Following the money

“The proposed transfer inappropriately favors one provider and undermines expansion of consumer choice.”

— Mental Health Advisory Task Force Chairwoman Linda Poss

A Buncombe County task force is up in arms about the recent transfer of more than $1 million in public assets to a private nonprofit agency.

The move, maintains the citizen task force, runs counter to the spirit of state-mandated mental-health reform.

The controversy reflects broader concerns about how reform — aimed at privatizing mental-health services across the state — is playing out locally.

Back on Sept. 24, members of Buncombe County’s Mental Health Advisory Task Force learned that the Blue Ridge Area Authority (see box) was poised to give $342,650 to New Vistas Behavioral Health Services, a private nonprofit created by Blue Ridge several years ago that was renamed and reconfigured as a “safety net” to provide services not offered locally by other care providers.

At that meeting, the Authority also indicated its intention (since carried out) to lift the restrictions on a $1.2 million fund set aside to pay for building maintenance so the money could be used to make startup grants to mental-health-services providers — with as much as 75 percent of the funds going to a single recipient.

The task force’s main concern: That the transfer of money inappropriately favors one provider, thereby reducing options for care recipients.

“Consumer choice is the cornerstone of the mental-health-reform statute, and tonight’s proposed transfer stands in stark opposition to the spirit and intent of House Bill 381,” declared task force Chairwoman Linda Poss, addressing members of the Blue Ridge Area Authority. (Poss noted later that she was speaking only for herself, not for her employer, Mission St. Joseph’s Health System.)

Shifting assets

The county task force cited the following objections to the transfer of assets:

• New Vistas had already received $273,197 in seed money (in January and April) to provide “safety net” services.

• Those services have not been well defined.

• Not enough work has been done to determine what providers are available and which services will be lacking in the new system;

• Public assets shouldn’t be disbursed without a public, competitive process;

• there must be a “full and public accounting” of the assets of both Blue Ridge and its nonprofit spinoffs;

• the contracting terms proposed by Blue Ridge Center officials for the “local management entity” (which will manage services under reform) favor large providers; and

• the Blue Ridge Area Authority is making decisions before the local management entity is up and running, based on recommendations by Blue Ridge Area Authority Director Larry Thompson, whose multiple roles constitute a “serious conflict of interest.”

In fact, Poss went on to tell the Authority, “The task force considers the present method of divestiture of public assets to be unethical, if not illegal, and will be recommending that the county commissioners ask county attorneys to investigate the legal aspects of these actions.”

As of late last week, however, Buncombe County Attorney Joe Connolly said he hadn’t seen the task force’s list of concerns about the transfer of assets.

At an Oct. 8 task force meeting, member Dan Zorn predicted that if Blue Ridge had sent out a request for proposals for even half of the amount disbursed, it would have attracted such a crowd of providers that “you would have turned them away at the Civic Center.”

On Sept. 24, however, the Blue Ridge board showed little sympathy for the task force’s arguments — except for Buncombe County Board of Commissioners Chairman Nathan Ramsey. After his motion to postpone voting found no support, the transfer of funds was overwhelmingly approved; Ramsey cast the lone dissenting vote.

In the end, New Vistas received $842,650 — $342,650 from the Authority and $500,000 from Blue Ridge Human Services Facilities (another Blue Ridge Area Authority spinoff). That’s in addition to the $273,197 New Vistas received from Blue Ridge HSF earlier this year, Thompson confirmed.

New Vistas is also supposed to meet with Blue Ridge HSF to work out the criteria for an additional grant of $430,717 — an arrangement that task force members find highly questionable. Thompson, meanwhile, notes that there’s disagreement over whether Blue Ridge HSF’s assets should rightly be considered public or private.

At present, New Vistas is projecting an $842,650 shortfall in its $4.8 million budget for fiscal year 2003-04. The nonprofit expects to begin providing some services starting Dec. 1. By fiscal year 2005-06, its budget is projected to increase to $8.8 million.

And even though Ramsey sided with the task force, he also voiced a pragmatic view of New Vistas, observing, “From the county perspective, we have to see that they’re successful.”

“It’s been a zoo.”

In an interview with Xpress, Thompson — who advises both the Blue Ridge Authority and Blue Ridge HSF — maintained that timing has had a lot to do with the way things have played out.

The county managers of the eight counties to be served by the new LME wanted Blue Ridge to divest its services as soon as possible, said Thompson (Ramsey, however, disputes that point).

“The problem we’re in here is a Catch-22,” stated Thompson. “By the time we know whether there’s … enough providers, we’ll already have to be providing services.”

The area director said the Authority hadn’t issued a request for proposals for most of the funding that went to New Vistas because a survey of local care providers had indicated that no one was interested in offering emergency services.

“We have had no volunteers for emergency service,” said Thompson, adding, “nor did we really expect any.”

And two other factors — the extensive array of services to be provided and the lack of solid budget information — made it hard to come up with a request for proposals, he noted. But to “somewhat compensate” for that omission, said Thompson, $300,000 remaining in Blue Ridge HSF’s building fund will be used to fund startup grants to providers.

As for the task force’s contention that the divestiture process is unethical or even illegal, Thompson responded: “We think we’re OK on this. They’re doing this all over the state.”

On the contrary, he added, Blue Ridge officials would consider it unethical to shift services away from Blue Ridge without having a safety net in place.

According to Phillip Hoffman, chief of resource and regulatory management at the N.C. Division of Mental Health, Developmental Disabilities and Substance Abuse Services, there are restrictions on what area authorities can do with their property — and they depend on where the money originated. But the state, he said, doesn’t usually tell an area authority how to spend its fund balance, unless it’s more than 15 percent of the agency’s budget.

The groundwork for the present dispute was laid back in December 2000, when — in an equally controversial move — the Blue Ridge Area Authority transferred ownership of its buildings to Blue Ridge Human Services Facilities, a nonprofit spinoff. At the time, the Authority said it wanted to prevent the state from commandeering the buildings for some other use.

Thompson conceded that the local management entity’s contracting terms do indeed favor large providers — but that’s in hopes of creating some provision for indigent care, he said. In the past, Thompson explained, the Blue Ridge Center has routinely funded such care by dipping into its fund balance — relying on its substantial cash reserves to pay for services for which there was no public funding.

“There is no basis for providing indigent care anymore, except if you can have a large provider — or more than one large provider — who maybe, over time, will be willing to have reserves of sufficient magnitude that they’re willing to provide free indigent care to folks who can’t pay,” asserted Thompson.

The area director also acknowledged that he fills multiple roles — at least for now — serving as area director of both the Blue Ridge and Rutherford/Polk systems, as interim director of the local management entity, and as assistant secretary of Blue Ridge HSF’s board.

“I am wearing multiple hats for the time being,” he conceded. “But the degree to which I wear multiple hats after Jan. 1 depends on the managers group. And again, that’s because there’s no road map in how to do this. So we’ve just been trying to invent something that seems to work and get the state and the counties to approve it.”

As for the complaint about the Authority making decisions before the local management entity is even operational, Thompson said the eight WNC county managers collaborating on local reform plans had been asked whether they wanted to be involved in establishing the nonprofit providers, but they declined.

“We’re out here with a changing set of rules — or no rules clear at all — trying to meet everybody’s expectations,” concluded Thompson. “And it’s been a zoo.”

A mental-health cheat sheet

Here’s a rundown of the key players in the local mental-health-reform landscape:

Blue Ridge Area Authority: the governing board of the Blue Ridge Center.

Blue Ridge Center: the current regional provider of mental-health, developmental-disability and substance-abuse services for Buncombe, Madison, Mitchell and Yancey counties. Scheduled to be fully phased out by July 1, 2004 under mental-health reform.

Blue Ridge Human Services Facilities (a.k.a. Blue Ridge HSF): a private nonprofit created by the Blue Ridge Area Authority that now owns Blue Ridge’s buildings (which were bought with public money).

County managers group: a committee made up of the county managers from Buncombe, Henderson, Madison, Mitchell, Rutherford, Polk, Transylvania and Yancey counties that has been working out the structure and details of local reform over nearly two years of meetings with Blue Ridge Center officials.

Local Management Entity: Under reform, the new entity that will manage services in the eight-county region.

Mental Health Advisory Task Force: a group of citizens appointed by the Buncombe County commissioners to advise them on mental-health-reform issues.

Mountain Laurel Community Services: a private nonprofit providing mental-health services in Henderson and Transylvania counties. Formerly Trend’s nonprofit foundation, Mountain Laurel owns Trend’s buildings and is largely staffed by former Trend employees, according to Blue Ridge Area Authority Director Larry Thompson.

New Vistas Behavioral Health Services: a private nonprofit created by Blue Ridge several years ago that was renamed and reconfigured to be the provider of last resort for services not otherwise available.

Trend Area MH/DD/SA Authority: the area authority that provided mental-health, developmental-disability and substance-abuse services in Henderson and Transylvania counties until earlier this year. Will be phased out completely by July 1, 2004 under mental-health reform.


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