Patients vs. Profits

Intermountain mines for detox gold


Intermountain Hospital, Boise's only privately owned psychiatric hospital, may be shifting ground following some powerful seismic aftershocks. First, on March 14, its corporate ownership transferred-sight unseen-from Ardent Health to Psychiatric Solutions Inc. Second, the hospital seems to have discovered a dependable revenue stream in detoxifying out-of-state adolescents, but at the cost of bed space for Idaho youth. In the midst of all this, Intermountain faces the flight of several long-term tenants from its professional plaza. Also lingering on are long-standing Medicaid complaints arising from the alleged mistreatment of clients shipped down to Boise from Alaska, and a civil action charging medical malpractice resulting from the death of a young patient a few years ago.

New corporate owner Psychiatric Solutions, headquartered in Franklin, Tennessee, is what analysts call a growth stock with "strong buy" indicators. In 2002, it acquired a number of psychiatric facilities throughout the United States, giving it control over 790 hospital beds and some $76 million in annual revenue. Over the next two years, PSYS bought up another 29 psychiatric hospitals, adding over 4,000 beds. Since the beginning of this year, PSYS has pursued an aggressive program of taking over competitors that own only one or two 50-bed facilities. These buyouts come at a time when the federal government has changed its per diem reimbursement rate, resulting in greater compensation and profitability for in-patient mental health services.

But despite its estimated $500 million of capital, PSYS remains a relatively small player in the $100 billion behavioral health industry. According to its Web site, PSYS intends on fueling further acquisitions by increasing admission rates, stay periods and fees by 7 percent to 9 percent. If the past provides any indication, PSYS will make good on its proposed targets. According MarketWatch investment services, $1300 invested in the company in March of last year would now be worth approximately $2,054, an impressive 84 percent growth rate. The buyout of industry rival Ardent marks an increase of another 20 hospitals, for which PSYS paid $550 million in cash up front and another $60 million in stock. The takeover gives PSYS an additional 2,000 beds that, with Ardent, generated $300 million last year alone. However, PSYS Vice President Brent Turner expressed, through his executive assistant, that he was "not interested" in publicly commenting on any changes to Intermountain's current operating policies or procedures. To date, according to Intermountain staff, no Psychiatric Solutions representatives have even site-visited Intermountain.

Individual staff members at Intermountain spoke to Boise Weekly about the change in ownership on the basis of strict anonymity, for fear of job retaliation. Comments ranged from optimistic-"We've heard that because PSYS only does psychiatry, they allow for better staffing ratios and are not as top heavy in management"-to the downright cynical, "Mostly the sentiment is that it can't get much worse." One staffer explained, "We're all hoping they take out Failla [the current CEO] and the director of clinical services and bring in their own people." Another said he doubted that Intermountain would change "its primary diagnostic tool-the wallet biopsy," referring to documented circumstances where patient treatment was terminated once insurance funds ran out.

Current Intermountain CEO Richard Failla and Community Liaison Officer Marilyn Baughman both refused repeated invitations to comment on these allegations or the impending change of ownership. Referring to previous coverage, Baughman asked Boise Weekly, "Why do you hate us so much?" but apologized for not providing any of the requested information.

Intermountain hospital staff complain that the current administrators have adopted a policy of "Texas Hold'em management," a partial reference to CEO Failla's most recent posting outside Amarillo (see BW Jan. 26, 2005) but also to Intermountain's Nu Start chemical dependency treatment program. The economic incentives for the hospital are powerful. According to insurance officials in those states, insured youngsters from Washington State and California can be admitted with pre-approved status, meaning that Intermountain is guaranteed full reimbursement for a standard 21-day length of stay-on the order of $13,650.

Unlike other states, Idaho Medicaid does not compensate for detox programs, and private plans such as Blue Cross cover no more than eight days of residency. According to Intermountain staffers, the hospital has responded by swapping bed space in its acute care adolescent and adult units. Prior to this modification the hospital hosted 24 adolescent beds; that number has now been reduced to 16. The net effect of the changes is to limit the number of inpatient placements available to relatively unprofitable young Idahoans with acute mental health problems. For example, of 14 children housed during the week of March 28, staff members counted nine from Idaho and the rest from Washington, California and Alaska.

Dissatisfaction with Intermountain's current management extends beyond its immediate walls. If the Intermountain Professional Plaza doesn't quite resemble a proverbial ghost town, a recent visit reveals a substantial number of empty offices, previously occupied by various tenants with professional and even contractual relationships with the hospital. "We Have Moved" signs are taped to the office doors of former occupants and psychiatrists Stephen Bushi, Samuel Johnson, Eric Simmons and Zane Nelson, who have all moved to 411 Allaumbaugh, just an empty lawn and parking strip away.

Robert Calhoun, Ph.D., in shared practice with five other psychologists, says his group, Mountain States Counseling and Psychological Services, will allow its one-year lease to expire after 12 years of occupancy. Calhoun explains, "The main thing we're struggling with is [Intermountain] not following up with maintenance-types issues, like replacing the carpet in our office. And then I just think through my experience with the hospital, my patients going there. I don't really want to be affiliated with them."

Calhoun adds that Intermountain suspended his privileges because he referred so few of his own patients, "But I don't even think they stipulated a number, to keep active there. I certainly won't be affiliated with Intermountain in any other way, and eventually I'll move off campus."

Intermountain has also yet to counter some outstanding complaints registered with the Alaska Department of Health and Social Services in Juneau. According to an internal DHSS memo dated March 29, 2001, the hospital staff was cited for "lack of knowledge about Alaska Native Culture, including geographical diversity and general remoteness of the various regions of Alaska." Site reviewers Catherine Santos and Wanda Wood commented that the hospital "appears to have situational power struggles. Very restrictive and controlled setting ... Therapist unaware of child's major treatment needs and history." The observers remarked, "After receiving request for informational materials prior to visit, all documentation requested was not available. Felt very guided and controlled during the review. Limited opportunities to see staff interactions with clients, but one that was seen resembled a power struggle. Staff appeared to be vested in being right. They were not forthcoming with information regarding staff training and qualifications."

The report concludes that Intermountain's treatment components ranged from petty to grossly inadequate, but overall they were, "Very restrictive." One example they cite is, "In cafeteria, the rules are such that there is only one minute allowed at the condiment table." At the same time, "There are also limited options for therapeutic groups. Facility mainly utilized milieu therapy," that is, warehousing patients without setting individual treatment and discharge plans or goals.

Finally, John Judge, Esq., an attorney with Landeck, Westberg Judge and Graham, P.A. of Moscow, confirms that the civil case of Woolf vs. Behavioral Health Care (Intermountain's previous owner) is now set for trial on March 13, 2006. The action arises out of the pulmonary collapse and death of an adolescent patient which the plaintiff family alleges occurred as a direct result of medical negligence and malpractice while in Intermountain's care. It is unclear if Psychiatric Solutions Inc. inherits the liability for this case as part of its new ownership of Intermountain Hospital.