Palomar Health and UC San Diego Health completed an agreement creating a joint powers authority to operate a new regional health system serving nearly one million people.
The new health system operates under the name Palomar UC San Diego Health to serve communities of North San Diego County and the surrounding regions, the newly created organization announced July 2.
Palomar UC San Diego Health combines the strengths of a community-based health system and an academic health system under a single unified governance structure, according to health system leadership.
A year ago, the organizations said they were in talks to form a jointly governed entity that would oversee operations of Palomar Health. In October, the Regents of the University of California and Palomar Health District Board of Directors approved the establishment of a joint powers authority (JPA) to stabilize and expand health care services for the community in the Palomar Health District of North San Diego.
"Palomar UC San Diego Health creates a new blueprint for health care in California," said Patty Maysent, CEO of UC San Diego Health, in a statement. "This new system, focused on North San Diego County, will grow and enhance health care services while offering increased access to advanced specialty care, close to home."
UC San Diego Health includes three hospitals with a combined 1,011 beds, as well as Moores Cancer Center, the region's only NCI-designated Comprehensive Cancer Center, the Sulpizio Cardiovascular Center and the Shiley Eye Institute. Palomar Health is the largest public healthcare district in California, managing a comprehensive network of hospitals and medical groups across an 800-square-mile area.
A JPA is a legal entity that allows two public health agencies to jointly run hospitals and clinics, share decisions and improve care for the community, the organizations explained in a press release. In this case, this JPA was formed with the former Palomar Health and the existing UC San Diego Health.
Maysent, Palomar CEO Diane Hansen and the JPA Board will oversee Palomar UC San Diego Health's long-term strategy from the launch of new clinical services and building expansions to investments in new equipment and projects.
"The new joint powers authority with UC San Diego Health marks a defining moment for health care in North San Diego County," Hansen, now CEO of the JPA, said in a statement. "This new health system allows us to preserve and bolster local care while expanding access to expertise, innovation and new services that will benefit our communities for decades to come."
Oversight of the JPA includes the joint operation of both the Escondido and Poway hospitals among other health facilities and resources.
The Palomar UC San Diego Health Authority and UC San Diego Health are two separate health systems, maintaining separate licenses and independent medical staffs.
According to news reports, Palomar Health faced financial challenges, including a $165 million operating loss in fiscal year 2024 and a one-year forbearance agreement with lenders in January that waived financial covenants tied to more than $700 million in revenue bonds, The Coast News Group reported.
Palomar’s facilities in Escondido and Poway, and its affiliated medical groups, will continue to operate independently of UC San Diego Health but will now be run by a new board of directors as part of the JPA, The San Diego Union-Tribune reported. Both parties are transferring significant assets, with Palomar contributing its Poway campus and 15% of its assets on Citracado Parkway in Escondido. UC San Diego has already loaned Palomar $40 million to help it cope with ongoing financial difficulties, and documents show it will contribute an additional $160 million to the JPA for a wide range of improvements, The San Diego Union-Tribune reported.
Planning for new health services is underway. Existing patients of the former Palomar Health will continue to receive care from their doctors and care teams, Palomar UC San Diego Health executives said. Information about access to UC San Diego Health specialists and a broader, more connected network of care are forthcoming.
"Early priorities include developing two shelled floors at the Escondido hospital to support the expansion of destination health care services," Maysent said. "This investment will significantly expand the depth and breadth of specialized care available in North San Diego County, including advanced cancer, cardiovascular and other complex clinical services."