Palomar Health in Escondido on May 23, 2023.
Palomar Health in Escondido on May 23, 2023. / Photo by Ariana Drehsler

In 1945, right after World War II ended, California saw a severe shortage of hospital beds.  

Those who lived in the more rural and lower income areas of the state had little access to basic health care. And the public and private hospitals that did exist were only in urban areas. 

That’s when state lawmakers enacted a new way for the public to create and access health care systems and facilities in their communities. These systems, though, come with strong oversight from the state and the public. 

They are called public health care districts and Palomar Health is one of them. 

Over the past year, I’ve written a few stories about Palomar Health, a public health care district in North County that operates Palomar Medical Centers in Escondido and Poway. 

I’ve covered Palomar Health’s board elections, a controversial switch to a new medical group and, more recently, its poor financial performance last fiscal year. 

This time, I want to take a step back and provide insight into how Palomar Health came to be, and why its status as a public health care district matters. 

What Are Public Health Care Districts?  

Public health care districts are a form of local government called special districts, meaning they are independent from city and county governments. They are governed by a board of directors that is elected by the public.   

In 1945, in response to the hospital shortage, state lawmakers adopted the Local Hospital District Law, later renamed the Local Health Care District Law. It allowed rural and low-income areas to collect tax dollars to construct and operate hospitals and health care facilities in their communities. 

Communities can do this by mobilizing and campaigning to put a measure for a new health care district on the ballot. After going through the proper channels with the state, it goes to a public vote. If residents in the district approve it, a health care district is formed. 

There are currently 76 health care districts in California, according to the Association of California Healthcare Districts, and 54 of them serve the state’s rural areas.  

Like other districts, Palomar Health started because of the need for more medical services in Escondido. In 1945, a citizen’s group called the Escondido Valley Hospital Association helped create and establish Palomar Health as a public health care district. 

State and public accountability: Health care districts, unlike other hospitals, have an added responsibility to the state and to the public. They are required to remain transparent to the communities they serve. 

All of them, including Palomar Health, must submit annual financial reports to the California State Controller and obey all state laws that include governing public records, record keeping, elections and public access to documents. 

That’s because they are created by the public, their governing boards are voted in by the public and they are partially funded by the public. 

Most health care districts receive a share of local property taxes. Palomar Health, for example, receives millions of dollars in property tax revenue each year. 

Financial hardships: Like many hospitals nationwide, a lot of health care districts are seeing significant financial declines.  

Strong state and public oversight mean that hospitals run by public health care districts can’t just be sold or dissolved in the face of financial hardships. The sale of a district’s hospital would first require dissolution of the health care district itself, which would require a vote of the public. 

So, leaders of districts like Palomar Health or Tri-City Healthcare District, which are both seeing declines in revenue, can’t decide to sell because of their financial issues.  

Leaders of Palomar Health, which saw its operations income plunge from roughly $42 million in 2022 to $9 million in 2023, insist that the district will see significant financial gains starting as early as October

Tri-City Medical Center recently closed its labor and delivery department due to its financial declines, but it’s currently searching for a large partner to help sustain the hospital long-term. 

The other option for struggling public health care districts is bankruptcy, which is a legal process that gives financially distressed entities protection from creditors by creating a plan between the entity and its creditors to resolve its outstanding debt.  

More than a dozen health care districts have declared Chapter 9 bankruptcy in the past 20 years. 

A Note on Public Access 

Palomar Health recently implemented a new terms of use agreement for visitors of its website, and it’s extensive.  

It says agreeing to the terms of use allows Palomar Health to monitor your use of the website and possibly collect your personal information. 

It also doesn’t allow users to “copy, reproduce, republish, post, retransmit, or distribute in any way any of the information or materials in this website without the prior written consent of Palomar Health.”  

Those are just a couple of highlights of the long agreement. And if you don’t agree to these terms, you can’t access the website. 

I visited each of the websites of the 75 other public health care districts in the state, and Palomar Health is the only one that requires users to agree to any terms of use and it’s the only district that has any sort of barrier to public access. 

In Other News 

  • ICYMI: Escondido won’t be providing funding this year to the city’s only homeless shelter because city officials are concerned the shelter is serving too many people who aren’t from Escondido. (Voice of San Diego) 
  • The producer of a failed, multimillion-dollar Del Mar horse show has been arrested on suspicion of murder-for-hire. Tatyana Remley pleaded not guilty to the charges that she tried to pay someone to kill her husband and dispose of his body. (Union-Tribune) 
  • A new double-tracked, concrete railroad bridge will replace the century-old bridge across the San Luis Rey River near the Oceanside harbor. (Union-Tribune) 

Tigist Layne is Voice of San Diego's north county reporter. Contact her directly at or (619) 800-8453. Follow her...

Join the Conversation


  1. Thank you for the informative, evenhanded, professional journalism. I’ll take some for East County should you decide it makes sense for the Voice of San Diego.
    Dana Law
    El Cajon

  2. San Diego is certainly not a poor farming community that requires public health care funding in this area.
    Am curious why Palomar Health has been buying full page adds in the Sunday Union Tribune for the last couple of months to advertise how great they are. People who require a hospital go where their insurance carrier directs them (in order to afford hospital care) – it is not a market place choice? Suggest that Palomar negotiate with insurance companies so they have enough patients to support their business after the Kaiser Permanente contract expires.

  3. I’ve had the opportunity to indirectly need to deal with Tri-City Hospital, and I have two thoughts. First, when I look at a bill, they are charging more than ever. Then, they give the insurance company a huge discount. Meanwhile, insurance premiums have doubled in the last 10 years. The place is packed…all it seems they want to do is move people on so they can refill a bed. Given all that, how can they be in such bad financial shape? My second thought was that the ER was so crowded people were waiting outside on a patio. A comment was overheard that Palomar just closes it’s doors to the ER when it reaches capacity, leaving Tri-City to take up the slack. And the reason had something to do with Tri-City having sort of of obligation to the County, when Palomar does not. Given they are both Public Health Care Districts, why is this the case? As usual, issues with the financial side of health care rarely make any sense. Maybe the author can check and follow-up with another article regarding this.

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