Borrego Health explores transferring operations of clinics to other federally qualified health center

The Borrego Health Board of Trustees has begun a formal process to explore options for transferring operations of clinics to a like-minded federally qualified health center, the organization announced Thursday.

If a transfer takes place, another federally qualified health center would operate clinics with the goal of having a "seamless continuation of care for our patients," said Sandra Hansberger, chair of the Borrego Health Board of Trustees.

At this time, clinics located in Riverside and San Diego counties will remain open.

Borrego Health is a federally qualified health center that receives funds from the federal government to provide primary care services in underserved areas. In 2021, Borrego Health served more than 120,500 patients and had more than 463,000 visits.

Thursday's news was yet another announcement from the health care organization that has faced challenges and legal troubles in recent years. It filed for Chapter 11 bankruptcy protection in September.

"The goal of the board is to make sure that we have a continuation of culturally competent care for our patients and the communities we serve," Hansberger said. "We think that exploring the option of transferring to another federally qualified health center is a prudent move at this time."

Borrego Health will send notices to several federally qualified health centers in the area to inform them of the process. After offers come in, the board will select a stalking-horse bidder, or an initial bid on the assets of a bankrupt company, while others have an opportunity to improve on the bid.

The process will take place through Borrego Health’s pending bankruptcy proceedings. The board will also need approval from the Health Services Resource Administration for a transfer.

Among the board's criteria is finding an organization that is in a strong financial position, can pay creditors who have previously provided services to Borrego Health and has a demonstrated track record of providing culturally competent care to farmworker, LGBTQ and rural community patients.

"We know that a really important part of that is allowing people to stay with their current providers," Hansberger added. "We'll be looking at an organization that can invest in our employees so that they can continue to provide that patient care that they've been providing to the same patients."

Hansberger said approvals would likely be wrapped up by the end of January, while actually transferring a federally qualified health center could take several months thereafter.

Jeffrey Pomerantz, of Pachulski Stang Ziehl & Jones LLP, an attorney for the Official Committee of Unsecured Creditors of Borrego Health, said in a statement: "The Official Committee of Unsecured Creditors of Borrego Health welcomes the Borrego Health Board of Trustees’ decision to explore a formal sale process, ideally to another Federally Qualified Health Center that shares in the mission and values of providing high-quality, culturally competent care to underserved populations.

"The Committee looks forward to working closely with Borrego Health to ensure access to care remains uninterrupted for patients and communities, especially considering the vital healthcare Borrego Health provides in San Diego and Riverside Counties. The Committee strongly believes in the value and importance of Borrego Health’s facilities and clinics and supports a reorganization that ensures the strongest future financial position for the organization including the ability to pay all creditors that have and may continue to support this essential healthcare mission."

Times have been tough recently for the nonprofit organization that has spent years trying to recover from what its new leaders say was years of corruption, self-dealing and theft by company insiders.

In July, Borrego Community Health Foundation sued a number of top former trustees and employees, alleging they schemed for years to siphon off millions of dollars from the corporation.

The company's Chapter 11 filing was driven by an Aug. 19 notice that said the state intends to reimpose its 100% payment suspension on all Borrego Health Medi-Cal services beginning Sept. 29. The state said it was withdrawing Medi-Cal reimbursements because of “continued and unresolved inappropriate billings,” according to the San Diego Union-Tribune.

The offices of Borrego Health and Premiere Healthcare, a medical billing company that served it, were raided by the FBI and state investigators in October 2020 as part of a criminal investigation into potential Medicare fraud. Both companies said last year that the criminal case involved a single dental clinic or a few facilities.

Months later, the California Department of Health Care Services suspended Medi-Cal payments to the Borrego Community Health Foundation. The Chapter 11 process prevented the latest suspension from taking effect.

The nonprofit also announced layoffs for more than 200 employees.

Ema Sasic covers entertainment and health in the Coachella Valley. Reach her at ema.sasic@desertsun.com or on Twitter @ema_sasic.

This article originally appeared on Palm Springs Desert Sun: Borrego Health explores transferring operations of clinics to other federally qualified health center