Carrier Clinic, Belle Mead, N.J., is closing its last three outpatient clinics on July 13, citing below-cost reimbursements from private and public payers.
Claiming the behavioral healthcare clinic's financial problems are a symptom of a national ill, Carrier officials say the cost of providing outpatient care is just too high. Volumes "are through the roof," with each clinic seeing 2,500 patients last year and even more patients on waiting lists, says Lisa Thibault, a Carrier spokeswoman. But the clinics were losing up to 50 cents on every dollar of revenue, she says.
"The more volume we did, the more money we lost," Thibault says.
Four other outpatient clinics operated by Carrier were closed in September 2000.
"I think in a general sense there has been tremendous pressure on behavioral health. Benefits and dollars have been limited in recent years," says Carole Szpak, a spokeswoman for the Washington-based National Association of Psychiatric Health Systems, a trade organization representing 300 behavioral health providers. "Providers have had to try to be cost-effective and creative in developing services with limited resources.
Although information is only anecdotal at this point, all aspects of behavioral health seem to be under siege, says Ron Czajkowski, a spokesman for the New Jersey Hospital Association. "We keep hearing it: HMOs see behavioral health as a slow-moving target. First, they take advantage of the more subjective nature of diagnoses, which gives them elbow room to chink away at reimbursement," he says. "Then they use third-party reviewers as an excuse to deny or limit payments."
The former Belle Mead Farm Colony and Sanatorium, 100-bed Carrier Clinic has been a rural New Jersey landmark since 1910, offering inpatient alcohol, drug and mental health programs on 300 acres of prime real estate. Founded by John Joseph Kindred, M.D., it took its current name in 1956 when Russell Neff Carrier, M.D., purchased the facility. The clinic converted to not-for-profit status in 1977 and was renamed the Carrier Foundation.
The hospital reverted to the Carrier Clinic name in 2000 and remains not-for-profit. The outpatient clinics were opened in the early 1990s, Thibault says.
As a result of the closings, Carrier will lay off 82 employees from its staff of 650. It will continue to manage outpatient services at two other New Jersey facilities, although the focus will narrow to specialized inpatient care. The hospital campus offers a wide variety of services, including a middle school and high school for emotionally disabled teens and a residential treatment program for adolescents.
Financially, the hospital is doing well on the inpatient side where reimbursements are "a little better," Thibault says, but hospital officials declined to disclose financial data. However, according to data from the American Hospital Directory collected from Medicare cost reports, Carrier lost $1.3 million on $63 million in total revenue in 1999, a 2% margin.
Thibault says Carrier's occupancy rate is among the highest in New Jersey, running at 92% from January through May this year, with an average length of stay of 11.4 days. That compares with an average of about 21 days in the early 1990s and 28 days in the 1980s, she says.
Thibault says the clinic closings are unrelated to merger discussions with Princeton House, a 70-bed inpatient behavioral health division of 392-bed Medical Center at Princeton (N.J.). Under the proposal, the combined mental health organization would be called Carrier Clinic and become a subsidiary of Princeton's parent, Princeton Healthcare System. The new Carrier Clinic will remain in Belle Mead, and Richard Sarle, Carrier's president and chief executive officer, will continue in his post.