patient care and service to its patients
and community, while striving to improve its financial position and overall fiscal performance.
The Hospital received Distressed Hospital loan proceeds of $8,300,000 on November 1, 2023. These funds were
used to maintain operations and in support of some Hospital projects to stabilize operations. The six-year loan is
zero interest and has an 18-month grace period before repayment. The Hospital received approval for loan
modification resulting in an additional 12 month deferral for payments, which will preserve $1.8M in working
capital in the short term. The Hospital will seek further loan modification up to loan forgiveness as the program
allows.
5
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2024
Items Affecting Operations (continued)
The District passed Measure N on the March 2024 ballot. Measure N is a $116M general obligation bond program
intended to renovate the Hospital and improve services to the community. Measure N allows the Hospital to
modernize and expand our facility. The District sold the first tranche of bonds in Sept 2024 for $53.5 million. The
District used $40 million to purchase the Hospital building and land through the locally controlled accountable
Pajaro Valley Health Care District.
The District has a line of credit with Santa Cruz County Bank, secured by community guarantors. In November
2024, a fourth guarantor was added, thereby increasing the line of credit from $3.0 million to $4.0 million. As of
12/31/24, the District has drawn $3.0 million. The District subsequently advanced the additional $1.0 million to
help cover expenses during the cyber attack recovery.
The Pajaro Valley Healthcare District Philanthropy Foundation is a non-profit 501(c)3 corporation in existence to
raise funds and secure grants for Watsonville Community Hospital activities and services. In 2024 they were able
to secure $2.4M in grants, including a three year $1.48 million Medi-Cal Capacity Grant.
Management utilizes a daily cash tracking tool to capture deposits, track expenditures and forecast future liabilities
and cash balances. Management has implemented additional reporting and monitoring tools to aid the leadership
in achieving its financial turnaround plans.
6
Pajaro Valley Healthcare District
Combined Statement of Net Position
December 31
2024 2023
Assets
Current Assets
Cash and cash equivalents $ 3,703,331 $ 6,639,515
Assets limited as to use 2,691,432 -
Patient accounts receivable, net of allowances 24,997,555 15,195,777
Other accounts receivable 128,787 -
Inventories 3,840,566 3,841,424
Prepaid expenses and other current assets 1,935,742 2,260,013
Total current assets 37,297,413 27,936,729
Assets limited as to use, net of current debt service 11,702,888 -
Capital assets, net of accumulated depreciation 45,096,317 3,138,796
Lease assets 417,973 33,549,419
Total assets 94,514,591 64,624,944
Deferred outflows of resources, net of inflows 647,855 -
$ 95,162,446 $ 64,624,944
Liabilities and Net Position
Current liabilities
Line of credit $ 3,000,000 $ -
Current maturities of debt borrowings 6,289,901 3,120,987
Accounts payable and accrued expenses 14,658,409 6,531,695
Accrued payroll and related liabilities 7,234,385 9,014,485
Estimated third party payor settements 569,228 728,871
IBNR self funded health benefits 685,410 1,706,135
Total current liabilities 32,437,333 21,102,173
Debt borrowings, net of current maturities 65,846,228 12,408,100
Lease liabilities 417,976 34,559,114
Total liabilities 98,701,537 68,069,387
Net position
Invested in capital assets, net of related debt 45,096,317 3,138,796
Restricted 14,394,320 2,600,000
Unrestricted (63,029,728) (9,183,239)
Total net position (3,539,091) (3,444,443)
Total liabilities and net position $ 95,162,446 $ 64,624,944
See accompanying notes to the financial statements
7
Pajaro Valley Healthcare District
Combined Statement of Revenues, Expenses and Changes in Net position
Year Ended December 31
2024 2023
Operating revenues
Net patient service revenues $ 1 42,092,210 $ 1 29,114,224
Other operating revenues 8 ,845,371 5 ,367,526
Total operating revenues 1 50,937,581 1 34,481,750
Operating expenses
Salaries & wages 7 0,669,317 7 0,156,726
Employee benefits 2 0,527,433 2 1,460,602
Contract labor 5,278,300 6 ,931,655
Supplies 12,402,259 8 ,319,794
Medical specialist fees 9 ,442,019 7 ,751,461
Purchased services 1 2,927,822 1 3,458,807
Lease cost and rent 1 ,470,931 1 ,914,944
Repairs & maintenance 1 ,516,915 1 ,359,867
Utilities 2 ,438,228 2 ,466,097
Depreciation and amortization 6 52,803 7 97,794
Other operating expenses 1 0,176,116 7 ,372,053
Property taxes & insurance 3 ,215,445 2 ,444,845
Interest 2,705,874 3 ,841,925
Total operating expenses 1 53,423,462 1 48,276,570
Operating income (loss) (2,485,881) (13,794,820)
Nonoperating revenues
Rental income 1,120,665 5 29,666
Interest income 3 73,424 1 03,547
District tax revenue 8 97,144 -
Total nonoperating revenues (expenses) 2 ,391,233 6 33,213
Increase/(decrease) in net position (94,648) (13,161,607)
Net position, beginning of the year (3,444,443) 9 ,717,164
Net position, end of year $ (3,539,091) $ (3,444,443)
See accompanying notes to the financial statements
8
Pajaro Valley Healthcare District
Combined Statement of Cash Flows
Year Ended December 31
2024 2023
Cash flows from operating activities
Cash received for operations $ 138,141,499 $ 137,341,169
Cash payments to suppliers and contractors (50,416,192) (53,842,286)
Cash payments to employees and benefit programs (93,997,575) (92,326,152)
Net cash (used in) operating activities (6,272,268) (8,827,269)
Cash flows from noncapital financing activities
Changes in assets limited to use (14,394,320) -
District tax revenues 897,144 -
Net cash (used in) noncapital financing activities (13,497,176) -
Cash flows from investing activities
Net purchase of capital assets and changes in other assets (44,267,871) (175,098)
Interest income 373,424 103,547
Rental income 1,120,665 529,666
Net cash (used in) investing activities (42,773,782) 458,115
Cash flows from financing activities
Line of credit 3,000,000 -
Proceeds from debt borrowings 59,923,235 9,095,000
Prepayments of debt borrowings (3,316,193) (2,746,899)
Net cash provided by financing activities 59,607,042 6,348,101
Decrease in cash and cash equivalents (2,936,184) (2,021,053)
Cash and cash equivalents at beginning of year 6,639,515 8,660,568
Cash and cash equivalents at end of year $ 3,703,331 $ 6,639,515
See accompanying notes to the financial statements
9
Pajaro Valley Healthcare District
Combined Statement of Cash Flows (continued)
Year Ended December 31
2024 2023
Reconciliation of operating income (loss) to net cash
provided by operating activities
Operating income $ (2,485,881) $ (13,794,820)
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 652,803 797,794
Changes in operating assets and liabilities
Receivables (9,930,565) 7,569,656
Inventories 858 (1,683,021)
Prepaid expenses and other current assets 324,271 295,812
Accounts payable and accrued expenses 8,126,714 (435,554)
Accrued payroll and related expenses (1,780,100) 372,623
Estimated third party payor settements (159,643) (868,313)
IBNR self funded health benefits (1,020,725) (1,081,446)
Net cash (used in) operating activities $ (6,272,268) $ (8,827,269)
See accompanying notes to the financial statements
10
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES
Organization: Pajaro Valley Health Care District, (the District) is a public entity organized under Local
District Law as set forth in the Health and Safety Code of the State of California. The District is a political
subdivision of the State of California and is generally not subject to federal or state income taxes. The
District is governed by a five-member Board of Directors, elected from within the district to specified terms
of office. The District is located in Watsonville, California. The District wholly owns the Pajaro Valley
Health Care District Hospital Corporation dba Watsonville Community Hospital (the Hospital). The
Hospital is a 501(c)(3) component unit of the District and operates a 106 -bed acute care hospital and other
patient services. The District also operates a clinic that serves patients in the area. The District's mission is
to provide health care services primarily to individuals who reside in the local geographic area. A combining
statement presenting both District and Hospital operations is presented in the supplementary information to
these combined financial statements.
The District and the Hospital were both created to purchase the operations and certain assets of the
Watsonville Community Hospital (WCH) and operate the hospital facility. WCH assets were acquired in
September of 2022. Hospital land and improvements (buildings) were acquired in October of 2024.
The District has a Professional Services Agreement (PSA) with Coastal Health Partners (CHP). CHP is
incorporated under the laws of the State of California and operates as a corporation. This agreement calls
for CHP to provide physicians to the District 1206(b) clinic. The District provides support staff to CHP
through the Hospital and passes those expenses onto the District Clinic.
The Combined Unit (the District and the Hospital) maintains its financial records in conformity with
guidelines set forth by the Local Health Care District Law and the Office of Statewide Health Planning and
Development of the state of California.
Basis of Preparation: The accounting policies and financial statements of the Combined Unit generally
conform with the recommendations of the audit and accounting guide, Health Care Organizations,
published by the American Institute of Certified Public Accountants. The financial statements are presented
in accordance with the pronouncements of the Governmental Accounting Standards Board (GASB). For
purposes of presentation, transactions deemed by management to be ongoing, major or central to the
provision of health care services are reported as operational revenues and expenses.
The Combined Unit uses proprietary fund accounting. Revenues and expenses are recognized on the accrual
basis using the economic resources measurement focus. Based on GASB Statement Number 20,
Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use
Proprietary Fund Accounting, as amended, the District has elected to apply the provisions of all relevant
pronouncements of the Financial Accounting Standards Board (FASB), including those issued after
November 30, 1989, that do not conflict with or contradict GASB pronouncements.
11
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Financial Statement Presentation: The Combined Unit applies the provisions of GASB 34, Basic
Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments
(Statement 34), as amended by GASB 37, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments: Omnibus, and Statement 38, Certain Financial Statement Note
Disclosures. Statement 34 established financial reporting standards for all state and local governments and
related entities. Statement 34 primarily relates to presentation and disclosure requirements. The impact of
this change was related to the format of the financial statements; the inclusion of management’s discussion
and analysis; and the preparation of the statement of cash flows on the direct method. The application of
these accounting standards had no impact on the total net assets.
Management’s Discussion and Analysis: Statement 34 requires that financial statements be accompanied
by a narrative introduction and analytical overview of the Combined Unit’s financial activities in the form
of “management’s discussion and analysis” (MD&A). This analysis is similar to the analysis provided in
the annual reports of organizations in the private sector.
Use of Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents: Cash and cash equivalents include deposits with financial institutions and
investments in highly liquid debt instruments with an original maturity of three months or less. Cash and
cash equivalents exclude amounts whose use is limited by board designation or by legal restriction.
Patient Accounts Receivable: Patient accounts receivable consists of amounts owed by various
governmental agencies, insurance companies and private patients. The Combined Unit manages its
receivables by regularly reviewing the accounts, inquiring with respective payors as to collectability and
providing for allowances on their accounting records for estimated contractual adjustments and
uncollectible accounts. Significant concentrations of patient accounts receivable are discussed further in the
footnotes.
Supplies: Inventories are consistently reported from year to year at cost determined by average costs and
replacement values which are not in excess of market. The Combined Unit does not maintain levels of
inventory values such as those under a first-in, first out or last-in, first out method.
12
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Capital Assets: Capital assets consist of property and equipment and are reported on the basis of cost, or in
the case of donated items, on the basis of fair market value at the date of donation. Routine maintenance
and repairs are charged to expense as incurred. Expenditures which increase values, change capacities, or
extend useful lives are capitalized. Depreciation of property and equipment and amortization of property
under capital leases are computed by the straight-line method for both financial reporting and cost
reimbursement purposes over the estimated useful lives of the assets, which range from 10 to 30 years for
buildings and improvements, and 3 to 15 years for equipment. The Combined Unit periodically reviews its
capital assets for value impairment. As of December 31, 2024 the Combined Unit has determined that no
capital assets are impaired.
Compensated Absences: The employees of the Combined Unit earn vacation, paid time off, holiday and
float benefits at varying rates. These accrual rates are determined based on the employee’s years of service,
full time equivalent (FTE) status, and union affiliation. This benefit can accumulate up to specified
maximum levels. Accumulated vacation, paid time off, and float benefits are paid to an employee upon
either termination or retirement. The combined liability for vacation, paid time off, and float liabilities as
of December 31, 2024 and 2023 totaled $4,057,874 and $4,279,528, respectively.
Some employees also have a Legacy bank of hours that can be utilized, once they have exhausted all other
accruals, and is payable at one half of their hourly rate of pay upon termination or retirement. The liability
for these hours as of December 31, 2024 and 2023 totaled $869,222 and $902,141, respectively.
Risk Management: The Combined Unit is exposed to various risks of loss from torts; theft of, damage to,
and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses;
natural disasters; and medical malpractice. Commercial insurance coverage is purchased for claims arising
from such matters.
Net position: Net position is presented in three categories. The first category of net position is “invested in
capital assets, net of related debt”. This category of net position consists of capital assets (both restricted
and unrestricted), net of accumulated depreciation and reduced by the outstanding principal balances of any
debt borrowings that were attributable to the acquisition, construction, or improvement of those capital
assets.
The second category is “restricted” net position. This category consists of externally designated constraints
placed on assets by creditors (such as through debt covenants), grantors, contributors, law or regulations of
other governments or government agencies, or law or constitutional provisions or enabling legislation. The
third category is “unrestricted” net position. This category consists of net position that does not meet the
definition or criteria of the previous two categories.
13
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Net Patient Service Revenues: Net patient service revenues are reported in the period at the estimated net
realized amounts from patients, third-party payors and others including estimated retroactive adjustments
under reimbursement agreements with third-party programs. Normal estimation differences between final
reimbursement and amounts accrued in previous years are reported as adjustments of current year's net
patient service revenues.
Financial Assistance: The Hospital offers a financial assistance policy for its patients. The financial
assistance policy describes the Hospital’s policy for both charity care (free care) and discounted care, and
the process for patients who need help paying for their emergency and medically necessary care. The intent
of this policy is to satisfy the requirements of Section 501(r) of the Internal Revenue Code and California
Health and Safety Code sections 127400 to 127446. Because the Combined Unit does not pursue collection
of amounts determined to qualify as charity care, they are not reported as net patient service revenues.
Services provided are recorded as gross patient service revenues and then written off entirely as an
adjustment to net patient service revenues.
Operating Revenues and Expenses: The Combined Unit’s statement of revenues, expenses and changes in
net assets distinguishes between operating and non-operating revenues and expenses. Operating revenues
result from exchange transactions associated with providing health care services, which is the Combined
Unit’s principal activity. Operating expenses are all expenses incurred to provide health care services, other
than financing costs. Non-operating revenues and expenses are those transactions not considered directly
linked to providing health care services.
Income taxes: The District operates under the purview of the Internal Revenue Code, Section 115, and
corresponding California Revenue and Taxation Code provisions. As such, it is not subject to state or federal
taxes on income. However, income from the unrelated business activities of the District may be subject to
income taxes.
The Hospital is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC).
Thus, no provision for income taxes is included in the accompanying financial statements. The Hospital
follows the accounting guidance for accounting for uncertainty in income taxes. The Hospital is subject
to federal and state income taxes to the extent it has unrelated business income. In accordance with the
guidance for uncertainty in income taxes, management has evaluated its material tax positions and
determined that there are no income tax effects with respect to its financial statements. The Hospital is
subject to examination by federal or state authorities within the three-year statute of limitations applied to
tax filings. The Hospital management has not been notified of any impending examination and no
examinations are currently in process.
14
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Revenue Recognition: As previously stated, net patient service revenues are reported at amounts that reflect
the consideration to which the Combined Unit expects to be entitled in exchange for patient services. These
amounts are due from patients, third-party payors (including health insurers and government programs),
and others and include variable consideration for retroactive revenue adjustments due to settlement of third-
party payor audits, reviews, and investigations. Generally, the Combined Unit bills the patients and third-
party payors several days after the patient receives healthcare services at the Combined Unit. Revenue is
recognized as services are rendered.
The Combined Unit has agreements with third-party payors that provide for payments to the Combined
Unit at amounts different from its established rates. Payment arrangements include prospectively
determined rates per day, discharge or visit, reimbursed costs, discounted charges and per diem payments.
Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered
and adjusted in future periods as final settlements are determined.
NOTE 2 – CASH AND CASH EQUIVALENTS
As of December 31, 2024 and 2023, the Combined Unit had deposits in a financial institution of $3,703,331
and $6,639,515, respectively. All these funds are in the form of cash and cash equivalents, which were
collateralized in accordance with the California Government Code ("CGC"), except for $250,000 per
account that is federally insured.
Under the provisions of the CGC, California banks and savings and loan associations are required to secure
the Combined Unit's deposits by pledging government securities as collateral. The market value of pledged
securities must equal at least 110% of the Combined Unit's deposits.
California law also allows financial institutions to secure Combine Unit deposits by pledging first trust deed
mortgage notes having a value of 150% of the Combined Unit's total deposits. The pledged securities are
held by the pledging financial institution's trust department in the name of the Combined Units.
Combined Unit investment policies allow investments in U.S. Government securities and state and local
agency funds which invest in U.S. Government securities. These investments, when present, are stated at
quoted market values. Changes in market value between years are reflected as a component of investment
income in the accompanying statement of revenues, expenses, and changes in net position.
15
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 3 – ASSETS LIMITED AS TO USE
Assets limited as to use are comprised of the remaining funds received from bond issuance. These
remaining funds will be used to upgrade the emergency room, perinatal unit, various equipment, and
energy efficiency projects.
Assets limited as to use as of December 31, 2024 and 2023 were comprised of the following:
2024 2023
Cash and cash euivalents held by U.S. Bank under agreements $ 14,394,320 $ -
Less current portion (2,691,432) -
Net assets limited as to use $ 11,702,888 $ -
NOTE 4 - NET PATIENT SERVICE REVENUES AND REIMBURSEMENT
PROGRAMS
The Combined Unit renders services to patients under contractual arrangements with the Medicare and
Medi-Cal programs, commercial insurance companies, health maintenance organizations (HMOs) and
preferred provider organizations (PPOs). Patient service revenues from these programs approximate 93.2%
of gross patient service revenues for the year ended December 31, 2024.
The Medicare Program reimburses the Hospital on a cost basis payment system for inpatient and outpatient
hospital services. The cost-based reimbursement is determined based on filed Medicare cost reports. Clinic
services are reimbursed based on fee schedules.
The Combined Unit contracts to provide services to Medi-Cal, HMO and PPO inpatients on negotiated
rates. Certain outpatient reimbursement is subject to a schedule of maximum allowable charges for Medi-
Cal and to a percentage discount for HMOs and PPOs.
Both the Medicare and Medi-Cal program's administrative procedures preclude final determination of
amounts due to the Combined Unit for services to program patients until after patients' medical records are
reviewed and cost reports are audited or otherwise reviewed by and settled with the respective
administrative agencies. The Medicare and Medi-Cal cost reports are subject to audit and possible
adjustment. Management is of the opinion that no significant adverse adjustment to the recorded settlement
amounts will be required upon final settlement.
Medicare and Medi-Cal revenue accounted for approximately 55% of the Combined Unit’s net patient
revenues for the year ended December 31, 2024. Laws and regulations governing the Medicare and Medi-
Cal programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable
possibility that recorded estimates will change by a material amount in the near term.
16
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 5 - CONCENTRATION OF CREDIT RISK
The Combined Unit grants credit without collateral to its patients and third-party payors. Patient accounts
receivable from government agencies represent the only concentrated group of credit risk for the Combined
Unit and management does not believe that there is any credit risk associated with these governmental
agencies. Contracted and other patient accounts receivable consist of various payors including individuals
involved in diverse activities, subject to differing economic conditions and do not represent any
concentrated credit risks to the Combined Unit. Concentration of patient accounts receivable at December
31, 2024 and 2023, were as follows:
2024 2023
Medicare $ 74,881,383 $ 34,412,365
Medi-Cal 28,028,570 43,776,399
Other third party payors 44,219,148 50,431,841
Self pay and other 35,432,353 22,023,987
Gross patient accounts receivable 182,561,454 150,644,592
Less allowances for contractual adjustments and bad debts (157,563,899) (135,517,104)
Net patient accounts receivable $ 24,997,555 $ 15,127,488
NOTE 6 - CAPITAL ASSETS
Capital assets as of December 31, 2024 were comprised of the following:
Balance at Transfers & Transfer & Balance at
12/31/2023 Additions Retirements 12/31/2024
CIP $ 989,966 $ 242,426 $ - $ 1,232,392
Land - 9 ,632,081 - 9 ,632,081
Buildings - 30,664,627 - 30,664,627
Equipment 2 ,795,443 2 ,017,897 - 4 ,813,340
Software 1 ,071,732 53,293 - 1 ,125,025
Totals at historical cost 4 ,857,141 42,610,324 - 47,467,465
Less accumulated depreciation (1,718,345) (652,803) - (2,371,148)
Capital assets, net $ 3,138,796 $ 41,957,521 $ - $ 45,096,317
17
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 6 - CAPITAL ASSETS (continued)
Capital assets as of December 31, 2023 were comprised of the following:
Balance at Transfers & Transfer & Balance at
12/31/2022 Additions Retirements 12/31/2023
CIP $ 965,266 $ 24,700 $ - $ 989,966
Equipment 1 ,738,255 1 ,057,188 - 2 ,795,443
Software 1 ,020,683 51,049 - 1 ,071,732
Totals at historical cost 3 ,724,204 1 ,132,937 - 4 ,857,141
Less accumulated depreciation (920,551) (797,794) - (1,718,345)
Capital assets, net $ 2,803,653 $ 335,143 $ - $ 3,138,796
NOTE 7 - DEBT BORROWINGS
Long-term debt consists of a note payable, a line of credit, and finance lease agreements as follows:
2024 2023
District debt
Santa Cruz County $ 1,300,004 $ 1,700,000
Mako Surgical 299,790 795,000
Phillips Medical 65,278 -
Bond Payable 24A 46,145,000 -
Bond Payable 24B 7,205,000 -
Premiums, net of accumulated accretion 1,751,435 -
Total District debt: 56,766,507 2,495,000
Hospital debt
David and Lucille Packard Foundation 2,294,266 4,715,253
Distressed Hospital Loan 8,300,000 8,300,000
Alliance Advance 3,500,000 -
Philips Medica Capital Lease (multiple finance leases 1,275,356 18,834
Total Hospital debt: 15,369,622 13,034,087
Total debt borrowings 72,136,129 15,529,087
Less current maturities (6,289,901) (3,120,987)
Debt borrowings, net of current maturities $ 6 5,846,228 $ 12,408,100
18
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 7 - DEBT BORROWINGS (continued)
Santa Cruz County: The District has a note payable with the County of Santa Cruz, for the purpose of
funding a Letter of Credit with the Santa Cruz County Bank, which was a requirement of the Hospital lease
agreement. Interest at 0% with four principal payments in the amount of $150,000 due the last day of each
quarter, beginning September of 2025. $1,000,000 is to be forgiven over 15 months beginning July of 2024,
in exchange for providing youth crisis services.
Mako Surgical: The District assumed an agreement to purchase a surgical robotic arm and related systems
for hip and knee applications. The interest rate is 0%. At the time, there were four remaining principal
payments of $120k, $200k, $280k, and $315k. The agreement includes an annual supply rebate program,
which has the potential to fully offset these payments. The final payment, less supply rebates, is due in
March of 2026.
Phillips Medical: The District entered a settlement agreement to lease a Philips Diamond Select Advance
Azurion 7 Cath Lab with Intrasight and repay related construction costs which were previously advanced
by Philips Medical Capital. The interest rate is 4.38%, with an initial payment of $395,100, followed by
three months at $0.00, three months at $10,573.16, and 66 months at $21,386.59. The final payment on the
lease is in June of 2030. The Constructions costs are payable in 60 monthly installments of $1,994.50 with
the final installment due in December of 2028.
Bond Payable 24A: Tax exempt general obligation bonds (election 2024); interest at 5.00% due
semiannually; principal due in annual amounts ranging from $620,000 on September 1, 2041 to $5,760,000
on September 1, 2054; collateralized by property taxes.
Bond Payable 24B: Taxable general obligation bonds (election 2024); interest at 5.00% due semiannually;
principal due in annual amounts ranging from $310,000 on September 1, 2034 to $1,285,000 on September
1, 2040; collateralized by property taxes.
David and Lucille Packard Foundation: The Hospital is a co-borrower on a note payable collateralized by
community pledges to the Pajaro Valley Healthcare District Project (the Project). As community pledges
are received, the Project will make annual principal payments, with the first payment due on March 31,
2024, and the final payment due on January 31, 2026. The Hospital will relieve the debt and recognize
revenue as principal payments are made by the Project. Interest at 0.5% will be paid by the Hospital bi-
annually on March 31st and September 30th, with the final payment due on January 31, 2026.
Distressed Hospital Loan: The Hospital received Distressed Hospital loan proceeds of $8,300,000 on
November 1, 2023. These funds were used to maintain operations and in support of some Hospital projects
to stabilize operations. The six-year loan is zero interest and has an 18-month grace period before
repayment. The legislation behind the Distressed Hospital Loan allows for the possibility of loan
forgiveness, that has not been confirmed as of 12/31/24. However, a loan modification was approved in
April of 2025, providing an additional 12 months of deferral.
Alliance Advance: Interest free Advance from Central California Alliance for Health against future
Hospital Quality Assurance Private Hospital Directed Payment expected in April of 2025.
19
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 8 – LINE OF CREDIT
In November of 2024, the District increased its $3.0 million line of credit to $4.0 million with Santa Cruz
County Bank, secured by community guarantors. The LOC has an interest rate of 1% plus prime (8.75% at
December 31, 2024) and matures on November 5, 2026. Accrued interest on any outstanding principal is
due monthly. As of December 31, 2024, the District had drawn $3,000,000 on the credit line.
NOTE 9 - RETIREMENT PLANS
The Hospital sponsors two 401(a) defined contribution retirement plans for employer contributions: one for
service and maintenance employees payable on a calendar year-end that contributes 6% or higher depending
on years of service of gross annual earnings; the second 401(a) plan covers other non-management, non-
highly compensated employees and contributes 6% of gross earnings bi-weekly. The Hospital also sponsors
a 457(b) deferred compensation plan for employee contributions, withheld from bi-weekly earnings.
In 2024, The Hospital made bi-weekly payment to Principal totaling $2,329,363 in 401(a) employer
contributions, and $3,913,589 in 457(b) Employee Contributions. Additionally, 401(a) employer
contributions were made in September of 2024 for the SEIU Service & Maintenance 2023 plan year totaling
$461,190.
Accrued payroll and related liabilities include $108,424 of 401(a) employer liabilities, calculated from the
final two pay period of the year and contributed to the plan in January of 2024. 401(a) liabilities for SEIU
Service & Maintenance employees was $526,675 as of December 31, 2024.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Construction-in-Progress: As of December 31, 2024, the Combined Unit had $1,232,392 in construction-
in-progress for the Cardio Cath Lab. Approximately $0 in remobilization fees are remaining to complete
construction. The project is complete. The Combined Unit is waiting for a certificate of occupancy to place
the Cath Lab in service.
Litigation: The Combined Unit may from time-to-time be involved in litigation and regulatory
investigations which arise in the normal course of doing business. As of December 31, 2024, management
is not aware of any legal matters or potential regulatory investigations.
Medical Malpractice Insurance: The Combined Unit maintains commercial malpractice liability insurance
coverage under a claims made and reported policy covering losses up to $15 million per claim and $25
million in the aggregate for all claims, subject to a deductible of $150,000 Indemnity & Expense each claim.
The District plans to maintain the insurance coverage by renewing its current policy, or by replacing it with
equivalent insurance.
20
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)
Workers Compensation Program: The Hospital workers compensation policy is through BETA Healthcare
Group and renews in July 2025. Annual premium is $1,155,232. The district workers compensation policy
is through Travelers and renews in Oct 2025. The annual premium is $28,160.
Health Insurance Portability and Accountability Act: The Health Insurance Portability and Accountability
Act (HIPAA) was enacted August 21, 1996, to ensure health insurance portability, reduce health care fraud
and abuse, guarantee security and privacy of health information, and enforce standards for health
information. Organizations are subject to significant fines and penalties if found not to be compliant with
the provisions outlined in the regulations. Management believes the Combined Unit is in compliance with
HIPAA as of December 31, 2024 and 2023.
Regulatory Environment: The Combined Unit is subject to several laws and regulations. These laws and
regulations include matters such as licensure, accreditation, government health care program participation
requirements, reimbursement for patient services, and Medicare and Medi-Cal fraud and abuse.
Government activity has increased with respect to possible violations of statues and regulations by health
care providers. Violations of these laws and regulations could result in expulsion from government health
care programs together with the imposition of significant fines and penalties, as well as significant
repayments for patient services previously billed. Management believes that the Combined Unit is in
compliance with all applicable government laws and regulations and is not aware of any future actions or
unasserted claims at this time.
NOTE 11 - LEASES
During 2024 the District purchased the hospital building from Medical Properties Trust, Inc., therefore this
lease is no longer included. The Combined Unit has multiple equipment and building leases, only one was
required to be capitalized under GASB 87. The District leases office space used for the Urology Center
with a remaining term of 69 months and a fixed monthly payment during the term. All other lease
arrangements are either immaterial or have a term of 12 months or less.
This lease does not have a readily determinable discount rate. The estimated borrowing rate is 9.5%.
Variable lease costs are excluded from the present value of lease obligations. The District’s lease
agreements do not contain any material restrictions, covenants, or any material residual value guarantees.
21
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 11 – LEASES (continued)
Lease related assets and liabilities as of December 31, 2024 and 2023 consist of the following:
Lease assets: 2024 2023
MPT $ - $ 32,414,776
Urology center 417,973 502,704
Other - 631,939
Total lease assets $ 417,973 $ 33,549,419
Lease liabilities: 2024 2023
MPT $ - $ 33,446,113
Urology center 417,976 507,764
Other - 605,237
Total lease liabilities $ 417,976 $ 34,559,114
Maturities of lease liabilities under noncancellable operating leases as of December 31, 2024, are as follows:
Years ending December 31,
2025 $ 93,876
2026 93,876
2027 93,876
2028 93,876
Thereafter 164,292
Total 539,796
Less imputed interest (121,820)
Present value of lease liabilities $ 4 17,976
22
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 12 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Combined Unit will continue
as a going concern. The Hospital has reduced its annual losses since emerging from bankruptcy in 2022,
however it suffered significant losses from operations in 2023 and has experienced cash flow difficulties
since the District acquired them in September 2022. The Combined unit also has only 9 days cash on
hand and significant debt obligations. These conditions raise substantial doubt about the Hospital’s
ability to continue as a going concern. Management’s plans regarding these matters are described
above in the Management’s Discussion and Analysis. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. In view of these matters,
continuation as a going concern is dependent on continued operations of the District and the Hospital,
which in turn is dependent on the District’s and the Hospital’s ability to increase collections, decrease
expenses, and raise additional capital.
The Combined Unit’s management continues its efforts to improve its financial position and overall fiscal
performance. Initiatives were created during the budget cycle that are tracked to see their overall impact to
performance. Service offerings are reviewed to identify opportunities to grow business and gain more
revenues.
Management utilizes a daily cash tracking tool to capture deposits, track expenditures and forecast future
liabilities and cash balances. Management has implemented additional reporting and monitoring tools to
aid the leadership in achieving its financial turnaround plans.
The Hospital was the victim of a cyber attack in November 2024, The attack levied a significant impact on
operations and temporarily slowed cash collections. Recovery efforts are on going. The District has Cyber
Attack insurance and is working closely with the insurer and related vendors.
The District has secured multiple funding sources to address the cashflow challenges. The District continues
to seek new funding sources. The District has applied to new inter-governmental transfer programs for
2025-26.
The Hospital received Distressed Hospital loan proceeds of $8,300,000 on November 1, 2024. These funds
were used to maintain operations and in support of certain Hospital projects to further stabilize operations.
The six-year loan is at 0.0% interest and has an 18-month grace period before repayment begins. The
Hospital received approval for loan modification resulting in an additional 12 month deferral for payments,
which will preserve $1.8M in working capital in the short term. The Hospital will seek further loan
modification up to loan forgiveness as the program allows.
The District passed Measure N on the March 2024 ballot. Measure N is a $116M general obligation bond
program intended to renovate the Hospital and improve services to the community. Measure N allows the
hospital to modernize and expand the facility. The District sold the first tranche of bonds in Sept 2024 for
$53.5 million. The District used $40 million to purchase the hospital building and land.
23
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2024
NOTE 12 – GOING CONCERN (continued)
The District has a $3.0 million line of credit with Santa Cruz County Bank, secured by community
guarantors. In November 2024, a fourth guarantor was added, thereby increasing the line of credit from
$3.0 million to $4.0 million As of December 31, 2024, the District has drawn $3.0M on the credit line. The
District subsequently advanced the additional $1.0 million to help cover expenses during the cyber attack
recovery.
The Pajaro Valley Healthcare District Philanthropy Foundation is a non-profit 501(c)3 corporation in
existence to raise funds and secure grants for Hospital activities and services. In 2024, they were able to
secure $2.4M in grants, including a three year $1.48 million Medi-Cal Capacity Grant.
The District received $1.0 million in loan forgiveness from the County of Santa Cruz in exchange for
supporting the County’s Pediatric Stabilization unit while they build a new facility.
NOTE 13 – SUBSEQUENT EVENTS
Management evaluated the effect of subsequent events on the combined financial statements through May
28, 2024, the date the combined financial statements are issued, and determined that there are no material
subsequent events that have not been disclosed.
24
SUPPLEMENTARY SCHEDULES
25
Pajaro Valley Healthcare District
Combining Statement of Net Position
December 31, 2024
District Hospital Eliminations Total
Assets
Current Assets
Cash and cash equivalents $ 1,168,762 $ 2,534,569 $ - $ 3,703,331
Assets limited to use 2,691,432 - - 2,691,432
Patient accounts receivable, net of allowances 20,452 24,977,103 - 24,997,555
Other accounts receivable 527,743 101,044 (500,000) 128,787
Inventories 20,859 3,819,707 - 3,840,566
Prepaid expenses and other current assets 213,951 1,721,791 - 1,935,742
Total current assets 4,643,199 33,154,214 (500,000) 37,297,413
Assets limited to use, net of current debt service 11,702,888 - - 11,702,888
Capital assets, net of accumulated depreciation 43,469,615 1,626,702 - 45,096,317
Lease assets 417,973 - - 417,973
Due from district - 11,525,293 (11,525,293) -
Total assets 60,233,675 46,306,209 (12,025,293) 94,514,591
Deferred outflows of resources, net of inflows 647,855 - - 647,855
$ 60,881,530 $ 46,306,209 $ (12,025,293) $ 95,162,446
Liabilities and Net Position
Current liabilities
Line of credit $ - $ 3,000,000 $ - $ 3,000,000
Current maturities of debt borrowings 1,358,666 4,931,235 - 6,289,901
Accounts payable and accrued expenses 961,831 14,196,578 (500,000) 14,658,409
Accrued payroll and related liabilities 195,132 7,039,253 - 7,234,385
Estimated third party payor settements - 569,228 - 569,228
IBNR self funded health benefits - 685,410 - 685,410
Total current liabilities 2,515,629 30,421,704 (500,000) 32,437,333
Debt borrowings, net of current maturities 55,431,775 10,414,453 - 65,846,228
Lease liabilities 417,976 - - 417,976
Due to hospital 11,525,293 - (11,525,293) -
Total liabilities 69,890,673 40,836,157 (12,025,293) 98,701,537
Net position
Invested in capital assets, net of related debt 43,469,615 1,626,702 - 45,096,317
Restricted 14,394,320 - - 14,394,320
Unrestricted (66,873,078) 3,843,350 (63,029,728)
Total net position (9,009,143) 5,470,052 - (3,539,091)
Total liabilities and net position $ 60,881,530 $ 46,306,209 $ (12,025,293) $ 95,162,446
See accompanying notes to the financial statements
26
Pajaro Valley Healthcare District
Combining Statement of Revenues, Expenses and Changes in Net position
For The Year Ended December 31, 2024
District Hospital Eliminations Total
Operating revenues
Net patient service revenues $ 2,991,509 $ 139,100,701 $ - $ 142,092,210
Other operating revenues 601,300 8,744,071 (500,000) 8,845,371
Total operating revenues 3,592,809 147,844,772 (500,000) 150,937,581
Operating expenses
Salaries & wages 3,142,722 67,526,595 - 70,669,317
Employee benefits 460,350 20,067,083 - 20,527,433
Contract labor - 5,278,300 - 5,278,300
Supplies 99,459 12,302,800 - 12,402,259
Medical specialist fees 373,982 9,068,037 - 9,442,019
Purchased services 395,443 12,532,379 - 12,927,822
Lease cost and rent 291,685 1,679,246 (500,000) 1,470,931
Repairs & maintenance 594 1,516,321 - 1,516,915
Utilities 23,681 2,414,547 - 2,438,228
Depreciation 578,272 74,531 - 652,803
Other operating expenses 48,982 10,127,134 - 10,176,116
Property taxes & insurance 1,044,353 2,171,092 - 3,215,445
Interest 2,378,025 327,849 - 2,705,874
Total operating expenses 8,837,548 145,085,914 (500,000) 153,423,462
Operating income (loss) (5,244,739) 2,758,858 - (2,485,881)
Nonoperating revenues (expenses)
Rental income 1,120,665 - - 1,120,665
Interest income 373,424 - - 373,424
District tax revenue 897,144 - - 897,144
Total nonoperating revenues (expenses) 2,391,233 - - 2,391,233
Increase/(decrease) in net position (2,853,506) 2,758,858 - (94,648)
Net position, beginning of the year (6,155,637) 2,711,194 - (3,444,443)
Net position, end of year $ (9,009,143) $ 5,470,052 $ - $ (3,539,091)
See accompanying notes to the financial statements
27
JWT & Associates, LLP
A Certified Public Accountancy Limited Liability Partnership
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the combined financial statements of the business-type activities of the Pajaro Valley
Health Care District (the District) as of and for the year ended December 31, 2024, and the related notes to the
combined financial statements, which collectively comprise the District's combined financial statements, and have
issued our report thereon dated May 28, 2025.
Internal Control over Financial Reporting
In planning and performing our audit of the combined financial statements, we considered the District's internal
control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinion on the combined financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not
express an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's combined financial
statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies. Given those limitations, during our audit we did not identify any deficiencies in internal control that
we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
28
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's combined financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the combined financial
statement. However, providing an opinion on compliance with those provisions was not an objective of our audit,
and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District's internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
JWT & Associates, LLP
Fresno, California
May 28, 2025
29
Pajaro Valley Health Care District
Schedule of Findings and Questioned Costs
For the Year Ended December 31, 2024
I.Summary of Auditor’s Results
Type of auditor’s report issued: Unmodified
Internal Control over financial reporting:
Material weakness identified? yes X no
Significant deficiency(ies) identified that are not considered
to be material weaknesses? yes X no
Noncompliance material to financial statements noted? yes X no
II.Current Year Audit Findings and Questioned Costs
Financial Statement Findings
None reported
III.Prior Year Audit Findings and Questioned Costs
None reported
30
Audited Financial Statements
and Other Financial Information
PAJARO VALLEY
HEALTH CARE DISTRICT
December 31, 2023
JWT & Associates, LLP
Advisory Assurance Tax
Pajaro Valley Health Care District
Audited Financial Statements and Other Financial Information
Table of Contents
Report of Independent Auditors .................................................................................................................... 1
Management’s Discussion and Analysis ...................................................................................................... 3
Audited Financial Statements
Combined Statements of Net Position ...................................................................................................... 6
Combined Statements of Revenues, Expenses and Changes in Net Position ........................................... 7
Combined Statements of Cash Flows ....................................................................................................... 8
Notes to Financial Statements ................................................................................................................. 10
Supplemental Combining Financial Statements
Combining Statement of Net Position .................................................................................................... 24
Combining Statement of Revenues, Expenses and Changes in Net Position ......................................... 25
Independent Auditor’s Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ........................................................... 26
Schedule of Findings and Questioned Costs ............................................................................................... 28
JWT & Associates, LLP
Advisory Assurance Tax
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Report of Independent Auditors
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
Opinion
We have audited the accompanying combined financial statements of Pajaro Valley Health care District (the
District) and Pajaro Valley Health Care District Hospital Corporation dba Watsonville Community Hospital
(the Hospital), collectively referred to as the “Combined Unit,” as of December 31, 2023 and 2022, which
comprise the combined statements of net position as of December 31, 2023 and 2022, and the related combined
statements of revenues, expenses, and changes in net position, and cash flows for the years then ended, and
the related notes to the combined financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial positions of the business-type activities and the discretely presented component unit of the District,
as of December 31, 2023 and 2022, and the respective changes in financial position, and, where applicable,
cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for
the Audit of the Financial Statements section of our report. We are required to be independent of the District,
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to
our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a
going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
a guarantee that an audit conducted in accordance with generally accepted auditing standards will always
detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from
1
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Misstatements are considered material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the District’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis be presented to supplement the basic financial statements. Such information is the
responsibility of management and, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audits of the basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Emphasis of Matter – Going Concern
The accompanying financial statements have been prepared assuming that the District will continue as a going
concern. As discussed in Note 10 to the financial statements, the Hospital has reduced the annual losses since
emerging from bankruptcy in 2022, however it has suffered significant losses from operations and has
experienced cash flow difficulties. These conditions raise substantial doubt about the District’s ability to
continue as a going concern. Management’s plans regarding these matters are also described in Note 10 and
in the Management’s Discussion and Analysis. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
JWT & Associates, LLP
Fresno, California
March 27, 2024
2
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2023
Management of the Pajaro Valley Health Care District (the District) has prepared this annual discussion and
analysis in order to provide an overview of performance for the fiscal year ended December 31, 2023, in
accordance with the Governmental Accounting Standards Board Statement No. 34, Basic Financials
Statements; Management’s Discussion and Analysis for State and Local Governments. The District wholly
owns the Pajaro Valley Health Care District Hospital Corporation dba Watsonville Community Hospital (the
Hospital). Together they are referenced as the Combined Unit. The intent of this document is to provide
additional information on the Combined Unit’s financial performance as a whole and a prospective look at
revenue, operating expenses, and capital development plans. This discussion should be reviewed in
conjunction with the audited financial statements for the fiscal year ended December 31, 2023, and
accompanying notes to the financial statements to enhance one’s understanding of the Combined Unit’s
financial performance. Being the first full year of operation, the prior comparison year is a 4-month period.
Introduction
The Combined Unit offers readers of our financial statements this narrative overview and analysis of our
financial activities for the year ended December 31, 2023. We encourage readers to consider the information
presented here in conjunction with the Combined Unit’s financial statements, including the notes thereto.
The Combined Unit is governed by a five-member elected board of directors. Day-to-day operations are
managed by the Chief Executive Officer. The Combined Unit employed 663 employees on December 31,
2023, and had monthly payroll of approximately $5.85M, not including benefits.
Required Financial Statements
The Combined Unit’s financial statements offer short-term and long-term information about its activities. The
statement of net position includes all of the Combined Unit’s assets and liabilities at December 31, 2023 and
provides information about the nature and amounts of investments in resources (assets) and the obligations to
Combined Unit creditors (liabilities). The statement of net position also provides the basis for evaluating the
capital structure of the Combined Unit and assessing the liquidity and financial flexibility of the Combined
Unit.
All revenue and expenses for the years ended December 31, 2023, and 2022 are accounted for in the statement
of revenue, expenses, and changes in net position. The statement can be used to determine whether the
Combined Unit has successfully recovered all its costs through its patient service revenue and other revenue
sources. Revenue and expenses are reported on an accrual basis, which means the related cash could be
received or paid in a subsequent period.
The final required statement is the statement of cash flows. This statement reports cash receipts, cash payments
and net changes in cash resulting from operations, investing and financial activities for the years ended
December 31, 2023, and 2022. They also provide answers to such questions as where cash came from, what
was cash used for and what was the change in the cash balance during the reporting period.
3
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2023
Financial Analysis of the Combined Unit
The Combined Unit’s net position, the difference between assets and liabilities, is a way to measure financial
health or financial position. Over time, sustained increases or decreases in the Combined Unit’s net position
are one indicator of whether its financial health is improving or deteriorating. However, other nonfinancial
factors such as changes in economic conditions, population growth and new or revised government regulations
and legislation should also be considered. In 2023, the Combined Unit’s net position decreased by
approximately $13.2M (see footnotes).
Financial Summary
• Total assets ended at $64.6 million being largely comprised of net patient AR $15.2M) and lease
assets ($33.5M). Total cash and cash equivalents at year end were $6.6 million (see the Statements
of Cash Flows for changes).
• Current assets ended at $27.9M compared to current liabilities which ended at $21M. The current ratio
for this year was 1.33.
• Net operating revenues were $134.5M and operating expenses were $148.3M. There was an
operating loss of $13.8M
• The decrease in net position was $13.2M See footnotes for more information.
Items Affecting Operations
The challenges facing the Combined Unit this fiscal period were largely similar, although varying in degree
of intensity, to those issues facing the health care industry in general and for rural health care facilities in
particular. Where the immediate environment and circumstances uniquely influence the Combined Unit, these
areas are also highlighted in the discussion below:
• Reimbursement: Medicare and Medi-Cal programs continue to look for ways to reduce
reimbursement.
• Labor: Physician positions continue to be difficult to recruit in rural areas.
• The Hospital emerged from bankruptcy and was purchased by The District on September 1, 2022,
with limited working capital. The District continues to work to stabilize operations.
• The District has secured multiple funding sources to address the cashflow challenges.
4
Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2023
Items Affecting Operations (continued)
• The Hospital renegotiated all major payor contracts to improve reimbursement. As of December 31,
2023, all were implemented.
• The Hospital faces challenges recruiting staff due to the high cost of living in the area and thus relies
on contracted resources to supplement staffing. These resources come at a slightly higher cost.
• The District leases hospital real estate from Medical Properties Trust. The Hospital operations must
cover this lease payment along with all deficits of The District.
In summary, the external environment continues to challenge rural healthcare providers in particular, with
continuing declines in reimbursement, increases in uncompensated care and ongoing labor and health
insurance issues. The Combined Unit strives to improve relationships within our community through
collaboration with community leaders and service groups, outreach to neighboring healthcare facilities,
improving access to care and recruitment of quality medical providers.
The Combined Unit’s employees are working together to continue to find ways to make progress on improving
how the Combined Unit organizes and processes work in such a way that it continues to improve patient care
and service to its patients and community, while striving to improve its financial position and overall fiscal
performance.
The Hospital received Distressed Hospital loan proceeds of $8,300,000 on November 1, 2023. These funds
were used to maintain operations and in support of some Hospital projects to stabilize operations. The six-
year loan is zero interest and has an 18-month grace period before repayment. The legislation behind the
Distressed Hospital Loan allows for the possibility of loan forgiveness, however that has not been confirmed
as of 12/31/23.
The District placed Measure N on the March 2024 ballot. Measure N is a $116M general obligation bond
program intended to renovate the Hospital and improve services to our community. Measure N will allow the
Hospital to modernize and expand our facility. It will also allow us to purchase the Hospital building and land
through the locally controlled accountable Pajaro Valley Health Care District. The purchase would eliminate
the current $3.0M annual lease payments to the third-party owner, allowing those funds to be reinvested in
supporting staff and patient care.
The District obtained a $3.0 million line of credit with Santa Cruz County Bank, secured by community
guarantors. As of 12/31/23, the District had not drawn on the credit line. The Pajaro Valley Healthcare District
Philanthropy Foundation is a newly formed non-profit 501(c)3 corporation in existence to raise funds and
secure grants for Watsonville Community Hospital activities and services. In 2023 they were able to secure a
$250K grant for the purchase of anesthesia machines. Additionally, they secured $60K in grants to support
translation services to support patient care for non-English speaking patients.
Management has implemented a cash management plan and is actively managing its revenue cycle
(collections) activities. Additionally, the District (Hospital) is opening a Cath Lab in Q2 2024 which will
provide new revenue generating opportunities. Other expense initiatives are also planned for 2024.
5
Pajaro Valley Healthcare District
Combined Statement of Net Position
December 31
2023 2022
Assets
Current Assets
Cash and cash equivalents $ 6 ,639,515 $ 8 ,660,568
Patient accounts receivable, net of allowances 1 5,195,777 2 1,266,511
Other accounts receivable - 1 ,498,921
Inventories 3 ,841,424 2 ,158,403
Prepaid expenses and other current assets 2 ,260,013 2 ,510,580
Total current assets 2 7,936,729 3 6,094,983
Capital assets, net of accumulated depreciation 3 ,138,796 3 ,015,808
Lease assets 3 3,549,419 3 4,759,953
Total assets $ 6 4,624,944 $ 7 3,870,744
Liabilities and Net Position
Current liabilities
Current maturities of debt borrowings $ 3 ,120,987 $ 1 ,702,035
Accounts payable and accrued expenses 6 ,531,695 6 ,922,004
Accrued payroll and related liabilities 9 ,014,485 8 ,641,862
Estimated third party payor settements 7 28,871 1 ,597,184
IBNR self funded health benefits 1 ,706,135 2 ,787,581
Total current liabilities 2 1,102,173 2 1,650,666
Debt borrowings, net of current maturities 1 2,408,100 7 ,478,951
Lease liabilities 3 4,559,114 3 5,023,963
Total liabilities 6 8,069,387 6 4,153,580
Net position
Invested in capital assets, net of related debt 3 ,138,796 2 ,891,822
Restricted 2,600,000 2 ,600,000
Unrestricted (9,183,239) 4 ,225,342
Total net position (3,444,443) 9 ,717,164
Total liabilities and net position $ 6 4,624,944 $ 7 3,870,744
See accompanying notes to the financial statements
6
Pajaro Valley Healthcare District
Combined Statement of Revenues, Expenses and Changes in Net position
Year Ended December 31
2023 2022
Operating revenues
Net patient service revenues $ 1 29,114,224 $ 3 3,308,250
Other operating revenues 5 ,367,526 5 32,944
Total operating revenues 1 34,481,750 3 3,841,194
Operating expenses
Salaries & wages 7 0,156,726 1 7,381,952
Employee benefits 2 1,460,602 6 ,100,838
Contract labor 6,931,655 2 ,414,616
Supplies 8,319,794 3 ,688,032
Medical specialist fees 7 ,751,461 2 ,876,058
Purchased services 1 3,458,807 5 ,579,962
Lease cost and rent 1 ,914,944 1 ,649,758
Repairs & maintenance 1 ,359,867 3 16,371
Utilities 2 ,466,097 7 12,745
Depreciation and amortization 1 ,979,831 3 84,786
Other operating expenses 6 ,190,016 2 ,906,562
Property taxes & insurance 2 ,444,845 7 31,821
Interest 3,841,925 3 20,538
Total operating expenses 1 48,276,570 4 5,064,039
Operating income (loss) (13,794,820) (11,222,845)
Nonoperating revenues
Rental income 529,666 2 77,387
Interest income 1 03,547 -
Total nonoperating revenues (expenses) 6 33,213 2 77,387
Net income/(loss) before extraordinary item (13,161,607) (10,945,458)
Gain from acquisition of hospital - 2 0,662,622
Increase/(decrease) in net position (13,161,607) 9 ,717,164
Net position, beginning of the year 9 ,717,164 -
Net position, end of year $ (3,444,443) $ 9 ,717,164
See accompanying notes to the financial statements
7
Pajaro Valley Healthcare District
Combined Statement of Cash Flows
Year Ended December 31
2023 2022
Cash flows from operating activities
Cash received for operations $ 137,341,168 $ 12,352,408
Cash payments to suppliers and contractors (52,660,249) (18,622,904)
Cash payments to employees and benefit programs (92,326,152) (12,053,347)
Net cash (used in) operating activities (7,645,233) (18,323,843)
Cash flows from noncapital financing activities
Gain from acquisition of hospital - 20,662,622
Net cash provided by noncapital financing activities - 20,662,622
Cash flows from investing activities
Purchases of property, plant & equipment (1,357,134) (3,136,584)
Interest income 103,547 -
Rental income 529,666 277,387
Net cash (used in) investing activities (723,921) (2,859,197)
Cash flows from financing activities
Proceeds from debt borrowings 9,095,000
Prepayments of debt borrowings (2,746,899) 9,180,986
Net cash provided by financing activities 6,348,101 9,180,986
Increase in cash and cash equivalents (2,021,053) 8,660,568
Cash and cash equivalents at beginning of year 8,660,568 -
Cash and cash equivalents at end of year $ 6,639,515 $ 8,660,568
See accompanying notes to the financial statements
8
Pajaro Valley Healthcare District
Combined Statement of Cash Flows (continued)
Year Ended December 31
2023 2022
Reconciliation of operating income (loss) to net cash
provided by operating activities
Operating income $ (13,794,821) $ (11,222,845)
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 1,979,831 384,786
Changes in operating assets and liabilities
Receivables 7,569,656 (22,765,432)
Inventories (1,683,021) (2,158,403)
Prepaid expenses and other current assets 295,812 (2,510,580)
Accounts payable and accrued expenses (435,554) 6,922,004
Accrued payroll and related expenses 372,623 8,641,862
Estimated third party payor settements (868,313) 1,597,184
IBNR self funded health benefits (1,081,446) 2,787,581
Net cash (used in) operating activities $ (7,645,233) $ (18,323,843)
See accompanying notes to the financial statements
9
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES
Organization: Pajaro Valley Health Care District, (the District) is a public entity organized under Local
District Law as set forth in the Health and Safety Code of the State of California. The District is a political
subdivision of the State of California and is generally not subject to federal or state income taxes. The
District is governed by a five-member Board of Directors, elected from within the district to specified terms
of office. The District is located in Watsonville, California. The District wholly owns the Pajaro Valley
Health Care District Hospital Corporation dba Watsonville Community Hospital (the Hospital). The
Hospital is a 501(c)(3) component unit of the District and operates a 106 -bed acute care hospital and other
patient services. The District's mission is to provide health care services primarily to individuals who reside
in the local geographic area. A combining statement presenting both District and Hospital operations is
presented in the supplementary information to these combined financial statements.
The District and the Hospital were both created to purchase the operations and certain assets of the
Watsonville Community Hospital (WCH) and operate the hospital facility. WCH assets were acquired in
September of 2022.
The District has a Professional Services Agreement (PSA) with Coastal Health Partners (CHP). CHP is
incorporated under the laws of the State of California and operates as a corporation. This agreement calls
for CHP to provide physicians to the District 1206(b) clinic. The District provides support staff to CHP
through the Hospital and passes those expenses onto the District Clinic.
The Combined Unit (the District and the Hospital) maintains its financial records in conformity with
guidelines set forth by the Local Health Care District Law and the Office of Statewide Health Planning and
Development of the state of California.
Basis of Preparation: The accounting policies and financial statements of the Combined Unit generally
conform with the recommendations of the audit and accounting guide, Health Care Organizations,
published by the American Institute of Certified Public Accountants. The financial statements are presented
in accordance with the pronouncements of the Governmental Accounting Standards Board (GASB). For
purposes of presentation, transactions deemed by management to be ongoing, major or central to the
provision of health care services are reported as operational revenues and expenses.
The Combined Unit uses proprietary fund accounting. Revenues and expenses are recognized on the accrual
basis using the economic resources measurement focus. Based on GASB Statement Number 20,
Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use
Proprietary Fund Accounting, as amended, the District has elected to apply the provisions of all relevant
pronouncements of the Financial Accounting Standards Board (FASB), including those issued after
November 30, 1989, that do not conflict with or contradict GASB pronouncements.
10
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Financial Statement Presentation: The Combined Unit applies the provisions of GASB 34, Basic
Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments
(Statement 34), as amended by GASB 37, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments: Omnibus, and Statement 38, Certain Financial Statement Note
Disclosures. Statement 34 established financial reporting standards for all state and local governments and
related entities. Statement 34 primarily relates to presentation and disclosure requirements. The impact of
this change was related to the format of the financial statements; the inclusion of management’s discussion
and analysis; and the preparation of the statement of cash flows on the direct method. The application of
these accounting standards had no impact on the total net assets.
Management’s Discussion and Analysis: Statement 34 requires that financial statements be accompanied
by a narrative introduction and analytical overview of the Combined Unit’s financial activities in the form
of “management’s discussion and analysis” (MD&A). This analysis is similar to the analysis provided in
the annual reports of organizations in the private sector.
Use of Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents: Cash and cash equivalents include deposits with financial institutions and
investments in highly liquid debt instruments with an original maturity of three months or less. Cash and
cash equivalents exclude amounts whose use is limited by board designation or by legal restriction.
Patient Accounts Receivable: Patient accounts receivable consists of amounts owed by various
governmental agencies, insurance companies and private patients. The Combined Unit manages its
receivables by regularly reviewing the accounts, inquiring with respective payors as to collectability and
providing for allowances on their accounting records for estimated contractual adjustments and
uncollectible accounts. Significant concentrations of patient accounts receivable are discussed further in the
footnotes.
Supplies: Inventories are consistently reported from year to year at cost determined by average costs and
replacement values which are not in excess of market. The Combined Unit does not maintain levels of
inventory values such as those under a first-in, first out or last-in, first out method.
11
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Capital Assets: Capital assets consist of property and equipment and are reported on the basis of cost, or in
the case of donated items, on the basis of fair market value at the date of donation. Routine maintenance
and repairs are charged to expense as incurred. Expenditures which increase values, change capacities, or
extend useful lives are capitalized. Depreciation of property and equipment and amortization of property
under capital leases are computed by the straight-line method for both financial reporting and cost
reimbursement purposes over the estimated useful lives of the assets, which range from 10 to 30 years for
buildings and improvements, and 3 to 15 years for equipment. The Combined Unit periodically reviews its
capital assets for value impairment. As of December 31, 2023 the Combined Unit has determined that no
capital assets are impaired.
Compensated Absences: The employees of the Combined Unit earn vacation, paid time off, holiday and
float benefits at varying rates. These accrual rates are determined based on the employee’s years of service,
full time equivalent (FTE) status, and union affiliation. This benefit can accumulate up to specified
maximum levels. Accumulated vacation, paid time off, holiday, and float benefits are paid to an employee
upon either termination or retirement. The combined liability for vacation, paid time off, holiday, and float
liabilities as of December 31, 2023 and 2022 totaled $4,279,528 and $4,137,292, respectively.
Some employees also have a Legacy bank of hours that can be utilized, once they have exhausted all other
accruals, and is payable at one half of their hourly rate of pay upon termination or retirement. The liability
for these hours as of December 31, 2023 and 2022 totaled $902,141 and $982,045, respectively.
Risk Management: The Combined Unit is exposed to various risks of loss from torts; theft of, damage to,
and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses;
natural disasters; and medical malpractice. Commercial insurance coverage is purchased for claims arising
from such matters.
Net position: Net position is presented in three categories. The first category of net position is “invested in
capital assets, net of related debt”. This category of net position consists of capital assets (both restricted
and unrestricted), net of accumulated depreciation and reduced by the outstanding principal balances of any
debt borrowings that were attributable to the acquisition, construction, or improvement of those capital
assets.
The second category is “restricted” net position. This category consists of externally designated constraints
placed on assets by creditors (such as through debt covenants), grantors, contributors, law or regulations of
other governments or government agencies, or law or constitutional provisions or enabling legislation. The
third category is “unrestricted” net position. This category consists of net position that does not meet the
definition or criteria of the previous two categories.
12
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Net Patient Service Revenues: Net patient service revenues are reported in the period at the estimated net
realized amounts from patients, third-party payors and others including estimated retroactive adjustments
under reimbursement agreements with third-party programs. Normal estimation differences between final
reimbursement and amounts accrued in previous years are reported as adjustments of current year's net
patient service revenues.
Financial Assistance: The Hospital offers a financial assistance policy for its patients. The financial
assistance policy describes the Hospital’s policy for both charity care (free care) and discounted care, and
the process for patients who need help paying for their emergency and medically necessary care. The intent
of this policy is to satisfy the requirements of Section 501(r) of the Internal Revenue Code and California
Health and Safety Code sections 127400 to 127446. Because the Combined Unit does not pursue collection
of amounts determined to qualify as charity care, they are not reported as net patient service revenues.
Services provided are recorded as gross patient service revenues and then written off entirely as an
adjustment to net patient service revenues.
Operating Revenues and Expenses: The Combined Unit’s statement of revenues, expenses and changes in
net assets distinguishes between operating and non-operating revenues and expenses. Operating revenues
result from exchange transactions associated with providing health care services, which is the Combined
Unit’s principal activity. Operating expenses are all expenses incurred to provide health care services, other
than financing costs. Non-operating revenues and expenses are those transactions not considered directly
linked to providing health care services.
Income taxes: The District operates under the purview of the Internal Revenue Code, Section 115, and
corresponding California Revenue and Taxation Code provisions. As such, it is not subject to state or federal
taxes on income. However, income from the unrelated business activities of the District may be subject to
income taxes.
The Hospital is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC).
Thus, no provision for income taxes is included in the accompanying financial statements. The Hospital
follows the accounting guidance for accounting for uncertainty in income taxes. The Hospital is subject
to federal and state income taxes to the extent it has unrelated business income. In accordance with the
guidance for uncertainty in income taxes, management has evaluated its material tax positions and
determined that there are no income tax effects with respect to its financial statements. The Hospital is
subject to examination by federal or state authorities within the three-year statute of limitations applied to
tax filings. The Hospital management has not been notified of any impending examination and no
examinations are currently in process.
13
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Recently Adopted Accounting Pronouncement: In June 2017 the Governmental Accounting Standards
Board released GASB 87 regarding changes in the way leases are accounted for. GASB 87 superseded
GASB 13 and GASB 62 and more accurately portrays lease obligations by recognizing lease assets and
lease liabilities on the statement of net position and disclosing key information about leasing arrangements.
GASB 87 increases the usefulness of financial statements by requiring recognition of certain operating lease
obligations to recognize the inflows of resources based upon the provisions of the lease contracts. The
Combined Unit has adopted GASB 87 effective September 1, 2022, in accordance with the timetable
established by GASB 87.
Other new GASB pronouncements recently issued were GASB’s 84 (Fiduciary Activities) 88 (Certain
Disclosures Related to Debt, including Direct Borrowings and Direct Placements) 89 (Accounting for
Interest Cost Incurred Before the End of a Construction Period) and 91 (Conduit Debt Obligation) have
been analyzed by Combined Unit management and have been determined to have no impact upon the
financial statements.
Revenue Recognition: As previously stated, net patient service revenues are reported at amounts that reflect
the consideration to which the Combined Unit expects to be entitled in exchange for patient services. These
amounts are due from patients, third-party payors (including health insurers and government programs),
and others and include variable consideration for retroactive revenue adjustments due to settlement of third-
party payor audits, reviews, and investigations. Generally, the Combined Unit bills the patients and third-
party payors several days after the patient receives healthcare services at the Combined Unit. Revenue is
recognized as services are rendered.
The Combined Unit has agreements with third-party payors that provide for payments to the Combined
Unit at amounts different from its established rates. Payment arrangements include prospectively
determined rates per day, discharge or visit, reimbursed costs, discounted charges and per diem payments.
Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered
and adjusted in future periods as final settlements are determined.
NOTE 2 – CASH AND CASH EQUIVALENTS
As of December 31, 2023 and 2022, the Combined Unit had deposits in a financial institution of $6,639,515
and $8,660,568, respectively. $2,600,000 of these funds are restricted and not available for use to the
Combined Unit. All of these funds are in the form of cash and cash equivalents, which were collateralized
in accordance with the California Government Code ("CGC"), except for $250,000 per account that is
federally insured.
Under the provisions of the CGC, California banks and savings and loan associations are required to secure
the Combined Unit's deposits by pledging government securities as collateral. The market value of pledged
securities must equal at least 110% of the Combined Unit's deposits.
14
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 2 – CASH AND CASH EQUIVALENTS (continued)
California law also allows financial institutions to secure Combine Unit deposits by pledging first trust deed
mortgage notes having a value of 150% of the Combined Unit's total deposits. The pledged securities are
held by the pledging financial institution's trust department in the name of the Combined Units.
Combined Unit investment policies allow investments in U.S. Government securities and state and local
agency funds which invest in U.S. Government securities. These investments, when present, are stated at
quoted market values. Changes in market value between years are reflected as a component of investment
income in the accompanying statement of revenues, expenses, and changes in net position.
NOTE 3 - NET PATIENT SERVICE REVENUES AND REIMBURSEMENT
PROGRAMS
The Combined Unit renders services to patients under contractual arrangements with the Medicare and
Medi-Cal programs, commercial insurance companies, health maintenance organizations (HMOs) and
preferred provider organizations (PPOs). Patient service revenues from these programs approximate 86.6%
of gross patient service revenues for the year ended December 31, 2023.
The Medicare Program reimburses the Hospital on a cost basis payment system for inpatient and outpatient
hospital services. The cost-based reimbursement is determined based on filed Medicare cost reports. Clinic
services are reimbursed based on fee schedules.
The Combined Unit contracts to provide services to Medi-Cal, HMO and PPO inpatients on negotiated
rates. Certain outpatient reimbursement is subject to a schedule of maximum allowable charges for Medi-
Cal and to a percentage discount for HMOs and PPOs.
Both the Medicare and Medi-Cal program's administrative procedures preclude final determination of
amounts due to the Combined Unit for services to program patients until after patients' medical records are
reviewed and cost reports are audited or otherwise reviewed by and settled with the respective
administrative agencies. The Medicare and Medi-Cal cost reports are subject to audit and possible
adjustment. Management is of the opinion that no significant adverse adjustment to the recorded settlement
amounts will be required upon final settlement.
Medicare and Medi-Cal revenue accounted for approximately 56% of the Combined Unit’s net patient
revenues for the year ended December 31, 2023. Laws and regulations governing the Medicare and Medi-
Cal programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable
possibility that recorded estimates will change by a material amount in the near term.
15
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 4 - CONCENTRATION OF CREDIT RISK
The Combined Unit grants credit without collateral to its patients and third-party payors. Patient accounts
receivable from government agencies represent the only concentrated group of credit risk for the Combined
Unit and management does not believe that there is any credit risk associated with these governmental
agencies. Contracted and other patient accounts receivable consist of various payors including individuals
involved in diverse activities, subject to differing economic conditions and do not represent any
concentrated credit risks to the Combined Unit. Concentration of patient accounts receivable at December
31, 2023 and 2022, were as follows:
2023 2022
Medicare $ 34,412,365 $ 33,608,188
Medi-Cal 43,776,399 45,145,391
Other third party payors 50,431,841 59,234,298
Self pay and other 22,023,987 11,100,868
Gross patient accounts receivable 150,644,592 149,088,745
Less allowances for contractual adjustments and bad debts (135,448,815) (127,822,234)
Net patient accounts receivable $ 15,195,777 $ 21,266,511
NOTE 5 - CAPITAL ASSETS
Capital assets as of December 31, 2023 were comprised of the following:
Balance at Transfers & Transfer & Balance at
12/31/2022 Additions Retirements 12/31/2023
CIP $ 965,266 $ 24,700 $ - $ 989,966
Equipment 1,738,255 1 ,057,188 - 2,795,443
Software 1,038,183 33,549 - 1,071,732
Totals at historical cost 3,741,704 1 ,115,437 - 4,857,141
Less accumulated depreciation (725,896) (992,449) - (1,718,345)
Capital assets, net $ 3,015,808 $ 122,988 $ - $ 3,138,796
16
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 6 - DEBT BORROWINGS
Long-term debt consists of a note payable, a line of credit, and finance lease agreements as follows:
2023 2022
District debt
Santa Cruz County $ 1,700,000 $ 2,700,000
Mako Surgical 795,000 -
Total District debt: 2,495,000 2,700,000
Hospital debt
David and Lucille Packard Foundation 4,715,253 6,357,000
Distressed Hospital Loan 8,300,000 -
Multiple finance leases; imputed interest ranging from 10-
11%; monthly lease payments ending in August of 2024: 18,834 123,986
Total Hospital debt: 13,034,087 6,480,986
Total debt borrowings 15,529,087 9,180,986
Less current maturities (3,120,987) (1,702,035)
Debt borrowings, net of current maturities $ 12,408,100 $ 7,478,951
Santa Cruz County: The District has a note payable with the County of Santa Cruz, for the purpose of funding
a Letter of Credit with the Santa Cruz County Bank, which is a requirement of the Hospital lease agreement.
Interest at 0% with principal payments in the amount of $500,000 due bi-annually on June 30th and December
31st. The first payment is due on June 30, 2023, with final payment due on December 31st, 2025.
Mako Surgical: The District assumed an agreement to purchase a surgical robotic arm and related systems for
hip and knee applications. The interest rate is 0%. At the time, there were four remaining principal payments of
$120k, $200k, $280k, and $315k. The agreement includes an annual supply rebate program, which has the
potential to fully offset these payments. The final payment, less supply rebates, is due in March of 2026.
David and Lucille Packard Foundation: The Hospital is a co-borrower on a note payable collateralized by
community pledges to the Pajaro Valley Healthcare District Project (the Project). As community pledges are
received, the Project will make annual principal payments, with the first payment due on March 31, 2023, and
the final payment due on January 31, 2026. The Hospital will relieve the debt and recognize revenue as principal
payments are made by the Project. Interest at 0.5% will be paid by the Hospital bi-annually on March 31st and
September 30th, with the final payment due on January 31, 2026.
17
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 6 - DEBT BORROWINGS (continued)
Distressed Hospital Loan: The Hospital received Distressed Hospital loan proceeds of $8,300,000 on November
1, 2023. These funds were used to maintain operations and in support of some Hospital projects to stabilize
operations. The six-year loan is zero interest and has an 18-month grace period before repayment. The legislation
behind the Distressed Hospital Loan allows for the possibility of loan forgiveness, however that has not been
confirmed as of 12/31/23.
The District also obtained a $3.0 million line of credit with Santa Cruz County Bank, secured by community
guarantors. The LOC has an interest rate of 1% plus prime and matures on November 5, 2026. Accrued interest
on any outstanding principal is due monthly. As of December 31, 2023, the District had not drawn on the credit
line.
NOTE 7 - RETIREMENT PLANS
The Hospital sponsors two 401(a) defined contribution retirement plans for employer contributions: one for
service and maintenance employees payable on a calendar year-end that contributes 6% or higher depending
on years of service of gross annual earnings; the second 401(a) plan covers other non-management, non-
highly compensated employees and contributes 6% of gross earnings bi-weekly. The Hospital also sponsors
a 457(b) deferred compensation plan for employee contributions, withheld from bi-weekly earnings.
Accrued payroll and related liabilities include $154,208 of 401(a) employer liabilities, calculated from the
final two pay period of the year and contributed to the plan in January of 2024. 401(a) liabilities for SEIU
Service & Maintenance employees was $552,800 as of December 31, 2023.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Construction-in-Progress: As of December 31, 2023, the Combined Unit had $989,966 in construction-in-
progress for the Cardio Cath Lab. Approximately $52,400 in remobilization fees are remaining to complete
construction. Funds for these fees will come from earnings.
Litigation: The Combined Unit may from time-to-time be involved in litigation and regulatory
investigations which arise in the normal course of doing business. As of December 31, 2023, management
is not aware of any legal matters or potential regulatory investigations.
Medical Malpractice Insurance: The Combined Unit maintains commercial malpractice liability insurance
coverage under a claims made and reported policy covering losses up to $15 million per claim and $25
million in the aggregate for all claims, subject to a deductible of $150,000 Indemnity & Expense each claim.
The District plans to maintain the insurance coverage by renewing its current policy, or by replacing it with
equivalent insurance.
18
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 8 - COMMITMENTS AND CONTINGENCIES (continued)
Workers Compensation Program: The Hospital workers compensation policy is through travelers and
renews in Oct 2024. Annual premium is $1,188,473. The district workers compensation policy is through
travelers and renews in Oct 2024. The annual premium is $20,898.
Health Insurance Portability and Accountability Act: The Health Insurance Portability and Accountability
Act (HIPAA) was enacted August 21, 1996, to ensure health insurance portability, reduce health care fraud
and abuse, guarantee security and privacy of health information, and enforce standards for health
information. Organizations are subject to significant fines and penalties if found not to be compliant with
the provisions outlined in the regulations. Management believes the Combined Unit is in compliance with
HIPAA as of December 31, 2023 and 2022.
Regulatory Environment: The Combined Unit is subject to several laws and regulations. These laws and
regulations include matters such as licensure, accreditation, government health care program participation
requirements, reimbursement for patient services, and Medicare and Medi-Cal fraud and abuse.
Government activity has increased with respect to possible violations of statues and regulations by health
care providers. Violations of these laws and regulations could result in expulsion from government health
care programs together with the imposition of significant fines and penalties, as well as significant
repayments for patient services previously billed. Management believes that the Combined Unit is in
compliance with all applicable government laws and regulations and is not aware of any future actions or
unasserted claims at this time.
NOTE 9 - LEASES
The Combined Unit has multiple equipment and building leases. The District leases the building and land
for the Hospital from Medical Properties Trust, Inc with a remaining term of 319 months and an estimated
annual increase to base rent of 2% based on CPI. The District also leases office space for a urology center
near the Hospital. This lease has 79 months remaining and a fixed monthly payment during the term. All
other lease arrangements are either immaterial or have a term of 12 months or less.
Neither lease has a readily determinable discount rate. The estimated borrowing rate for the Hospital
building and land and for the urology center is 9.5%. The urology center lease requires payment of common
area maintenance, which represent the majority of variable lease costs. Variable lease costs are excluded
from the present value of lease obligations. The District’s lease agreements do not contain any material
restrictions, covenants, or any material residual value guarantees.
19
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 9 – LEASES (continued)
Lease related assets and liabilities as of December 31, 2023 and 2022 consist of the following:
Lease assets: 2023 2022
MPT $ 32,414,776 $ 33,042,270
Urology center 502,704 554,503
Other 631,939 1,163,180
Total lease assets $ 33,549,419 $ 34,759,953
Lease liabilities: 2023 2022
MPT $ 33,446,113 $ 33,300,104
Urology center 507,764 557,177
Other 605,237 1,166,684
Total lease liabilities $ 34,559,114 $ 35,023,965
Total operating lease expense for the year ended December 31, 2023, was $1,914,944. Future minimum
rental payments required under operating lease obligations as of December 31, 2023, are summarized as
follows:
Years ending December 31,
2024 $ 3,544,634
2025 3,385,886
2026 3,192,676
2027 3,239,280
Thereafter 85,982,188
Total 99,344,664
Less imputed interest (64,785,550)
Present value of lease liabilities $ 34,559,114
The weighted average reamining lease term for these leases is 25 years and the weighted average discount rate
is 9.5%.
20
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 10 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Combined Unit will continue
as a going concern. The Hospital has reduced its annual losses since emerging from bankruptcy in 2022,
however it has suffered significant losses from operations and has experienced cash flow difficulties since
the District acquired them in September 2022. These conditions raise substantial doubt about the Hospital’s
ability to continue as a going concern. Management’s plans regarding these matters are described above
and in the Management’s Discussion and Analysis. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. In view of these matters, continuation as a going
concern is dependent on continued operations of the District and the Hospital, which in turn is dependent
on the District’s and the Hospital’s ability to increase collections, decrease expenses, and raise additional
capital.
The Combined Unit’s management is working to continue to find ways to make progress on improving how
the Combined Unit organizes and processes work in such a way that it continues to improve patient care
and service to its patients and community, while striving to improve its financial position and overall fiscal
performance.
The Hospital received Distressed Hospital loan proceeds of $8,300,000 on November 1, 2023. These funds
were used to maintain operations and in support of certain Hospital projects to further stabilize operations.
The six-year loan is at 0.0% interest and has an 18-month grace period before repayment begins. The
legislation behind the Distressed Hospital Loan allows for the possibility of loan forgiveness, however that
has not been confirmed as of December 31, 2023.
The District has placed Measure N on the March 2024 ballot. Measure N is a $116M general obligation
bond program intended to renovate the Hospital and improve services to the community. Measure N will
allow the hospital to modernize and expand the facility. It will also allow the District to purchase the hospital
building and land. The purchase would eliminate the current $3.0M annual lease payments to the third-
party owner, allowing those funds to be reinvested in supporting staff and patient care.
The District obtained a $3.0 million line of credit with Santa Cruz County Bank, secured by community
guarantors. The LOC has an interest rate of 1% plus prime and matures on November 5, 2026. Accrued
interest on any outstanding principal is due monthly. As of December 31, 2023, the District had not drawn
on the credit line. The Pajaro Valley Healthcare District Philanthropy Foundation is a newly formed non-
profit 501(c)3 corporation in existence to raise funds and secure grants for Hospital activities and services.
In 2023, they were able to secure a $250K grant for the purchase of anesthesia machines. Additionally, they
secured $60K in grants to support translation services to support patient care for non-English speaking
patients.
Management has implemented a cash management plan and is actively managing its revenue cycle
(collections) activities. Additionally, the District (Hospital) is opening a Cath Lab in Q2 2024 which will
provide new revenue generating opportunities. Other expense initiatives are also planned for 2024.
21
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2023
NOTE 11 – SUBSEQUENT EVENTS
Management evaluated the effect of subsequent events on the combined financial statements through March
27, 2024, the date the combined financial statements are issued, and determined that there are no material
subsequent events that have not been disclosed.
22
SUPPLEMENTARY SCHEDULES
23
Pajaro Valley Healthcare District
Combining Statement of Net Position
December 31, 2023
District Hospital Eliminations Total
Assets
Current Assets
Cash and cash equivalents $ 2,784,641 $ 3,854,874 $ - $ 6,639,515
Patient accounts receivable, net of allowances 34,066 15,161,711 - 15,195,777
Other accounts receivable - - - -
Inventories 20,859 3,820,565 - 3,841,424
Prepaid expenses and other current assets 765,157 1,494,856 - 2,260,013
Total current assets 3,604,723 24,332,006 - 27,936,729
Capital assets, net of accumulated depreciation 3,090,877 47,919 - 3,138,796
Lease assets 32,940,084 609,335 - 33,549,419
Due from district - 9,160,814 (9,160,814) -
Total assets $ 39,635,684 $ 34,150,074 $ (9,160,814) $ 64,624,944
Liabilities and Net Position
Current liabilities
Current maturities of debt borrowings $ 1,200,000 $ 1,920,987 $ - $ 3,120,987
Accounts payable and accrued expenses (106,224) 6,637,919 - 6,531,695
Accrued payroll and related liabilities 274,306 8,740,179 - 9,014,485
Estimated third party payor settements - 728,871 - 728,871
IBNR self funded health benefits - 1,706,135 - 1,706,135
Total current liabilities 1,368,082 19,734,091 - 21,102,173
Debt borrowings, net of current maturities 1,295,000 11,113,100 - 12,408,100
Lease liabilities 33,967,426 591,688 - 34,559,114
Due to hospital 9,160,814 - (9,160,814) -
Total liabilities 45,791,322 31,438,879 (9,160,814) 68,069,387
Net position
Invested in capital assets, net of related debt 3,090,877 47,919 - 3,138,796
Restricted 2,600,000 - - 2,600,000
Unrestricted (11,846,515) 2,663,276 (9,183,239)
Total net position (6,155,638) 2,711,195 - (3,444,443)
Total liabilities and net position $ 39,635,684 $ 34,150,074 $ (9,160,814) $ 64,624,944
See accompanying notes to the financial statements
24
Pajaro Valley Healthcare District
Combining Statement of Revenues, Expenses and Changes in Net position
For The Year Ended December 31, 2023
District Hospital Eliminations Total
Operating revenues
Net patient service revenues $ 2,488,045 $ 126,626,179 $ - $ 129,114,224
Other operating revenues 932,754 5,085,425 (650,653) 5,367,526
Total operating revenues 3,420,799 131,711,604 (650,653) 134,481,750
Operating expenses
Salaries & wages 2,977,295 67,179,431 - 70,156,726
Employee benefits 557,809 20,902,793 - 21,460,602
Contract labor - 6,931,655 - 6,931,655
Supplies 27,227 8,292,567 - 8,319,794
Medical specialist fees 178,908 7,572,553 - 7,751,461
Purchased services 224,819 13,233,988 - 13,458,807
Lease cost and rent 270,683 1,644,261 - 1,914,944
Repairs & maintenance 295 1,359,572 - 1,359,867
Utilities 13,239 2,452,858 - 2,466,097
Depreciation and amortization 1,979,831 - - 1,979,831
Other operating expenses 35,062 6,154,954 - 6,190,016
Property taxes & insurance 99,492 2,345,353 - 2,444,845
Interest 3,773,502 68,423 - 3,841,925
Total operating expenses 10,138,162 138,138,408 - 148,276,570
Operating income (loss) (6,717,363) (6,426,804) (650,653) (13,794,820)
Nonoperating revenues (expenses)
Rental income 529,666 - - 529,666
Interest income 103,547 103,547
Management fees (650,653) - 650,653 -
Total nonoperating revenues (expenses) (120,987) 103,547 650,653 633,213
Increase/(decrease) in net position (6,838,350) (6,323,257) - (13,161,607)
Net position, beginning of the year 682,713 9,034,451 - 9,717,164
Net position, end of year $ (6,155,637) $ 2,711,194 $ - $ (3,444,443)
See accompanying notes to the financial statements
25
JWT & Associates, LLP
A Certified Public Accountancy Limited Liability Partnership
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the combined financial statements of the business-type activities of the Pajaro Valley
Health Care District (the District) as of and for the year ended December 31, 2023, and the related notes to the
combined financial statements, which collectively comprise the District's combined financial statements, and have
issued our report thereon dated March 27, 2024.
Internal Control over Financial Reporting
In planning and performing our audit of the combined financial statements, we considered the District's internal
control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinion on the combined financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not
express an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's combined financial
statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies. Given those limitations, during our audit we did not identify any deficiencies in internal control that
we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
26
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's combined financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the combined financial
statement. However, providing an opinion on compliance with those provisions was not an objective of our audit,
and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District's internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
JWT & Associates, LLP
Fresno, California
March 27, 2024
27
Pajaro Valley Health Care District
Schedule of Findings and Questioned Costs
For the Year Ended December 31, 2023
I.Summary of Auditor’s Results
Type of auditor’s report issued: Unmodified
Internal Control over financial reporting:
Material weakness identified? yes X no
Significant deficiency(ies) identified that are not considered
to be material weaknesses? yes X no
Noncompliance material to financial statements noted? yes X no
II.Current Year Audit Findings and Questioned Costs
Financial Statement Findings
None reported
III.Prior Year Audit Findings and Questioned Costs
None reported
28
Audited Financial Statements
and Other Financial Information
PAJARO VALLEY
HEALTH CARE DISTRICT
December 31, 2022
JWT & Associates, LLP
Advisory Assurance Tax
Pajaro Valley Health Care District
Audited Financial Statements and Other Financial Information
December 31, 2022
Report of Independent Auditors ....................................................................................................... 1
Management’s Discussion and Analysis .......................................................................................... 3
Financial Statements
Combined Statement of Net Position ........................................................................................... 6
Combined Statement of Revenues, Expenses, and Changes in Net Position ............................... 7
Combined Statement of Cash Flows ............................................................................................ 8
Notes to Financial Statements .................................................................................................... 10
Supplemental Combining Financial Statements
Combining Statements of Net Position ...................................................................................... 23
Combining Statements of Revenues, Expenses, and Changes in Net Position .......................... 24
Independent Auditors Report on Internal Controls .......................................................................... 25
JWT & Associates, LLP
Advisory Assurance Tax
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Report of Independent Auditors
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
Opinions
We have audited the accompanying financial statements of the business-type activities and the discretely
presented component unit of the Pajaro Valley Health Care District (the District), as of and for the year ended
December 31, 2022, and the related notes to the financial statements, which collectively comprise the District's
basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial positions of the business-type activities and the discretely presented component unit of the District,
as of December 31, 2022, and the respective changes in financial position, and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Basis for Opinions
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for
the Audit of the Financial Statements section of our report. We are required to be independent of the District,
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to
our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a
going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
a guarantee that an audit conducted in accordance with generally accepted auditing standards will always
detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
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misrepresentations, or the override of internal control. Misstatements are considered material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the District’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis be presented to supplement the basic financial statements. Such information is the
responsibility of management and, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audits of the basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
JWT & Associates, LLP
Fresno, California
October 25, 2023
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Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2022
Management of the Pajaro Valley Health Care District (the District) has prepared this annual discussion and
analysis in order to provide an overview of performance for the fiscal year ended December 31, 2022 in
accordance with the Governmental Accounting Standards Board Statement No. 34, Basic Financials
Statements; Management’s Discussion and Analysis for State and Local Governments. The District wholly
owns the Pajaro Valley Health Care District Hospital Corporation dba Watsonville Community Hospital (the
Hospital). Together they are referenced as the Combined Unit. The intent of this document is to provide
additional information on the Combined Unit’s financial performance as a whole and a prospective look at
revenue, operating expenses and capital development plans. This discussion should be reviewed in
conjunction with the audited financial statements for the fiscal year ended December 31, 2022 and
accompanying notes to the financial statements to enhance one’s understanding of the Combined Unit’s
financial performance. Being the first year of operation, there is no prior year analysis.
Introduction
The Combined Unit offers readers of our financial statements this narrative overview and analysis of our
financial activities for the year ended December 31, 2022. We encourage readers to consider the information
presented here in conjunction with the Combined Unit’s financial statements, including the notes thereto.
The Combined Unit is governed by a five-member elected board of directors. Day-to-day operations are
managed by the Chief Executive Officer. The Combined Unit employed 593 employees on December 31,
2022 and had monthly payroll of approximately $4.25M, not including benefits.
Required Financial Statements
The Combined Unit’s financial statements offer short-term and long-term information about its activities. The
statement of net position includes all of the Combined Unit’s assets and liabilities at December 31, 2022 and
provides information about the nature and amounts of investments in resources (assets) and the obligations to
Combined Unit creditors (liabilities). The statement of net position also provide the basis for evaluating the
capital structure of the Combined Unit and assessing the liquidity and financial flexibility of the Combined
Unit.
All revenue and expenses for years ended December 31, 2022 are accounted for in the statement of revenue,
expenses and changes in net position. The statement can be used to determine whether the Combined Unit has
successfully recovered all of its costs through its patient service revenue and other revenue sources. Revenue
and expenses are reported on an accrual basis, which means the related cash could be received or paid in a
subsequent period.
The final required statement is the statement of cash flows. This statement reports cash receipts, cash payments
and net changes in cash resulting from operations, investing and financial activities for the years ended
December 31, 2022. They also provide answers to such questions as where did cash come from, what was
cash used for and what was the change in the cash balance during the reporting period.
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Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2022
Financial Analysis of the Combined Unit
The Combined Unit’s net position, the difference between assets and liabilities, is a way to measure financial
health or financial position. Over time, sustained increases or decreases in the Combined Unit’s net position
are one indicator of whether its financial health is improving or deteriorating. However, other nonfinancial
factors such as changes in economic condition, population growth and new or revised government regulations
and legislation should also be considered. In 2022, the Combined Unit’s net position increased by
approximately $9.7M largely due to an extraordinary gain (see footnotes).
Financial Summary
• Total assets ended at $73.9 million being largely comprised of net patient AR ($21.3M) and lease
assets ($34.8M). Total cash and cash equivalents at year end were $8.7 million (see the
Statements of Cash Flows for changes).
• Current assets ended at $36.1M compared to current liabilities which ended at $21.7M. The
current ratio for this year was 1.66.
• Net operating revenues were $33.8M and operating expenses were $45.1M. There was an
operating loss of $10.9M
• The increase in net position was $9.7M due to an extraordinary gain of $20.7M. See footnotes for
more information.
Items Affecting Operations
The challenges facing the Combined Unit this fiscal period were largely similar, although varying in degree
of intensity, to those issues facing the health care industry in general and for rural health care facilities in
particular. Where the immediate environment and circumstances uniquely influence the Combined Unit, these
areas are also highlighted in the discussion below:
• Reimbursement: Medicare and Medi-Cal programs continue to look for ways to reduce
reimbursement.
• Labor: Physician positions continue to be difficult to recruit in rural areas.
• Hospital emerged from bankruptcy and was purchased by The District on September 1, 2022,
with limited working capital. The District continues to work through transition activities to
stabilize operations.
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Pajaro Valley Health Care District
Management’s Discussion and Analysis
For the Year Ended December 31, 2022
Items Affecting Operations (continued)
• The Hospital Corporation renegotiated all major payor contracts to improve reimbursement. As
of December 31, 2022, only one was implemented and the remaining were implemented in
2023.
• The Hospital faces challenges recruiting staff due to the high cost of living in the area and thus
relies on contracted resources to supplement staffing. These resources come at a higher cost.
• The District leases hospital real estate from Medical Properties Trust. The Hospital operations
must cover this lease payment along with all deficits of The District.
In summary, the external environment continues to challenge rural healthcare providers in particular, with
continuing declines in reimbursement, increases in uncompensated care and ongoing labor and health
insurance issues. The Combined Unit strives to improve relationships within our community through
collaboration with community leaders and service groups, outreach to neighboring healthcare facilities,
improving access to care and recruitment of quality medical providers.
The Combined Unit’s employees are working together to continue to find ways to make progress on improving
how the Combined Unit organizes and processes work in such a way that it continues to improve patient care
and service to its patients and community, while striving to improve its financial position and overall fiscal
performance.
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Pajaro Valley Healthcare District
Combined Statement of Net Position
December 31, 2022
Assets
Current Assets
Cash and cash equivalents $ 8 ,660,568
Patient accounts receivable, net of allowances 2 1,266,511
Other accounts receivable 1 ,498,921
Inventories 2,158,403
Prepaid expenses and other current assets 2 ,510,580
Total current assets 3 6,094,983
Capital assets, net of accumulated depreciation 3 ,015,808
Lease assets 3 4,759,953
Total assets 7 3,870,744
Liabilities and Net Position
Current liabilities
Current maturities of debt borrowings 1 ,702,035
Accounts payable and accrued expenses 6 ,922,004
Accrued payroll and related liabilities 8 ,641,862
Estimated third party payor settements 1 ,597,184
IBNR self funded health benefits 2 ,787,581
Total current liabilities 2 1,650,666
Debt borrowings, net of current maturities 7 ,478,951
Lease liabilities 3 5,023,963
Total liabilities 6 4,153,580
Net position
Invested in capital assets, net of related debt 2 ,891,822
Restricted 2 ,600,000
Unrestricted 4 ,225,342
Total net position 9 ,717,164
Total liabilities and net position $ 7 3,870,744
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Pajaro Valley Healthcare District
Combined Statement of Revenues, Expenses and Changes in Net position
For The Year Ended December 31, 2022
Operating revenues
Net patient service revenues $ 3 3,308,250
Other operating revenues 5 32,944
Total operating revenues 3 3,841,194
Operating expenses
Salaries & Wages 17,381,952
Benefits 6 ,100,838
Contract Labor 2 ,414,616
Supplies 3 ,688,032
Medical Spec Fees 2 ,876,058
Purchased Services 5 ,579,962
Lease Cost and Rent 1 ,649,758
Repairs & Maintenance 3 16,371
Utilities 712,745
Depreciation and amortization 3 84,786
Other Operating Exp 2 ,906,562
Prop Taxes & Ins 7 31,821
Interest 3 20,538
Total operating expenses 4 5,064,039
Operating income (loss) (11,222,845)
Nonoperating revenues
Rental income 277,387
Total nonoperating revenues (expenses) 2 77,387
Net income/(loss) before extraordinary item (10,945,458)
Gain from acquisition of hospital 2 0,662,622
Increase/(decrease) in net position 9 ,717,164
Net position, beginning of the year -
Net position, end of year $ 9 ,717,164
See accompanying notes to the financial statements
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Pajaro Valley Healthcare District
Combined Statement of Cash Flows
For The Year Ended December 31, 2022
Cash flows from operating activities
Cash received for operations $ 12,352,408
Cash payments to suppliers and contractors (18,622,904)
Cash payments to employees and benefit programs (12,053,347)
Net cash provided by operating activities (18,323,843)
Cash flows from noncapital financing activities
Gain from acquisition of hospital 20,662,622
Net cash provided by noncapital financing activities 20,662,622
Cash flows from investing activities
Purchases of property, plant & equipment (3,136,584)
Rental income 277,387
Net cash used in investing activities (2,859,197)
Cash flows from financing activities
Proceeds from debt borrowings 9,180,986
Net cash provided by financing activities 9,180,986
Increase in cash and cash equivalents 8,660,568
Cash and cash equivalents at beginning of year -
Cash and cash equivalents at end of year $ 8,660,568
See accompanying notes to the financial statements
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Pajaro Valley Healthcare District
Combined Statement of Cash Flows (continued)
For The Year Ended December 31, 2022
Reconciliation of operating income (loss) to net cash
provided by operating activities
Operating income $ (11,222,845)
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 384,786
Changes in operating assets and liabilities
Receivables (22,765,432)
Inventories (2,158,403)
Prepaid expenses and other current assets (2,510,580)
Accounts payable and accrued expenses 6,922,004
Accrued payroll and related expenses 8,641,862
Estimated third party payor settements 1,597,184
IBNR self funded health benefits 2,787,581
Net cash provided by operating activities $ (18,323,843)
See accompanying notes to the financial statements
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES
Organization: Pajaro Valley Health Care District, (the District) is a public entity organized under Local
District Law as set forth in the Health and Safety Code of the State of California. The District is a political
subdivision of the State of California and is generally not subject to federal or state income taxes. The
District is governed by a five-member Board of Directors, elected from within the district to specified terms
of office. The District is located in Watsonville, California. The District wholly owns the Pajaro Valley
Health Care District Hospital Corporation dba Watsonville Community Hospital (the Hospital). The
Hospital is a 501(c)(3) component unit of the District and operates a 106 -bed acute care hospital and other
patient services. The District's mission is to provide health care services primarily to individuals who reside
in the local geographic area. A combining statement presenting both District and Hospital operations is
presented in the supplementary information to these combined financial statements.
The District and the Hospital were both created to purchase the operations and certain assets of the
Watsonville Community Hospital (WCH) and operate the hospital facility. WCH assets were acquired in
September of 2022.
The District has a Professional Services Agreement (PSA) with Coastal Health Partners (CHP). CHP is
incorporated under the laws of the State of California and operates as a corporation. This agreement calls
for CHP to provide physicians to the District 1206(b) clinic. The District provides support staff to CHP
through the Hospital and passes those expenses onto the District Clinic.
The Combined Unit (the District and the Hospital) maintains its financial records in conformity with
guidelines set forth by the Local Health Care District Law and the Office of Statewide Health Planning and
Development of the state of California.
Basis of Preparation: The accounting policies and financial statements of the Combined Unit generally
conform with the recommendations of the audit and accounting guide, Health Care Organizations,
published by the American Institute of Certified Public Accountants. The financial statements are presented
in accordance with the pronouncements of the Governmental Accounting Standards Board (GASB). For
purposes of presentation, transactions deemed by management to be ongoing, major or central to the
provision of health care services are reported as operational revenues and expenses.
The Combined Unit uses proprietary fund accounting. Revenues and expenses are recognized on the accrual
basis using the economic resources measurement focus. Based on GASB Statement Number 20,
Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use
Proprietary Fund Accounting, as amended, the District has elected to apply the provisions of all relevant
pronouncements of the Financial Accounting Standards Board (FASB), including those issued after
November 30, 1989, that do not conflict with or contradict GASB pronouncements.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Financial Statement Presentation: The Combined Unit applies the provisions of GASB 34, Basic
Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments
(Statement 34), as amended by GASB 37, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments: Omnibus, and Statement 38, Certain Financial Statement Note
Disclosures. Statement 34 established financial reporting standards for all state and local governments and
related entities. Statement 34 primarily relates to presentation and disclosure requirements. The impact of
this change was related to the format of the financial statements; the inclusion of management’s discussion
and analysis; and the preparation of the statement of cash flows on the direct method. The application of
these accounting standards had no impact on the total net assets.
Management’s Discussion and Analysis: Statement 34 requires that financial statements be accompanied
by a narrative introduction and analytical overview of the Combined Unit’s financial activities in the form
of “management’s discussion and analysis” (MD&A). This analysis is similar to the analysis provided in
the annual reports of organizations in the private sector.
Use of Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents: Cash and cash equivalents include deposits with financial institutions and
investments in highly liquid debt instruments with an original maturity of three months or less. Cash and
cash equivalents exclude amounts whose use is limited by board designation or by legal restriction.
Patient Accounts Receivable: Patient accounts receivable consists of amounts owed by various
governmental agencies, insurance companies and private patients. The Combined Unit manages its
receivables by regularly reviewing the accounts, inquiring with respective payors as to collectability and
providing for allowances on their accounting records for estimated contractual adjustments and
uncollectible accounts. Significant concentrations of patient accounts receivable are discussed further in the
footnotes.
Supplies: Inventories are consistently reported from year to year at cost determined by average costs and
replacement values which are not in excess of market. The Combined Unit does not maintain levels of
inventory values such as those under a first-in, first out or last-in, first out method.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Capital Assets: Capital assets consist of property and equipment and are reported on the basis of cost, or in
the case of donated items, on the basis of fair market value at the date of donation. Routine maintenance
and repairs are charged to expense as incurred. Expenditures which increase values, change capacities, or
extend useful lives are capitalized. Depreciation of property and equipment and amortization of property
under capital leases are computed by the straight-line method for both financial reporting and cost
reimbursement purposes over the estimated useful lives of the assets, which range from 10 to 30 years for
buildings and improvements, and 3 to 15 years for equipment. The Combined Unit periodically reviews its
capital assets for value impairment. As of December 31, 2022 the Combined Unit has determined that no
capital assets are impaired.
Compensated Absences: The employees of the Combined Unit earn vacation, paid time off, holiday and
float benefits at varying rates. These accrual rates are determined based on the employee’s years of service,
full time equivalent (FTE) status, and union affiliation. This benefit can accumulate up to specified
maximum levels. Accumulated vacation, paid time off, holiday, and float benefits are paid to an employee
upon either termination or retirement. The combined liability for vacation, paid time off, holiday, and float
liabilities as of December 31, 2022 totaled $4,137,292.
Some employees also have a Legacy bank of hours that can be utilized, once they have exhausted all other
accruals, and is payable at one half of their hourly rate of pay upon termination or retirement. The liability
for these hours as of December 31, 2022 totaled $982,045.
Risk Management: The Combined Unit is exposed to various risks of loss from torts; theft of, damage to,
and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses;
natural disasters; and medical malpractice. Commercial insurance coverage is purchased for claims arising
from such matters.
Net position: Net position is presented in three categories. The first category of net position is “invested in
capital assets, net of related debt”. This category of net position consists of capital assets (both restricted
and unrestricted), net of accumulated depreciation and reduced by the outstanding principal balances of any
debt borrowings that were attributable to the acquisition, construction, or improvement of those capital
assets.
The second category is “restricted” net position. This category consists of externally designated constraints
placed on assets by creditors (such as through debt covenants), grantors, contributors, law or regulations of
other governments or government agencies, or law or constitutional provisions or enabling legislation. The
third category is “unrestricted” net position. This category consists of net position that does not meet the
definition or criteria of the previous two categories.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Net Patient Service Revenues: Net patient service revenues are reported in the period at the estimated net
realized amounts from patients, third-party payors and others including estimated retroactive adjustments
under reimbursement agreements with third-party programs. Normal estimation differences between final
reimbursement and amounts accrued in previous years are reported as adjustments of current year's net
patient service revenues.
Financial Assistance: The Hospital offers a financial assistance policy for its patients. The financial
assistance policy describes the Hospital’s policy for both charity care (free care) and discounted care, and
the process for patients who need help paying for their emergency and medically necessary care. The intent
of this policy is to satisfy the requirements of Section 501(r) of the Internal Revenue Code and California
Health and Safety Code sections 127400 to 127446.Because the Combined Unit does not pursue collection
of amounts determined to qualify as charity care, they are not reported as net patient service revenues.
Services provided are recorded as gross patient service revenues and then written off entirely as an
adjustment to net patient service revenues.
Operating Revenues and Expenses: The Combined Unit’s statement of revenues, expenses and changes in
net assets distinguishes between operating and non-operating revenues and expenses. Operating revenues
result from exchange transactions associated with providing health care services, which is the Combined
Unit’s principal activity. Operating expenses are all expenses incurred to provide health care services, other
than financing costs. Non-operating revenues and expenses are those transactions not considered directly
linked to providing health care services.
Income taxes: The District operates under the purview of the Internal Revenue Code, Section 115, and
corresponding California Revenue and Taxation Code provisions. As such, it is not subject to state or federal
taxes on income. However, income from the unrelated business activities of the District may be subject to
income taxes.
The Hospital is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC).
Thus, no provision for income taxes is included in the accompanying financial statements. The Hospital
follows the accounting guidance for accounting for uncertainty in income taxes. The Hospital is subject
to federal and state income taxes to the extent it has unrelated business income. In accordance with the
guidance for uncertainty in income taxes, management has evaluated its material tax positions and
determined that there are no income tax effects with respect to its financial statements. The Hospital is
subject to examination by federal or state authorities within the three-year statute of limitations applied to
tax filings. The Hospital management has not been notified of any impending examination and no
examinations are currently in process.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Recently Adopted Accounting Pronouncement: In June 2017 the Governmental Accounting Standards
Board released GASB 87 regarding changes in the way leases are accounted for. GASB 87 superseded
GASB 13 and GASB 62 and more accurately portrays lease obligations by recognizing lease assets and
lease liabilities on the statement of net position and disclosing key information about leasing arrangements.
GASB 87 increases the usefulness of financial statements by requiring recognition of certain operating lease
obligations to recognize the inflows of resources based upon the provisions of the lease contracts. The
Combined Unit has adopted GASB 87 effective September 1, 2022, in accordance with the timetable
established by GASB 87.
Other new GASB pronouncements recently issued were GASB’s 84 (Fiduciary Activities) 88 (Certain
Disclosures Related to Debt, including Direct Borrowings and Direct Placements) 89 (Accounting for
Interest Cost Incurred Before the End of a Construction Period) and 91 (Conduit Debt Obligation) have
been analyzed by Combined Unit management and have been determined to have no impact upon the
financial statements.
Revenue Recognition: As previously stated, net patient service revenues are reported at amounts that reflect
the consideration to which the Combined Unit expects to be entitled in exchange for patient services. These
amounts are due from patients, third-party payors (including health insurers and government programs),
and others and include variable consideration for retroactive revenue adjustments due to settlement of third-
party payor audits, reviews, and investigations. Generally, the Combined Unit bills the patients and third-
party payors several days after the patient receives healthcare services at the Combined Unit. Revenue is
recognized as services are rendered.
The Combined Unit has agreements with third-party payors that provide for payments to the Combined
Unit at amounts different from its established rates. Payment arrangements include prospectively
determined rates per day, discharge or visit, reimbursed costs, discounted charges and per diem payments.
Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered
and adjusted in future periods as final settlements are determined.
NOTE 2 – CASH AND CASH EQUIVALENTS
As of December 31, 2022, the Combined Unit had deposits in a financial institution of $8,660,568. All of
these funds are in the form of cash and cash equivalents, which were collateralized in accordance with the
California Government Code ("CGC"), except for $250,000 per account that is federally insured.
Under the provisions of the CGC, California banks and savings and loan associations are required to secure
the Combined Unit's deposits by pledging government securities as collateral. The market value of pledged
securities must equal at least 110% of the Combined Unit's deposits. California law also allows financial
institutions to secure Combine Unit deposits by pledging first trust deed mortgage notes having a value of
150% of the Combined Unit's total deposits. The pledged securities are held by the pledging financial
institution's trust department in the name of the Combined Units.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 2 – CASH AND CASH EQUIVALENTS (continued)
Combined Unit investment policies allow investments in U.S. Government securities and state and local
agency funds which invest in U.S. Government securities. These investments, when present, are stated at
quoted market values. Changes in market value between years are reflected as a component of investment
income in the accompanying statement of revenues, expenses, and changes in net position.
NOTE 3 - NET PATIENT SERVICE REVENUES AND REIMBURSEMENT
PROGRAMS
The Combined Unit renders services to patients under contractual arrangements with the Medicare and
Medi-Cal programs, commercial insurance companies, health maintenance organizations (HMOs) and
preferred provider organizations (PPOs). Patient service revenues from these programs approximate 98%
of gross patient service revenues for the year ended December 31, 2022.
The Medicare Program reimburses the Hospital on a cost basis payment system for inpatient and outpatient
hospital services. The cost-based reimbursement is determined based on filed Medicare cost reports. Clinic
services are reimbursed based on fee schedules.
The Combined Unit contracts to provide services to Medi-Cal, HMO and PPO inpatients on negotiated
rates. Certain outpatient reimbursement is subject to a schedule of maximum allowable charges for Medi-
Cal and to a percentage discount for HMOs and PPOs.
Both the Medicare and Medi-Cal program's administrative procedures preclude final determination of
amounts due to the Combined Unit for services to program patients until after patients' medical records are
reviewed and cost reports are audited or otherwise reviewed by and settled with the respective
administrative agencies. The Medicare and Medi-Cal cost reports are subject to audit and possible
adjustment. Management is of the opinion that no significant adverse adjustment to the recorded settlement
amounts will be required upon final settlement.
Medicare and Medi-Cal revenue accounted for approximately 63% of the Combined Unit’s net patient
revenues for the year ended December 31, 2022. Laws and regulations governing the Medicare and Medi-
Cal programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable
possibility that recorded estimates will change by a material amount in the near term.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 4 - CONCENTRATION OF CREDIT RISK
The Combined Unit grants credit without collateral to its patients and third-party payors. Patient accounts
receivable from government agencies represent the only concentrated group of credit risk for the Combined
Unit and management does not believe that there is any credit risk associated with these governmental
agencies. Contracted and other patient accounts receivable consist of various payors including individuals
involved in diverse activities, subject to differing economic conditions and do not represent any
concentrated credit risks to the Combined Unit. Concentration of patient accounts receivable at December
31, 2022, were as follows:
_2022_
Medicare $ 33,608,188
Medi-Cal 45,145,391
Other third party payors 59,234,298
Self pay and other 11,100,868
Gross patient accounts receivable 149,088,745
Less allowances for contractual adjustments and bad debts (127,822,234)
Net patient accounts receivable $ 21,266,511
NOTE 5 - CAPITAL ASSETS
Capital assets as of December 31, 2022 were comprised of the following:
Balance at Transfers & Transfer & Balance at
12/31/2021 Additions Retirements 12/31/2022
CIP $ - $ 965,266 $ - $ 965,266
Equipment - 1 ,738,255 - 1 ,738,255
Software - 1 ,038,183 - 1 ,038,183
Totals at historical cost - 3 ,741,704 - 3 ,741,704
Less accumulated depreciation - (725,896) - (725,896)
Capital assets, net $ - $ 3,015,808 $ - $ 3,015,808
16
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 6 - DEBT BORROWINGS
Long-term debt consists of a note payable, a line of credit, and finance lease agreements as follows:
District debt
The District has a note payable with the County of Santa Cruz, for the
purpose of funding a Letter of Credit with the Santa Cruz County Bank,
which is a requirement of the Hospital lease agreement. Interest at 0%
with principal payments in the amount of $500,000 due bi-annually on
June 30th and December 31st. The first payment is due on June 30,
2023, with final payment due on December 31st, 2025. $ 2,700,000
Total District debt: 2,700,000
Hospital debt
Note payable to the David and Lucille Packard Foundation; the
Hospital is a co-borrower on a note payable collatoralized by
community pledges to the Pajaro Valley Healthcare District Project
(the Project). As community pledges are received, the Project will
make annual principal payments, with the first payment due on March
31, 2023, and the final payment due on January 31, 2026. The Hospital
will relieve the debt and recognize revenue as principal payments are
made by the Project. Interest at 0.5% will be paid by the Hospital bi-
annually on March 31st and September 30th, with the final payment due
on January 31, 2026. 6,357,000
Multiple finance leases; imputed interest ranging from 10-11%; monthly
lease payments ending in August of 2024: 123,986
Total Hospital debt: 6,480,986
Total debt borrowings 9,180,986
Less current maturities ( 1,702,035)
Debt borrowings, net of current maturities $ 7,478,951
17
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 7 - RETIREMENT PLANS
The Hospital sponsors two 401(a) defined contribution retirement plans for employer contributions: one for
service and maintenance employees payable on a calendar year-end that contributes 6% or higher depending
on years of service of gross annual earnings; the second 401(a) plan covers other non-management, non-
highly compensated employees and contributes 6% of gross earnings bi-weekly. The Hospital also sponsors
a 457(b) deferred compensation plan for employee contributions, withheld from bi-weekly earnings.
Accrued payroll and related liabilities include $174,217 of 401(a) employer liabilities, calculated from the
final two pay period of the year and contributed to the plan in January of 2023. 401(a) liabilities for SEIU
employees was minimal.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Operating leases: The Combined Unit leases various equipment and facilities under operating leases
expiring at various dates. Total building and equipment rent expense for the year ended December 31,
2022, was $1,571,712. Future minimum lease payments for the succeeding years under operating leases
as of December 31, 2022, other than those disclosed in Note 9, that have remaining terms in excess of one
year are not material.
Construction-in-Progress: As of December 31, 2022, the Combined Unit had $965,266 in construction-in-
progress for the Cardio Cath Lab. Approximately $25,000 in remobilization fees are remaining to complete
construction. Funds for these fees will come from earnings.
Litigation: The Combined Unit may from time-to-time be involved in litigation and regulatory
investigations which arise in the normal course of doing business. As of December 31, 2022, management
is not aware of any legal matters or potential regulatory investigations.
Medical Malpractice Insurance: The Combined Unit maintains commercial malpractice liability insurance
coverage under a claims made and reported policy covering losses up to $15 million per claim and $25
million in the aggregate for all claims, subject to a deductible of $150,000 Indemnity & Expense each claim.
The District plans to maintain the insurance coverage by renewing its current policy, or by replacing it with
equivalent insurance.
Workers Compensation Program: The Hospital workers compensation policy is through travelers and
renews in Oct 2023. Annual premium is $1,755,002. The district workers compensation policy is also
through travelers and renews in Oct 2024. The annual premium is $17,775.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 8 - COMMITMENTS AND CONTINGENCIES (continued)
Health Insurance Portability and Accountability Act: The Health Insurance Portability and Accountability
Act (HIPAA) was enacted August 21, 1996, to ensure health insurance portability, reduce health care fraud
and abuse, guarantee security and privacy of health information, and enforce standards for health
information. Organizations are subject to significant fines and penalties if found not to be compliant with
the provisions outlined in the regulations. Management believes the Combined Unit is in compliance with
HIPAA as of December 31, 2022.
Regulatory Environment: The Combined Unit is subject to several laws and regulations. These laws and
regulations include matters such as licensure, accreditation, government health care program participation
requirements, reimbursement for patient services, and Medicare and Medi-Cal fraud and abuse.
Government activity has increased with respect to possible violations of statues and regulations by health
care providers. Violations of these laws and regulations could result in expulsion from government health
care programs together with the imposition of significant fines and penalties, as well as significant
repayments for patient services previously billed. Management believes that the Combined Unit is in
compliance with all applicable government laws and regulations and is not aware of any future actions or
unasserted claims at this time.
NOTE 9 - LEASES
The Combined Unit has multiple equipment and building leases. The District leases the building and land
for the Hospital from Medical Properties Trust, Inc with a remaining term of 321 months and an annual
increase to base rent of 2%. The District also leases office space for a urology center near the Hospital. This
lease has 91 months remaining and a fixed monthly payment during the term. All other lease arrangements
are either immaterial or have a term of 12 months or less.
Neither lease has a readily determinable discount rate. The estimated borrowing rate for the Hospital
building and land and for the urology center is 9.5%. The urology center lease requires payment of common
area maintenance, which represent the majority of variable lease costs. Variable lease costs are excluded
from the present value of lease obligations. The District’s lease agreements do not contain any material
restrictions, covenants, or any material residual value guarantees.
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Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 9 – LEASES (continued)
Lease related assets and liabilities as of December 31, 2022 consist of the following:
Lease assets: 2022
MPT $ 33,042,270
Urology center 554,503
Other 1 ,163,180
Total lease assets $ 34,759,953
Lease liabilities: 2022
MPT $ 33,300,104
Urology center 557,177
Other 1 ,166,684
Total lease liabilities $ 35,023,965
Total operating lease expense for the year ended December 31, 2022 was $1,571,712. Future minimum
rental payments required under operating lease obligations as of December 31, 2022 are summarized as
follows:
Years ending December 31,
2023 $ 3,542,186
2024 3 ,544,634
2025 3 ,385,886
2026 3 ,192,676
Thereafter 89,221,468
Total 102,886,850
Less imputed interest ( 67,862,885)
Present value of lease liabilities $ 35,023,965
The weighted average reamining lease term for these leases is 25.7 years and the weighted average discount
rate is 9.5%.
20
Pajaro Valley Health Care District
Notes to the Financial Statements
For the Year Ended December 31, 2022
NOTE 10 – GAIN FROM ACQUISITION OF HOSPITAL
For the year ended December 31, 2022, the Combined Unit recognized an extraordinary gain of
$20,662,622. This extraordinary gain was generated as a result of acquiring the operations and certain assets
of the Watsonville Community Hospital in September 2022. The District purchased the Hospital at a
discounted price out of bankruptcy, which generated the gain.
NOTE 11 – SUBSEQUENT EVENTS
Management evaluated the effect of subsequent events on the combined financial statements through
October 25, 2023, the date the combined financial statements are issued, and determined that there are no
material subsequent events that have not been disclosed.
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SUPPLEMENTARY SCHEDULES
22
Pajaro Valley Healthcare District
Combining Statement of Net Position
December 31, 2022
District Hospital Eliminations Total
Assets
Current Assets
Cash and cash equivalents $ 2,748,593 $ 5,911,975 $ - $ 8,660,568
Patient accounts receivable, net of allowances 3,242 21,263,269 - 21,266,511
Other accounts receivable - 1 ,498,921 - 1 ,498,921
Inventories 15,409 2 ,142,994 - 2 ,158,403
Prepaid expenses and other current assets 5 81,562 1 ,929,018 - 2 ,510,580
Total current assets 3 ,348,806 32,746,177 - 36,094,983
Capital assets, net of accumulated depreciation 2 ,885,858 1 29,950 - 3 ,015,808
Lease assets 33,721,877 1 ,038,076 - 34,759,953
Due from district - 3 ,205,566 (3,205,566) -
Total assets 39,956,541 37,119,769 (3,205,566) 73,870,744
Liabilities and Net Position
Current liabilities
Current maturities of debt borrowings - 1 ,702,035 - 1 ,702,035
Accounts payable and accrued expenses 4 12,552 6 ,509,452 - 6 ,922,004
Accrued payroll and related liabilities 2 31,003 8 ,410,859 - 8 ,641,862
Estimated third party payor settements - 1 ,597,184 - 1 ,597,184
IBNR self funded health benefits - 2 ,787,581 - 2 ,787,581
Total current liabilities 6 43,555 21,007,111 - 21,650,666
Debt borrowings, net of current maturities 2 ,700,000 4 ,778,951 - 7 ,478,951
Lease liabilities 33,987,142 1 ,036,821 - 35,023,963
Due to hospital 3 ,205,566 - (3,205,566) -
Total liabilities 40,536,263 26,822,883 (3,205,566) 64,153,580
Net position
Invested in capital assets, net of related debt 2 ,885,858 5,964 - 2 ,891,822
Restricted 2 ,600,000 - - 2 ,600,000
Unrestricted (4,803,145) 9 ,028,487 - 4 ,225,342
Total net position 6 82,713 9 ,034,451 - 9 ,717,164
Total liabilities and net position $ 41,218,976 $ 35,857,334 $ (3,205,566) $ 73,870,744
See accompanying notes to the financial statements
23
Pajaro Valley Healthcare District
Combining Statement of Revenues, Expenses and Changes in Net position
For The Year Ended December 31, 2022
District Hospital Eliminations Total
Operating revenues
Net patient service revenues $ 4 51,860 $ 32,856,390 $ - $ 33,308,250
Other operating revenues 7 54,870 8 7,518 (309,444) 5 32,944
Total operating revenues 1 ,206,730 32,943,908 (309,444) 33,841,194
Operating expenses
Salaries & Wages 9 19,690 16,462,262 - 17,381,952
Benefits 1 75,378 5 ,925,460 - 6 ,100,838
Contract Labor - 2 ,414,616 - 2 ,414,616
Supplies 2 5,443 3 ,662,589 - 3 ,688,032
Medical Spec Fees 37,514 2 ,838,544 - 2 ,876,058
Purchased Services 4 80,077 5 ,099,885 - 5 ,579,962
Lease Cost and Rent 1 ,353,548 2 96,210 - 1 ,649,758
Repairs & Maintenance 96 3 16,275 - 3 16,371
Utilities 5,848 7 06,897 - 7 12,745
Depreciation and amortization 3 84,786 - - 3 84,786
Other Operating Exp 4 9,608 2 ,856,954 - 2 ,906,562
Prop Taxes & Ins 28,644 7 03,177 - 7 31,821
Interest 2 73,907 4 6,631 - 3 20,538
Total operating expenses 3 ,734,539 41,329,500 - 45,064,039
Operating income (loss) (2,527,809) (8,385,592) (309,444) (11,222,845)
Nonoperating revenues (expenses)
Rental income 2 77,387 - - 2 77,387
Management fees (309,444) - 3 09,444 -
Total nonoperating revenues (expenses) (32,057) - 3 09,444 2 77,387
Net income/(loss) before extraordinary item (2,559,866) (8,385,592) - (10,945,458)
Gain from acquisition of hospital 3 ,242,579 17,420,043 - 20,662,622
Increase/(decrease) in net position 6 82,713 9 ,034,451 - 9 ,717,164
Net position, beginning of the year - - - -
Net position, end of year $ 6 82,713 $ 9,034,451 $ - $ 9,717,164
See accompanying notes to the financial statements
24
JWT & Associates, LLP
A Certified Public Accountancy Limited Liability Partnership
1111 East Herndon, Suite 211, Fresno, California 93720
Voice: (559) 431-7708 Fax:(559) 431-7685
Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards
The Board of Directors
Pajaro Valley Health Care District
Watsonville, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the combined financial statements of the business-type activities of the Pajaro Valley
Health Care District (the District) as of and for the year ended December 31, 2022, and the related notes to the
combined financial statements, which collectively comprise the District's combined financial statements, and have
issued our report thereon dated October 25, 2023.
Internal Control over Financial Reporting
In planning and performing our audit of the combined financial statements, we considered the District's internal
control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinion on the combined financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not
express an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's combined financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies. Given those limitations, during our audit we did not identify any deficiencies in internal control that
we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
25
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's combined financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the combined financial
statement. However, providing an opinion on compliance with those provisions was not an objective of our audit,
and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District's internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
JWT & Associates, LLP
Fresno, California
October 25, 2023
26
Pajaro Valley Health Care District
Schedule of Findings and Questioned Costs
For the Year Ended December 31, 2022
I. Summary of Auditor’s Results
Type of auditor’s report issued: Unmodified
Internal Control over financial reporting:
Material weakness identified? yes X no
Significant deficiency(ies) identified that are not considered
to be material weaknesses? yes X no
Noncompliance material to financial statements noted? yes X no
II. Current Year Audit Findings and Questioned Costs
Financial Statement Findings
None reported
III. Prior Year Audit Findings and Questioned Costs
None reported
27