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Detroit health workers receive paychecks after delay

Karen Bouffard
The Detroit News

More than 85 Detroit health workers were not paid Friday but received their checks Monday, caught in a cash dispute between the Detroit health department and their nonprofit employer that took over health services under former Detroit Mayor Dave Bing.

Workers with the Institute for Population Health, which provides some city health services under an arrangement started under Bing, were paid Monday after $496,000 was transferred from the city of Detroit to the institute. Under Mayor Mike Duggan, the Detroit Department of Health & Wellness Promotion reclaimed control of the city's health care programs Oct. 1.

For the previous two years, the Institute for Population Health received money directly from the state to provide services such as tuberculosis care, infectious disease testing and the Women, Infants and Children supplemental food program while the city grappled with financial problems.

The city has contracted out most of the services to other vendors such as the Detroit Medical Center and Wayne State University School of Medicine. The institute agreed to continue providing WIC and some other services until Jan. 1 because vendors are not yet ready to take over the contracts.

But the Duggan administration and institute are now clashing about whether the money given by the city Monday is a loan or overdue government funding.

Detroit Health Director Vernice Anthony described the funding as a loan to help the institute with a "cash flow" problem.

"We worked very diligently last week when we heard there was a payroll problem," Anthony said Monday. "We have made an emergency loan of $496,000 today."

Loretta Davis, president and CEO of the Institute for Population Health, disagreed.

Anthony said the city formerly would send advance payments to the institute to ensure the nonprofit could meet its payroll obligations while waiting for the state to approve the invoices and send the funds. But under the new contract that started Oct. 1, the city would not provide advance payments, Davis said.

"In years past, they would be given an advance as opposed to having to depend on their own cash flow," Davis said. "This year there's a new contract in place, and that contract says payments cannot be made until invoices are submitted to the city and approved by the state.

"There was no mistake made on our end. We were to get an advance; that was in contractual language," Davis said. "We were to send in our expenses on a monthly basis, and the advance would be recouped later in the year.

"What we have is not a loan," Davis added. "What we have is what was owed to us under contractual language."

Immunizations, HIV/AIDS testing, family planning and other health services were turned over to the institute in 2012 because the Detroit health department had too much red tape and high employee costs.

The institute learned in late September that most direct health services would be shifted to vendors contracted by the city. The vendors are paid with state and federal funds sent to Detroit by the Michigan Department of Community Health.

The $496,000 the institute received Monday was for a fraction of the services the institute previously provided, Davis said. About $11 million in funding the institute previously received was awarded by the city to other vendors, including roughly $4 million for the WIC program.

Among the largest awards is an $800,000 contract to the DMC Children's Hospital of Michigan for children's special health care services, which covers care for some of Detroit's sickest kids. Duggan was CEO of the DMC until he ran for mayor.

About $3.7 million will go to the Wayne State medical school to handle infectious disease testing and treatment.

Immunization is the only health service the city will provide directly. Immunizations will eventually be integrated into the WIC food and nutrition service.

"This decision was made less than 30 days before the end of our contract," Davis said Monday. "We had graciously agreed to keep the services going, but then we didn't get paid. It's not easy to get these things in place, and when you try to make these changes in less than 30 day there are mistakes that are going to happen."

Anthony said, "There really is no one at fault."

"We were not aware that IPH would have the cash flow problem that they had," Anthony said. "I think everyone was doing what they have to do …to insure the integrity of the payment."