Statement: CFMC board answers questions about center’s closure

Press release

Posted by
Fri, March 27, 2009


The Chamber of Commerce has released this statement from the board of Coastside Family Medical Center that answers a number of questions the community has been asking about the closure of the center.

The Board of CFMC would like to take this opportunity to clear up some misconceptions.

The Board of CFMC greatly regrets having to close the clinic and wishes that we could have done more to make the transition less painful for both the patients and staff. We are very grateful to the staff that has worked so hard over the years and in this difficult time to provide the best health care possible to Coastside residents. We’re also very appreciative of community members who jumped in and tried to provide positive assistance for those who needed immediate help.

Why did you have to close the clinic?

One reason: no more money to fund the shortfall. The financial history is well known to most. The clinic was founded when Stanford University, after experiencing a $1.5m annual loss, abruptly closed the doors in 2001. A group of us rallied and formed a non-profit 50( c)3 to run the clinic as it always had been designed serving the insured, uninsured, and underinsured. We experienced a $600,000 loss the first year and had a loss of at least $400,000 each year thereafter.

How did you keep it open so long?

We relied on our fundraisers, grants, foundations, and personal contributions. All of the board were contributors to the clinic. Stanford Hospital and Mills Peninsula were generous. A small number of individual donors were extraordinarily generous. The lobby displayed a giving tree and donation box for all those who could contribute and be recognized. Numerous articles were run over the years in the Review pertaining to CFMC’s non-profit status and the challenges of contributions. Every year we sent an appeal to our entire list of past donors and new prospects. Our last annual appeal in November only brought in $18,000 and grant and foundation funding all but dried up in this economy. The clinic ran a $50,000 monthly loss, $70,000 if we had paid the county our rent. The board has always worked on a volunteer basis and the dollar equivalent of the professional work contributed by the board was immense. This was money we did not have to spend.

More answers, including why the community was not informed until the center closed, after the jump.

Why was it operating at a loss?

The clinic was a ‘hybrid’ model serving insured and uninsured equally. This was very unique. As a struggling non-profit for eight years trying to meet the needs of all at an equal level of service, the CFMC board grappled with major demographic shifts that changed the mix of patients. More underinsured than insured were now being served which was not reimbursed at the rate of Federally Qualified Health Clinics enjoyed by some facilities. For example, FQHC clinics receive $386 per patient visit and non FQHC clinics (like CFMC) received, between $66 and $77. This does not cover costs. This is why every possible affiliation to try and obtain an FQHC status was explored. FQHC status was not available to the clinic because the community as a whole was too prosperous. The Coastside Family Medical Center hybrid illustrates the inequality of our health system.

Why did you not give notice?

The clinic was caught in a ‘perfect storm’ between March 5 and March 11. We had worked with the county to have it either merge with or operate the clinic to use its FQHC status. We told the county we could only keep the doors open until mid March and a slight possibility of April 1st. The county concluded on March 5 that application of county pay and benefit scales to the clinic made county status for the clinic unprofitable. At that point the clinic asked for a bridge loan of $300,000. We found out that was not a possibility on Wednesday night, March 11th. Simultaneously a $54,000 check from a major medical organization that was agreed to arrive that week (and unquestionably due and owing) did not come in, and we therefore did not have the funds available to make payroll for Thursday and Friday. Staff had been paid thru Wednesday. We consulted an attorney and determined it would be irresponsible at a minimum and possibly fraudulent conduct for us to keep the doors open knowing we did not have the funds to pay staff and creditors.

Why did you not let the community know?

Rumor, panic and disorder are the mortal enemies of negotiations. This was occurring in 2001 with a much more ‘insured’ patient base when community volunteers stepped in and Stanford swiftly agreed to hand the clinic over to the community. We had to be careful what we said while negotiating with other clinics in order to continue to be perceived as a viable partner. We had survived close calls like this at other times in the clinic’s life. We were also negotiating to hire three more doctors so the county could have a full staff when they took over. These set of circumstances are regrettable, but cannot be fairly judged in hindsight.

Why didn’t you ask the community to chip in?

The community was repeatedly asked through the fundraising. Unless the community could donate $70,000 per month, the closure was inevitable without the FQHC status. The community in general has been a helpful but frankly small part of our fundraising. The assertion that the community would have done much more this time than it historically did is without foundation in experience. The fundraising histories of Coastside nonprofits, and their results from the community at large, are well known and are entirely consistent with our decision to close.

Why were the locks changed?

We were told by counsel the locks must be changed. We are responsible for everything in the clinic to remain intact as an asset of the court (so salaries and creditors could be paid) and also to secure the patient records. Prescription medications were another concern and there could have been legal liability had they not been secured.

Can we get our records?

Your records are secure and will be mailed to the requesting doctor when you make your appointment despite the legal debate of protocol going on amongst the attorneys. Further contact information will be relayed via this paper following the appointee of a trustee.

What next?

The facility is there. The county could come in and set up a clinic for the uninsured when they realize the impact this will have on San Mateo Medical Center. And, a private practice could use a portion of the space to set up practice for the insured. Hopefully, some of our doctors would remain should that happen. The clinic had to close to make either of these a possibility.

The directors want the community to fully understand how hard and how emotional this was and how hard we worked to keep the clinic open. We realize the closing was less than smooth and that many of you are angry. Please know that all of us deeply regret the ‘perfect storm’ that derailed a timely notification and closure. Please also understand that we did not cause those events to occur, whether the questionable conclusion of the county or the unpardonable ethical slapse of the payor that held the check. We are devastated at the loss of the clinic that we have patronized for up to 30 years and that we worked so hard to keep alive for eight years. We hope the community will join us in trying to change the health laws that ended our vision after eight productive years.


From the letter:

“...We experienced a $600,000 loss the first year and had a loss of at least $400,000 each year thereafter…”

“Why was it operating at a loss?”

“...the CFMC board grappled with major demographic shifts that changed the mix of patients. More underinsured than insured were now being served…”

Again, this goes back to board’s failed stewardship. They had a fiduciary duty to operate the center (a valuable community resource) in a sustainable manner. They did not do that. Rather, it appears they did just the opposite. And now the valuable community resource is gone for good. Who is to blame?

Is there some law that says you must operate a community medical center in a manner that will guarantee that it eventually goes bankrupt?

Not only has CFMC been mismanaged into bankruptcy by allowing free medical care to anyone (to the benefit of coastside business owners) rather than limiting to a responsible and fiscally manageable number, they claim ownership of our medical records.  Since CFMC no longer exists what do they need the records for?  Will they pile them in the parking lot and burn them?  Put them in storage?  Who’s going to pay for that?  Why not release them to the individual they were compiled for in the first place? This fiasco just gets worse and worse.