Profit Strategy: Mental Health Institutions Prefer Out-of-State Children

South Carolina children in need of immediate 24-hour mental health care risk being stuck for days or weeks waiting for help before being sent hundreds of miles away for treatment.

When there are no available mental hospital beds in South Carolina, some children have to travel across the southeast to institutions in Florida, Georgia, North Carolina, Virginia, Tennessee, Alabama or Kentucky – wherever there is a bed.

The problem in South Carolina isn’t a shortage of psychiatric hospital beds, government officials say, but that many of the state’s 518 licensed child beds are filled with out-of-state patients. At last count, according to the state Department of Health and Human Services, about half of the children admitted to a mental institution in South Carolina were not from South Carolina.

The reason comes down to the bottom line of institutions that depend on state reimbursement rates, as Medicaid often covers care for these patients. The rate in South Carolina is about $330 a day, one of the lowest prices for these services in the country, said Deborah McKelvey, executive director of Windwood Family Services in rural Charleston County. The Medicaid rate in North Carolina is approaching $500 a day, while other states pay up to $800, she said.

“It’s like any business,” said McKelvey, whose psychiatric hospital is a nonprofit whose mission is to care specifically for South Carolina patients. Her institution is operating at a loss and partly covers the gap through fundraising.

Seven other public psychiatric hospitals for children operate as for-profit companies. Three of them are owned by Broadstep, a portfolio company of private equity firm Bain Capital. Some health researchers have stated that such ownership arrangements may prioritize profit over patient care.

“More than any other part of the healthcare industry, private equity is investing in behavioral health,” said Eileen O’Grady, a researcher with the observation group. Private equity project. “We don’t really have a clear idea of ​​how much money they make. They are not required to disclose anything to the public.”

Group published a report in February titled “The Kids Are Not OK,” which outlines some of the measures private equity-owned mental health facilities have taken to increase their profits in recent years, including cutting staff and postponing building maintenance.

“Despite appalling conditions in some youth mental health companies, their private shareholders have, in some cases, made huge profits,” O’Grady writes.

Representatives from Bain Capital and Broadstep did not agree to speak on record and did not respond to written questions.

The influx of such investments contributed to the creation of a kind of arms race. South Carolina Medicaid raised the reimbursement rate on April 1 to $500 per child per day to encourage commercial establishments to take in more of the state’s children. The adjustment is expected to cost the Medicaid agency an additional $14 million a year on top of the $20 million it already spends on psychiatric inpatient care for children. According to the director of SC Health and Human Services, Robbie Kerr, the money should make room for the bed. But this may not be enough in the long run.

“We already know that our neighboring states are ready to raise their rates as soon as I do,” Kerr told a group of lawmakers in January. “It’s going to be an inflationary spiral.”

It is not uncommon for American children in need of intensive psychiatric care to be sent to another state for treatment. KHN recently reported that about 90 Montana children covered by Medicaid are in psychiatric institutions in 10 states. Similar trends took place in Arizona, Minnesotaand Oregon. Many states lack psychiatric beds.

However, many psychologists and child protection services experts suggest that children who receive such care closer to home are more likely to succeed. This is mainly because it is easier for patients to maintain contact with their parents, caregivers and the community during their stay, which can be an average of weeks or months.

Medicaid documents show that some companies in South Carolina even accepted children from Alaska and Vermont. Meanwhile, South Carolina ranks 50th among all states, and the District of Columbia – below only North Carolina – in the proportion of children with severe depression and not receiving treatment for it. advocacy group Mental Health America.

Some children left untreated become violent and suicidal and eventually require treatment in a psychiatric hospital or inpatient facility. They may experience anxiety, depression, or PTSD, or have a substance use disorder. In many cases, the pandemic has exacerbated their mental illness. It also reduced the number of beds in psychiatric hospitals.

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According to a report filed by the facility with the South Carolina Department of Health and Human Services. At Springbrook Behavioral Health in Greenville, a psychiatric hospital that specializes in children with severe autism, only one of 40 Medicaid patients was from South Carolina. At a facility in Simpsonville called Excalibur-Venice, 41 Medicaid patients came from North Carolina and only 10 from South Carolina.

Excalibur-Venice is one of three South Carolina properties under the umbrella of Broadstep, a Raleigh, NC-based company backed by Bain Capital’s Double Impact Fund. According to Broadstep’s website, Broadstep’s operations cover dozens of similar mental health facilities in seven states, and Bain Capital is far from the only private equity player investing in mental health care.

In my 2022″Global Healthcare Private Equity and M&A ReportBain & Company — a consulting firm separate from the private equity firm but founded by the same businessman — said the pandemic provided opportunities for investment in behavioral health.

“With reduced stigma around mental health services, coupled with higher employer and payer commitment,” the report notes, “the market for mental health services is set to expand over the next few years.”

However, in the Carolinas, the need for psychiatric beds remains particularly acute. In mid-March, Bailey Pennington, a spokeswoman for the North Carolina Department of Health and Human Services, confirmed that 21 children from that state were on standby waiting for a bed to become available at a facility in North Carolina or another state. . Nearly 250 Medicaid-covered North Carolina children were committed to an out-of-state mental health facility between mid-2019 and mid-2021, she said. And North Carolina, despite having twice as many residents and many more Medicaid enrollees, has fewer child mental health beds than South Carolina.

“Probably now I have five to ten young people who could benefit from this level of care, who are moving from one place to another,” said Michael Leach, director of the South Carolina Department of Human Services.

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In some cases, he says, parents abandon their children because they can no longer cope with their mental health needs. Sometimes law enforcement agencies intervene, but parents refuse to take their children. Children sleep in county wards or emergency rooms when psychiatric beds are not available, he said.

Often, beds are technically available in South Carolina, but mental health facilities cannot retain staff to treat more patients. According to Leach, this is when children can be expelled from the state. In mid-March, nineteen children in state care from South Carolina were undergoing out-of-state psychiatric treatment, Leach said.

“I need more [beds] right now than I have access to,” Leach said. “This is the real thing.”

Kaiser Health News is a national health policy news service. It is an editorial independent program of the Henry J. Kaiser Family Foundation and not affiliated with Kaiser Permanente.

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