Lyon-Martin Health Services, the San Francisco-based clinic that provides health care to women and transgender people regardless of their ability to pay, needs to raise $250,000 within the next month or it will close, according to board treasurer Peter Balon.

The news caught city health officials and community members by surprise. The clinic is named after pioneering lesbians Phyllis Lyon and her wife, the late Del Martin.

The board had planned to close the clinic today (Thursday, January 27), but after word of the board's decision leaked early in the week, many community members, including staff, expressed concern about what would happen to patients. The clinic has expected to see 2,500 patients this year. The budget for 2010 was about $2.2 million.

Balon, who said Lyon-Martin also has up to $1 million in debt, said that it appears the clinic will close "unless we can fundraise or get assistance from the city, everything else remaining equal."

Asked if the board had thought it could just close the clinic today and be done with it, Balon said, "Yeah, we did, actually. We just didn't know about all the rules."

As of Wednesday morning, key staff were trying to craft a plan to ensure patients could continue to somehow receive care.

Balon said besides the loan, there's also money owed to a "plethora" of vendors. He estimated that the overall debt is $800,000 to $1 million. That includes a $600,000 loan the clinic took out in 2009 to cover operations. They've been paying that off, but a large amount remains, he said.

In addition to the loan, in the last year, about $500,000 in debt has piled up. Balon said part of that was because of the clinic's billing system. Lyon-Martin had money "on the books" that it wasn't able to collect through Medi-Cal and Medicare, he said.

The debt also accumulated because it was costing more money to operate the clinic than it had in the bank.

Balon also said that the board had received "clean audits every year, so the assumption was the numbers were indeed good." But in April 2010, they hired a finance director. That position had been open for "quite a long period of time," he said. Around August, he said, the finance director "reported that the receivable balance would need to be written down."

Board attempts to fix problems

Balon said the board had done "everything it could" to make Lyon-Martin "viable." He said the board tried to resolve the problems by finding additional funding sources and working with the San Francisco Community Clinic Consortium, the group of nonprofit clinics of which it is a member. The board's also been working with the city's health department. Staff had been cut, among other measures, he said.

Over the last few weeks, however, "We weren't sure we had the wherewithal to pay our staff. It didn't seem ethically responsible to carry on the business," he said.

According to Balon, it wasn't until after the board announced its resolution this week to shutter the clinic that it learned there was more it needed to do.

"There are regulations in place the board didn't know about," he said. "We're not clinical practitioners."

However, Balon said, the board wants to "do this totally appropriately and responsibly and ethically."

He noted that the health department had helped New Leaf: Services for Our Community transition patients to other providers when that organization shut down last year. Lyon-Martin had received many New Leaf patients and the clinic had had the impression that "when the clinic stops, [the health department] steps in," said Balon.

Balon said he was "virtually certain" the board will approve the plan the staff was developing, which he said the health department and the consortium would also review.

Clinic director speaks out

Elizabeth Sekera, Lyon-Martin's clinic director, said in an interview Tuesday morning, when it sill looked like the clinic would close Thursday, that the board had "tied the staff's hands behind their back. We've been unable to fundraise in a proper manner at this point because of them."

She said that "without a clear closing plan" that addresses legal and other needs, closure would mean "abandonment of one of the most marginalized populations and communities."

Wednesday morning, Sekera didn't agree that the board had done everything it could. "I don't want to answer that question," she said when asked about the idea.

She also said there was more to the debt than the loan, billing, and operating expenses that Balon discussed, but she said she couldn't explain further. She did say staff hadn't done anything wrong.

"My hunch is the community will expect an audit of our finances, and I believe an audit will be done of what's really happened here," she said.

She also said, "At this point, in order to gain the trust of the community, I think yes, [the board members] should resign," According to the clinic's website, there are six board members. Board chair Lauren Winter and member Kimberly Gillette didn't respond to interview requests and other board members couldn't be reached for comment.

Sekera said that the goal was to complete the plan by the end of Wednesday. She said the plan would include reaching out to other clinics to make sure patients have places to go.

She said based on the community response she's seen, she has "high hopes" the clinic will be able to raise enough money to stay open. She said among other things people discussed at a meeting at the San Francisco LGBT Community Center Tuesday night was raising funds through Facebook.

There is now a "Save Lyon-Martin" Facebook page that promises "organizing updates" and another meeting.

Harbatkin said Wednesday about $14,000 had been raised.

Health director 'surprised'

San Francisco Public Health Director Barbara Garcia said Wednesday morning that her department was "quite surprised," of the Lyon-Martin board's decision to close. "They gave us no announcement until they were about ready to close," she said.

"We're committed to trying to see how we can try to help them," Garcia said, but Lyon-Martin also needs to help itself.

"A lot of it's going to have to do with their own leadership issues and financial management," said Garcia.

"We're going to have to do some reorganizing of the organization," said Garcia. She said Lyon-Martin "might have to get a bit smaller for the costs to meet expenses."

Garcia said that the department had given Lyon-Martin money about two or three months ago to help it find a financial consultant so they could get help with its billing issues. She said the clinic is a federally qualified health center and gets "a pretty high reimbursement rate for their care," but "they did not bill for two years."

As for closing today, "We basically asked them to delay that decision," said Garcia. "We were in the midst of trying to get them a three-month turnaround loan" of "several hundred thousand dollars," she said.

She also said her agency "could probably advance [Lyon-Martin] some dollars," but her department is facing a potential $60 million deficit "so we have no new dollars to give them." She didn't know how much the department might be able to advance.

Asked if Lyon-Martin's board should resign, Garcia said, "I think they're going to have to reconfigure their board." She said the department has "a great deal of confidence" in interim Executive Director Dr. Dawn Harbatkin, but Teri McGinnis, the former executive director, "never provided them with adequate financial oversight."

Garcia said Lyon-Martin is "critically important, but the city "can not continue to support organizations that are not managed well."

McGinnis resigned in November, and Harbatkin, Lyon-Martin's medical director, had been appointed to also serve as interim director. Harbatkin has previously said McGinnis's resignation was voluntary and not related to Lyon-Martin's finances.

McGinnis couldn't be reached by phone Wednesday.

Richard Hodgson, vice president of policy and planning for the Community Clinic Consortium, said Wednesday that his group would continue to work with the clinic. He said a statement the board released Tuesday makes it clear "they're taking a more responsible position on closing."

The consortium has a contract with the city's health department that Lyon-Martin is a subcontractor on, he said.

He said he had "no opinion" on whether the board should resign. In an earlier interview, he'd said, "Every organization in the consortium has autonomous management."

Debra Benedict, who's 53 and lives in San Francisco, first heard about the possibility of the clinic closing today from the Bay Area Reporter on Tuesday, just after she'd been to the clinic.

Benedict expressed disbelief, saying, "They're definitely not going to be closing down," because she's supposed to check in with them by phone in a month.

"That's a terrifying concept," said Benedict, who said she's been a patient at Lyon-Martin for two or three years and identifies as "questioning." She praised the staff's efficiency, compassion, and other qualities and said, "I wouldn't dream of going anywhere else."