Bankruptcy Judge OKs Reorganization of Watts Health Center

A federal bankruptcy judge approved a financial reorganization plan Monday that will allow a South-Central Los Angeles health foundation to pay $12 million in debts while continuing to operate.

The Watts Health Foundation, which had offered a growing number of free and low-cost preventive health care programs through its Watts Health Center since opening in 1978, filed for protection from its creditors under Chapter 11 of the federal Bankruptcy Code in March, 1987.

In an attempt to stay afloat, the foundation laid off nearly 25% of its 800 employees, slashed its annual budget from $124 million to $100 million and cut the amount of funds allocated to the Watts Health Center.

A Cloud Removed

Clyde W. Oden, president of the foundation, said he is relieved by Judge James R. Dooley’s approval of the reorganization plan, saying it removes a cloud from the foundation.

The plan is, in effect, an agreement between the foundation and an estimated 4,000 creditors, who will receive the money owed them over the next 4 1/2 years.

“To the patients that we serve, to the business world, to the (government health-care) regulators, our future is no longer in doubt,” Oden said.

The foundation was thrown into financial chaos by an unanticipated shortfall in revenues generated by its United Health Plan, a prepaid health plan that is the foundation’s prime source of revenue.

The state Department of Corporations temporarily banned the foundation from soliciting members for the plan. Since news of the foundation’s financial troubles arose, membership in the plan has fallen to 50,000 from 74,000.

The foundation’s Watts Health Center at 103rd Street and Central Avenue has long been one of Watts’ bright spots, offering programs aimed at prenatal care, preventing teen-age pregnancy and screening for sickle-cell anemia--the type of preventive health care traditionally lacking in poor communities.

Earlier this year, despite the foundation’s financial problems, the county Board of Supervisors renewed a $1.1-million contract with the foundation to participate in a countywide anti-drug program.

Oden said that with the approval of the reorganization plan, he and other foundation officials will feel free to “speak out” on health-care issues in South Los Angeles, such as the closing of hospital emergency rooms and what Oden described as the lack of sufficient centers to treat cocaine addiction.