Survival of Medical Clinic in Doubt Due to Mounting Debt
By LAURENCE DARMIENTO
Staff Reporter
The Community Health Foundation medical clinic, which has been plagued with accusations of billing irregularities, owes up to $6.5 million or more in debt that may force it to shut down.
New management and board members appointed over the last two months at the order of federal regulators have been reviewing the clinic’s finances through internal reviews and outside audits. The nonprofit East Los Angeles clinic owes the money to vendors, employees and government agencies.
“We are all trying very hard here to ensure the clinic does continue,” said acting chief executive Richard Veloz, a health care consultant. “We are in a situation where we need to secure funding through various programs in order to start paying back some of that debt.”
The health foundation once served as many as 65,000 patients through its two main offices and more than a dozen satellite clinics in the East Los Angeles area. But allegations of billing improprieties caused the county last year to withdraw a key $3.4 million contract to serve uninsured patients.
It also lost other funding, including a Medi-Cal contract with Health Net Inc., and is now seeing just a fraction of its former patient load largely at its two main sites. Still, its closure would be a blow to an area where many residents do not have health insurance.
Audits show that the state Department of Health Services, which matches federal funding, is owed $2.1 million for billing irregularities dating back to 1996, said Norma Arceo, a department spokeswoman.
And the county Department of Health Services seeks $1.3 million in repayment for a community outreach program that it maintains was not properly administered, said John Wallace, a department spokesman.
The clinic also owes vendors as much as $2 million, while employees are owed $1 million or more in back pay and other benefits, Veloz said.
But Stephanie Salcido, a field representative with the Service Employees International Union, which represents 55 workers at the clinic, said employees are owed significantly more.
Documents given to the union by management indicate that workers are owed $1.9 million in back wages and vacation pay, as well as for union dues and taxes that were withdrawn from paychecks but not properly deposited.
That does not include money withdrawn but not placed in retirement accounts, an amount that may reach $500,000 but has not been fully tabulated, she said.
Salcido believes management is publicly minimizing the debt in an attempt not to scare off potential partners who could help save the clinic. “No one will invest their time and money in this place if they think it’s that bad,” she said.
Veloz did not dispute the back pay figures provided by Salcido, but maintained that the total debt did not exceed $6.5 million. He added that the clinic wants to pay back the employees whatever they are owed, but is negotiating with vendors for a discount. It also is paying the state $9,800 a month for its debt, but is disputing the $2.1 million total, Veloz said.
In order to increase revenues, the clinic has begun talking to Health Net and the county about getting new contracts, he said. Brad Kieffer, a Health Net spokesman, said the company is considering the proposal.
