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The Budget Motel on North Interstate Avenue looked like a godsend for about a dozen recently homeless Portlanders battling addiction and mental illness.
In September, case workers offered them free rooms with queen beds, private bathrooms, and regular housekeeping. For nearly three months, groceries have been delivered to their doors, and a bus arrived twice a week to take them to rehab.
It all seemed too good to be true. Turns out, it was.
The company bankrolling the program, a Portland mental health clinic called WiiCare, is imploding. When a WW reporter visited the motel on Dec. 6, the buses had long stopped arriving. Clients said they hadn’t received groceries for weeks. No one’s paying the hotel bill. Awful rumors spread quickly: Soon, everyone might be back out sleeping on concrete.
“I have no idea if they’re going to come tomorrow and say we have 24 hours,” says 37-year-old Clifford York, a Safeway employee who’s shed his heroin addiction but hasn’t been able to work enough hours to pay rent. “They could put us on the street right before Christmas—right as it gets cold.”
The source of the problem: WiiCare’s primary funder, the nonprofit CareOregon, has cut off its funding, citing the clinic’s enormous cost per client. In other words, the state’s largest Medicaid insurer says the year-old startup was charging the government too much money to care for some of Portland’s most afflicted citizens.
The decision has set up a potential legal battle between CareOregon and the upstart social services provider. WiiCare was attempting something new: recruiting the homeless into intensive behavioral health care treatment while housing them in residential neighborhoods and, as of late, hotel rooms. Now its founder says WiiCare is being targeted for trying to disrupt a broken system—one that, despite massive taxpayer investment, has left more and more Portlanders on the streets.
Who’s right? That may be up to a court to decide.
CareOregon says WiiCare “may be billing inappropriately,” and now, after a review by a fraud examiner, the insurer is demanding that the company return over $1.5 million—nearly all of the money WiiCare says it was paid. Claims were submitted under the wrong provider name or using incorrect billing codes, CareOregon said in an Nov. 5 “demand for repayment” letter.
Close readers of WW will remember WiiCare from an August cover story about neighbors’ concerns regarding a home in the far East Portland neighborhood of Wilkes where WiiCare was housing its clients (“Crowded House,” Aug. 7).
WiiCare CEO Faith Omar is indignant. She says CareOregon cut her off without notice and the cost will destroy her business. WiiCare has retained attorneys and furnished WW a copy of a formal appeal, dated Dec. 5, which says the clinic’s “coding practices…follow industry standards” and that the insurer’s demand is “exorbitant.”
If necessary, Omar says, she’ll sue.
Omar laid out her case in a two-hour interview with WW at her clinic. She says she has spent every dime CareOregon gave her in an effort to address Portland’s chronic homelessness—paying herself a salary of only $30,000.
By her telling, she did the dirty work Oregon needs most, achieved results, and was treated like an outlaw because insurers couldn’t swallow how much that work really costs.
“Everybody wants to be a critic,” she says. “Nobody wants to do something.”
Omar, 28, has long wanted to help the less fortunate. She grew up in Malawi, a landlocked African nation that is one of the world’s poorest, and came to Minnesota as a young girl. She moved to California, working first as a nursing assistant and then as a door-to-door insurance broker.
After traveling the West Coast, she founded WiiCare in the city where she felt the need was greatest: Portland.
Last year, Omar filed incorporation paperwork with the state and rented a clinic on Northeast Sandy Boulevard. She turned it into a mental health clinic and day center. Foosball and pool tables stood in the lobby and a big-screen TV hung on the wall. Meanwhile, one of her investors, Arizona businessman Whaill Abdallah, purchased homes across the metro area to house the clinic’s clients and employees.
Word spread, through flyers distributed downtown and by ensuing word of mouth. To help manage the rapid growth, Omar brought in a chief operating officer from Seattle whose previous work experience, according to LinkedIn, was as a customer service manager at crypto startups. The company hired 20 employees: outreach workers, case managers, therapists, peers, a security guard.
There were some hiccups. Neither of WiiCare’s homes were registered with the state or licensed with local authorities, oversights that were addressed after WW reported on neighbors’ complaints. And the clinic never shed its “provisional” status in CareOregon’s provider network.
But the model bore fruit, while it lasted. WiiCare has provided dozens of people with health care, housing, food, transportation, cellphones and even jobs. WiiCare currently houses 26 clients. Omar estimates the program has successfully rehabilitated 20 people off the streets.
In August, she held a black-tie ceremony for a half-dozen graduates of the program. Photos shared with WW show everyone cheesing in rented suits at a theater.
In September, WiiCare began moving clients into the Budget Motel, which had previously housed clients of Transition Projects and Central City Concern. “I felt like a human again,” one resident told WW.
Then, it all fell apart.
WiiCare’s big bills were attracting scrutiny. At its peak, Medicaid was paying the company nearly $450,000 a month, according to records from the Oregon Health Authority. (Omar disputes this.)
Still, Omar says she was billing up to $19,000 a month for her neediest clients.
That’s an eye-popping number, around double the cost of simply treating mental illness at an inpatient facility. But Omar says her program is actually saving taxpayers money by getting people off the streets for good.
A Portland study in 2013 found that Medicaid costs were cut in half, by around $1,000 a month per person, after homeless clients moved into supportive housing.
And that’s just one of many other costs associated with homelessness. A recent analysis found metro-area counties spent $531 million on anti-homelessness programs in fiscal year 2023 alone. A stay at Oregon State Hospital, the state’s premier psychiatric treatment facility where counties send their most difficult cases, costs upwards of $40,000 a month.
Still, by fall, CareOregon had had enough. It made its last payment to WiiCare in August and issued a formal “do not pay” notice in October, citing “cost and utilization patterns [that] were significantly higher than similar organizations.”
Ultimately, CareOregon told WiiCare to transition its clients to other providers.
That’s easier said than done. The capacity of the state’s behavioral health care system is notoriously limited. Omar says there are no other organizations providing the breadth of services she does.
When she called around seeking therapists, she was told there were waitlists.
In a statement to WW, CareOregon appeared unaware of the situation at the Budget Motel. “We have ongoing concerns about behavioral health services provided by WiiCare that may not have aligned with regulatory standards. We do not have any housing services requests from any members identified as being clients of WiiCare, and we are not aware of any impact on housing for our members,” it says.
Omar’s company is still limping along. WiiCare has let go or stopped paying most of its staff and mothballed its clinic. Some final paychecks have bounced. As WW interviewed clients in the Budget Motel parking lot, a WiiCare employee arrived to drop off eggs, bread and other staples from the trunk of a Honda Civic. He said he wasn’t being paid.
Neither is the hotel’s owner, Lucky Patel. He’s run the Budget Motel for 25 years and says he’s owed $35,000. (Omar says the total is much less, and that she will “keep those clients off the street the best she can.”)
Patel’s business is also struggling. His regular patrons have abandoned him after years of the motel housing the homeless. He’s behind on his property taxes and says he’s raiding his son’s college fund to keep the lights on.
He’s in talks with his attorney about his options. He doesn’t want to issue evictions unless he has to.
“I feel bad for the clients,” he says. “I don’t know where they’re going to go.”