North County Report: Palomar, UCSD Outline New Partnership in Last-Minute Town Hall 

The partnership between two major hospital systems is slowly coming into focus.  

Last night, Palomar Health and UCSD Health officials held a town hall to explain how they are going to work together and what it means for each hospital.  

Background: The two systems are teaming up in a sort of ‘I scratch your back, you scratch my back’ arrangement. The idea: help Palomar climb out of its financial hole while giving UCSD Health a larger footprint in North County. 

In 2023, we were the first to report that Palomar Health’s financial position was rapidly declining, and it’s not alone. Hospitals across the country are facing declining patient volumes and shrinking revenue.  

As community members, staff and at least one physician filtered into a conference room at Palomar Medical Center in Escondido, I realized there were a lot of empty chairs.  

Top executives and attorneys from both systems sat at the front of the room, flanking UCSD Health CEO Patty Maysent and Palomar Health CEO Diane Hansen. 

Maysent acknowledged the low attendance, admitting they announced the town hall pretty last minute, but said there would likely be more events like this one. 

The partnership will take the form of a joint powers authority, a public entity created when two or more agencies agree to share power, roll out new programs, build facilities or provide services together. 

They’re calling it the Palomar UCSD Health Authority.  

The Big Takeaways 

Maysent emphasized that Palomar Health and UCSD Health are not merging, and each organization will remain independent.  

The Palomar UCSD Health Authority will operate both Palomar Medical Centers in Escondido and Poway under their own licenses, and UCSD Health and its facilities will remain separate. The existing medical staff at both Palomar facilities in Escondido and Poway will also remain in place. 

The partnership will roll out in two phases. First, Palomar Health will transfer 49 percent of its assets – including debt but excluding General Obligation bonds – to the Health Authority. 

General obligation bonds are voter-approved debt that public health care districts use to fund major capital projects, like building or renovating hospitals. They’re repaid through local property taxes, which is why they must remain with Palomar Health and cannot be transferred to the new Health Authority. 

In this phase, UCSD Health will commit $200 million for infrastructure and service expansion at Palomar Health. This will include new clinical programs, like a comprehensive cancer center at Palomar’s Escondido campus, and a plan to finish out two shelled floors at the hospital for other services. 

In phase two, Palomar Health will transfer the remaining 51 percent of assets to the Health Authority. 

The reason why it happens in two phases is because, as a health district, there needs to be authority to transfer the entire amount over,” Maysent said. “So, there’s a period of time where 51 percent will remain with the health district and leased to the authority until either a voter referendum is passed or a judicial opinion is granted or legislation allows the other 51 percent to move over.” 

After seven years, there is an option in the agreement for UCSD Health to buy out the assets and liabilities at fair market value, Maysent said, but that’s “not the intent.” 

“If things are working well at that point, there’s no reason to do that,” she said. 

It’s all happening really fast: The two organizations are expecting to complete most of the process within the next few months. 

Within three to four months, Maysent said, they expect to receive approvals from state agencies to form the joint powers authority, they hope to finalize legal agreements between all parties and they’ll establish the joint powers authority’s new board of directors. 

What’s next: A state agency called the Office of Healthcare Affordability has to approve the transaction. That will likely take about 90 days, Maysent said. Once approved, that joint powers authority will begin operations. In the meantime, they will establish the new board. 

Speaking of the Board 

The new Palomar UCSD Health Authority will be governed by a six-member board that will run operations of Palomar’s hospitals in Escondido and Poway. 

The new board will have equal representation from UCSD Health and Palomar Health with each hospital system appointing three board members. Applications for those board seats have already been submitted and are currently being reviewed, Hansen said. She added that the new board members could be announced at Palomar Health’s board meeting on Monday. 

The Palomar Health District Board, whose board members were elected by the public, will remain in place, but will have different responsibilities moving forward. 

“They’ll focus more on community projects, healthcare within the community, being more of that liaison to the health system,” Hansen said. “The operations of the facilities, both Poway and Escondido, will be managed by the Palomar UCSD Health Authority…the district board will still remain, but they will have a little bit different focus and a little bit different level of responsibility.” 

I asked Hansen if Palomar Health’s board will still have public board meetings and keep things like financial reports accessible to the public. 

Yes, she said, Palomar’s board will continue to have monthly board meetings, but Hansen and Maysent will be the ones relaying information on behalf of the new Health Authority to Palomar’s board members, most likely on a quarterly basis. 

“That will include financial reports and updates on all of the same kind of information that we currently bring to those meetings; that will continue to be reported on,” Hansen said. 

Maysent added that the Health Authority’s board will also be public and there will be opportunities to have “readouts.” 

“As we’re trying to demonstrate now, we’re going to lean toward transparency in everything that we try to do,” Maysent said. 

Remember: There’s one Palomar Health board member who isn’t happy with the new board structure.  

Board Director John Clark was the only Palomar board member who didn’t support the resolution to create the new Health Authority with UCSD Health, choosing to abstain from the vote back in October. 

“It effectively removes direct representation of the district’s voters in the new governance structure, which is deeply troubling,” Clark said in a statement in October.  

Because Palomar Health is a public institution, each of its board members is elected by voters who live in the Palomar Health district.  

Around Town: Judge Suspends Encinitas Councilmember’s Misdemeanor Case 

Encinitas Councilmember Luke Shaffer, who was accused of assaulting a resident during a parking dispute, will now be able to have his case dismissed if he completes eight hours of anger management classes and 60 hours of non-sports volunteer work. 

A judge granted Shaffer misdemeanor diversion on Monday, which puts his criminal case on pause while he completes these tasks. If he does, Shaffer can seek to have the case dismissed. 

In August, the District Attorney’s office charged Shaffer with felony assault and two misdemeanor counts: hit-and-run driving and willful omission to perform duty, a charge that applies when a public official knowingly fails to perform a legally required duty.  

Then, last month, a judge reduced the felony assault charge and tossed out the misdemeanor count of willful omission to perform duty. 

The charges stemmed from a July confrontation over trash bins between Shaffer and resident Declan Caulfield. Shaffer moved Caulfield’s trash bins to clear space to park his truck. Caulfield moved the bins back, insisting that’s where the bins needed to be. Shaffer then got into his truck and allegedly reversed into the bins and Caulfield’s outstretched palms.  

“We’ve consistently held that the conduct on that date was not criminal and certainly was not felonious. Today the court’s ruling reflects that,” Blumberg said, according to the Coast News. “Councilmember Shaffer is grateful to put this behind him and focus on the people of Encinitas.” 

Caulfield issued a statement shared by his attorney via email: 

“As a longtime Encinitas resident who cares deeply about this community, I am relieved this legal process is finally concluding and that Councilmember Shaffer is being held accountable. Still, it is deeply troubling that such aggression and irresponsibility came from an elected official,” Caulfield said. “I fully support the court’s orders requiring intensive anger management and substantial community service, essential steps to ensure real accountability and to reaffirm that no one, regardless of office, is above the law.” 

In Other News 

• ICYMI: I had a conversation with Encinitas Mayor Bruce Ehlers about the new City Council’s recent efforts to introduce more enforcement into the city’s homeless policies. (Voice of San Diego) 
• Carlsbad is moving forward with new rules for e-bikes, including setting a minimum age of 12 to ride electric bicycles with pedal assist or a throttle within the city. (Coast News) 
• Local dining chain Swami’s Café and restaurant Honey’s Bistro will pay $650,000 to settle a case alleging sexual harassment and retaliation against female employees. (Coast News) 

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