Behavioral Health Providers Struggle To Make Ends Meet


When Charles River Hospital in Wellesley announced it was closing earlier this month, and Lowell General Hospital began shutting down its psychiatric wards, the reaction in the behavioral health community was one of frustration and further anxiety. One emotion not elicited was surprise.

That’s because the climate for providing behavioral health services has become increasingly challenging, and many facilities have decided to simply give up the fight.
And more could be taking that route in the months and years to come, said David Matteodo, executive director of the Mass. Assoc. of Behavioral Health Systems.

If that happens, then an already vicious cycle — one in which increasingly fewer facilities are called upon to meet steadily increasing demand in a system that doesn’t properly reimburse those providing the care — will accelerate.

Mattedo said a recent survey of behavioral health providers revealed that more than two-thirds were losing money. Those who somehow managed to break even or finish in the black will find it more difficult to do so in the year ahead because reimbursement rates — which were increased last year for the first time in nearly a decade — are not likely to improve.

Meanwhile, the cost of providing care and recruiting and retaining qualified professionals continues to climb.

“It’s simply a difficult environment to operate in,” said Robert Simpson, chief operating officer for Sisters of Providence Behavioral Health. The network, which operates Providence Hospital — converted from an acute care hospital to a behavioral health facility in 1996 — and also Brightside for Families and Children and other programs, provides living proof that filling beds certainly isn’t enough to be successful in today’s health care climate.

The various facilities at Providence, for example, have been running at more than 90{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of capacity for some time, said Jonathan Chasen, M.D., medical director of Sisters of Providence Behavioral Healthcare, but the network has still lost money.

That’s because Medicaid and Medicare are not reimbursing providers at close to the cost of providing care, and private payers have been just as bad, if not worse.

Meanwhile, an already difficult situation was made even more so by the events of Sept. 11, said Margaret Barry, vice president of Behavioral Health at Holyoke Hospital. The 9/11 acts of terrorism and the subsequent anthrax attacks and rising anxiety have made many people’s psychiatric problems even more acute.
And the real impact of Sept. 11 may not manifest itself for months or even years to come, she said.

In this environment, providers are simply trying to find ways to survive, said Simpson, while continually lobbying state and federal officials for more fiscal relief.

Head Games

Matteodo says the closings at Charles River and Lowell provide ample evidence of a system that is dysfunctional to say the least. The inadequate reimbursement rates have made it difficult for both private stand-alone facilities such as Charles River and psychiatric units attached to acute care hospitals, such as Lowell’s, to make ends meet.

In the latter case, he explained, many hospitals — already strapped by generally poor reimbursement rates across the board — are finding that they simply cannot absorb mounting losses in their behavioral health units.

“There is enormous pressure on every facility,” he told The Healthcare News. “And when more beds come off line, that pressure increases because access will be tighter. Everyone’s asking, ‘how will those beds be absorbed?’”

Matteodo prefaced all of his remarks about reimbursement rates by saying that as bad as things might be, they were much worse only a year ago. The state recently pumped an additional $6.3 million (an 11{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} boost) into the Medicaid reimbursement pot, and Matteodo is certainly grateful. However, that was the first increase for most facilities in eight years, and there remains at least a 15{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} gap between the cost of care and what the state provides through the Mass. Behavioral Health Partnership, the entity created about a decade ago to manage behavioral health services in the Commonwealth.

Nearly one-third of the patients cared for at most facilities are covered by the partnership, said Matteodo, stressing the importance of proper funding from that agency.

Asked to quantify the gap, Matteodo said the cost for treating a patient in a behavioral health unit varies greatly but averages about $625 per day (more for children, because the ratio of staff to patients is higher). However, the state is reimbursing for $557 per day, and this rate is much lower in some cases, however, especially for children.

“We know our costs are going up, and we would like to get some kind of inflationary increase,” he said, “but we’ve been told it’s not forthcoming.”

The financial stress and strain is particularly acute when it comes to providing services to children, said Simpson, who noted that the SPHS has the only children’s unit west of Boston. Referring to the phenomenon known as “stuck” kids, he said there are more than 100 children in psychiatric wards every day who don’t need to be there but have nowhere else to go because residential programs are full.

And the reimbursement rates for many of these stuck kids is only about $400 per day, said Matteodo, adding quickly that the number was much lower until an intense lobbying effort brought some relief from the Legislature.

Still, the “stuck kids” phenomenon represents the most striking example of how injust the reimbursement policies are. “It’s not the hospitals’ fault that these kids have no place to go,” said Matteodo, “but they’re the ones who are being penalized.”

Chasen concurred. “When we were expanding our children’s beds, the state asked us to step to the plate,” he said. “We did, but now we’re being penalized like everyone else … that’s a funny thank-you to get.”

And while the state’s reimbursement record has been historically poor, private payers have been no better, especially for children’s services, said Simpson. Often, private payers, using vague or unrealistic models, will arbitrarily decide how many days or weeks or care to pay for, he explained, adding that the stay is often much longer than the payer thinks it should be.

There are appeal processes, he said, but these are time-consuming and often unsuccessful. “The burden is placed completely on the provider,” he said.

Both Chasen and Simpson said that if theirs was a private, stand-alone facility, it would likely have chosen the route taken by Charles River some time ago. However, as part of a Catholic health system with a mission to serve the needy, the SPHS behavioral health network plugs on.

State of Anxiety

The disparity between the cost of care and reimbursement rates is coming at a time when demand for psychiatric services continues to escalate, said Chasen. The reasons for this phenomenon vary, but leading contributors are an aging population, fewer stigmas about psychiatric problems, and even direct-to-consumer marketing of many new drugs.

And the events of Sept. 11 have put even more stress on the system, said Barry.

“The attacks have had a definite on people, especially those who had a pre-existing psychiatric condition,” she said. “For many people, their sense of safety and security has been destroyed.”

The days and weeks after the attacks added to the general anxiety felt by many people, she said, noting that the anthrax attacks and warnings about more terrorist acts made watching the nightly news a difficult exercise.

“It’s been like a Chinese water torture for a lot of people … the anxiety just keeps building, and there’s no way to release it,” she said, adding that the Oklahoma City bombing in 1995 showed that attacks of this nature often bring behavioral health problems, including drug and alcohol abuse, depression, and other ailments, that don’t manifest themselves for many years, she said.

Barry said the Sept. 11 attacks have led to everything from soaring alcohol sales in New York to a recognized increase locally in the number of cracked teeth resulting from people grinding their teeth at night.

The current state of affairs in the behavioral health community certainly has the administrators of local facilities gnashing their teeth. They continue to plead their case for better reimbursement rates in Boston and Washington, but the question remains: is anyone listening?

In today’s ultra-challenging health care environment, many systems have adopted the attitude that “if there’s no margin, there’s no mission,” Simpson concluded. “But the sisters who started the SPHS have always said that if there’s a mission, there will be a margin — somehow.”

The current state of affairs in behavioral health is certainly testing that theory, he said.