Planned Parenthood of El Paso closure status: More than a half million in debt and a state investigation
by Lisa Degliantoni
Posted on July 23, 2009
Editor's note: A previous version of this story incorrectly reported that the OIG investigation was federal when it is in fact state. The mistake was due to an editing error. This story was corrected at 10:30 p.m. Friday July 24, 2009.
The state Office of the Inspector General has an open investigation into money provided to El Paso Planned Parenthood, a state official has confirmed.
It's not clear whether the investigation is connected to an audit of the agency's financials, first reported upon by NPT in this story posted July 6.
“All I can tell you is that the Department of State Health Services has referred a case to the Office of Inspector General in 2009,” said Carrie Williams, a spokeswoman for the Texas Department of State Health Services.
The investigation by the OIG is another piece of the puzzle of what happened to Planned Parenthood, an El Paso institution that announced in late June it was closing after 72 years. More than 28,000 patients were sent their medical files and notices as to where to go in the future.
The reaction was swift and unhappy, for the most part. ("I’d feel better if there’d been some warning or even a last ditch call-to-action campaign for supporters to ‘Save Our Services’," wrote Vanessa Torres.) Questions abounded. Was Planned Parenthood of El Paso victim of a bad economy, poor management, anti-abortion activists or a perfect storm of all three? Why were warning signals not sent; why were no appeals made to supporters? Who was responsible?
NPT began tracking the story with a number of tips and with the common-sense thought that an institution this large and long-lived does not just shut its doors overnight. Over the last two weeks, NPT contacted or spoke to dozens of people, very few of whom would allow their names to be used for fear of reprisal. That itself was telling.
As it turned out, while the closure may have come as a shock to the general public, it was no secret in-house and among various people in the non-profit sector that the organization was struggling.
Multiple sources – none of whom were willing to speak on the record – say Planned Parenthood had been spiraling down since at least 2003, and a review of the financials available shows the deficit swelled from $380,623 in 2006 to $583,987 in 2007, the most recent year for which tax documents known as 990s, required of non-profits, were available.
In addition to the audit and investigation of Planned Parenthood's finances, NPT has learned that a merger with Planned Parenthood of Austin was floated, according to the former director, Marci Brooks, who was the boss from 2007 until her April resignation. She said that a condition of the merger would be for El Paso Planned Parenthood to begin offering abortions.
Her assertion was refuted by Planned Parenthood Federation of America, an umbrella organization that has no direct control over local groups but does provide oversight in the form of accreditation reviews and other organizational support.
"I've spent the last three months working 14-hour days"
The abortion allegation takes place within the context of discussions about how to save the organization.
Analinda Moreno, the interim director, said the organization just “ran out of money, it’s financial and I’ve spent the last three months working 14-hour days every day to try and prevent this from happening.”
Moreno said she began a formal search for a new CEO but didn’t feel “morally right” bringing on new board members, when she knew the state of affairs at the organization.
She also said she tried to tweak the business model by raising fees, discontinuing HIV/AIDS services, meeting with the state and federal government (Center for Disease Control and the Texas Department of Health and Human Services) and supporters in the community.
But others said they did not see those efforts.
“We tried to work with them and it became clear we weren’t going to get anywhere so we went to the state. The state was asked to take the lead,” said Bill Schlesinger, co-director for Project Vida, which operates clinics that offer primary care including family planning, behavioral health, wellness exams, laboratory and medicines. Project Vida clinics will take in former Planned Parenthood of El Paso clients, and will need to apply for grants to meet the demand, Schlesinger said.
One former employee, who asked not to be named for fear of reprisal, said that after Brooks left in April, Moreno and the three standing board members Bonnie Escobar, Lynn Salas and Carlos Cabada, turned Planned Parenthood of El Paso offices into a “vortex, where everything would go in and nothing would come out. No phone calls, no emails were ever responded to.”
Brooks: Programmatic mistakes and pressure for abortions
Brooks said that it was a mistake to terminate the AIDS prevention and other related programs, especially $1.2 million provided for Federally Qualified Health Center grants (the designation allows clinics that serve low-income people to receive grants). She said despite what she considered to be programmatic mistakes she continued to advocate for Planned Parenthood, but got no response.
“After my departure, I was still advocating for (Planned Parenthood) and a local agency willing to partner and loan the agency working capital. My calls and emails were not returned,” she said.
Brooks said before she left there were two affiliates willing to sign management agreements. A financial viability plan was conducted and the affiliates on the table to merge were Planned Parenthood-Texas Capital Region (Austin) and Planned Parenthood Association of Hidalgo County.
But Patricio Gonzales, CEO of Planned Parenthood of Hidalgo County, said there were no such agreements on the table.
“We only had conversations about future collaborations, how we could help one another, not an official merger," Gonzales said. "We had conversations with Marci Brooks and Lynn Salas, board chair, over the phone and at the national meeting. I am devastated and sad at what happened there, I hope some day in the future we can figure out a way to get it restarted.”
The Austin group did not respond to request for comment.
"Our relationship with the church was better"
Brooks said that the board voted that Brooks should pursue the merger, but when she left the board chairwoman, Lynn Salas, met with the staff and said the merger would not happen because one condition was that El Paso provide abortions, something the El Paso agency never had done. Salas has not returned repeated telephone calls seeking comment.
Tony Ramos, who served in various positions for almost 10 years and left Planned Parenthood in May 2009 as director of HIV/AIDS Prevention Services, said that “from its inception, the Planned Parenthood board of directors made a conscious decision not to provide those (abortion) services. … Whenever someone asked for abortions, we were obligated to provide them with the phone number of any of the other local providers of said services, however we never 'pushed' abortions … because of our refusal to provide those services, our relationship with the church was better than that of other cities.”
Brooks now is director of the West Texas Area Health Education Center (AHEC), which states on its Website that its mission is to "is to address the health care provider shortage and improve health care access in West Texas through education and development of the health care workforce."
AHEC works with Project Vida, where more than one person told NPT that Brooks said she resigned from El Paso's Planned Parenthood because the Planned Parenthood Federation told the local agency it had to provide abortion services.
When reached on the phone, Brooks said there was a “mandate” brought on by the Planned Parenthood Federation for all clinics to provide abortion services, but that wasn't why she left. She cited personal reasons and the intense commitment required to do the job at Planned Parenthood.
“When I was CEO, there was a vote during the annual March membership meeting, for all affiliates to be required to provide abortion services at their clinics. The membership had to vote, the membership is the affiliates for all of the country. It would require a bylaws change. There was a vote on that very thing making it a core service all of the affiliates,” said Brooks.
A spokeswoman for the Planned Parenthood Federation said Brooks got it wrong.
Diane Quest, communications director for the Planned Parenthood Federation, said “The Planned Parenthood Federation was not advocating/asking/pressuring Planned Parenthood of El Paso to provide abortion care. The organization is not run that way.”
Jeffrey Hons, president and CEO of the San Antonio Planned Parenthood, who attended the March 2009 annual affiliate meeting in D.C., said “there was no agenda item let alone vote like that took place. No one is forcing the El Paso affiliate to provide abortion services. The standards of affiliation don’t require abortion care. It’s not a requirement to being a Planned Parenthood affiliate.”
Said Hidalgo County's Gonzales: "In our March meeting of 2009 we had no discussion of (the) abortions issue. As affiliates we have the ability to decide what is in the best for our community. As an affiliate we are allowed to decide what services to provide, we do family planning here at the Hidalgo clinic, but not abortions."
"A shock and surprise"
The abortion question aside, the reason cited by El Paso Planned Parenthood for closing was financial.
"The fiscal and administrative strain of providing high-quality health care under our current business structure and during this difficult economic time has become more than the organization can sustain," the organization stated in an open letter to patients in late June announcing the closure.
It was a surprise to at least some inside and around the operation.
"I had never seen the financials until I was appointed interim CEO in April 2009,” said interim director Moreno. When Moreno stepped in, the organization was carrying at least the more than half a million in bills due to vendors and other accrued debt in 2007, which almost certainly has grown since then. Before the board appointed her interim CEO, Moreno had been with Planned Parenthood for four years in various positions including quality control, monitoring how many clients were serviced.
“This news came as a shock and surprise to me,” said former CEO Betty Hoover when asked recently if there was anything that made her believe the organization would be out of business only two years after her departure in 2007.
But Brooks, CEO from May 2007 to March 2009, who signed the tax returns (known as 990s when filing for a non profit organization) for both 2006 (Sept. 6, 2007) and 2007 (Sept. 23, 2008), said that when she took over as CEO in May 2007, she knew the financial outlook was grim and by the time she left in 2009, she believed the organization would only last until October.
“We were always very public about our cash flow issues, the entire company knew and we were on probation for poor financials in 2008. Everyone at the organization was fully aware of the financial situation, from board members down to the general public,” said Brooks.
But again, there is dispute within the organization about who knew what.
“We were in good shape and we weren’t allowed to approve a budget that wasn’t fiscally sound,” said one board member who left in March 2009. Because board members of 501(c-3) non-profits are liable in that the IRS can collect unpaid employee taxes from board members and not the organization, they watch finances closely and would balk at debt and net assets getting too close to one another.
"Vendor lines of credit were maxed"
Financial information available on guidestar.org (form 990s, required by the federal government for non-profits) shows that:
-- In 2006, total liabilities were $699,478 and the net assets were $1,066,709;
-- in 2007, total liabilities were $932,886 and the net assets were $1,023,785;
-- numbers for 2008 won’t be available until 990s are filed, which could be as late as November. (See 990s for 2006 and 2007 at bottom of article.)
Brooks said that financial loss between 2006 and 2007 was attributed to clinic operations, depreciation, and expense of equipment. In addition to the loss, she said, “vendor lines of credit were maxed, the operating line of credit was maxed, and patient receivables on individual accounts were escalating.”
When asked about the $203,362 increase in accrued debt in 2007, Brooks recommended NPT review grants and grant requirements that would have made Planned Parenthood purchase new equipment or manpower. She declined several times to be specific, saying only that the information is there to be found in the financials.
Moreno said the operation ran on an antiquated business model, where fees hadn’t been changed since 1996 and were finally increased in March 2009 to much “shock and protest” from the clinics. As private clinics were increasing fees with the market, Planned Parenthood of El Paso was still charging $95 for mammograms while private clinics were charging almost $200, she said.
Although there is dispute within the organization and locally whether the dire financial situation was known, the national Planned Parenthood Federation knew because it reviewed El Paso Planned Parenthood in 2008 and denied the local organization full accreditation.
“In 2008 Planned Parenthood Centers of El Paso underwent an on-site accreditation review but did not receive full accreditation status because of some financial issues that were identified. Planned Parenthood Federation provided advice and guidance for regaining financial stability," PPFA spokeswoman Quest said.
"The affiliate employed various strategies over the course of the year but ultimately the financial strain, combined with the declining economy and the increasingly difficult health care climate, were too much for the affiliate to continue providing the quality care it was known for.”
* * *
To reach Lisa Degliantoni, write to email@example.com or call (915) 351-0605, ext. 29, or 915.356.0930.
Both Marci Brooks and Analinda Moreno did not want their photos taken for this story. Pictured here is Brooks in AHEC newsletter.
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