Circle Family Healthcare Network files for Chapter 11 bankruptcy

February 19, 2013
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Circle Family Healthcare Network, a faith-based community health center that’s operated on the West Side for 36 years, filed for Chapter 11 bankruptcy earlier this month.

The non-profit listed assets of about $783,000 and more than $3 million in liabilities in its Feb. 8 petition to the U.S. Bankruptcy Court’s Northern District of Illinois in Chicago.

Circle CEO Andre Hines said the financial reorganization would allow the non-profit to continue to provide services to Austin and other West Side residents.

“We had to have a new start, and that meant restructuring,” Hines said.

Circle– which provides medical, behavioral health and human services in Austin, Humboldt Park, East and West Garfield Park, and North Lawndale— saw about 12,000 patients with about 71,000 office visits last year, Hines said.

The non-profit has been burdened with “a lot of debt for a long time” coupled with slow state payments and reduced grant funding for behavioral health services, Hines said.

On Friday, Circle officially shut down its Humboldt Park’s behavioral health center, 1633 N. Hamlin Ave.

“We just couldn’t continue to provide services because of the slow state payments,” Hines said.

Some of Circle’s behavioral health grants have been “totally cut out” and others have been reduced, she added.

Humboldt Park’s closed clinic brings Circle down to five West Side centers. Two federally qualified community health centers are in Austin.

The non-profit had to scale back employment at all of its centers, including at the Humboldt Park location, starting about six months ago, going from 125 total employees to 70. Hines said she’s not sure how many of the 125 employees were laid off or transferred from the Humboldt Park center.

Some of the Humboldt Park employees left voluntarily. Circle offered employees different positions at other locations if they were available, she said, adding that the closing would allow Circle to provide more behavioral health services in Austin than previously offered.

Hines, who became CEO of Circle in 2010, she said she inherited the non-profits bad debt, specifically two lines of credit taken out in 2000 and 2004 that have turned into long-term loans.

Those current loans are estimated at about $313,000, according to public records filed with the bankruptcy court.

The debt was a lot higher three years ago when she came on board, Hines added.

“I have been paying on that since I’ve been there,” she said. “Understand that I have not had any loans or lines of credit available to me since I’ve been there for the last three years. I’ve only been paying on debt that’s [as] old as 2000.”

Most of Circle’s debt payments have come out of its operational budget, which is a little more than $6 million, Hines said. She said she didn’t know why Circle initially needed the lines of credit, because they were taken out before she became CEO.

Hines stressed that Circle is not proud of the fact that it had to file Chapter 11 bankruptcy.

“We’re Christian, and we want to be able to pay our debt,” she said.

Some of Circle’s current 70 employees haven’t been paid for more than a month.

“We’ve had major issues making payroll,” Hines said.

The largest debt owed to employees is for senior management, but they’re “the last to get paid,” and that’s how it’s been for some months now during the restructuring process, she added.

Hines said state payments for primary care services, including immunizations and vaccinations, family practice, and obstetrics and gynecology, among others, have been timely, and the non-profit has been able to secure government grant funding for primary care.

Back in August 2011, for example, Circle received $500,000 from the U.S. Department of Health and Human Services to build two school-based health centers at John Marshall and Proviso West high schools.

In 2010, Circle also received $200,000 in state funds to administer a one-year violence prevention initiative in Austin, as reported by AustinTalks.

The clinics provide services to many individuals who are “medically indigent,” or without Medicaid or another source of health insurance.

“We provide services to so many individuals who are homeless and who don’t have a source of income, so we put them on a sliding-fee scale,” Hines added. “The sliding-fee scale goes down to $20, but we typically are not able to collect that even.”

The non-profit writes a big portion of that off, she said, because, “we just can’t collect it.”

Although Circle is not a free clinic, it doesn’t turn patients away if they can’t pay.

Elce Redmond, an organizer with the South Austin Coalition Community Council, said if Circle were to close its facilities in Austin, it would be an “absolute shame” and detrimental to the community, which already lacks quality health-care options.

Robert Urso, president and CEO of PCC Community Wellness Center, which runs the Austin Family Health Center, 5425 W. Lake St., said it was “extremely unfortunate” to discover that Circle filed for bankruptcy.

“PCC truly values the relationship we have established with (Circle) over many years,” Urso said in a written statement.

“We remain committed to ensuring access to health care services in our shared community and are willing to discuss with (Circle) ways in which we can assist during this challenging time.”

Urso said in a follow-up interview that PCC and Circle are not competitors but collaborators.

And the “best scenario for all parties,” he said, is for Circle to emerge from bankruptcy as a strong community health center.

If not, PCC doesn’t have capacity to absorb the care for those additional patients, he said.

But Circle won’t leave Austin, Hines stressed.

“We’ve suffered a long time financially trying to deal with old debt, so this restructuring gives us an opportunity to recommit to providing the services in Austin and surrounding communities,” Hines said.

Cover image of Circle CEO Andre Hines courtesy of Austin Weekly News.

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