New approaches lower mental health expenses

From The Portland Business Journal, June 6, 2004

Four years ago, Multnomah County’s mental health care system, like so many of its patients, was in crisis.

People struggling with severe but manageable mental illnesses were unnecessarily hospitalized at great expense.

Lack of adequate emergency services and poor coordination among Portland-area mental health agencies led to expensive, inefficient and sometimes tragic outcomes, such as the 2001 shooting death of a Mexican immigrant at Pacific Gateway, the now-closed psychiatric hospital.

That same year, the county’s Crisis Triage Center closed due to escalating costs, cutting off a crucial emergency service for patients suffering from acute mental illnesses.

To deal with these and other mounting problems, county and mental health leaders began three years ago to revamp the way adult mental health services were delivered.

They created a system that now includes a 24-hour mobile response unit, 24-hour walk-in clinics, and teams of mental health and social workers who design out-of-hospital treatment plans for mentally ill clients.

The redesign still is in progress, but it has brought some dramatic results particularly in reducing hospitalizations of adult mentally ill patients, say officials of Portland-based Cascadia Behavioral Healthcare, the largest of about a dozen mental health organizations that contract with the county to provide mental health services.

“We have cut unnecessary hospitalizations in half, thanks to increased hours, outreach and more intensive services,” says Mark Schorr, director of communications and staff development for the agency, which performs services worth $38 million a year.

“This has been vital, not only because of the state financial crunch, but also because two hospitals with psychiatric beds [Pacific Gateway and Woodland Park] were closed in the past few years.”

Peter Davidson, medical director of the county’s mental health and addiction system and its clinical services coordinator, says the redesigned system has reduced the amount the county spends to hospitalize patients covered by the Oregon Health Plan — the state-sponsored safety net for low-income residents lacking health insurance — from $9 million three years ago to “well under $4 million” this year.

Some of the reduction is due to cuts in the health plan itself and the number of patients it covers.

“But [the cuts] weren’t nearly enough to account for the size of the reduction — they played only a small part,” says Davidson, who led the county’s redesign efforts when he was hired three years ago as medical director of its mental health division.

Under the redesign, Cascadia has managed to cut the number of days its Oregon Health Plan clients spend in the hospital from 678 in September 2002 to 291 last month, according to agency data.

Considering that hospitalization costs about $800 a day per patient, fewer hospital stays mean more money for out-of-hospital care, says Leslie Ford, Cascadia’s chief executive officer.

“For every month that we lowered inpatient utilization another piece, we were able to share in some of the savings and build up our outpatient system,” she says. “The more we build that up, the less we need to default into acute care [hospitalization].”

Adding to increased efficiency, Davidson says, is a mental health call center operated by the county that includes a crisis line where people can call during emergencies.

The center also has $9,000 that can be used to fix short-term problems, such as paying for transportation or medications for someone in crisis.

“We are building the details of the system project by project,” Davidson says.

Cascadia serves 80 percent of adults on the Oregon Health Plan who need mental health services. It responds to the bulk of the county’s emergency calls through Project Respond, a 24-hour mobile outreach program based at Cascadia’s largest facility at Southeast 43rd Avenue and Division Street.

Cascadia’s staff numbers around 1,000 and it operates about 60 sites in Multnomah, Washington and Marion counties

Besides mobile response teams, Cascadia’s programs include treatment, counseling, housing and job-seeking programs for people with severe and persistent mental illness.

Cascadia formed in January 2002, just as the county was embarking on its redesign program, with the merger of three independent mental health agencies — Unity Inc., Mount Hood Mental Health and Network Behavioral HealthCare. The merger was independent of the county’s redesign efforts, but Cascadia soon became the county’s major contractor for mental health services.

Cascadia primarily serves adults. Other agencies, such as Morrison Center and Trillium Family Services, work with children struggling with mental illnesses.

Trillium — formed in 1998 with the merger of Parry Center for Children and Waverly Children’s Home in Portland and the Children’s Farm Home in Corvallis — has redesigned its programs in ways that are similar to the county’s revamped system.

Trillium changed its funding model from traditional fee-for-service contracts to a more flexible system that allows children to receive an array of services, said Trillium President Kim Scott.

“We treat about 18 percent more children through flexible funding,” Scott said. “Outcomes are better, families are better supported and the services are more lower-cost.”

Trillium’s services include providing case managers and therapists to work in teams with parents, teachers and others who are acquainted with the children.

“Our goal is to help guide the child from high-end care back to the community,” Scott said.

Mental health services provided by the county and its contracted agencies get most of their funding from government sources — federal, state and the county’s own general fund. Not surprisingly, state and county budget shortfalls have presented hurdles in the county’s mental health redesign efforts.

The mental health division has had to absorb Oregon Health Plan cutbacks during the last two years, reducing the number of adults who receive services.

The income tax surcharge approved last year by Multnomah County voters gave the Mental Health Division $11 million to restore critical-care services that were on the chopping block, according to Davidson.

But adults with persistent, though not acute, mental illnesses have been dropped from the plan, leaving more adults without insurance for mental health care.

For instance, health plan cuts forced Cascadia to drop 2,500 cases since February 2003, from 8,500 to 6,000.

The agency saw a corresponding, 88 percent increase in the number of people seeking crisis services after the cuts, says Cascadia CEO Ford.

“That’s why so many cases are out in the street,” says Ford. “A lot of [mentally ill people] do not have insurance.

“As a state, we will have to deal with the issue of the uninsured because if you treat them in high-end services, like emergency rooms and hospital stays, it is less effective and far more expensive.”

Despite the cutbacks, county officials will continue to work for more cost efficiencies in the mental health care system, Davidson says.

Among the goals: continue to improve services for mentally ill adults, including finding solutions for homeless and other mentally ill people who are walking the city’s streets; combine programs that treat mental illness with those that treat alcohol and drug addiction; beef up systems for children and families.

“We’re in the earliest stages of finding out what works,” Davidson says.