UC San Diego Health says its flagship campuses are effectively full. Its new joint health system with Palomar offers another path to expand cancer, cardiovascular and other specialty services without constructing another hospital.

UC San Diego Health’s growing demand for complex specialty care has created a basic problem: its major campuses have little room left to expand.

UCSD CEO Patty Maysent told Becker’s Hospital Review that the system is “really capacity constrained,” with its La Jolla and Hillcrest campuses effectively full as UCSD seeks to grow cancer care, cardiothoracic surgery, neurosurgery, trauma, maternal-fetal medicine and other advanced programs.

Rather than build another hospital, UCSD has turned north.

On July 1, UC San Diego Health and Palomar Health began operating Palomar UC San Diego Health, a new public health system established through a Joint Powers Authority, or JPA.

The arrangement is not a conventional merger or acquisition. Instead, the organizations created a jointly governed public entity that operates Palomar facilities while UC San Diego Health and the Palomar UC San Diego Health Authority maintain separate licenses and independent medical staffs.

For UCSD, the partnership provides something increasingly scarce at its existing campuses: physical capacity.

Among the priorities are two unfinished floors at Palomar Medical Center Escondido slated for development of advanced cancer, cardiovascular and other complex services. UCSD’s Moores Cancer Center teams are expected to work with Palomar oncology providers, including efforts to increase access to clinical trials. Cardiovascular and cardiothoracic surgery are also among the initial expansion areas, and Becker’s reports that medical oncologists have already been recruited for the initiative.

The arrangement could also extend UCSD’s physician workforce farther into North County. Residents, fellows and subspecialists are expected to practice in the region, potentially creating additional appointment capacity and allowing some patients to receive advanced care closer to home rather than traveling to La Jolla or Hillcrest.

For Palomar, the partnership addresses a different set of pressures.

The health system reported a $165.1 million operating loss and an 18.5% negative operating margin in fiscal 2024. In March 2025, Palomar borrowed $20 million from UC San Diego Health to help sustain patient care.

The JPA therefore brings together complementary needs: UCSD requires space for continued specialty growth, while Palomar gains access to academic clinical programs and UCSD’s operational and financial expertise.

Palomar’s assets and liabilities are expected to transfer into the authority in phases. Governance is shared through a six-member board, with UCSD and Palomar each appointing three representatives.

For physicians, the arrangement raises questions that extend beyond hospital capacity.

Existing Palomar patients are expected to remain with their current physicians and care teams, and the two organizations have not merged their medical staffs. But as UCSD specialists, trainees, clinical trials, and advanced programs expand into North County, the partnership could eventually affect referral patterns, specialist recruitment,t and where complex cases are treated.

Those effects remain prospective.

What Remains Unclear

The organizations have not publicly quantified how many beds, operating rooms, clinic appointments, or procedures the expansion will ultimately add; how many UCSD physicians will practice in North County; how credentialing and compensation arrangements will work; or whether referral patterns will materially change.

No post-JPA financial or operating results are yet available to show whether the arrangement has improved Palomar’s finances or measurably reduced UCSD’s capacity constraints.

The new system may give both organizations tools to address those problems, but whether it succeeds remains to be demonstrated.