Holes in the safety net

The imminent closing of New Vistas-Mountain Laurel’s doors could leave thousands of local mental-health patients without immediate treatment options. The closure represents the latest fallout from a multiyear, multistage process that began in 2001, when state lawmakers decided to reinvent a flawed but operational health-care safety net that had for years been responsible for ensuring that North Carolinians at least had access to a base-line level of mental-health services.

The new laws streamlined management and privatized the provision of services. But in many areas the anticipated marketplace of competitive private enterprises failed to emerge. Private providers haven’t necessarily wanted to take on the less-profitable cases, leaving those patients to whatever nonprofit provider of last resort may be available.

In an eight-county area of Western North Carolina — Buncombe, Henderson, Madison, Mitchell, Polk, Rutherford, Transylvania and Yancey — that role has fallen to New Vistas, which is currently serving more than 10,000 clients.

Some say that New Vistas’ collapse may be only the tip of the iceberg. “Unfortunately, I think the closing of New Vistas-Mountain Laurel is a harbinger of things to come,” predicts David Cornwell, who founded the Hendersonville-based nonprofit advocacy group North Carolina Mental Hope. “It’s not the first nor will it likely be the last collapse of a ‘safety net’ provider around the state and only adds chaos to an already chaotic situation.”

Offering a more hopeful view, Dan Zorn, the founder of the for-profit care provider Families Together, said: “I hope that people hear there are multiple providers coming in to deal with the problem. In six or nine months we can have a much more robust system than before, if people just roll up their sleeves and go to work.”

Treatment issues aside, the potential financial consequences are considerable: Buncombe County officials have already earmarked about $500,000 to provide emergency services for unmedicated psychiatric patients who might fall through the cracks, according to county Social Services Director Mandy Stone. And the Western Highlands Network, the “local management entity” for the counties in question, has committed up to $1 million in additional emergency funding.

When the N.C. General Assembly decided to completely revamp the state’s mental-health system in October 2001, it defunded existing programs and ordered government agencies to switch from providing care to a management role.

Millions of dollars were chopped from state budgets as actual patient care was handed off to private companies that were expected to fill the resulting treatment void. Further forcing the issue, the state announced that it would downsize WNC’s Broughton Hospital from 550 beds to 250 in 2008 — part of a statewide cutback that will slash the total number of beds in public mental hospitals by half.

Even at the time, however, many mental-health professionals feared the new system would leave significant numbers of clients out in the cold. While those with health insurance, Medicaid or Medicare coverage could still obtain services, those without insurance or in need of long-term treatment for major mental illnesses might be left with nowhere to turn.

In the eight WNC counties, the Western Highlands Network replaced three separate agencies — Blue Ridge Mental Health, Rutherford-Polk Area Mental Health/Developmental Disabilities/Substance Abuse Services and Trend Community Mental Health Services.

Meanwhile, beginning in 2002, the Buncombe County Board of Commissioners cut its $600,000 annual payment to Blue Ridge Mental Health to $465,000. The county has continued that level of support for Western Highlands until the current fiscal year, when it boosted it back to $600,000.

Meanwhile, the federal government was headed in the same direction. The President’s New Freedom Commission on Mental Health, which presented its findings in July 2003, extolled the benefits of turning over treatment programs to local communities — with little mention of where the funding might come from. People formerly referred to as “clients” were now called “consumers,” and the commission confidently concluded that consumer choice would soon provide better treatment and better outcomes for all involved. Acting in the spirit of the report, Congress cut Medicaid funding for mental-health and other services — the first such cuts in the four decades since the program’s creation, according to National Public Radio.

Picking up the pieces

A 1996 analysis by the Washington, D.C.-based Economic Policy Institute, assessing the conditions necessary for privatization to work, stated, “Most agree that, perhaps most importantly, there needs to be a competitive marketplace — that is, a significant number of bidders to ensure competition and to provide back up should the chosen provider fail.”

Several years ago, Blue Ridge created a private nonprofit, New Vistas Behavioral Health Services (now New Vistas-Mountain Laurel), to provide “safety net” services not offered locally by other care providers. One New Vistas counselor (who requested anonymity, citing employment concerns) told Xpress: “Part of the new paradigm is that clients are supposed to be given a choice of providers. But high-risk clients are often turned down by their provider of choice, and New Vistas ended up with those expensive cases that no one else would touch.”

The creation of New Vistas was not without controversy. In September 2003, when Buncombe County’s Mental Health Advisory Task Force learned that Blue Ridge was poised to give New Vistas $342,650, the task force raised numerous objections. New Vistas, it noted, had already received $273,197 in seed money to provide “safety net” services that had not been well defined, and it was unclear what other providers were available and which services would be lacking in the new system. The task force also argued that public assets shouldn’t be disbursed without a public, competitive process and that there had been no “full and public accounting” of the assets of either Blue Ridge Mental Health or its nonprofit spinoffs.

In the end, facing a state-mandated dissolution, Blue Ridge simply ignored the task force’s objections, giving New Vistas an additional $842,650 and handing off management responsibility to Western Highlands. New Vistas became the safety-net provider for a handful of counties in 2003. And this past January, it merged with Mountain Laurel Community Services (which had operated in Henderson and Transylvania counties), creating a single, nonprofit mental-health safety-net operation for an eight-county area.

From the beginning, New Vistas was plagued by financial woes that stemmed at least in part from its mandate to serve unfunded or underfunded clients. The nonprofit lost $600,000 in its 2003-04 fiscal year and has struggled ever since. It has now reached the end of its financial rope and will terminate services Oct. 31.

According to CEO Will Callison, only the merger with Mountain Laurel saved the nonprofit from collapse back in January. Mountain Laurel’s physical assets provided collateral for loans to keep the operation afloat. However, Callison said the provider ran up losses of $1.5 million for the last fiscal year, almost all of them — about $1.4 million — in psychiatric services.

At a Sept. 20 press conference, Callison cited a series of other financial blows New Vistas has sustained over the past year. Changes in state requirements forced the nonprofit to provide in-home counseling instead of in its office, Medicaid fees were cut by 25 percent, and a very expensive computer system was installed. “There were too many financial hurdles placed in our path too quickly for us to absorb,” he said.

At the press conference, Xpress asked Callison and Western Highlands CEO Arthur Carder if the failure of the region’s safety net suggested a fundamental flaw in the privatization model.

Callison replied: “The safety net was really done away with. You’re stuck with a system that is privatized and not providing for certain services.” He added, “It’s a poor commentary on society that jails are becoming, by default, mental-health-care institutions.”

Carder, however, defended the approach, saying, “I think that a private system has the possibility of driving up the quality of care.”

Whatever the cause of New Vistas’ financial woes, its impending termination of services has thrown the local mental-health community into an uproar. Employees and clients alike face uncertain futures, and Western Highlands is scrambling to find new providers.

Worried

David Cornwell of North Carolina Mental Hope is pessimistic about the prospects for a speedy resolution. “There seems to be no clear vision from state leadership on how to get us out of the chaos that so-called reform has created,” he says. “We’re in an emergency, and until we demand our lawmakers treat it as such, nothing is likely to change. Things will just continue to spiral down.”

And Kathy Wallace, a board member with the Western Carolina chapter of the National Alliance for the Mentally Ill said: “Providing adequate treatment for mental illness isn’t just the humane thing to do. It saves tax dollars by reducing the costs of incarceration, homelessness, productivity and other costs paid for with tax dollars. And while this year’s General Assembly approved the largest appropriation for mental health in a long time, at less than $70 million, that’s less than a quarter of the $285 million recommended earlier this year by the North Carolina Psychiatric Association to bring the state up to 85 percent of the national per capita average for mental-health spending.

As for New Vistas’ demise, Wallace said: “It was all kind of expected. I’m amazed New Vistas took on the safety-net role, really. There wasn’t funding for it.” She continued: “That’s the reason for the state providing mental-health treatment in the first place, decades ago. There was no other funding source.”

Florence Rowe, co-president of NAMI Western Carolina, told Xpress: “There’s not enough funding to treat people who have these disorders. The big question is where it should come from. There are three sources — county, state and federal governments — and it’s clear that the only services that are going to be provided are those that will be reimbursed.”

Despite years of progress in enhancing public awareness, says Rowe, getting adequate funding remains difficult, because of mental health’s “stigma — people don’t want to be identified as having a disorder or having a relative with a disorder.” And in the current situation, she said, ” I’m deeply concerned about the consumers who might fall through the cracks and not receive services during the transition.”

To prepare for the potential fallout — including a possible surge in unmedicated psychiatric patients apprehended by law-enforcement officials or turning up in hospital emergency rooms — Buncombe County has authorized Western Highlands to tap a half-million-dollar fund left over from the dissolution of Blue Ridge Mental Health. She explained, “The money will be used for provider development,” said Stone, the county’s DSS director. “Providers will have a financial strain, adding staff and delivering service before they can begin billing.”

At the press conference, Carder said Western Highlands is recruiting private mental-health providers to pick up New Vistas’ case load. He said his organization expects to help New Vistas staffers find new jobs and even take their current cases with them. Ensuring that patients continue receiving psychiatric medications, said Carder, is Western Highlands’ highest priority. “We’re hoping that providers will provide good packages of services that include emergency care,” he said.

Meanwhile, Stone told Xpress: “Buncombe County owns the buildings on Biltmore, and they will be made available for providers who take on a significant number of consumers, including ‘uncovered’ clients. Providers will qualify for free or reduced rent based on the number of consumers they take on. Hopefully consumers will still be able to go to the same facility as before. This will make the initial transition easier, and we hope the consumers will follow staff to the new providers.”