Lyon-Martin Explores Merger

Lyon-Martin Health Services, a nonprofit that provides primary medical care to women and transgender people regardless of their ability to pay, and HealthRight 360, which offers substance abuse counseling and other programs, are exploring a merger.

The boards of the two San Francisco-based nonprofits plan to vote on the proposal May 28. Both groups will be represented at a town hall at 6:30 p.m. Thursday, May 22 at the San Francisco LGBT Community Center, 1800 Market Street.

Officials say the move would ensure Lyon-Martin's survival while offering enhanced services for clients at each of the two organizations.

"I think this merger saves Lyon-Martin well into the future, and I just could not be happier," said Marj Plumb, Lyon-Martin's board chair.

The clinic, which was founded in 1979 and serves just over 2,000 active patients, nearly shut down in 2011 after a surprise announcement from then-board members that the group was heavily in debt.

Community members quickly rallied to keep the nonprofit, which has a budget of about $2 million, afloat, but it has still struggled to pay off an estimated $1 million in long-term debt.

If the merger goes through, HealthRight 360, which last fiscal year provided direct services to 23,911 people and has a budget of about $75 million, a figure that includes budgets of smaller organizations it's recently merged with, will take on Lyon-Martin's debt. It would also share some administrative staff with the smaller organization, which should help Lyon-Martin save on positions such as finance.

The move is expected to benefit clients of both groups.

"Bringing Lyon-Martin into the HR360 family gives us the opportunity to expand and enrich care for women and LGBTQ individuals," HealthRight 360 CEO Vitka Eisen said in a news release.

HealthRight 360 itself is the result of the 2011 merger of Haight-Ashbury Free Clinics and Walden House.

In an interview, Eisen said, "To the degree that Lyon-Martin Health Services patients could benefit from a robust continuum of behavioral health care," such as substance abuse and mental health counseling, "that would be made more easily available." The nonprofit also offers assistance with employment skills and housing, among other services.

Lyon-Martin, which provides services including HIV care and gynecologic care, would remain at its current 1748 Market Street location and maintain its mission while becoming a program of HealthRight 360.

Dr. Dawn Harbatkin, Lyon-Martin's executive and medical director, said "what has been really exciting" is that HealthRight 360 has agreed on many "non-negotiable pieces" with Lyon-Martin, including "serving our community in the way we serve them."

"They really do share our values and our commitment to serving marginalized populations," said Harbatkin of the larger group, which has operations in other parts of California. "They run the only transgender residential treatment facility for substance disorders in the state."

Eisen will remain HealthRight 360's CEO. Harbatkin's new title hasn't been finalized. Like Plumb, both are out lesbians.

Debt, Staff

Lyon-Martin is "basically treading water" in its efforts to pay off about $1 million in long-term debt, which includes money the nonprofit owes on a loan. HealthRight 360 will take over that debt.

"When we merge, we assume all the liabilities," said Eisen. Taking it on is "something that's manageable over time," she said.

San Francisco Health Director Barbara Garcia has been talking about agencies increasing efficiency through merging for years.

"We are very excited about the merger of Lyon-Martin Health Services and HealthRight 360," Garcia said in a statement. "Leveraging our community assets like this is exactly what we need to do in the midst of health care reform to ensure that health services for our important communities continue."

Lyon-Martin has about 25 paid staff. It is likely some employees will be let go but those decisions haven't been finalized. HealthRight 360 has approximately 800 paid workers.

"I'm really sure we'll keep all of our patient care-related staff," said Harbatkin. "... Anyone working daily with patients will continue to do that."

The Affordable Care Act national health care reform is bringing changes to clinics across the country, including the expense of updating records systems.

The merger would also aid Lyon-Martin in this area. HealthRight 360 "will implement their electronic health records at Lyon-Martin, so we'll all be on the same system," and the larger group will maintain it, said Plumb.

Staying on Market

Lyon-Martin is finalizing an 18-month lease with the corporation that bought the building in which it is housed, which also includes a tax office and recovery groups, in December.

Harbatkin said the new agreement would mean "a slight increase in rent," and the clinic is discussing with the new building owner who will pay for electricity.

There had been uncertainty around Lyon-Martin's ability to stay at its current location, given the building being sold and many sites in the neighborhood being transformed into condominiums.

The nonprofit had discussed moving into the LGBT Community Center, which is nearby, but costly renovation work would have been necessary to make space at the center suitable for a medical clinic.

"Personally, I don't think the LGBT center is completely off the list of things," said Plumb. "I think there are still ways Lyon-Martin and the LGBT center could work really well together, but the idea of trying to raise $1.5 million on top of having a million-dollar debt, and on top of getting ready for health care reform just seemed really daunting and not a wise business move, necessarily, at that point," said Plumb.

Eisen said the merger discussions started around January, after she and Harbatkin, who are both board members of the San Francisco Community Clinic Consortium, had lunch.

Board chairs of both nonprofits expressed enthusiasm for the merger.

"I would be very shocked if the merger didn't go through," said Plumb.

HealthRight 360 board Chair Harlan Grossman said he's "fully supportive of the merger."

The two groups' mission statements "align very nicely," said Grossman, who's a straight ally.

Along with the board votes, there's at least one other hurdle.

The proposal also needs the approval of Cal-Mortgage, which is part of the Office of Statewide Health Planning and Development and insures a $7 million bond that HealthRight 360 has.

Eisen said Cal-Mortgage, which she said has been briefed on the proposed merger, has to endorse the idea to "make sure we're not impairing our ability to service our own debt."

Asked about the possible merger, Mabel Chan, a Cal-Mortgage senior account manager, said, "We haven't received the request, so I haven't really had a chance to look at the transaction. ... I'm waiting to have more conversation with HealthRight 360."

To RSVP for the Thursday town hall, send an email to [email protected].