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Local Health Clinics Had to Tap Reserves During State Budget Standoff

Zara Marselian can tick off a list of her financial worries for La Maestra Community Health Centers after going more than seven weeks without receiving a Medi-Cal payment.

Staff payroll, clinic bills and the more than 20,000 Medi-Cal patients who are treated annually at the clinic were just a few of her concerns.

Until the budget for 2007-2008 was approved Aug. 21, the state had suspended all Medi-Cal payments since July 1, the start of the fiscal year. Providers of the health insurance for low-income people and those with disabilities had to tap into reserves, borrow funds or look into loan options to make ends meet.

Medi-Cal is the single largest source of health insurance coverage in the state and serves 6.6 million people in California, according to the California Healthcare Foundation. Medi-Cal is California’s Medicaid program.

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Medi-Cal Recipients

Fifty-two percent of La Maestra patients are Medi-Cal recipients , a percentage that is similar to most community clinics in San Diego County, said Marselian, chief executive officer of La Maestra Community Health Centers.

“It’s outrageous,” she said, “that health care should even be on the negotiating table.”

Although Marselian did not have to cut staff or hours, plans for new programs, extended clinic hours and additional services were curtailed. In seven weeks, the clinic’s small cash reserve was empty, something that Marselian considers a Catch-22 because, as a nonprofit organization, the clinic can’t “hoard (reserves) in a bank account,” she said.

On the La Maestra Web site, annual revenue is listed as $6.72 million, and last year alone, 80,000 visits were reported to the clinic’s main location on Fairmount Avenue in City Heights. The clinic sees more than 39,000 patients annually at its three locations in City Heights, El Cajon and National City.

“When this budget issue happened, all funds from the state of California are held up,” Marselian said. “And community clinics, they’re stuck.”

Although State Controller John Chiang could make “Medi-Cal payments to nurses, doctors and pharmacists, he does not have the authority to pay institutions like hospitals, nursing homes, managed health care plans, clinics and regional centers,” according to the controller’s Web site.

In the South Bay, the San Ysidro Health Center historically reports that 45 percent of its 53,000 annual patients are Medi-Cal recipients, according to Kevin Mattson, the clinic’s chief financial officer.

“Thankfully, we had 30 days of cash on hand,” he said. “We haven’t curtailed services or cut back.”


Standoff

Typically, the clinic receives about $1 million in Medi-Cal money per month and seven weeks into the budget standoff, about $1 million was tied up from the state, according to Mattson. The San Ysidro Health Center operates six clinics in San Ysidro, National City and Chula Vista.

“Most community clinics don’t have 30 days (of) cash,” he said. “Some have less than a week. It’s different philosophies for different clinics.”

If the budget standoff had hit in month three or month four, Mattson noted that the clinic has a capital line of credit or could advance funds from the federal government in case of a cash emergency.

On Aug. 16, the Department of Health Care Services notified the California Primary Care Association that the DHCS would issue letters that showed the value of pending Medi-Cal claims so that clinics could apply for temporary loans from banks and other financial institutions.

For Marselian, credit lines are an important means to have as a backup, but she said, “Who is going to reimburse us for the interest on loans?” She added that some nonprofit clinics find themselves charged up to 30 percent in interest.

Molina Healthcare Inc. provided a no interest loan of $300,000 to the Los Angeles Child Care and Development Agency, the Long Beach managed-care organization said Aug. 21.

The nonprofit organization, which provides child care for low-income families in the Los Angeles area, tapped its credit lines and was considering closing its doors, according to a news release from Molina Healthcare. It is funded by the California Department of Education.

But Marselian was able to advance federal funding from the remaining months of the year to subsidize current costs, although that may affect the clinics in November and December.

“We’re really in a bind,” she said the day before the budget was approved.

The 51-day budget standoff came only five years after a budget deadlock that didn’t end until the governor signed it Sept. 5.

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