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Clinics pained by budget impasse

Staff and wire reports | Wednesday, Jul 23 2008 7:05 PM

Last Updated: Thursday, Jul 24 2008 7:38 AM

California lawmakers’ inability to pass a budget on time is threatening the cash flow of health clinics that are funded by Medi-Cal and serve some of the state’s poorest residents.

Kern County’s Clinica Sierra Vista is feeling the pinch.

Looking at an invoice for $1.6 million Clinica is owed by Medi-Cal but won’t get, CEO Steve Schilling says he is using loans to increase cash in the interim.

“I would, with a stroke of the pen, take these guys off the payroll by July 1 if they didn’t get a budget passed,” Schilling said. “It seems to become a chronic, repeated event here.”

Most clinics funded by Medi-Cal, a health care program for the poor, bill for reimbursement and get a weekly check. When the fiscal year began July 1 without a state budget, an emergency fund of $2 billion kicked in. That amount included $1 billion in matching federal money.

The fund is supposed to tide clinics over until September, but in recent years it hasn’t been lasting that long.

Last year, money ran out July 27, said H.D. Palmer, spokesman for the Department of Finance. This year, it’s anticipated the state will be able to cover most of the reimbursements that normally would go out on Thursday.

After that, there will be no more money unless lawmakers pass a budget.

Clinics get between 40 percent and 50 percent of their revenue from Medi-Cal, so the delay in reimbursement is felt immediately, said Chris Patterson, spokesman for the California Primary Care Association.

Some larger clinics have reserves, while others are able to get lines of credit from local banks or health care foundations.

Clinica is hoping to get a $770,000 loan from the heath plan Health Net of California, which is providing emergency loans to safety-net clinics threatened by the budget impasse.

Local nonprofit National Health Services, which also runs several clinics, received a loan July 1 from Health Net for $550,000. For smaller clinics, reduced hours, layoffs and even temporary shutdowns are a possibility.

“It’s a pretty bad situation,” Patterson said.

The cash-flow squeeze comes on top of a previous decision by Gov. Arnold Schwarzenegger to delay Medi-Cal reimbursements for August, part of a bigger effort to address the state’s $15.2 billion deficit.

The Primary Care Association, which represents 600 clinics, is planning a series of events Thursday to highlight the funding gap.

“This will be the second year in a row that the safety net of clinics and their patients have to bear the burden of inaction by our leaders in Sacramento,” Patterson said.

Republican and Democratic lawmakers have been at an impasse over several key issues, including whether to raise taxes to deal with the deficit. Both sides say they’re looking out for the best interests of state residents.

“Unfortunately, clinics are caught in a crossfire,” said Steve Maviglio, spokesman for Assembly Speaker Karen Bass, D-Los Angeles.

Clinica is in even more of a bind than it was last year, Schilling said.

In late June, the nonprofit announced it would absorb Fresno-based Sequoia Community Health Centers, loaning more than $1 million to help them meet expenses.

Sequoia filed for Chapter 11 bankruptcy following other reimbursement delays from the state for medical services and lower reimbursements from the federal government.

Layoffs and service reductions aren’t being considered yet, Schilling said, but Clinica will have to stop expanding programs until this is over.

“Does it stick Clinica’s neck out a little farther?” Schilling asked of the recent consolidation. “Yes it does.”

— Staff writer Emily Hagedorn contributed to this report.