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Upstairs Down - and Out?

Executive Director Steven Schnee blames the problems on a program that doesn't cover all costs of patient care.
Deron Neblett

Less than four months after it opened, the inpatient unit at the NeuroPsychiatric Center is losing money at a rate that may force local health officials to shut it down.

The board of trustees of the Mental Health & Mental Retardation Authority of Harris County, the agency that operates NPC, has given Executive Director Steven B. Schnee until late March to come up with a financial plan to save the 16-bed unit. It is on the second floor of the old Ben Taub clinic; the first floor is a psychiatric emergency room that opened in October 1999.

NPC is losing $300,000 a month. Schnee told MHMRA trustees at a January 23 board meeting that the agency "miscalculated" the number of uninsured patients who would seek treatment at NPC. The agency had counted on recouping about $3.8 million from Medicaid and other insurers to balance NPC's $10 million budget, which is only partially covered by tax revenue from the state and Harris County. But the actual reimbursements add up to far less than expected.

Schnee had recommended that the board authorize MHMRA to stop admitting patients to NPC immediately, divert new ones to the Harris County Psychiatric Hospital and eventually "mothball" the second floor. Instead, trustees voted to put off a decision for 60 days.

In the meantime, the board told Schnee to put together a business plan for NPC and begin shopping it to Harris County Commissioners, state legislators and private charitable organizations. Schnee's first goal is to secure so-called bridge financing to carry NPC through to late spring when, officials hope, the legislature will increase mental health funding. Until then, the board's nondecision means at least another $600,000 in losses at NPC.

That's an expense MHMRA can ill afford. One of the largest public mental health agencies in the country, MHMRA is also one of the poorest. The state spends about $12 per resident to treat mental illness in Harris County; the national average is $27. MHMRA already has been forced to cut back sharply on clinical treatment and social services available for the poor and uninsured. Last August 31, just days before the second-floor "crisis stabilization unit" opened, MHMRA ended its budget year nearly $3 million in the hole -- a deficit caused largely by unforeseen operating costs at NPC.

To be sure, some of MHMRA's financial wounds are self-inflicted. A few months ago the agency forfeited $5 million to the Texas Department of Mental Health & Mental Retardation for failing to execute a state-mandated program to distribute the latest antipsychotic drugs (see "Catch Us If You Can," by Brian Wallstin and Margaret Downing, November 19, 2000).

More recently, the agency ran afoul of the state by apparently failing to meet quarterly performance targets, which could force MHMRA to forfeit another $800,000. When the crisis at NPC arose two weeks ago, Schnee asked state mental health officials to help but was told no money was available.

Despite NPC's financial instability, most mental health advocates urged MHMRA trustees to find a way to keep the second floor in business. To close it would be "unconscionable," said Betsy Schwartz, executive director of the Mental Health Association of Greater Houston.

The trustees unanimously agreed. "It's time we put the cost to human beings first," said board vice-chair Lynn Cleveland. Trustee Paige Cokinos called the board's decision "a victory." Mae McMillan, another trustee, said, "I feel a lot of hope in this room."

But some advocates were more angry than hopeful. Robert Hager, an attorney who sits on MHMRA's Adult Mental Health Planning Advisory Council, said he was "stunned" at the board's decision. In Hager's view, MHMRA shouldn't have opened NPC's second floor without the money to operate it.

"They should be asked to explain how this happened," he said.


Schnee blames changes in "the environment" since NPC was conceived four years ago. Back then, he said, Harris County didn't have a Medicaid managed-care program, which now routinely fails to cover the complete cost of an eligible patient's care. And, Schnee says, no one expected mental health funding from the state to become so scarce.

"The second floor has demonstrated what it can do," he says. "The problem is we need to have paying customers in 11 of our 16 beds on average, and they have been overwhelmingly indigent."

Another explanation is that NPC was an idea that was ill-conceived and poorly executed. When county commissioners agreed in 1997 to pony up $5 million for NPC's construction, they apparently did so on little more than assurances by MHMRA and local advocates that the facility was desperately needed. MHMRA had no detailed business plan for NPC, nor did the agency conduct a feasibility study or prepare any long-range financial projections on the project's viability.

Today, no one disputes the need for NPC's emergency room. Until the first floor opened, the acute-care psychiatric unit at county-run Ben Taub Hospital was on "drive-by" status, or filled to capacity, for more than a week every month. MHMRA expected to treat 20 to 25 emergency-room patients a day at NPC; more than 40 are coming in daily, many of them new to the public mental health system.

NPC's second-floor unit provides three- to five-day stays for patients who cannot be stabilized in the downstairs emergency room. George Santos, medical director of West Oaks Hospital and a member of the Harris County Mental Health Needs Council, says the unit "was never a good idea." He believes it is an example of MHMRA's failure to "really look at how best to address the needs that are out there."

NPC seemed to have unanimous support among advocates when the project was approved four years ago. But Santos and a few others have always disagreed with MHMRA's decision to operate an inpatient unit. They argue that it would be more cost-efficient for MHMRA to send patients who need hospitalization to the 250-bed Harris County Psychiatric Center, which, unlike NPC, is a fully staffed and accredited hospital.

MHMRA pays the psychiatric center about $20 million a year to operate 143 beds for poor and uninsured patients. However, on any given day, the psychiatric center has another 60 to 80 beds that are empty -- more than enough to handle NPC's current load of about two admissions per day.

Yet in his written request for emergency funding from the state, Schnee tried to turn that point on its end: If NPC's 16 beds were closed, he said, patients would be "backed up" awaiting admission to Harris County Psychiatric Center. Schnee didn't try to make that point to trustees at the January 23 board meeting, probably because it's an unlikely scenario.

"Can we handle the patients currently being served at NPC? Yes, without a doubt," says Geri Konigsburg, spokesperson for the psychiatric center.

So is NPC's inpatient unit worth saving?

Many advocates believe it is. However, still unclear are the costs, sources of funding and how quickly that money would become available. Schnee has requested an additional $1.8 million from Harris County, but that possible funding is earmarked for the first-floor emergency room. Betsy Schwartz of the Mental Health Association volunteered to solicit $1 million in grants from local foundations, a process Schwartz predicts will take three months.

MHMRA's best hope for long-term support of NPC undoubtedly rests with the state legislature. A statewide consortium of advocates, including Schnee, has been pushing lawmakers to improve Texas's dismal record on public mental health services. Even so, any new appropriations won't become available for several months -- by which time NPC's supporters must craft a convincing argument that the facility is worthy.

"We have to really document the need for the second floor and demonstrate the uniqueness of that service," Schwartz says. "Obviously, we can't move forward until we do that."


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