Charter Behavioral Health Systems is shedding 10% of its operations in a retooling. But its 79 hospitals keep it the clear leader among the nation's psychiatric hospital chains.
Less clear is whether additional closures for the Alpharetta, Ga.-based company are in the offing.
In a written statement, President and Chief Executive Officer Michael French said the closures are part of a plan to "substantially redesign" the company.
The decision to close four hospitals and consolidate five others in October comes only a few months after quality concerns prompted Charter to shut down inpatient operations at two hospitals and trim services at a third.
This time Charter's actions are an attempt to stanch financial losses. Data from HCIA, a Baltimore-based healthcare information company, show the four closing hospitals lost money last year. Sixty-bed Charter Behavioral Health System of Orlando in Kissimmee, Fla., had an operating loss of $990,000; 60-bed Charter BHS of Little Rock in Maumelle, Ark., had a $700,000 operating loss; 80-bed Charter BHS of Kansas City in Overland Park, Mo., had a $353,000 operating loss; and 96-bed Charter BHS of Columbia (Mo.) posted a $1.2 million operating loss.
Consolidating into nearby Charter facilities will be Charter hospitals in Chandler, Ariz.; Mesa, Ariz.; Mission Viejo, Calif.; Plano, Texas; and South Bend, Ind. In May, Charter completed a similar consolidation of its Wisconsin facilities.
The actions come two weeks after Atlanta-based Magellan Health Services transferred most of its Charter ownership to co-owner Crescent Operating, a diversified management company in Fort Worth, Texas.
Mark Covall, executive director of the National Association of Psychiatric Health Systems, said his industry is struggling under falling reimbursement rates, shrinking mental health benefits and a shift toward outpatient treatment.
"We had an infrastructure that was based on a different treatment system and a different financial system," he said. "I think in the long run (consolidation) is very positive for the industry."