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

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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

  • Duke Alden

    As the chair of the Board of Directors at Howard Brown Health Center I can assure you that we take our leadership and oversight role very seriously. We’re making progress to resolve the issues of the past while we diligently focusing on our future.

    Following an internal review and discovery of financial mismanagement in 2010, Howard Brown’s then Board of Directors felt it was necessary to reorganize with entirely new members to earn back the trust of the community and ensure accountability. To that end, the Board was reconstituted in 2011. We have more recently recruited additional board members who are contributing their expertise in compliance, financial controls, and adding depth as we tackle the rapidly changes in healthcare – three critical areas for our organization. These directors are, respectively, Bernard Mims, Director of Compliance at Northwestern Memorial Hospital; Mark Hawkins, Controller of DePaul University; and Ryan Siemers, a healthcare consultant at PriceWaterhouse Coopers.

    Since October, the Board has been moving through a robust strategic planning process, engaging partner organizations and staff at every level to map our future in four areas: mission and program alignment; financial strategy and sustainability; board/staff development and investment; branding and marketing.

    Our strategic planning has been particularly focused on Howard Brown’s financial strategy and sustainability and the 2012 report from our auditors affirms that we are on the right track. It shows in black and white that we are making the necessary changes that have helped to reduce the number of material findings by 80 percent since 2010. It also shows that we are meeting our obligations and settling our debts, and that we are doing so by managing our expenses and increasing our revenues appropriately. We have a far tighter handle on our finances, stronger checks and balances, and a new compliance officer to improve operational quality.

    Karma Israelsen, our interim-CEO, brought skills in operations and regulatory affairs and a deep understanding of Howard Brown to her post at this time of transition. She recruited necessary staff, recognized talent, and reinvigorated the sense of mission that we need to serve the 16,000 patients who rely on us. We are, by any measure, a stronger organization under her guidance.

    The true test of an organization that has suffered hard times is whether its heart and soul remain strong. Howard Brown Health Center is emerging from its hard times with its mission – our heart – intact. If I sound proud, it is because I am. Our staff – our soul – serves the organization with renewed enthusiasm and camaraderie as we continue to dedicate our work to enhancing the patient experience.

    If you talk with other Board members, you will hear much of the same. I do confidently say that Howard Brown Health Center is a vital healthcare organization and I will personally attest to its strength and quality.


    Duke Alden
    Chair, Board of Directors
    Howard Brown Health Center

  • Ruth McCambridge

    Thank you Duke. Your response is heartening. It is not easy to govern or manage a turnaround and especially when your operating environment is so fraught. Personally, I wish you the very best and hope that you will stay in touch.

  • Reader

    This article also ignores the fact that in the 2012 audit, there are only 7 audit findings. To that end, it supports that the board is doing exactly what it needs to do and moving through a number of issues that need addressing. Many of these finding are minor items as well. Additionally, three years running, the organization has turned a profit of approximately $ 1million.

    It is a shame and poor reporting that the article has no real point other than to try to make an issue out of something that isn’t an issue instead of talking about the work the organization has done under new management and new governance.