Chicago Health Center Bankruptcy Jeopardizes 12,000 Patients

For the last few years, the East Chicago Community Health Center has been losing money in their operations despite government funding. These loss-making activities culminated in a Chapter 11 bankruptcy filing on January 12. As a consequence, the board gave its long time executive director and founder, Cornell Brantley the boot. The Center carries out essential health services to the public irrespective of their status, income or insurance standing. Presently, the Center serves about 12,000 patients and its bankruptcy jeopardizes their very existence.

According to its bankruptcy filing, the Center has assets worth $5.1 million while its liabilities amount to $2.3 million. In the course of its operations, the Center has lost over $2 million over a period of 5 years. However, it is still allowed to run its operations but under federal bankruptcy rules. This means providing services, paying workers and vendors from the revenue generated.

But the financial deficits have compelled the Center to cut down on some of its services in an effort to stem the decline. Centier Bank, one of the Center’s creditors, agreed to receive a reduced payment on the mortgage it holds for the loan of $1 million for a building it financed. It suspended its Obstetrics and Gynecology services in one of the neediest areas in Illinois while it has not given dental treatments since 2008.

A spate of financial mismanagement was found to be the cause of the Center’s losses. In general, the Center made expansion plans beyond its means, for example it entered a three-year rent and equipment lease for a Hammond satellite clinic it has not operated in years. It also employed too many physicians when the number of patients and amount of revenue did not warrant it. Furthermore, the Center obtained a $1 million to build and staff two clinics at separate sites. What made it worse was that contracts like the one for the Hammond clinic was concluded by the management even before presenting them to the board, according to one former board member, Luis Molina.

To make matters worse, the Center is also experiencing strained relationships with other parties. The Healthy East Chicago building, the Center’s previous landlord tried to evict them over nonpayment of $301,708 in back rent. The Center also owes the city of Chicago $68,820 in unpaid telephone charges and business bills. In addition, they also owe other hospitals, namely St. Catherine hospital and Methodist hospitals together more than $250,000.

Should the Center be forced to shut down altogether, it would be a severe loss to the public in East Chicago.

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