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Hattie Larlham faces uncertain future, looking to be acquired

Akron Beacon Journal - 6/14/2017

June 14--Faced with increased financial pressures and a changing landscape for developmental disabilities care, Hattie Larlham is talking with other service providers about taking over the 56-year-old nonprofit.

The Twinsburg Township-based organization revealed the discussions Wednesday, saying it believes "being acquired ensures the best possible outcome for the people we serve."

The nonprofit also said it will no longer operate its Food Hub urban grocery store in Akron and will close its last remaining Hattie's Cafe in the city this summer to save money.

The difficult decisions come at the same time that CEO Wendy Pardee is leaving at the end of July and the group is in search of an interim leader.

The nonprofit declined to speculate what may happen to the Hattie Larlham name and operation in the future if it isn't acquired.

"We have some challenging issues ahead in the next few years that we will need to address and so right now, are focusing our energies on finding the right acquisition partner," Chief Development Officer Catherine Schwartz said. "We believe that being acquired ensures the best possible outcome for the people we serve."

The nonprofit declined to identify its potential suitors, saying confidentiality agreements are in place. But Schwartz noted that the organizations "have the financial capacity to take us on and [their] missions align with ours."

Hattie Larlham also couldn't say whether its brand will survive an acquisition.

"It's hard to answer that question since we are so early in the process and don't have a partner identified yet," Schwartz said. "However, the Hattie Larlham name is recognized as a well-respected provider of high quality, compassionate, gold standard care which may have value to an acquiring partner."

The talks are expected to continue for up to 18 months.

Hattie Larlham was founded by Hattie Lena Gadd Larlham, a nurse who believed that people with developmental disabilities deserve quality care. Today, the group, with an annual budget of about $50 million and 1,100 employees, serves more than 1,800 children and adults throughout Ohio.

It provides numerous programs that are expected to continue operating as usual, including Hattie's Doggie Daycare & Boarding, community employment, Constant Companions, community homes and in-home nursing care, and the Hattie Larlham Center for Children with Disabilities. Its programs in Central Ohio, including Community Connections, ADDVentures, Dahlberg Gibson Learning Center and others, also will continue.

But the Food Hub, located on Diagonal Street near the Akron Zoo, and cafe, located in the Canal Place complex downtown, are no longer part of the nonprofit's uncertain future.

The Food Hub will close Aug. 31, unless another group steps forward to buy or lease the operation, and the cafe will be shut down July 31. Hattie Larlham spent $1.2 million to open the Food Hub.

The grocery and cafe serve as training sites for the nonprofit, which said it will work with trainees at those locations to find other employment.

"It's important that everybody knows that while these have been wonderful projects for the individuals we serve and are wonderful programs, sometimes things ... are not as financially viable or as financially sustainable," Hattie Larlham board Chairman Mike Weinhardt said. "We have to be prudent knowing what we are facing with the requirements for our most vulnerable and medically fragile individuals."

The nonprofit said new government mandates -- including allowing people with developmental disabilities to have a private room if they wish and downsizing group homes -- require Hattie Larlham to devote more money to renovating their facilities.

Disabilities funding, though, has remained stagnant and new Hattie Larlham programs haven't been profitable.

The Food Hub opened a year ago to great fanfare, providing fresh fruits and vegetables to a food desert in the city. But the operation is expected to lose nearly $300,000 in its first full year.

Hattie Larlham will not renew its lease at Canal Place when it expires on July 31. The nonprofit declined to release the amount of the lease or to say if the cafe was losing money.

The Hattie's Cafe in the Summit County Courthouse closed in December.

Hattie Larlham operates as several entities, including a foundation.

Hattie Larlham Community Services reported $1.9 million losses in 2014 and 2015 in its Form 990 reports filed with the Internal Revenue Service.

In 2014, expenses also outpaced revenue by $1.2 million for the Hattie Larlham Center for Children with Disabilities in Mantua in Portage County. The 2015 report wasn't available.

Meanwhile, the Hattie Larlham Care Group reported revenue of $193,182 and $156,027 in 2014 and 2015, respectively.

Those were the most recent filings available. Hattie Larlham said its Form 990 for 2016 wasn't complete yet.

Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com. Follow him on Twitter at @armonrickABJ .

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