Saint Louise, a 93-bed acute care hospital, opened in 1989 under the sponsorship of the Daughters of Charity, which merged with Catholic Healthcare West in 1996. Catholic Healthcare West closed Saint Louise in December 1999, five months after buying the 96-bed South Valley Hospital in Gilroy and deciding to merge the two facilities at the Gilroy site.

At the time of the merger, hospital officials said the relocation would reduce overhead by slightly less than $14 million. Officials also said that combined losses at both hospitals had exceeded $65 million. Although they initially considered keeping outpatient services in Morgan Hill, Catholic Healthcare West eventually decided against it and consolidated all services in Gilroy.

Catholic Healthcare West, a nonprofit healthcare organization, operates about 50 hospitals in California, Arizona and Nevada. Last year, the Morgan Hill retained a healthcare consultant to study the type of medical facilities needed by its approximately 30,000 residents. The consultant, San Francisco-based HOM Group Inc., and the city identified Cisco's nearby Coyote Valley Research Project as a major indicator of a need for a full-service medical facility. The project, spreading over 688 acres and housing up to an estimated 20,000 workers, is a signifier of major growth in the once-rural area south of San Jose, where Morgan Hill is located.