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Cooperative effort rises to finance clinics

FOUR NORTH BAY CENTERS SEEK FUNDING TO WEATHER STATE MEDI-CAL CUTBACKS

CALIFORNIA – Four North Bay clinics are seeking loans this month through a $12 million bridge loan program created to keep the facilities open while the state withholds Medi-Cal reimbursements in the fall.

This budget session, California legislators notified the state’s federally qualified health centers that they would not receive their Medi-Cal payments in August, but instead have to wait until the state budget is approved – which some worry could take as long as October.

For community clinics, the state dollars make up as much as 60 percent of their budgets and even one month can mean a shortage of millions. Southwest Community Health Center in Santa Rosa, for example, will go without $2.2 million during the summer.

“Last year, we had a two-week delay in payments, so we’ve been through this drill before,” said Carmela Castellano-Garcia, president and chief executive officer for the Sacramento-based California Primary Care Association, which started the loan program.

“But this year knowing the magnitude of the budget deficit and the additional Medi-Cal cuts, it really aggravates the concern of the delays.”

After plans to build the loan pool kicked off several months ago, Sutter Health, Catholic Healthcare West and the Sisters of Mercy offered additional capital for the fund, which is now more than $12 million.

“We knew that this was the thing to do right now. It’s about keeping access to health care open,” said Bernita McTernan, senior vice president of sponsorship and mission integration for Catholic Healthcare West.

“It’s about leadership. This is not just the community clinics’ problem, but it impacts all of us and we have to use that leadership for a state that critically needs this.”

Veteran community funding administrators NCB Capital Impact of Oakland will provide the management and underwriting for the fund, as well as supply some of the capital for the project.

“Our organization has been financing the needs of underserved populations for 25 years and we have a long relationship with CPCA. They were really the impetus behind trying to create this pool specifically to address this crisis,” said Scott Sporte, managing director for NCB Capital.

“We’ve done projects like this in the past, but this year we knew it would have to be much larger than anything we’ve ever done before.”

Mr. Sporte said they started taking applications from clinics about three weeks ago and have assigned about $5 million. The loans have a fixed rate of 4.5 percent compared with a rate of 7 percent or more if they applied on the open market.

In order to qualify, the center has to be federally qualified and not have any capital in reserves. According to a survey completed by CPCA in April, 50 percent of clinics said they had no existing line of credit and 41 percent said they only had enough capital to cover operating expenses without Medi-Cal for 30 days.

The maximum amount for each loan is $500,000 or equal to 90 days worth in operating expenses. Borrowers are required to pay back the loans by Oct. 31 or within 60 days after the budget is passed.

North Bay clinics that have applied or are in the process of applying include the Coastal Health Alliance in Point Reyes, Petaluma Health Center, Alliance Medical Center and Alexander Valley Medical Center.

“What it really comes down to is while the payments may be delayed, the symptoms and issues facing people every day cannot be stopped for three weeks, they need to get into the door right now,” said Traci Van, community benefit program manager for Sutter Health.