Loan applicants Diana Perparos and Scott Andrews look over Web site print outs related to an alleged financial fraud involving Professional Business Strategies of Roseville. They are joined by Regina Burnley, left, in a conference call with attorneys.A Roseville-based financial services group, Professional Business Strategies, allegedly defrauded more than 100 customers seeking business loans, according to court document and interviews with the firm’s clients and former marketers.
Many of the clients paid $15,000 to $20,000 in upfront loan fees, and some paid much more. A Bee investigation of PBS - including interviews with more than 20 clients and former contract employees, and a review of contracts and law enforcement records - suggests that most of the would-be borrowers may never have gotten their loans.
The company is a multi-state operation whose chief executive has a history of legal and financial problems. An investigator for the California Attorney General’s office contacted 33 of the firm’s clients - a small fraction of the total. Collectively, they lost $415,000 in fees for promised loans of well over $30 million. Only one of their loans was funded, an attorney general’s investigator said in an affidavit related to a warrant to search the firm’s office.
In late July, the attorney general raided the 14-month-old financial services company and seized records at its offices and the Lincoln home of Robert W. Hanson Jr., the head of the firm, as part of its ongoing investigation. Former clients also are considering a class action lawsuit.
Yet just a few hours after that raid, PBS held another marketing seminar, recruiting new clients for its lending programs.
Neither Hanson nor any other current employee could be reached for comment despite calls to home or cellular phones. Emails bounced back as undeliverable.
“Anyone can be investigated for anything,” said Matt A. Rose of Las Vegas, who served as interim president of the firm’s sales and marketing division for a few months this year. “Until there is proof, until charges are levied, I’m remaining hopeful.”
The company is being investigated for a practice known as “advance fee fraud” - a scam that often goes unpunished, because firms shut down soon after clients demand refunds, according to Bill McDonald, former enforcement director for the California Department of Corporations, who reviewed PBS documents for the attorney general.
The cases are difficult to prosecute because some perpetrators exploit loopholes in the law to avoid criminal charges, McDonald said. Others hide or spend all the money collected, reducing the appeal to victims of pressing a costly lawsuit.
Not a single such case has been prosecuted this year by the attorney general.
Officials declined to comment on the pending investigation, but in her July 21 affidavit, special agent Debra L. Gard alleged that Hanson and his firm “committed grand theft by false pretenses.” She identified 56 victims and made reference to about 75 others; The Bee discovered about a dozen more.
The marketing efforts continued even after the raid, clients said. But one thing did change: Hanson’s name suddenly disappeared from the PBS website. The firm’s phone goes unanswered and has no voice mail.
When a reporter met a group of clients at the PBS office a few days after the raid to demand their refunds, the door was locked and the office phone played an endless loop of greetings. The security camera was trained on anyone who approached.
A week later, the company had vacated its offices, a security guard said. Even the sign and the camera were gone.

Sacramento’s Mel Rapton Honda used this clunker to advertise the Cash for Clunkers program. Apparently it worked. The dealer took in 80 clunkers in two weeks from customers who bought new Hondas.The federal Cash for Clunkers program has thawed an otherwise icy new car market, but not everyone is feeling the warmth.
Numerous auto collectors, advocates for the poor, used car dealers and nonprofit organizations that make money on donated cars have been decidedly cool to the Car Allowance Rebate System program that prompted many Americans to buy a new car in recent weeks. Environmental and consumer groups also have raised concerns.
It’s a cautionary tale that has plentiful precedents in the nation’s car-obsessed history: Any movement in the massive auto industry typically produces unwanted ripples elsewhere.
For example, Katina Rapton, general manager of Mel Rapton Honda in Sacramento, noted that while her dealership took in an eye-popping 80 clunkers in exchange for new Hondas from July 27 through Tuesday, the dealership’s used car operation suffered by comparison.
“We’ve just been so busy with Cash for Clunkers that the used side sort of slipped,” she said. “I can’t complain. I know it will come back. It’s a cyclical business.”
U.S. auto industry analysts have estimated that three out of every five clunkers turned in by consumers attracted by government rebates would otherwise have ended up for sale on a used car lot.
Advocates for the poor have complained that some of the clunkers being turned in, never to be used again, could have supplied basic transportation to needy individuals who can’t afford to pay for even a moderately priced used car.
Likewise, car collectors and entities that actively seek donations of old cars say they would rather restore clunkers or turn them into a revenue source, instead of seeing their drivetrains destroyed and their remains chopped up for parts and scrap.
The California Automobile Museum in Sacramento does both: It accepts car donations to raise money and restores autos for display.
“I would definitely say that the Cash for Clunkers program has affected our vehicle donation program,” said Karen McClaflin, executive director of the museum. “Vehicle donations for the museum are way down, and while we could probably attribute some of that to the economy, there’s no doubt that some would-be donors are trading in their older cars for the cash in hand rather than the tax deduction.
“We also have an additional concern that collector cars – possibly having an even higher value than the Cash for Clunkers deal – potentially are being traded in and crushed, forever lost to future generations of car lovers and collectors,” McClaflin continued.
“We don’t know what cars will eventually be collectibles in the future. There are car clubs out there that collect Pintos, Pacers, K-Cars and Yugos. These cars are a part of history, and once they’re gone, they’re gone, which is really a shame.”
The Diamond Bar-based Specialty Equipment Market Association, a trade group representing 7,358 companies that sell aftermarket auto parts worldwide, opposed Cash for Clunkers when it was proposed earlier this year, saying it wanted to “work with lawmakers to find ways to minimize the harm a motor vehicle scrappage program will needlessly impose on thousands of independent repair shops, auto restorers, customizers and their customers across the country.”
In the end, SEMA did get a concession from the government: The clunkers program excludes vehicles built before 1984.
On Thursday, advocacy groups weighed in with more concerns about Cash for Clunkers.
Sacramento-based Consumers for Auto Reliability and Safety joined other U.S consumer groups calling on the U.S. Department of Transportation to crack down on dealerships allegedly pressuring consumers into questionable terms in clunker deals. They said this included getting customers to sign agreements forcing them to repay their federal rebate if the dealership is not reimbursed for a sale.
Rosemary Shahan, president of Consumers for Auto Reliability and Safety, called this “a form of bait and switch.”
Environmental groups also expressed alarm that some of the top sellers among vehicles purchased via government subsidies include large sport-utility vehicles and pickup trucks – flying in the face of the Obama administration’s goal of getting more fuel-efficient cars on the road.
Edmunds.com, the Santa Monica-based auto information site, noted that one of the top new vehicles being purchased through the clunkers program is the Ford F-150 pickup, which gets less than 20 miles per gallon.
Other auto industry insiders blame Cash for Clunkers for a rise in new car prices, because the sizable rebate and increased consumer demand give dealers little motivation to sweeten a deal.
“Since the program launched, we’ve seen that shoppers are getting less of a discount off sticker price for new cars,” said Michelle Krebs, an analyst with Edmunds.com.
“In some cases, they are choosing less expensive trim levels and option packages than had been typical in recent months, but paying more for them.”
The Bethesda, Md.-based Car Care Council believes the buying rush prompted by Cash for Clunkers caused consumers to lose sight of the value of a well-maintained vehicle.
“The fact is that Cash for Clunkers is only going to benefit a very small fraction of American consumers,” said Rich White, the council’s executive director.
“It’s important to remind motorists that those who treat their vehicles as valuable investments and commit to regular vehicle maintenance end up saving a lot of money.”
Citing data from Runzheimer International, a Waterford, Wis.-based management consulting firm specializing in transportation, White said consumers will save $10,000 over a four-year period by keeping an existing car rather than buying a new one.
“Even with the Cash for Clunkers incentive, maintaining your current vehicle is the best economic option,” White said.

A vacancy sign is alight at a motel in South Lake Tahoe.SOUTH LAKE TAHOE – At first glance, you wouldn’t think the economy had even ruffled the serene waters of Lake Tahoe. On a recent weekday – even an oddly overcast August day when hail pelted the lake – hordes of families flitted in and out of the shops at Heavenly Mountain Resort. A crowd of tourists exited the Tahoe Queen cruise boat, fanning out onto the marina.
But despite appearances, Tahoe hasn’t been immune to the tourism industry’s turbulence, which has bumped U.S. travel spending down 12 percent through June this year, according to the U.S. Travel Association.
At Tahoe, tourists are coming, but staying for shorter trips. With an eye on every dollar, they’re choosing fewer pricey entertainments and less expensive meals. While hotel bookings are down, campgrounds are teeming.
Tourism officials and local business owners say the recession has left a decided crimp in this summer’s revenue. The hotel occupancy rate in South Lake Tahoe was 47.1 percent in June, down nearly 13 percent from June 2008, according to the Lake Tahoe Visitors Authority.
Even the Reno-Tahoe International Airport is seeing a decrease in visitors. Through June this year, the airport’s passenger count was down 19.4 percent from 2008.
Lake Tahoe is simply reflecting the economy’s struggles.
“People are waiting to see whether or not they have a job, then deciding whether or not to travel,” said Tahoe tourism consultant Carl Ribaudo.
He and other tourism officials have also noticed a hike in “drive market” travelers – those who are vacationing at destinations within driving distance of home.
Take Bryan Backstrom of Riverside, who said his family typically takes summer vacations to Mexico or elsewhere. This year, it’s Tahoe.
“We’re trying to be thrifty on expenditures, so we vacationed a little bit closer to home this year,” said Backstrom, patiently waiting for his wife to finish shopping at the Heavenly Mountain Resort’s shopping village.
“We’re definitely a value proposition for travel,” said Carol Chaplin, director of the Lake Tahoe Visitors Authority on the south shore.
In 2006, overnight visitors spent an average of $108 per day on the south shore, compared with $233 per day in Napa, according to the respective tourism bureaus.
That may help explain why Tahoe’s hotel occupancy rates are down less drastically than more expensive vacation destinations.
Another sign of the times: more last-minute hotel bookings.
At the Embassy Suites Lake Tahoe Hotel and Ski Resort, between 50 and 75 hotel rooms occupied on a Saturday night are booked that same day.
“It’s highly unusual that we get that many room bookings that same day,” said spokesman Bill Cottrill. He said visitors usually reserve hotel rooms more than three weeks in advance.
Unlike past summers, vacationers are coming up for shorter visits, usually opting to stay just one or two weekend nights, said Chaplin.
“The weekends are always busy, but the weeks have been much slower,” said cafe employee Gosia Pogoda, who has spent several years working in the south shore marina area.
Fancy restaurants and pricey recreation seem to be hit the hardest.
Nepheles Restaurant, a small fine-dining institution in South Lake Tahoe, has had a rough summer.
“We’ll have a great weekend, but then things will slow right back down,” said owner Tim Halloran, who opened Nepheles 32 years ago. “We’re seeing a less ’spendy’ crowd,” he said, noting that revenue is down 25 percent from last year.
Over at Tahoe Sport Fishing, employee Nathan Owen said the company’s revenue is down about 25 percent this summer.
“There’s just not as many people here, so businesses are getting shut down,” he said. “The Fourth of July fireworks were even cut short this year.”
To cope, businesses have been slashing prices, advertising deals and reinventing their products.
To enliven its cruises, the Tahoe Queen hired local actors to portray historical figures such as writer Mark Twain and Julia Bulette, a Virginia City prostitute.
Tom Turner, owner of three restaurants around the lake, said he’s lowered prices by about 10 percent at Riva in South Lake Tahoe and Gar Woods on the north shore.
“People are ordering less expensive items, and we’re not selling as much wine by the bottle,” he said.
Even some wedding chapels report a slowdown. Chapel of the Bells, the oldest wedding chapel in Tahoe, has seen business decline 15 percent to 20 percent in the past two years, said its owner, the Rev. Robert McIntyre. McIntyre is offering several budget-friendly enticements, including a $25 “recession special” wedding photo session.
Not everyone’s suffering. The recession has proved a boon to at least one Tahoe sector: campgrounds and RV parks.
Families have been saving money by camping instead of renting hotel rooms and keeping busy with free activities such as hiking, biking and river rafting, said Steve Teshara, who heads both the North Lake Tahoe Resort Association and the North Lake Tahoe Chamber of Commerce in Tahoe City.
At Zephyr Cove RV Park on the lake’s Nevada side, every weekend’s been full, with bookings up 20 percent from last year, said spokesman Austin Sass.
At South Lake Tahoe’s KOA campground, weekend reservations have been maxed out since July 4.
“Business has been good,” said manager Shawn Poulen.

At Heavenly Village Shopping Center, Theresa Mamales photographs Joey Mamales and daughter Chloe on a family vacation.

Simon Baker stars in “The Mentalist,” assisting a fictional California Bureau of Investigation and an agent played by Robin Tunney.Sacramento is getting a swanky new riverfront restaurant.
It opens today – for one day only.
The outdoor cafe is the creation of a Hollywood crew that’s here shooting scenes for CBS’ “The Mentalist” and transforming an eighth-floor balcony of West Sac’s ziggurat building into a restaurant.
The local filming is a first for “The Mentalist,” even though the hit show is cinematically set here and features a supposed Sacramento-based crime-fighting organization.
The film crew’s base camp will be set up today outside the pyramid-like building now occupied by the state’s Department of General Services.
Cast and crew will take a freight elevator from the basement to the eighth floor, minimizing disruptions for employees, says DGS spokesman Eric Lamoureux.
“For 99.9 percent of our people, it will be business as usual,” he says.
But that’s not to say employees aren’t excited about Hollywood’s arrival. Lamoureux says women seem especially interested in catching a glimpse of “Mentalist” star Simon Baker.
“If you ask most females about him, they’ll give you a reaction,” he says.
Hollywood north?
Credit for luring “The Mentalist” crew to town goes to film commissioner Lucy Steffens of the Sacramento Convention and Visitors Bureau, who’s been lobbying for local shooting since the show debuted last year and became a surprise hit.
During the show’s first season, “they didn’t have the budget” to leave Los Angeles, she says.
But she pitched the show’s producers and directors again earlier this summer at an L.A. meeting. That led to three execs – including director Chris Long – spending a day here with Steffens scouting local sites.
More than 100 cast and crew members will be in West Sac today and at the state Capitol on Friday. They will generate a large – but as-yet-undetermined – boost for the local economy.
But Steffens wants even more.
“My hope,” she says, “is they do an entire episode (in Sacramento), with more locations.”
Growth spurt
Add Ross Stores to the short list of national companies expanding their Sacramento operations during tough times.
The Pleasanton-based clothing discounter is opening two new outlets next year, both in aging centers receiving long-needed face-lifts.
The most recent deal: a lease for 27,000 square feet of renovated space in the Rancho Cordova Town Center (on Olson Drive near Highway 50) where a new Target superstore is nearing completion.
The new Ross Dress For Less outlet will open early next year, replacing an existing store nearby on Zinfandel Drive, says Ken Noack Jr., a Grubb & Ellis broker who represented property owner Pacific Castle of Southern California.
About the same time, Ross will open a 30,000-square-foot store in a shopping center at Watt Avenue and Elkhorn Boulevard.
Remodeling work begins next week on the site, a former Ralphs supermarket building, says project developer Mark Engstrom. The Sacramento County Board of Supervisors voted Tuesday to approve a redevelopment agency loan for part of the project’s $7 million cost.
Noack says the retail market remains depressed. But “we’re starting to see some movement,” he says, partly because discounters such as Ross are taking advantage of rock-bottom lease rates.
Other retailers in expansion mode locally include Kohl’s and Forever 21.
Stay tuned for more: Noack reports that some large Southern California retailers have begun scouting local sites.

Film commissioner Lucy Steffens wants an entire episode of ‘The Mentalist’ filmed locally.

California’s economic woes – and those of its trading partners – continue to slow the amount of goods flowing out of Golden State ports.
California merchandise exports were down sharply for the eighth straight month in June, according to the University of California Center Sacramento. Exports were valued at $9.98 billion, down 24.9 percent from $13.29 billion in June 2008.
The center based its analysis on data released Wednesday by the U.S. Department of Commerce. The national export numbers also trailed last year’s results, but some trade experts pointed to monthly increases in both exports and imports as a positive sign for the U.S. economy.
In its analysis of California trade, the UC center noted that the state’s June exports increased by $479 million over May totals. However, that sliver of good news did little to boost analysts’ take on the state’s big picture.
“The fact that June’s export numbers were higher than May’s does not signal an imminent recovery in our foreign trade,” said Jock O’Connell, the UC center’s international trade and economics adviser. “Historically, June’s exports have typically been higher than May’s, and these were the lowest California export figures for the month of June since 2005,” O’Connell said.
Manufactured exports out of California fell by 28.8 percent in June, while agricultural goods and other non-manufactured exports dipped by 23.6 percent. Re-exports of goods previously imported into the state were off by 10.3 percent.
The UC center said California’s year-to-date exports of $56.3 billion are down 23 percent from $73.2 billion in the 2008 January-to-June period.
O’Connell said “exports are lagging economic indicators” because they typically reflect orders placed months in advance.
He said recent indications of an improving U.S. economy are unlikely to produce a dramatic change in California trade anytime soon.
“The recession is easing off, and things are less worse than they were last month,” he said. “But there’s no expectation of robust recovery. Any recovery we have is going to be a very modest, delicate and fragile recovery.”
The amount of goods arriving in California’s ports was also down about a third for the year.
The UC center said the value of foreign goods entering the United States through California in June was $20.8 billion, a 33.4 percent decrease from $31.2 billion last year.
State-specific imports are not broken down, because some goods entering California are bound for other states throughout the nation. Consequently, exports of California-produced goods are considered the key indicator of Golden State trade.
Nationwide, the Commerce Department said U.S. exports rose 2 percent to $125.8 billion in the May-to-June period. But O’Connell said the year-over-year picture is more negative, with U.S. exports down 24.7 percent for the first half of 2009.
National imports, meanwhile, rose for the first time in 11 months. The Commerce Department said U.S. imports were up 2.3 percent compared with May, to $152.8 billion.
The Associated Press reported that the first back-to-back gains for exports in a year were especially good news for America’s manufacturing sector, as U.S. firms benefited from higher shipments of semiconductors, aircraft and telecommunications equipment.
The Commerce Department said the U.S. trade deficit widened 4 percent to $27 billion, from May’s $26 billion deficit. The May imbalance was the lowest deficit in nearly a decade.
AP quoted experts saying that gains in U.S. exports and imports were indicators that the recession is ending.
But analysts also warned that recovery likely will widen the trade gap, because a rebounding U.S. economy is projected to grow faster than the global economy. Americans’ rising purchases of foreign goods could boost the U.S. trade deficit, according to AP reports.
“The economic rebound is starting,” said Joel Naroff, chief economist at Naroff Economic Advisors. “This is likely to be the beginning of the end for the narrowing of the trade deficit.”
AP said the politically sensitive trade deficit with China increased 5.4 percent to $18.4 billion in June, the highest level since January. But for the year, that deficit is running 13.1 percent below last year’s record pace.

Get ready for another round of workers’ compensation insurance premium increases next January.
An influential group controlled by the insurance industry Wednesday recommended a 22.8 percent rate increase. The Workers’ Compensation Insurance Rating Bureau of California, in arguing for the higher rates, said rising medical costs are largely the reason.
The findings are advisory but generally set the pattern for the industry. Insurers raised rates nearly 10 percent on average in July after the bureau called for a 23.7 percent increase. Rates generally are set twice a year, in January and July.
Workers’ comp is a hot-button issue for many employers and is often blamed for the state’s reputation as an expensive place to do business.
Backlash against sky-high premiums prompted the Legislature to overhaul the system twice, in 2003 and 2004, and rates are about 60 percent lower than in 2003. But as rates have begun to creep back up, economic development officials from states such as Nevada have been pointing to workers’ comp costs in their efforts to lure companies from California.
– Dale Kasler

The federal government’s Cash for Clunkers car program apparently prompted record numbers of consumers to visit Kelley Blue Book’s online site.
Kelley, the longtime auto-pricing bible and operator of a popular car information site at www.kbb.com, said it had a record 649,000 visits to its Web site on July 27, the day the federal clunker program started. On Aug. 3, Kelley said, that record was broken when 658,000 visited its site.
For all of July, Kelley recorded 15.9 million visits to its site, an all-time monthly record and a 20 percent increase over online traffic reported in July last year.
– Mark Glover

FILE - In this Aug. 28, 2008 file photo, a longshoreman readies a container for shipment at the APL Terminal at the Port of Los Angeles. The U.S. trade deficit edged up slightly in June as imports rose for the first time in 11 months, another sign that the worst recession since World War II is beginning to loosen its grip on the economy.California exports were sharply down for the eighth straight month in June as the state’s struggling economy and fiscal problems among trading partners continued to put the brakes on trade.
In June, merchandise exports from the Golden State were valued at $9.98 billion, down 24.9 percent from their June 2008 level, according to the University of California Center Sacramento. The center based its analysis on data released today by the U.S. Department of Commerce. The UC center analysis noted, however, that California’s June exports increased by $479 million over May totals.
Manufactured exports out of California fell by 28.8 percent in June, while agricultural goods and other non-manufactured exports shrank by 23.6 percent. Re-exports of goods previously imported into the state were off by 10.3 percent.
The UC center said California’s year-to-date exports of $56.3 billion are down 23 percent from $73.2 billion in the 2008 January-to-June period.
The Commerce Department said U.S. exports were off by 24.7 percent in the first half of this year.
California import figures likewise were dismal. The UC center said the value of foreign goods entering the United States through California dropped by 33.4 percent in June compared with 2008.
State-specific imports are not broken down because some goods entering California are bound for other states throughout the nation. Consequently, exports of California-produced goods are considered the key indicator of Golden State trade.

Cammie Maciel and her daughter, 4-month-old Alysah, are welcome at the Frank Zaccari Insurance Agency in Elk Grove, where she is able to pump breast milk “I’m so grateful for it. It’s why I continue to work as hard as I do,” Maciel said.Cammie Maciel jokes that her 4-month-old daughter is her company’s youngest employee.
“She works very hard,” Maciel said with a laugh. So does Maciel, an insurance agent at Frank Zaccari Insurance Agency in Elk Grove. That’s why the Elk Grove mother is relieved to be able to pump breast milk for Alysah on the job.
“I’m so grateful for it. It’s why I continue to work as hard as I do,” Maciel said. “For Alysah to see my face, that bond is so important, and I’m still able to provide for my family, which is huge.”
Zaccari Insurance is one of six local employers that will be honored as mother-baby friendly workplaces by the Breastfeeding Coalition of Greater Sacramento in ceremonies noon Thursday at the state Capitol.
Other local honorees include Carl’s Jr. restaurants, the Child Abuse Prevention Council of Sacramento, Elk Grove Unified School District, UC Davis Medical Center and the state Franchise Tax Board.
The California Task Force on Youth and Workplace Wellness will also award four companies with statewide honors at the Thursday ceremony.
Zaccari’s workplace has long been friendly to mothers with children. Maciel, a mother of four, also brings her three school-age children to work on occasion. And fellow agent Isabel Zamudio, the only other employee, sometimes brings her 8-year-old daughter.
The children are made to feel welcome. A tiny kitchen is packed with snacks and juices and a spare office has a television, DVDs and a computer. When needed, the same room becomes “Baby Central,” with a bassinet, toys and privacy for mother and baby.
Zaccari said providing time and space for Maciel makes sense.
“She’s a very good employee and day care for a newborn is almost prohibitive,” Zaccari said. “She can come to work, and I get use of a very good employee. It’s not that hard to take care of people who take care of you.”
That sentiment is what drives the awards, showing that a workplace friendly to breast-feeding mothers is good for the employer, the employee and the business.
“Breast-feeding helps families save more money. It helps the employer save money, and employees don’t have to miss as much work. The family and employee win – it makes sense all the way,” said Jeannette Newman-Velez, a coordinator for the state Women, Infants and Children Program and an organizer of the local award program.
Women with children are the fastest growing segment of the work force, reports the U.S. Bureau of Labor Statistics. Nearly 55 percent of women with children under the age of 3 are employed.
“We’re trying to put (breast-feeding) in a positive light,” Newman-Velez said. “A mother shouldn’t have to choose between the health of their baby and their job.”
A 2002 state law requiring employers to provide break time and make an effort to provide a private space for employees to pump breast milk helps ensure that mothers don’t have to make that choice.
“There were a lot of pioneers who raised awareness. Employers saw the advantage and that encouraged moms to go the extra mile,” said Karen Dietzen, lactation program coordinator at UC Davis Medical Center. The hospital provides four rooms or “lactation stations” that see as many as 1,000 usages a month, Dietzen said.
Still, new mother Adrienne Bockskopf of Sacramento, hired at the Franchise Tax Board in March, was worried whether she would be able to nurse her newborn or pump milk at her new job.
But the board’s Rancho Cordova campus had stations throughout, including near her workstation.
“It saves a lot of money, and it’s good for your work,” Bockskopf said. “They’re helping you make your baby healthy.”

Kaiser Permanente eliminated 1,850 jobs in California on Tuesday, serving notice that the recession is sickening the health care industry at long last.
About 1,200 jobs will vanish in Northern California, although the actual number of layoffs could be reduced by a buyout program. The job losses in Sacramento could be in the hundreds, said spokesman Pete Janhunen of SEIU United Healthcare Workers-West, although he said that figure could change significantly.
Kaiser wouldn’t provide details on where the jobs are being cut, but said the numbers will amount to about 2 percent of its Northern California work force.
Kaiser employs about 8,000 workers in the Sacramento area.
The news came a week after Kaiser said second-quarter profits jumped 75 percent, to $620 million. But income from day-to-day operations actually fell by 18 percent. The Oakland health care giant warned that its subscriber numbers are falling – and it’s bracing for a decline in Medicare reimbursements from the U.S. government, as well as the impact of proposed national health care reform.
Job cuts have hit the health care sector in recent months, with about 100 or so jobs apiece being trimmed at Sutter Health and Health Net Inc. in the Sacramento area. Kaiser itself cut 700 data-center jobs in California earlier this year. The state lost 1,900 health care jobs in June, or 0.1 percent of the total.
But the sector has still recorded a net gain of nearly 20,000 jobs in the past year – and has been largely immune to the big job losses that have hit the rest of the economy. It is just about the only major industry that’s added jobs during the recession.
That might be changing. As employees in other industries get laid off and lose employer-paid health insurance, that means fewer subscribers for Kaiser, said Joanne Spetz, a health care economist at the University of California.
Kaiser said its subscriber rolls dropped by 36,000 in the first half of the year, to about 8.6 million.
“They have fewer enrollees, they have fewer people to take care of, they don’t need as many workers to take care of people,” Spetz said.
Kaiser spokesman Marc Brown said the cutbacks will mainly affect housekeepers, pharmacy technical clerks, medical transcription secretaries, information-management clerks, and business office employees.
“These actions will not result in reductions in the level of service and quality care we provide our members and patients,” senior vice president Gay Westfall said in a prepared statement.
Westfall said the latest cutbacks come in addition to earlier moves, including delays in merit pay raises for nonunion workers and a scaling back of capital spending. Brown said a new hospital in Vacaville, set to open last spring, has been delayed until October.
In announcing the job eliminations, Westfall also cited national health care reform, but did not elaborate on Kaiser’s specific concerns about the plan still taking shape in Washington. Spetz said Kaiser might be worried about competition from a government-sponsored health insurance plan, a key element of President Barack Obama’s proposal.
“They might think they might lose some market share to that,” Spetz said. “But health reform has not really been defined. … Nobody really knows what health reform is.”
Because of a recently negotiated voluntary buyout plan, it’s possible there will be few, if any, forced layoffs if enough workers agree to buyouts, Janhunen said. Still, he said the union is frustrated that positions will be eliminated.
“They made $620 million last quarter,” he said.