When Donald Sykes finished his seventh month as administrator of Willow Creek Hospital in Arlington, Texas, his employees threw a party to celebrate his "record-breaking" tenure.
Sykes, who was hired in August 1993, was Willow Creek's eighth administrator in five years. His predecessors each lasted fewer than seven months.
"Some people have viewed it as surviving a nuclear holocaust, and wondered, `Do you really want to be the one living in the cave when it's over?"' Sykes said. "It's a tough business."
The doomsday reference is to the psychiatric hospital industry, and, in recent years, Texas has served as an oversized example of the difficulties it has faced nationwide. When the business was booming nationally, it snowballed in Texas. When occupancy at psychiatric hospitals began dipping nationally, the state's facilities were closing.
Just as Texas gave birth to dozens of new psychiatric hospitals in the late 1980s, it became their graveyard in the 1990s.
Rocked by scandal and overbuilding, half the inpatient beds operated by private psychiatric hospitals closed between 1990 and 1995, according to the Texas Hospital Association. From a peak in 1990 of 75 hospitals, the number in the state has fallen to 49. Nationally, the number of facilities fell an estimated 5% to 10% last year alone, industry data indicate.
The average psychiatric hospital lost money from 1990 through 1993, according to the most recent data available from HCIA, a Baltimore-based healthcare information company (See chart, p. 65).
Although the industry's depression continues, those hospitals that have survived are beginning to find their niche. Freestanding psychiatric hospitals are reaching out more to the communities they serve and partnering with others.
And the hospitals have entered the managed-care business but are walking a fine line between contracting and competing with managed behavioral healthcare firms.
"No longer is the hospital the driving force behind the delivery system," said Albert Gale, vice president of operations for the Western division of Sterling Healthcare, a 15-hospital system.
Gale is well-acquainted with the changing environment for psychiatric providers. He used to head the Texas psychiatric division of Hospital Corporation of America. Nashville, Tenn.-based HCA exited the psychiatric business in Texas in 1992 and merged with Columbia Hospital Corp. in February 1994.
Sterling operates a 66-bed hospital in Portland, Ore., as part of a delivery system that also includes three outpatient centers, a 34-bed residential treatment center and a managed-care company. The managed-care component alone provides behavioral healthcare to 26,000 individuals.
Sterling's Portland facility, Pacific Gateway Hospital, is the only remaining freestanding psychiatric hospital in Portland, but it competes with several medical-surgical hospitals that operate psychiatric units.
How does Pacific Gateway market itself against giant managed behavioral-care companies such as Value Behavioral Health and Medco Behavioral Care Corp.? "We bring to the table a full continuum of care. Others have to go out and pick up providers, (which can) create an inefficient system," Gale said.
However, he's quick not to criticize Avon, Conn.-based Value, one of the nation's largest managed-care firms and a Sterling customer. Sterling typically partners with such firms, rather than competing with them, Gale explains.
Psychiatric providers that got into managed care early are glad they did.
"If you tried to get some contracts today, you couldn't. They say we have longstanding relationships. Often, they don't go out for bid," said Joel Rosenhaus, chief executive officer for Charter Medical Corp.'s New England region. Atlanta-based Charter, the nation's largest psychiatric hospital chain, has three hospitals in the region.
One of those hospitals is Charter Brookside Behavioral Health System in Nashua, N.H., which has had a contract with Value since 1990. About 50% of Brookside's revenues are derived through managed-care pacts, he said.
Brookside formerly was owned by National Medical Enterprises (now known as Tenet Healthcare Corp.), which was forced to divest its psychiatric operations last year as part of a fraud settlement with the federal government.
Rosenhaus said the taint of that scandal didn't have much effect on Brookside. "The truth is that (Brookside) has never done anything wrong," he said. "Those problems were in Texas and Florida."
State Sen. Mike Moncrief, the Texas legislator who crusaded against private psychiatric hospitals in a series of much-publicized statewide hearings a few years ago, acknowledges Texas' psychiatric providers have cleaned up their acts.
"Psychiatric care has changed for the better," Moncrief said. However, he adds that legislators remain vigilant. "As long as you have an industry that is a multibillion-dollar one, people are going to stay up late at night figuring out how to abuse the system in the morning. As long as they stay up, I will, too."
Although regarded for his hard line against psychiatric hospitals, Moncrief took the unusual step of honoring Willow Creek last December. A Senate proclamation praised the management and staff that "changed this hospital from a discontinued, for-profit institution to a hospital that is an integral part of the treatment community."
Willow Creek had been owned by Columbia Hospital Corp., which hired Sykes just weeks before it sold the hospital to Adventist Health Systems-Sunbelt in August 1993.
Instead of going with Columbia, Sykes stayed on and turned the operation around. Since he took over, patient days at the hospital have quadrupled to 2,300 a month.
The first thing Sykes did was cancel the stipends to doctors who were admitting patients to the hospital. How did the doctors react? "They didn't object that much because they thought we weren't going to be open much longer," Sykes said.
Sykes also started a host of community programs and began talking with other not-for-profit providers in Dallas/Fort Worth about ways to work together.
Georgia managed care.
Collaboration is the byword for facilities in Georgia, too. A little more than a year ago, 11 for-profit and not-for-profit hospitals formed the Georgia Behavioral Health Coalition, a forum that meets monthly with managed-care companies and state officials. The coalition wants to be an alternative network to Charter, which owns five hospitals in the state.
Recently, the group hired Coopers & Lybrand to put together an integrated delivery system so its members could contract with payers.
"We have to be partners with managed care," said Dick White, the coalition's chairman.
Psychiatric providers see partnership as preferable to mere contracts in which payers control everything-admissions, length of stay, payment rates.
"Some of the hoops that hospitals have to go through before admitting these kids are outrageous," said Jim Wrich, CEO of J. Wrich & Associates, a Chicago-based firm that monitors managed-care programs.
Wrich is critical of managed-care companies that are paid on a capitated basis and reduce care to widen their profit margin. Some of them take as much as 60% of the payment for administrative expenses and profits, he charges.
"The system has gone from almost being carte blanche to being highly restrictive," Wrich said about psychiatric services. "Going to a pure outpatient system is going to be a disaster, and that's practically where we are."
Others claim a better balance has been achieved in the industry.
"One of the things I hear frequently from managed-care payers is, `We can send someone through the best program in the world, but if they don't take responsibility for their own illness, they won't do very well,'*" said Mark Crea, vice president for Serenity Support Services, which sells interactive booklets to about 1,000 psychiatric providers.
Patient responsibility now is stressed, Crea said. For example, patients refer to personal journals they keep during their therapy as they assess their own future progress, Crea said.
Sykes agrees that providers are working more to address patient needs. "There are so many people who don't need therapy," he said. "And, there are so many people who don't get the care they truly need."