Cascadia gets loans from state, county

From the Oregonian, May 7, 2008

Mental health – The $2.5 million buys the service provider some time, but it faces an “uncertain future”

State and Multnomah County officials agreed Tuesday to provide up to $2.5 million in loans to keep Oregon’s largest mental health care provider operating for the next two months.

The loans will keep Cascadia Behavioral Healthcare open long enough to complete planning the future of the local mental health system, including decisions about whether to break up the nonprofit company, said county Chairman Ted Wheeler.

Without the loans, Cascadia would have had to close its doors by the end of the week, putting clients in jeopardy and costing the county millions of dollars to rebuild the system, Wheeler said.

“A lot of people would find themselves on the street, some people would probably die,” he said.

Dr. Derald Walker, now in his second week as Cascadia’s CEO, praised the county and state for providing the money.

“It takes us out of the imminent financial crisis, but no one in their right mind would say it takes us out of crisis,” Walker said. “We have a huge uncertain future ahead of us.”

Cascadia provides treatment, housing and emergency services to more than 20,000 clients statewide and operates 90 facilities in Multnomah, Washington, Clackamas, Lane and Marion counties.

After years of rapid growth to become the dominant provider in the state’s most populous county, the company has increasingly struggled to cover costs. In recent months, it ousted its entire executive team, cut upper management ranks by 40 percent and staff by 20 percent to get back on stable financial footing.

Last week, Capital Pacific Bank took most of Cascadia’s available cash to pay off an outstanding debt. The state and county agreed to speed up $1.5 million in payments owed to Cascadia so it could pay its 1,000 employees.

But the infusion didn’t help Cascadia catch up on lease and mortgage payments, including for its clinics and administrative headquarters. Vendors, including those providing crucial food and pharmaceutical services, started demanding cash payments upfront for all transactions, further aggravating the crunch.

Wheeler said Tuesday’s loan — $1.5 million from Multnomah County and $1 million from the state Department of Human Services — buys “time for a thoughtful transition of services.”

Jim Scherzinger, deputy finance director for state Human Services, recommended the state and county carefully track spending. “We fully expect to get the money back,” he said.

Some in Cascadia wondered why the county and state hadn’t acted sooner to provide financial support, a move they believed would have kept the bank from declaring the company in default last week.

Jana McLellan, deputy chief operating officer for Wheeler, said the county needed more time to conduct its own financial analysis of Cascadia.

Across town at Woodland Park Medical Plaza, Cascadia executives spoke to a group of clients, assuring them of their commitment to continue services, but making few promises.

Several clients feared their treatment could be cut at any time, one declaring that she was already suffering “feelings of abandonment.”