Project 90 struggles to avoid downsizing: Nonprofit drug rehab looks for support from county

Even after receiving a $2.2 million loan from San Mateo County last year, Stansberry said it’s been a challenge to pay employees, vendors and cover the costs of providing services to up to 200 clients a year.

“We’ve pretty much emptied the cupboard. So we’ve got to face the facts and get to where we can sufficiently operate and, in some cases, that may mean some cutbacks,” he said. “I’ve been investigating the possibility we may have to completely shut down, which we’re trying not to do.”

Once offering services in three counties, it had to close down its Santa Clara County centers last month and is now only operating in San Mateo County, Stansberry said.

Although the 45-year-old nonprofit owns about seven properties in San Mateo County, it’s unable to sell any due to the terms of the county’s loan. Now, it’s essentially “cash poor” and in need of about $300,000 a year to maintain the current level of services, Stansberry said.

“We’ve borrowed and suffered and done whatever we’ve always been able to, but right now I’m at the point where we might not be able to make the next payday,” he said.

State waiver

The untenable situation is due in part to the state and county’s expansion of the ACA and Medicaid to pay for the clinical portion of substance abuse treatment. Nearly seven years into its approval, the state finally received a waiver allowing San Mateo County providers to receive Medi-Cal dollars. However, the government insurance support will never fund the costly residential portion of treatment.

All but two providers have signed up on the waiver and have agreements through the county to receive Medi-Cal support. The hope is by July, Project 90 will solidify an agreement with the county to implement the ACA wavier, said Steve Kaplan, director of the county’s Behavioral Health and Recovery Services.

Kaplan agreed it’s taken years to implement these changes affecting treatment providers with whom the county contracts to provide vital services.

“We weren’t expecting it to be smooth sailing, but everybody’s in the same boat and it hasn’t sunk yet,” Kaplan said, adding they must continue despite the uncertainty of the ACA’s future. “We’re really concerned. … But rather than going through the ups and downs of following what’s going on in Washington, our focus needs to be on implementing what we have.”

But with the waiver comes regulations. Medi-Cal will only support licensed beds, of which the county contracts with more than a dozen providers to offer about 150. Project 90 accounts for about 24 beds, Kaplan said. Project 90 is not the only substance abuse treatment provider that has struggled financially and last year the county offered a $5 million loan pool to help keep them afloat.

While Stansberry said he’s sought to sell at least one of the nonprofit’s properties to avoid going under, Kaplan noted the county’s goal is to retain as many beds as possible.

“It’s important we maintain that inventory throughout the county. We know that when those go, quote, out of production, given the climate in the county around property values, it’s literally impossible to bring them back and it’s an important component of our continuum of care,” Kaplan said.

Stansberry knows firsthand how difficult it can be to replace a facility. Last year, it had to close down its largest facility the O’Toole Center and a neighboring residential property. The owner of the Ninth Avenue sites just south of San Mateo’s Central Park are now in the midst of redeveloping the lots into office space and a multi-family residential complex.

Stansberry said they’ve tried to find a suitable alternative for the property that included both residential and clinical facilities, but the market pressures have been unyielding.

“With all of the building that’s going on, everybody’s looking for properties that they can tear down or build up high-rises. That’s part of the situation San Mateo County is in with affordable housing,” Stansberry said.

No shortage in need

And there’s no shortage in the demand for treatment or those in need of a sober living environment. Wait lists are common and many of Project 90’s clients might otherwise end up on the street or back in the criminal justice system, Stansberry said. Plus, since Proposition 47 reduced sentences for drug crimes, the courts have been releasing more people with substance abuse addictions, he said.

At one point, they had a $5 million annual budget. That’s been cut in more than half and they’re now down to about 110 beds for those ranging from more intensive in-patient treatment to those who’ve gone back to work and are in need of a sober living environment, he said.

Stansberry acknowledged the county’s intent in having conditions of the loan be such that it would retain as many beds as possible. But he suggested tying up its almost $10 million in properties has allowed the county to pay a lower rate for treatment. Stansberry explained the county’s loan, which almost serves as a mortgage, only covers a small percentage of the market value or what the county would pay if its provider was renting.

“They did that to be able to protect substance abuse treatment. They don’t want them sold because they want to provide services and we have the same feeling they do. We want to continue to provide treatment, but we can’t do that if we don’t have sufficient cash flow to pay our vendors and employees,” Stansberry said.

Ultimately, both Kaplan and Stansberry agreed the ramifications of not providing services would have widespread effects on the county, families and the community at large.

“It’s important because it isn’t just about that person having a problem with substances. There are collateral implications whether it’s extended through impacts on families, impacts on community, impact on the cost of providing medical care, cost related to criminal justice, cost related to child welfare,” Kaplan said. “When you think about this from a broader community standpoint, I believe an average citizen would want cost related to care for individuals to be reduced if possible, and that families and kids are safe.”

samantha@smdailyjournal.com

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Twitter: @samantha_weigel