Santa Barbara Neighborhood Clinic’s financial challenge

June 1, 2013

People waited in line to receive the 80 vouchers for free dental care services at a Santa Barbara Neighborhood Clinic event in 2012. Photo courtesy of Santa Barbara Neighborhood Clinics

Board reviewing options this month to keep health care provider in business

By Frank X. Moraga / Amigos805

A cancer prevention fair providing free screenings at Santa Barbara Neighborhood Clinic’s eastside location drew more than 350 people in May 2012.

Likewise, a free dental clinic hosted by SBNC and the Santa Barbara/Ventura Counties Dental Care Foundation held the prior month drew an overwhelming response with individuals lining up outside the clinic shortly after midnight so they could be the first in line for the 8 a.m. opening. All 80 services vouchers for free dental care were handed out by 7:30 a.m., with those not seen by dentists given vouchers to come back another day.

The large response for dental services illustrates the huge need in our community for affordable health and dental care, clinic officials said at the time, services that have been provided for more than 40 years by SBNC.

The need is certainly there, but rising operating expenses and the increased cost of complying with government regulations, versus limits set by those regulations for reimbursements of patient visits, mean that SBNC is just not making enough money to cover its costs.

As a result, SBNC must immediately reduce expenses and receive additional financial support through individual donations and foundation grants or it will be forced to close its doors, officials reported in a media briefing in late May at SBNC’s Eastside Clinic on Milpas Street in Santa Barbara.

Such a closing would have a major impact on the 17,000 low-income patients who were served in 2012 by SBNC in the Santa Barbara region.

“The clinic in the last five years, and over its whole life, has never operated on a basis where our income matches our expenses,” Mark Palmer, acting SBNC’s CEO, said in an interview with Amigos805.

“Several things converged on us over this past year that really caught us by surprise,” he said. “First, we have been sustaining ourselves by selling assets.”

In 2006, SBNC sold its Isla Vista building for $2.6 million, leasing it back for $1 per month.

“After five years the $2.6 million has run out,” he said.

Then, the federal government mandated that the organization go to an electronic health record-keeping system, a necessary but expensive requirement not compensated for by the govenment.

“The next piece was that the number of patients without health insurance increased by 10 percent over the past year,” he said, with 33 percent of patients who walked through the door in 2012 not having insurance.

Finally, community contributions totaled $1.5 million in 2012, down 30 percent over the prior year.

“We have had the perfect storm,” Palmer said. “We had more patients who can’t pay, more mandated expenses, had our cash cushion depleted and like every nonprofit in town, the contribution dollars are down. That is how we got here.”

After reviewing the financial situation, Palmer, a software technology executive, and fellow board member Brian Knowles volunteered to lead the effort to modernize the organization’s business model.

“It’s going to take awhile. One of the challenges and approaches I had when I got this volunteer job was trying to get to a clinic that is sustainable,” Palmer said. “We found five clinics that were doing the same things we are doing and looked at what their model was like. What we saw was that we’re operating a model of 40 years ago. The model is all different today. Other clinics have figured out how to get paid more for the same things we do. Clinics have figured out how to get more federal grants, which is complicated because of how we are licensed, and we have a lot less community support than many of them.

“It’s time for us to adjust our business to reflect the new model,” he said.

The board brought in an advisory group composed of leaders from Santa Barbara’s major healthcare providers (Cottage Health System, CenCal Health, Sansum Clinic and Santa Barbara County Public Health Dept.) to help SBNC continue its mission.

The financial goal for the organization is to raise $1.5 million over the next six months, Palmer said.

“We’re not just asking for money to do the same thing we’ve done before,” Palmer said. “We’re asking for dollars to reinvent ourselves in order to make sure this mission continues in the community.”

With the financial support from Cottage Health System, SBNC has hired a well-respected professional healthcare consultant to evaluate all of the options available so the board can choose the best option, he said.

The consultant will present their report to SBNC next week, with the board making final decisions at its June 22 monthly board meeting, Palmer said.

“I’m confident we will find a way to come out of this and serve our mission,” he said.

And that mission is providing health care for everyone who needs it, he said.

“This stuff is a passion for me,” Palmer said. “This is increasingly important to the community. I want to live in a community where people have the option of getting health care independent of their ability to pay.”

As one example, he cites the work of SBNC’s dental program.

“Our dental clinic program educates kids on how to brush their teeth properly,” he said. “There are families out there where there’s only one toothbrush in the house. We’re the source to bring toothbrushes to families. We’re doing really neat things. It’s above and beyond.

“As a board member and CEO, I’m passionate about preserving the mission first. What needs to be done to serve that market is up for grabs, but I’m confident we will find some funding in some shape or form.”

Palmer, who never wanted to become a full-time healthcare administrator, said his software business background has helped him look at the healthcare industry from an outsider’s perspective.

“I can’t help but think of the number of times I’ve been told I think differently,” he said. “It’s quite fascinating. I take it as a compliment. We are challenging things. We have to ask more questions and so we are not missing anything because we are just assuming” we know the business.

Palmer said he is just amazed by the qualifications and dedication of the people who work for the organization, with many doctors coming from top schools in the nation.

“One doctor was asked questions (about the financial situation). He said ‘I’m here to give the same care for the same people that I have over the last 30 years. I’m determined to give that same care.’ ”

 Community support needed

Donations may be made online at, by phone at 805-617-7869 or mailed to Santa Barbara Neighborhood Clinics, 1900 State St., Suite G, Santa Barbara, CA 93101.

 About Santa Barbara Neighborhood Clinics:

The mission of Santa Barbara Neighborhood Clinics is to provide high-quality, comprehensive, affordable healthcare to all people, regardless of their ability to pay, in an environment that fosters respect, compassion and dignity, SBNC reported.

In 2012 SBNC served nearly 17,000 unduplicated patients with more than 56,000 total clinician visits. More than 95 percent of SBNC patients are low-income or very-low-income.

Santa Barbara Neighborhood Clinics was formed in July 1998 by merging three existing medical clinics that had provided care to low-income patients since the 1970s, SBNC reported on its website. “The Isla Vista Health Projects opened in 1970, followed shortly by the Carrillo Clinic (originally the Freedom Clinic) in 1971, and the Westside Clinic in 1973. All three clinics shared a common belief in providing medical services for families regardless of ability to pay, and were created on the philosophy that obtaining quality medical care is a fundamental right for all people. More than that, each of the clinics is, and has been, an intrinsic part of its community and neighborhood. Because of their close relationships with the surrounding community and awareness of their neighborhood’s special needs, a strong bond of trust has been formed between patients and each of our clinics.”

Clinics are located at:

Eastside Neighborhood Clinic

— 915 N. Milpas St., Santa Barbara, 805-963-1641

Eastside Family Dental Clinic

— 923 N. Milpas St. Santa Barbara, 805-884-1998

Westside Neighborhood Clinic

— 628 W. Micheltorena St., Santa Barbara, 805-963-1546

Isla Vista Neighborhood Clinic,

—  970 Embarcadero Del Mar, Isla Vista, 805-968-1511

For more information, visit

Dr. Kimberly Hurvitz, a local dermatologist, examines a patient for skin cancer at the 2012 Cancer Prevention Fair held at Santa Barbara Neighborhood Clinics’ eastside location. This annual event, sponsored by Santa Barbara Neighborhood Clinics, Cancer Center of Santa Barbara and Cottage Health System, provided more than 350 free cancer screenings and information for community members who are uninsured or under-insured. Photo courtesy of Santa Barbara Neighborhood Clinic s

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