Agave Health Inc. notified its workers last week that all staff salaries will be reduced 5 percent as of April 5. In addition, merit increases for supervisors and managers will be frozen through the end of the year.
The mileage reimbursement rate will be reduced from 56 cents a mile to 25 cents as of April 1.
A March 20 memo from CEO Heath Kilgore cited “increased expenses and insufficient productivity” since Jan. 1 and said the company has to make changes to be financially stable.
“We are currently operating at a significant loss each month and this cannot continue,” Kilgore wrote.
The cuts are necessary to prevent “any further reductions, extensive layoffs, or any site closures,” he said.
Agave Health took over much of the operations of Santa Fe-based TeamBuilders and two other New Mexico nonprofits after the shake-up last year in the system that provides services to the mentally ill and addicted.
It runs treatment programs in a dozen counties, including Bernalillo and Santa Fe, and has about 350 employees.
“We’re here, we’re here to stay, and we’re committed,” Kilgore told the Journal on Thursday. “We regret it came down to this, but we need to ensure that we’re successful.”
Agave has contracts with the four managed care organizations that run New Mexico’s newly revamped Medicaid program – called Centennial Care – as well as with OptumHealth New Mexico, which is managing the state’s non-Medicaid behavioral health spending.
Kilgore’s memo said Agave will be consolidating functions and reassigning duties. The memo also said that, as of next Tuesday, employees who provide direct services to clients must spend 75 percent of their time doing that – as opposed to attending meetings or performing supervisory duties, for example. Currently, the expectation is 70 percent.