The Turnaround (And Around) of the Howard Brown Health Center

May 7, 2013; Crain’s Chicago Business

The Howard Brown Health Center in Chicago has been going through some tough administrative times. After receiving “material findings” in 2010 and 2011, its most recent audit has found seven remaining areas of “material weakness.” The center’s Interim Chief Executive, Karma Israelsen, asserts that the nonprofit has made “significant, substantial progress,” in that the auditors made 41 material findings in 2010, but only 17 in 2011. So it’s headed in the right direction, except all of the findings this year were also made last year. That does not look good; here’s where we ask the usual question, “where the heck is the board?”

But to be fair, this is not the only issue needing the board’s attention. The organization is still in the middle of a turnaround that started in 2010, when the organization was called to task for financial mismanagement. In April 2012, the center finally settled with several federal agencies for $715,000 after being charged with mismanaging more than $3 million in grant money.

Apparently the organization is on its second CEO (although the current exec is an interim) since the reorganization started. The first, Jamal Edwards, resigned “abruptly” last September after having earned $265K. Attorney Edwards had recommended that the previous CEO and CFO be fired, then landed in the position himself with, reportedly, no experience in nonprofit management and limited experience in healthcare. An article in the Windy City Times entitled “Can Howard Brown Survive Jamal Edwards?” suggests that his management style might have been driving off staff.

“Jay Paul Deratany, an attorney and a Howard Brown board member at the time of Edwards’s hiring, says of his fellow lawyer’s candidacy, “There’s a significant question as to whether or not an attorney who is advising a board of directors to terminate a CEO should then go on to become the CEO. That’s referred to as a direct conflict of interest.” Another attorney at Kirkland & Ellis led the Howard Brown review, which took conflict-of-interest rules into account. But Edwards tells me, “I was their general counsel. Of course I advised them what to do. But the decision is their decision.…If you can find proof that it’s a conflict of interest, then let me know. It’s not a conflict of interest.”

The current interim, Karma Israelsen, was formerly the chairwoman of the board.

Even while in the middle of a turnaround, the organization grew its revenue from $16.2 million in 2011 to $19.2 million in fiscal 2012. It has grown its patient base and opened up new revenue streams, and was also apparently was able to log a surplus of $1.2 million in 2012. But this year, the opening of the center’s new Lakeview clinic has been delayed by an estimated four months because, as Israelsen admits, the planning was done poorly and the necessary building permits were not in place.

Health Centers are complex entities in the middle of a field in serious upheaval, and Howard Brown is reportedly a well-respected provider to the LGBT community. Is the board and administration able to move it forward? —Ruth McCambridge