was a crisis of this magnitude going on, watching the staff, taking care of the patients. to me, it has been a unique experience. i have not heard a lot of talking in the background and the exile -- anxiety. they are business as usual. the board is meeting as needed and taking full responsibility for their government's responsibility. accountability and verification of information. they are authorizing a, preauthorize and all expenditures. they put on a hiring freeze. we have worked together, the board, the staff, the consultants to bring in a turnaround team and implement a turnaround plan note -- plan, which understand you have a copy of. -- which i understand you have a copy of.

we fully intend to comply with those requirements. the clinic's turnaround plan has begun. the first step was hiring an executive director with experience, and the board has done this. the board has also entered into a contract with a firm to provide consulting and accounting staff. i now take great pleasure in introducing you to the new executive director of lyon- martin health center. supervisor mirkarimi: welcome. >> this is literally my second day as executive director of lyon-martin. i have a 25 to 30-year history

working with many sides, including the health care side, and in the last 15 years, i have focused on community health centers, such as lyon-martin. i will not repeat the details already said by others. i will say that i am in the process at looking very deeply into the analysis and the details that supported the letter that came forth from financial consultants that provided the assessment. i will be working very closely with the executive financial team. their cpa will be on our team saying. we will get an assessment of what we find. we do have an established leadership team now. we will be focusing on specific areas that need to be addressed

at the health center. all of this work in partnership with the community, and i did attend a town hall meeting last night and committed myself to that organization, to this community, that i will be totally visible and transparent with the information as it comes forward, and i will also mindy mizell visible to any efforts, fund-raising efforts, information sharing -- and i will also make myself visible to any efforts, fund-raising efforts, information sharing. i will commit to you that by march 12 of this month that i will have a very detailed budget and financial analysis that will be presented to the board and also be shared with you and with the community. the $500,000, the assessment that came forward, i still have to go through the details.

i have to work with the consortium to understand. if we had to break down things, we are looking at an amount set -- an amount that includes about $250,000 from the public and more from private foundations. this is just a very preliminary breakdown. again, we have to look very closely at our analysis and at what the emerging plan will be. you heard from jean that there is an exit plan in place. i believe that the team and the board members are well versed at this point in the direction we need to take, and we will work towards it. thank you. supervisor mirkarimi: thank you very much. we appreciate it. now, we will go to the clinic

consortium. >> i and the ceo of the clinic consortium. we are -- i am the ceo. there is a total of 80,000 patients. there is also federal funding for health care for the homeless. part c of a community-based grant. we contract back out to various clinics, including the department of public health. dph and some clinics in san francisco, including lyon- martin. there is a differential in medicaid payment. the rates are pretty substantial.

they went from about $9 million per year. personally, i have been at the consortium for about 20 years. i trained as a clinical social worker, clinical psychologist. before that, that is too far back to even talk about. lyon-martin is a founding member of the consortium. they are on our board. they are not allowed to vote. they must abstain. our board chair is also here to address any concerns you may have. how did we get there? how did we get to where we are today? some background. prior to this, there was a meeting in december of top officials.

"i want to know what is going along with a gay and lesbian and transgendered health care in this country." we have a clinic in san francisco that is the only lesbian and transgendered clinic in the country. there are other clinics. this is the only one with the primary purpose of lesbian and transgendered health care. the day that this whole thing broke was the day that we were hosting the administrator here in town, and the surgeon general would be in san francisco in two weeks. a reflection to how did we get there. the lyon-martin board are very committed. they were among the first to create open access. clinically, we have no concerns.

what we see is a group of good intended board members, good intended staff who did not have what was needed to be done. this is, unfortunately, something we are seeing in clinics across california and across the country. the increasing demand for service, 50% uninsured, is an unsustainable model. it is hard when a patient calls to say, "sorry, we cannot see you because you do not have the insurance." a poor payer mix. in addition, over the last several years, the california state legislature eliminated funding. a loss of $33 million across the state. lyon-martin also had budget cuts

in the past. the department of public health eliminated the funding that they were getting. the women's commission said, "we need to support this clinic." so the consortium which funds the clinics with this money, and only part. we only give them part of the money. assessments in preparation for the health care reform, to go in and look and see, because we know that the current models are going to transition. hsf consultants called and said there were significant financial system problems in lyon-martin. they had a receivables system that did not have aging and receivables of over $900,000.

the clinic did not have an appropriate right of policy, so everything that they note -- did not have an appropriate write- off policy, so everything that they had, they kept riding down -- writing down. it looked like they would be financially viable. it was a financial system that was not there. we went ahead with consultants with familiarity and did a complete financial system assessment. we now have that information. one of the first things we did is precontracted -- we contract

it -- contracted with a company to go and do back billing. $250,000. one office attempted to work to see if we could go back further than one year. however, because of regulations with matching funds, they could only go back that far. the consortium, which has four accounting staff, we took our staff and started to let at all of the financial systems, except for the financial accounts receivables, which still need to be fixed. and the budget. we did bank reconciliations.

and we did it together. this is not about the consortium. this was a team approach. others have stepped forward to say, "what can we do." they have also offered technical assistance. they understand that they will have to discharge some healthy san francisco patients. we are working to determine where and how and then looking to see how it can also be increased. we had conversations with the health plan board, and we are looking at a pair -- payer mix plan. the consortium is here. we believe firmly that we need lyon-martin.

if they were too close, we do not know where we could transfer 500 transgendered patients. they have particular needs, and when we look at the clinical provisions, we do not have a provider that we could transfer to. we thank you for your attention and look forward to our work together. supervisor mirkarimi: sir, if i could, i would like to ask you a few questions. through the board. i think we were all shocked to hear of the closure of the clinic. what would be protocol so that that threat of having two overnight displays, say, 500 transgendered patients -- having to overnight displace, say, 500 transgendered patients -- a

clinic is in trouble, at least there would be some early- warning signs, or some balloons floated, to hopefully avert that closure, or if it had to close, why it was such a shock. so that that closure would not seem so over the night but would at least be well prepared for. >> i think i can answer the question. we can also talk about healthy san francisco. patients would be tiered in terms of most in need. looking at each of the patients. one of the concerns is if they closed at the end of the month, .-- end of the month, there is a

concern of chaos. i am not sure i am answering the question. sorry. supervisor mirkarimi: "chaos," that is how we saw it several weeks ago, which is what motivated the community. i think that was one of the ingredients that brought people together, but we want to know now what is the mechanism that is put in place to avoid a repeat scenario. >> i am not sure, a supervisor. that is what we are trying to work out. supervisor mirkarimi: would there be a routine, where if they got to a place of closure, there would be some warning sign to determine where the placement of patients who could be displaced in a way that would

seem somewhat seamless? >> the clinic consortium is introducing new protocols in the clinics that we fund for increased monitoring. there is a federal protocol that we are adopting that is really intense. some clinics already have that oversight. we are hoping for the ones that do not. supervisor mirkarimi: what about the operation -- operating budget for the clinic itself? >> i believe about $2 million. supervisor mirkarimi: and the deficit that we became aware of a few weeks ago? >> december 14. i had come back from boston for a meeting. i understand now it was over $1 million.

a national bank has agreed to restructure the long term loan. supervisor mirkarimi: the threat of closure, that is not going to happen in march? correct? >> the community has responded such, and other groups are responding. there are some foundations that have expressed interest, but they are looking for a budget and cash flow projections. supervisor mirkarimi: but the amounts raised so far by the community and others, does that then provide for -- what period of time? >> i believe, supervisor, i would have to defer that to someone from the sl --lyo -- lyon-martin staff.

we are in constant contact with washington about this. we do have federal funds at risk, so we have a potential congressional investigation at lyon-martin also. lyon-martin has hired a financial consulting firm to do their finances, and i believe they start tomorrow. .-- the new ceo, to work together as a collaboration. there is going to be increased oversight and scrutiny, including the restructuring of the board. supervisor mirkarimi: i think that is part of it, was a part of the government's korea -- was

it part of the government's -- was a part of the government -- was it part of the governance? >> we had some folks who for a variety of reasons -- i am not sure. we have not done a full diagnosis of where the communication breakdown was between the past administration and the current administration. what we do know is that i think it was a well intended board that did not understand the finances, and this is something we are seeing over and over again, unfortunately, at nonprofits around the country. this does not excuse it. there are 1400 health centers across the country, and this is an area of the weakness. the board members are well intended. they are mission driven. they are passionate. but unless you really

understand finance, balance sheets, this really gets a little bit -- many times, they rely on one or two people to do it, so i think that is one of the problems that existed here. supervisor mirkarimi: note do you think the report addresses this or is in the process of doing so? >> i think so. what type of infrastructure development needs to be built into the receivables system? we have a good financial reports for the first time. -- we have a good -- havwe good financial reports for the first time. supervisor mirkarimi: does any of the existing deficit become such a problem that it

threatens the future stability? potential action? >> there is one thing being addressed currently. that is certainly a potential. they do have a debt to the state of california for taxes. they have a debt to the irs for taxes. i believe the board is working on having a plan. it would be a plan to approach irs and the state of california. we understand that it is a long- term plan, but we also know that there is a health center in philadelphia that experienced a similar kinds of problems, and they went to the irs and negotiated with them and have a long-term plan, so the irs is familiar with this type of

situation. supervisor mirkarimi: sometimes the irs negotiates. could they be in that frame of mind? >> with our informal conversations, they said we have to get our money and get it paid. iand not have to pursue a bunch of folks to get it back. their greater interest is that somehow the irs has indicated they will have to pay interest, and they waved all penalties. supervisor mirkarimi: overall, the prospects of the income that could be harnessed looks strong. i read through the report, i really tried to understand the the report. there is a series of information coming out.

it is not like the potential is there. this clinic has really carved a particular niche for itself, and because of its specialty and how it is utilized, it has all the reason not just to survive this crisis but to sustain, does it not? >> exactly, today in the san francisco health plan board meeting and also in discussions with the financial consultants, lyon-martin has a significant number of medicare, medical patience. it is congressional approved. it is why it was approved in 1990. the high reimbursement rate in with the state moving, the disabled population into metical, lyon-martin is well-

positioned because of their population to increase their numbers, yes. supervisor mirkarimi: and this is why i want us to be optimistic, the forecast for lyon-martin. understand how we got here, but look for all the indicators that i think really suggest that it could have a bright future. >> i think to the board's credit, they're really started moving on this quickly. they were provided a pro bono attorney, excellent in providing guidance. in my conversations with the board, they have been absolutely wonderful. she is a physician. that is not her area of expertise, i think should be the first to say, they put the budget together. they have done two turnarounds

in two health centers in california. from what i am hearing, when i did reference checking, his last assignment at the coastal alliance was very happy with his work. he really made a difference up there. i think they're taking the right steps. the other thing, as you can imagine, the board was scared, not sure where to turn, and the attorneys helped with that. supervisor mirkarimi: very good. are there any other members of the consortium that would like to present? supervisor kim: just to get some clarification and the restructuring, it seems fairly clear that you will still continue to serve your very low- income clients, and middle-

income clients. what does this mean for your patience that our sliding scale? >> i will ask one of the representatives from lyon- martin. supervisor kim: specifically, will this change who can get services from lyon-martin in the future? >> they must retain a sliding fee scale. their target must be to to% -- must be 200%. >> the patient mixture will not change. they will still be able to use the clinic, they will not be turned away. it becomes my responsibility, the leadership's responsibility, and the board's responsibility to find a way to balance those needs with our financial resources.

but no one will be turned away. supervisor kim: so there are not concerns or challenges with certain income populations? >> no, the other thing we will supplement, citywide, we close clinics to new patients. every single clinic in san francisco, they may be down a provider, so i am assuming that is the strategy we will implement. it is closed to all new patients. supervisor kim: did you say that you had to discharge some of our san francisco healthy patients? >> ok, just -- can we defer the question? supervisor kim: sure. thank you. i believe there was another individual? supervisor mirkarimi: anybody from the consortium?

or is that it? if you would like to come back. >> thank you, supervisors. i wanted to give a sense of the city's investment and lyon- martin, which they provide that high-quality, but also behavioral services, mental health, and substance abuse. the value of that investment this year is a little over $300,000. the department actually does not have a contract with lyon- martin. lyon-martin is a subcontractor for the range of services both on the health the san francisco side and on the behavioral health services side. when the department became aware of the cash flow issues, which are not uncommon for a nonprofit, we advanced funding to the organization to allow them to meet payroll, to

address operating expenses, and the like. we certainly have the ability to help with cash flow issues. but cash flow is very different from reducing long-term debt. the department does not have in its budget additional new dollars to allocate to lyon- martin at this time. in fact, i am sure that eric in his new role is probably aware that any organization, either philanthropy, local government, community-based organization, and individuals interested in providing funding to lyon- martin is going to want to see a business plan, where the business plan is solid and shows not only how lyon-martin will be able to fulfil its ongoing operating expenses,