Why UC San Diego Health and Palomar Health are exploring a partnership
UCSD Health and Palomar are discussing the formation of a Joint Powers Authority that would oversee Palomar’s operations.
UC San Diego Health and Palomar Health are discussing the possibility of collaborating.
UC San Diego Health and Palomar Health have signed a letter of intent to form a Joint Powers Authority. The entity would be jointly governed by both systems and oversee Palomar.
The two organizations signed a letter of intent this month to explore the formation of a “Joint Powers Authority.” The discussions involve the creation of the authority, envisioned as a “jointly governed entity” that would oversee the operations of Palomar Health.
UCSD Health and Palomar say they hope to finalize the details of the Joint Powers Authority by late 2025. Palomar is a health care district operating two medical centers and other healthcare locations in the San Diego region’s North County.
The organizations described the effort as a desire to develop a “long-term strategic partnership,” according to a news release.
Palomar Health has struggled financially and a partnership could provide more stability.
In March, UCSD Health loaned Palomar $20 million to help bolster the organization.
That same month, Palomar received a downgrade from Fitch Ratings, lowering the rating on bonds from “B” to “B-”. Fitch also assigned a negative outlook to Palomar, citing “the persistent and severe challenges Palomar still confronts as management navigates significant financial stress and uncertainty.”
Patty Maysent, CEO of UC San Diego Health, said a partnership with Palomar could lead to more healthcare options for residents in the region.
“This step forward with Palomar Health reflects our mutual commitment to expanding access to academic health care and stabilizing and strengthening regional health care delivery,” Maysent said in a statement. “We are excited to enter this phase of focused collaboration.”
Diane Hansen, CEO of Palomar Health, said the letter of intent signifies progress toward offering better care to patients.
“The LOI is an important step in a longer process ultimately aimed at enhancing health care services, optimizing regional capacity, and meeting the needs of patients across a broader geography,” Hansen said in a statement.
Palomar’s market share has declined in recent years, while its regional competitors, including UCSD Health, Scripps Health, Sharp HealthCare, and Kaiser Permanente, have held steady or improved, according to the Fitch Rating report in March.
Still, as Fitch described Palomar Health as “essential to North San Diego County as the district maintains the only trauma center and NICU within the county boundaries.”
This month, UC San Diego Health opened the McGrath Outpatient Pavilion at its Hillcrest medical campus.
UCSD Health provides 1,101 beds for inpatient care and operates Hillcrest Medical Center, Jacobs Medical Center, and East Campus Medical Center, along with a host of other healthcare locations.
Like some other academic health systems who have let staff go in recent months, UCSD Health announced in June that the organization was laying off more than 200 employees.
UCSD Health said the layoffs were in response to growing financial pressure “caused by federal impacts to health care, regulatory uncertainty, and rising costs of care,” CBS 8 San Diego reported. The layoffs included 22 registered nurses, according to the California Nurses Association.
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