Medi-Cal funding of clinics is suspended

Times Staff Writer

Thousands of medical providers who care for low-income Californians are scrambling to find funds to keep their doors open, as the failure of lawmakers to pass a budget forces the state to halt payments to them.

State officials put the healthcare facilities on notice that starting today, payments from the Medi-Cal insurance program for the poor will be frozen until a budget is approved. An emergency pot of cash officials had set aside to pay the healthcare clinics, nursing homes and adult day care centers in the event of a delayed budget has run dry.

Although most of the facilities have no immediate plans to turn away patients, the providers warn that a budget stalemate that drags on through the summer will affect care. In the meantime, they are turning to banks, foundations and their own reserves for emergency cash to pay the bills.


“Most of the clinics are working on trying to get lines of credit,” said William Dobson, president and chief executive of Watts Healthcare Corp., which runs two clinics and a school healthcare program serving 22,000 low-income patients. “How long we can go depends on whether we can get them.”

During last year’s budget standoff, many providers reported paying astronomical interest rates for temporary credit. This year promises to be tougher. Banks are financially squeezed and reluctant to offer bridge loans.

Hit hardest are the state’s 1,200 group homes for the developmentally disabled. They rely on Medi-Cal for 100% of their funding, and most of the owners don’t have reserves to fall back on.

“It is very scary this year,” said Cheryl Loflin Wertz, who runs 18 of the group homes in Los Angeles and Orange counties. “We’ve laid people off, haven’t let other people take vacations, cut back. . . . I’ve already borrowed money from my family. There isn’t anyplace to go to borrow.”

Those who have secured loans are paying a premium.

Michelle Clarke, who operates 12 group homes between Upland and Loma Linda, said she would be out of cash by mid-August. A lender will give her the $100,000 a week she needs to stay solvent, she said, but each weekly loan will cost her $5,000 in interest and fees.

Not every provider of healthcare to the poor is affected. State law requires that private doctors treating Medi-Cal patients continue to be paid. Pharmacists will also continue to get Medi-Cal funds during the budget stalemate.

But any medical business or organization the state categorizes as a healthcare “institution” -- a definition that extends even to group homes with half a dozen beds -- gets cut off.

At the East Valley Community Health Center, that means putting off plans to take in new patients, despite heavy demand. This month the center was finally able to move out of trailers and into its new facility in West Covina. Now it can’t afford to fill the space with people in need of care and is putting off hiring a new healthcare professional until Medi-Cal payments resume.

“People have been waiting for the new facility,” said Alicia Mardini, chief executive. “We were getting 100 new patients coming through the door every day . . . and we have to tell them, ‘Sorry, we don’t have the capacity.’ ”