In a major boost to California’s mental health infrastructure, the Palomar Health Foundation has secured a conditional award of nearly $50 million—the largest single grant of its kind in the San Diego region.

The award has come from the Behavioral Health Continuum Infrastructure Program (BHCIP) under Proposition 1. The funding will support development of the Palomar Health Behavioral Health Institute, a 120-bed acute psychiatric facility slated to open in 2027.

Backed by California’s Department of Health Care Services (DHCS), BHCIP is part of a broader strategy to modernize the state’s behavioral health system by expanding capacity and improving access to services. Palomar’s forthcoming 84,700-square-foot center will provide not only inpatient psychiatric care, but also hospital-based outpatient services and 38 detoxification and withdrawal management slots, offering life-changing care for adolescents, adults, and geriatric patients.

“This is the largest grant ever received by Palomar Health — and a transformational milestone for our community.”

“This is the largest grant ever received by Palomar Health — and a transformational milestone for our community,” said Kristin Gaspar, president & CEO of the Palomar Health Foundation. “It will create lasting change for thousands of individuals and families.”

Once operational, the outpatient program is projected to serve nearly 20,000 individuals annually, significantly strengthening Northern San Diego’s behavioral health ecosystem.

The investment comes amid growing demand for comprehensive behavioral health services in the region, with particular focus on reducing mental health crises, improving long-term outcomes, and integrating community-based care models. BHCIP’s Round. 1 funding—totalling $3.3 billion across 124 projects statewide—is expected to create 6,800 residential beds and 26,700 outpatient treatment slots.

“This award is a powerful vote of confidence in Palomar Health’s ability to lead this vital work.”

“This award is a powerful vote of confidence in Palomar Health’s ability to lead this vital work,” added Diane Hansen, president and CEO of Palomar Health. “It marks a significant step forward in our mission to reimagine healthcare in Northern San Diego and beyond.”

The Behavioral Health Institute will be located just south of Palomar Medical Center Escondido, placing it in close proximity to existing acute care services and enhancing care coordination.

As California prepares to launch additional projects under Proposition 1 in 2026, the Palomar Health Behavioral Health Institute sets a powerful example of what’s possible when state investment aligns with local innovation and urgent need.