KHI News Service

Mental health system close to collapse, center directors say

By Dave Ranney | January 25, 2010

Last year, nine of the state’s 27 community mental health centers spent more money than they took in.

A new survey shows that even more of the centers are now facing potential money troubles.

“They’re really struggling,” said Mike Hammond, executive director of the Association of Community Health Centers of Kansas. “In terms of profitability — that is, revenues off-setting costs — three-fourths of them are marginal at best, and it’s getting worse.”

Hammond said the survey showed that two-thirds of the centers have less than three months’ operating expenses in reserves.

“The national standard is to have six months in reserves,” he said.

More layoffs

Earlier this month, Pawnee Mental Health Services, the Manhattan-based center that serves 10 counties, laid off 18 employees and wrote off any hope for filling 16 long-vacant positions.

“Three years ago, we had a $3.1 million budget,” said Robbin Cole, the center’s executive director. “Today, we’re down to $1.9 million.”

Centers cut staff and services

A third of MH centers are operating in the red

Cut threatens nursing facilities for mentally ill

Cole said she had to lay off 31 full- and part-time employees in Februarys 2009.

“In the last three years, we’ve gone from 320 employees to about 250,” she said.

Since Thanksgiving, Bert Nash Community Mental Health Center in Lawrence has eliminated eight workers. Others are taking cuts in pay or benefits.

“Our executive-level staff is working a day a month without pay,” said Executive Director Dave Johnson. “We’re not calling it a furlough because nobody’s getting a day off. All other management staff has been furloughed a day a month, and all non-management staff have had a week’s vacation taken away.”

Johnson said Bert Nash and most other mental health centers are providing fewer services and insisting that uninsured patients pay in advance.

In the past, the centers served all comers regardless of their ability to pay. Now, those who can’t pay are likely to be put on a waiting list unless they are severely ill.

That’s not always an easy call to make and a person mildly unstable one day can become dramatically so the next.

“My greatest fear is that something tragic is going to happen,” Johnson said. “I pray every day that it doesn’t.”

Troubles started with budget cuts

Center directors say their troubles began two years ago when a recession-fueled drop in revenue prompted the Kansas Department of Social and Rehabilitation Services to propose — and legislators to adopt — funding cuts.

The lost money had bought services for people who were uninsured, generally the working poor who earned too much to qualify for Medicaid but not enough to afford private health insurance.

Initially, the community mental health centers had access to $31 million in state-funded grants. But after the cuts, support for the so-called mental health reform grants fell to $21.8 million.

Last year’s across-the-board cuts in state spending reduced the grants even more to $10.8 million.

“That’s a 65 percent reduction in mental health reform funding since 2008,” Hammond said. “Now, on top of that, we’ve been hit with a 10 percent cut in our Medicaid payments. The system can’t sustain cuts like this and continue functioning like it has. There’s no way. We’re at the breaking point.”

For legislators struggling to balance the budget, cutting the grants had a certain logic. Because the grants weren’t matched by federal dollars to begin with, no federal aid dollars were forfeited as the grants were reduced.

But the 10 percent cut in Medicaid reimbursements, which became effective Jan. 1, is expected to cost the centers another $9.4 million in the second half of fiscal 2010 and $19 million in fiscal 2011, which begins July 1.

Medicaid is a 30:70 blend of state and federal funds. So for every $3 reduction in state funding, the centers also give up $7 in federal support.

Hammond and others have asked legislators to rescind the Medicaid cut since it costs the centers more than twice what it saves the state.

So far, the cut remains in place.

Three funding streams

Generally, mental health centers rely on three funding streams: Medicaid, private insurance and sliding-scale payments from patients who are either uninsured or underinsured.

Center directors say the reduction in state-grant funding and the ever-increasing numbers of uninsured patients are turning the centers into Medicaid-dependent agencies.

To survive, they must focus operations on the poor — because that’s who Medicaid pays them to see — rather than the public at large.

Hammond said centers with higher percentages of Medicaid patients are now faring better than those with lower percentages because with Medicaid they are paid for their services.

“We’re doing OK — not great, but OK,” said Ron Denney, executive director at Four County Mental Health Center in Independence. The center’s percentage of Medicaid clientele is among the highest in the state.

According to center directors, the working poor and the uninsured are, more and more, left to fend for themselves.

Fewer hospital beds

That’s a major shift in state policy.

“What people seem to have forgotten is that back in 1990, the decision was made to serve people in the community rather than in an institution,” said Jim Carlin, executive director at the Southwest Guidance Center in Liberal. “We spent the next seven or eight years developing enough capacity in the community that we were able to close Topeka State Hospital and downsize the (state) hospitals in Osawatomie and Larned.

“It was a wonderful thing,” Young said, “there actually came to be a community-based network of services all across the state that was mandated to serve all those who needed services.”

In 1990, the state’s mental health system included more than 1,000 state hospital beds. Today, there are 360.

The arrangement worked, Carlin said, because the state grants helped underwrite the centers’ cost for serving those who couldn’t pay their bills.

Now that the grants are roughly one-third what they were three years ago, the system is close to collapse, he said. Those who don’t receive needed services will be at greater risk of hospitalization.

Stays in the state’s three hospitals for the mentally ill cost taxpayers considerably more than treating people in a community-based setting.

Despite the cuts in funding, the centers are required by state law to serve all adults with a severe and persistent mental illness, children with a serious emotional disturbance or anyone in crisis, which generally means they are a threat to themselves or others.

Offsetting losses

To offset their losses, several center directors said they’ve started requiring uninsured patients to either pay for services as they are received or be caught up on their bills before scheduling follow-up visits.

“Starting in February, we’re instituting a policy that says you have to pay your bill before we’ll reschedule you,” said David Elsbury, chief executive at the Kanza Mental Health and Guidance Center in Hiawatha. “We’ve never been that rigid before. We’ve also started a waiting list, which we’ve never done before.”

Elsbury said before the cuts he had 15 full- and part-time therapists. Today, he has nine.

“We had the staff to do whatever needed to be done,” he said. “Now we don’t. We’re still providing services but they may not be as often or as timely.”

Center directors said they’ve begged their legislators for relief.

“I’m told, ‘Oh, yes, I understand,’ and ‘What’s happening is really regrettable,’” Cole said. “But then the next thing I hear is, ‘but my constituents don’t want to pay more taxes.’

“It’s like they’re dealing with two different realities,” Cole said. “I’m not so sure they know what to do.”

Rep. Melvin Neufeld, R-Ingalls, said many legislators, in fact, do not.

“For the very first time, a lot people in this body (the Legislature) actually understand that the state is broke. That’s a new idea to most people. They’ve always thought there would be another trick they could use to spend money. But it’s not there,” Neufeld said. “So, now, what you’re seeing is people getting pretty much resigned to the fact that they’re just going to have to live with this, and they’re not looking for solutions.”

Neufeld said he and Rep. Bob Bethell, R-Alden, are close to introducing legislation aimed at restoring some of the Medicaid cut.

But not all legislators, he said, are paying attention.

“Given that education accounts for two-thirds of the budget and Medicaid is 19 percent of the budget, there’s way more priority put on education,” Neufeld said. “That’s what most people hear the most about. They tend to block the other stuff out.”

Sen. Dwayne Umbarger, R-Thayer, said he shares the center directors’ frustration.

“I’ll get in trouble for saying this, but from my perspective one of the things we’re dealing with is that we as legislators are paying more attention to the political ramifications of what we do rather than the social consequences,” he said. “I came to Topeka to identify problems and to take positive action to address them. I didn’t come here to run for re-election.”