As Santa Clara County seeks ways to trim its seven-figure budget amid the loss of critical federal revenues, county officials have approved the purchase of a new health clinic in San Jose that they say will save them money in the long run.
The county originally had planned to lease the 1410 S. Bascom Avenue medical offices in a 30-year deal approved by the Board of Supervisors in 2022.
But the multi-decade lease would have cost the county on average $25.5 million annually. In the agreement approved by the Board on Tuesday, the county will instead purchase the property using lease revenue bonds that will lower the annual payment to roughly $20 million. The county says the total savings amount to $112 million over the course of three decades.
“As stewards of taxpayer dollars, it is critical that we continue to optimize county operations to deliver the greatest value at the most efficient cost,” County Executive James Williams said in a news release.
The purchase is part of the county’s “ongoing efforts to streamline and restructure operations in light of the fiscal crisis we face due to unprecedented federal budget cuts,” according to Williams.
The county is bracing for roughly $1 billion in lost federal revenues annually in the coming years as a result of President Donald Trump’s “Big, Beautiful Bill,” which takes an axe to the federal Medicaid program. In Santa Clara County, one in four residents rely on the publicly funded health insurance program for low-income and disabled individuals, which is known as Medi-Cal in California.
The county immediately felt the impacts of the bill via cuts and freezes to several Medicaid-related revenue streams that are crucial for health and hospital systems that disproportionately serve a large percentage of Medicaid enrollees.
The county is expected to lose $223 million in Medicaid revenues this fiscal year as a result of the cuts — a number that is expected to increase with each year. For the 2026-2027 fiscal year, the county is estimating $506 million in lost Medicaid revenues.
Last fall, the county began reviewing the Santa Clara Valley Healthcare system’s budget as it tries to find $200 million in cost savings. County voters in November also approved a sales tax increase that will help offset roughly a third of the lost federal revenues annually.
Supervisor Margaret Abe-Koga called the county’s decision to purchase the property “smart fiscal management.”
“Do you want to rent a place or buy a home if you can afford to buy a home?” she said. “I think most people realize that’s a good investment.”
In a statement, Board President Otto Lee called the move a “true win-win for our county.”
“This decision today ensures sustainability and long-term community health,” he said. “Given the financial challenges ahead, acting now to reduce monthly costs and secure a critical healthcare asset is both prudent and forward-thinking.”
The 10-story, 230,000-square-foot building will serve as the newest Valley Health Center, which will consolidate services across the Santa Clara Valley Medical Center campus. Construction on the building was completed in October and county officials said the clinic will open sometime in early 2026.