PORTLAND, Ore. (KOIN) — Portland’s FamilyCare Heath, a non-profit that serves 115,000 people covered by the Oregon Health Plan and Medicaid, is closing down after a decision made by its board on Thursday night.

“We are not able to sign our 2018 (Coordinated Care Organization) contract because the state has offered insufficient rates,” a spokesperson for FamilyCare Health told KOIN 6 News. “This would make us bankrupt before the end of 2018.”

The spokesperson confirmed that 250 employees will be laid off starting on Jan. 5.

FamilyCare Health announced on Feb. 27 that it filed a lawsuit against Oregon Health Authority in Marion County, calling it “a last resort.” FamilyCare Health cited an inequitable and actuarially unsound rate-setting process,” as the reason for the lawsuit.

Jeff Heatherington, the President and CEO of FamilyCare Health, released this statement at the time:

It is with deep reluctance that we move forward with this new lawsuit against OHA. We have been strong supporters of the Oregon Health Plan (OHP) since its creation and we continue to believe in the program. We have worked diligently to engage the OHA in a productive dialogue around rate development, only to be met with delay tactics, fuzzy accounting, and outright refusals to provide the data used to calculate our rates. Today we are compelled to act in order to protect our organization and the Oregon Medicaid recipients who rely on us.”

Heatherington said the problems with the state started in 2015. He said the rates the state gives the company are costing millions of dollars and if they signed on for another year, they’d lose about $95 million.

A spokesman told KOIN 6 News said they had been in negotiations with OHA up until Friday.

“It’s important for us to do everything we can to support members, providers, and employees during this transition,” the spokesman said. “The state has put us in an extremely difficult situation. We’ve had the lowest plan for the last three years. We just can’t sign a contact that would make us bankrupt. No business can.”

The Oregon Health Authority provided the following statement about the closure:

OHA is committed to ensuring all Oregon Health Plan members have access to the health care they need. The Oregon Health Authority (OHA) and Family Care continue to work together to address Family Care’s issues and enable Family Care to remain in the market in 2018. Today, Family Care contacted leadership at OHA and asked to begin discussions about potential transition planning for the Oregon Health Plan members Family Care serves. OHA and Family Care are now working together to initiate necessary transition planning while discussions continue to find a solution to Family Care’s issues. We will work with various partners who can help in this effort. No matter the outcome, Family Care members will continue to have access to all their benefits under the Oregon Health Plan.”

Doctors like licensed professional counselor Dr. Karen Hixon fear what the future holds for clients in the wake of this shutdown.

“A therapeutic relationship is the most important thing in mental health counseling,” she said. “We work with the most vulnerable folks.”