Palomar Health, UCSD pivot from $100M psychiatric hospital plans after matching funds fall short

Palomar Health in Escondido, California, is at risk of losing a $50 million California Department of Health Care Services grant after abandoning plans for a 120-bed psychiatric hospital that had anchored its behavioral health expansion strategy. The project, initially backed through California’s Proposition 1 bond program, unraveled after Palomar failed to secure required matching funds and later faced scaled-back state support for only 50 Medi-Cal funded beds. A revised proposal with UC San Diego Health would redirect funding to smaller inpatient units, outpatient addiction and trauma programs, and crisis services across the region, effectively ending the promised standalone hospital project for inland North County residents.