Encompass closes one mental health site, another at risk as budget cuts loom

Encompass Community Services, Santa Cruz County’s largest nonprofit provider of behavioral mental health services, says its Casa Pacific mental health residential facility is at risk of closure due to the loss of funding as the state and county governments look to make sweeping cuts to health services.

If the nonprofit isn’t able to find the money to help operate the facility, it will be forced to close the Watsonville site at the end of the month, according to CEO Shellee Stopera. 

The nonprofit has already been forced to close down its Telos facility in Live Oak — a program that has been around for nearly three decades — due to the county reducing its reimbursement rates to cover patient room and board costs, said Stopera. The Live Oak facility provided crisis mental health services, which helps address immediate and critical mental health crises. Patients usually stayed for at least two weeks until they had been stabilized before transferring to a long-term care facility, Stopera said. 

Encompass is the only provider of mental health residential services in Santa Cruz County for residents enrolled in Medi-Cal — California’s Medicaid program. The nonprofit’s financial challenges come as Gov. Gavin Newsom is proposing a budget that includes new restrictions on Medi-Cal. The county’s board of supervisors is also weighing proposals this week on whether to make deep cuts to its Health Services Agency, including layoffs and staffing reductions, ahead of a budget vote slated for Tuesday.

All eight patients at Live Oak facility have been transitioned to either different programs or have been completely discharged, Stopera said. As of Friday, the site will officially close its doors. 

“There’s no alternative for this level of care right now. That’s the issue, too,” said Stopera. “These individuals will have nowhere to go.” 

In comparison, the Casa Pacific site, which has a 12-bed capacity, is a long-term program for patients who have already been stabilized at a crisis management center. The facility helps patients stay on track, ensuring they are taking their medication and have a plan on how to live independently after discharge, said Stopera. 

The Casa Pacific facility serves about 50 people a year and employs 17 staff members, who have already been notified of a potential closure. “It’s something that will obviously impact not only the community, but staff,” Stopera said. 

County funds contribute $125 per person per day to help cover room and board costs, said Stopera. She said the county is proposing to cut those reimbursement payments by 40%, to $75; on average, room and board for the facilities costs $162 per person. 

Encompass also receives funding from Medi-Cal reimbursements to help cover operational costs, and programs like Casa Pacific and Telos are primarily funded by county and state dollars, she said. 

Stopera told Lookout that Encompass had also anticipated receiving $471,000 from Measure K funds — a half-cent sales tax increase on goods purchased in unincorporated areas — to help alleviate any financial burdens created from the county reducing room and board reimbursements. However, Stopera said Encompass was informed by county officials that it would not be receiving the funding this year. 

Without that funding from Measure K, the nonprofit will be left scrambling to find solutions to cover costs in the weeks ahead, she said. If the county had awarded the nonprofit that funding, it would have been able to cover operational costs at Casa Pacific. 

“We’re looking at every single thing you can imagine,” Stopera said. “Everybody’s really trying to figure out and think out of the box because this is just critical. It’s critical for the community.”

District 5 Santa Cruz County Supervisor Monica Martinez told Lookout that finding funding to preserve these facilities will be a priority over the next few days before county elected officials take a final budget vote next week. 

Martinez has a keen knowledge of how the beds at Telos and Casa Pacific fit into the greater social safety net. Prior to being elected to the board of supervisors in November, Martinez spent a decade leading Encompass as its chief executive officer. She said the nonprofit is dealing with many of the same issues as local governments: low service reimbursement rates, increased expenses and challenges with recruitment. 

As the safety net providers at every level endure tightening budgets and resources, the county government and community must focus on saving “the most critical programs,” Martinez said. 

“Those beds are critical; if the beds aren’t available, people are going to the emergency room, they’re going to jail, they’re living on the street,” she said in the hallway outside the supervisors’ chambers on Wednesday. “In my opinion, we need to be preserving treatment beds in this budget cycle.” 

Stopera echoed her predecessor, emphasizing if Casa Pacific is shut down, people will be forced to seek care at local emergency rooms, where they will not receive the same level of personalized treatment. “It will create a burden on the rest of the local health care system,” she said. 

People could end up relapsing because of change of treatment or not taking medication and not having that sense of stability that is provided by Encompass’ residential programs, Stopera said. The funding cuts will only create a larger gap in services available to residents in the county, she said. 

“We’re advocating,” Stopera said. “We’re hopeful for some creativity around this matter when it comes to the fiscal aspect.” It will be unfortunate for the community if the organization isn’t able to figure this out, she said. 

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FOR THE RECORD: This story was updated to clarify that Encompass is the only provider of mental health residential services for county residents enrolled in Medi-Cal.

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