Multnomah County cuts some contracts with Cascadia

From the Oregonian, June 17, 2008

The struggling mental health provider will keep control of three clinics

Multnomah County announced a reorganization of its local mental health system Monday, substantially scaling back contracts with struggling Cascadia Behavioral Healthcare and setting the stage for a potentially difficult transition for clients with mental illness.

By transferring roughly a third of its business with Cascadia to other companies, the county is realizing a long-held goal of shrinking the state’s largest provider of mental health services.

The changes won’t begin immediately, allowing time to tell clients about any direct effects on them. “People need to continue going to Cascadia for services,” said Joanne Fuller, county human services director.

Nevertheless, the shift may prove rough, both for smaller providers asked to quickly take over new sites, programs and employees, as well as for patients who must give up established relationships with counselors and clinics.

“Transition is always traumatic for people with severe mental illness,” said Jason Renaud, a volunteer with Mental Health Association of Portland.

The reorganization will strip two of five clinics from Cascadia’s control: The Garlington Center in Northeast Portland will close and other agencies will serve its 237 adult clients. The county plans to keep the 358-client Gresham clinic open, but Cascadia will no longer run it.

Cascadia also will lose responsibility for a number of programs, including Bridgeview Community, transitional housing in Portland that helps seriously mentally ill people prepare for independent living; specialty mental health programs aimed at Latino and African American clients; and some youth programs.

At least three smaller nonprofit companies will take on some of Cascadia’s services and clients — Central City Concern, Lifeworks Northwest and Luke-Dorf Inc.

Cascadia’s size became an issue in April when the nonprofit company’s near-collapse required a last-minute government-backed loan of $2.5 million. Cascadia currently provides about 80 percent of the county’s adult mental health services, including housing, treatment and crisis services for mental illness and drug and alcohol addiction.

The new plan sets a goal of having no more than 40 percent of county-funded mental health services with any single agency, though Cascadia will still have more than that even with the proposed reduction.

“This is not the last plan your going to see,” said County Chairman Ted Wheeler.

Downsizing the company represents a substantial philosophical shift from 2002, when Multnomah County was instrumental in creating Cascadia by encouraging the merger of the county’s three largest mental health providers.

County leaders, believing a large provider would lead to improved care, continued to foster its growth by directing an increasing number of contracts to Cascadia, allowing it to swell to a $58 million-a-year enterprise.

“County vulnerable”

The relationship changed when Karl Brimner took over as county mental health director in 2006. Brimner was skeptical of the size and influence of Cascadia and worried that company’s leaders were increasingly struggling to manage such a complex organization.

“Karl was uncomfortable with the mental health system being so dependent on one provider,” Fuller said. “He thought it made the county vulnerable.”

The county ended the practice of awarding contracts to Cascadia without bids, increased scrutiny of how the company was executing its contracts and at one point stopped referring all new clients unless Cascadia dealt with financial and caseload problems, Fuller said.

In January — months before the company’s own board of directors had an inkling of the severity of the financial problems — a top county mental health employee predicted that Cascadia would collapse and ask for a government bailout.

If Cascadia did, the employee — Patrick Payton — recommended that the county move contracts to other providers and demand “a role in Cascadia’s executive decisions to a degree and for a period to be dictated by the county,” according to internal e-mails released in response to a public records request.

When Cascadia executives indeed approached county leaders in April for a loan, the county talked not only about reducing its contracts with Cascadia, but also cutting off the agency altogether.

“While we have left the option of a smaller, stronger Cascadia ‘on the table,’ this document addresses the probability that circumstances will compel us to completely dismantle Cascadia’s service system,” said an April 26 memo from Payton. “The county could be forced to manage Cascadia on a temporary basis while one or more of these options are implemented.”

In the end, county officials decided to keep some services with Cascadia, particularly residential services and crisis services that Cascadia specializes in. The agency will also maintain control of its downtown clinic, its Woodland Park clinic and its urgent walk-in clinic. Together, the clinics treat more than 1,800 clients.

And though Cascadia’s finances are now in better shape, a financial report accompanying Monday’s reorganization said any unplanned costs could force Cascadia to seek additional government loans.

“They’re operating very close to the edge,” said Jim Scherzinger, deputy director of the state Department of Human Services.

As part of the reorganization, Cascadia has agreed to make additional changes, such as reducing administrative spending, increasing productivity and drafting a plan to lay off employees. In addition, Cascadia must agree to continued financial monitoring by the county and state and accept more restrictions on its remaining contracts that will allow the governments to end them at any time.

“Our first and foremost challenge is to make sure we’re financially healthy under the new structure and to work with the county and the new providers to make sure that the transition is as positive as possible,” said Derald Walker, Cascadia’s CEO.

Cascadia also had significant contracts with Washington and Marion counties and the state. Washington County announced it was moving its $2 million in contracts with Cascadia to other providers starting next month.

EXTRA – Multnomah County Proposes Slashing Cascadia By A Third,, June 16, 2008

EXTRA – State, county carve up Cascadia, Portland Tribune, June 16, 2008

EXTRA – Cascadia to shrink 30 percent under county deal, Portland Business Journal, June 16, 2008