Cascadia battered by financial storm

Mental health agency seeks help from Multnomah County and state – The Portland Tribune, April 24, 2008

Running out of time to pay off mounting debts, the nonprofit lynchpin of Multnomah County’s mental health system is seeking millions of dollars in financial assistance from the county and the state Department of Human Services.

Cascadia Behavioral Healthcare owes its bank, Capital Pacific, a payment on a $2 million line of credit by the end of the month.

Cascadia’s chief executive officer, Leslie Ford, resigned Wednesday, and its chief operating officer, Judy Watson, resigned earlier this month. Cascadia’s board of directors has appointed psychologist Derald Walker as the new CEO. Walker previously served as a vice president at the agency.

Cascadia is working with its bank to refinance the loan, Walker told the Portland Tribune in an interview on his first day on the job.

“We’re optimistic,” he said. “We’re talking with the bank and with our partners at the county and the state about how to solve this problem.”

Walker emphasized his commitment to stabilize the agency and reassure its clients that it will continue to provide “solid, available, consistent” services.

With an annual budget of $60 million, Cascadia provides services to about 23,000 mentally ill clients across the state, running the gamut from professionals with gambling problems to shoeless schizophrenics wandering the streets of Old Town.

It provides crisis intervention, treatment, walk-in clinics, housing, counseling, case management, outreach and other critical services at scores of sites scattered throughout the Portland area, in addition to operating janitorial and landscaping services.

Staff hears a warning

Last week, Ford warned Cascadia employees to brace themselves for a round of layoffs, benefits rollbacks and cuts in services.

“Cascadia is grappling with many critical issues which impact both our operational and financial health,” she wrote.

Meanwhile, Ford approached officials at Multnomah County to help Cascadia weather the impending financial storm by loaning the agency $4 million. Multnomah County Chairman Ted Wheeler denied the request, according to Jana McLellan, the county’s deputy chief operating officer.

Cascadia then requested that the county accelerate roughly $2 million in payments due to the agency for services already provided. In response, Wheeler has dispatched a forensic auditor, Darrell D. Dorrell of Financial Forensics in Lake Oswego, to inspect Cascadia’s accounts and report back to the county board of commissioners.

The term “forensic auditor” may raise eyebrows, but officials say it refers simply to an expert who scrutinizes an organization’s financial records with an eye to its ongoing viability.

“We have no indication that there’s been fraud,” said county auditor LaVonne Griffin-Valade, who is overseeing the audit. “We simply want to get an accurate snapshot of Cascadia’s financial situation.”

Effects could be widespread

The county commissioners would have to approve any additional payments to Cascadia, which holds about $20 million in county contracts.

The big question hanging over the discussion is what will happen to Cascadia’s clients, many of whom literally depend on the agency for their sanity.

“The services Cascadia provides are terribly important to the mentally ill folks in our community,” county Commissioner Maria Rojo de Steffey said. “What happens to our clients if Cascadia goes under?”

One mental health professional, speaking on condition of anonymity, called the situation “alarming” and noted that any interruption of services would have negative impacts not just on clients and other mental health providers, but on hospital emergency rooms, the criminal justice system and the state of the homeless in Portland.

“The community would pay for it in the end,” the professional said.

Mental health officials have been scrambling to come up with a plan to ensure continuity of services for those clients.

“The bottom line is to make sure folks have access to services,” Karl Brimner, the director of the county’s mental health services, told a hastily arranged meeting of mental health providers Thursday morning.

Cascadia has grappled with several challenges over the past year. A computer glitch last summer accidentally choked off almost $1 million of reimbursements from Medicaid, the government insurance program for the poor, triggering a cash-flow crisis.

Money was so tight that the nonprofit suspended direct deposit for employee paychecks, received shut-off notices from utilities and at one point owed $325,000 to its own health insurer, Kaiser Permanente.

Meanwhile, a combination of high caseloads and sagging morale sparked a union drive among some frontline staff, who are trying to persuade their co-workers to sign up with the American Federation of State, County and Municipal Employees.

Finally, Cascadia is in ongoing discussions with the state Office of Payment Accuracy and Recovery over a Medicaid audit that identified $2.7 million in overbilling (down from an initial estimate of $3.4 million). Medicaid billing is a highly sensitive issue for the agency; filling out paperwork is time-consuming and distracts staff from spending time with clients.

At the same time, several Cascadia employees have told the Portland Tribune that they feel pressured to “fudge the numbers,” as one employee put it.

Anyone with questions about mental health services can call the county’s call center, 503-988-4888.