Circle Family Healthcare Network, a faith-based community health center that has 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 nonprofit 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, she added. On Friday, Circle officially shut down its Humboldt Park 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 noted.
Humboldt Park's closed clinic brings Circle down to five West Side centers. Two federally-qualified community health centers are located in Austin.
The nonprofit 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 is 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 available before.
Hines, who became CEO of Circle in 2010, said she inherited the organization's bad debt, specifically two lines of credit taken out in 2000 and 2004 that have turned into long-term loans.
Those loans total 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, according to Hines.
"I have been paying on that since I've been here," she said. "Understand that I have not had any loans or lines of credit available to me 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, said Hines, who doesn't know why Circle initially needed the lines of credit because they were taken out before she became CEO.
Employees not paid in over a month
She 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, who are "the last to get paid," and that's how it's been for some months now during the restructuring process, she added.
State payments for primary care services, including immunizations and vaccinations, family practice, and obstetrics and gynecology, among others, have been timely, she said, and the nonprofit 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," i.e. 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 said. "The sliding-fee scale goes down to $20, but we typically are not able to collect even that."
The nonprofit writes off a large portion of that, 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.
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.
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