The Mental Health and Mental Retardation Authority of Harris County

Did you know that over the past several months some 300 private psychiatric inpatient beds in Harris County have closed or are in the process of closing? Actually, the same thing has been occurring all over the state and nation — private psychiatric hospitals closing their operations or downsizing their bed availability. So what, you say. It’s not really our concern. These are the private beds. You know, the ones who had all that "trouble" some years back. There’s no reason for the public sector to be concerned. Right?

No! Wrong! There is significant reason to be concerned. Why? Because the private sector, the private psychiatric inpatient hospitals have quietly, over the years, been absorbing a portion of the acute inpatient care for the indigent, uninsured adult patients. For years these hospitals have "written off" the care provided to persons who sought services through their hospital. In the past, this care was a "hidden tax" on the paying customers, the costs spread across those patients with means and/or third-party coverage. The hospitals, if they were for-profit, were able to deduct or "write off" as bad debt this unreimbursed care. In recent years, the financial climate has significantly changed. Insurers have substantially modified the reimbursement rules and private pay patients are fewer in number. In other words, the private psychiatric hospitals have experienced a major realignment in the coverage pattern for the costs of care. Insurers have gradually reduced the amount of reimbursement per unit of service. Competition has permitted "shopping" the market for hospitals favorable to the rates deemed appropriate for the level of care. And, managed care has substantially altered the landscape as to who is authorized for inpatient services and for what duration (the length of inpatient stay per episode has been reduced).

These changes in the financial environment have occurred at a time when some say the number of uninsured within the private hospitals have increased. As the number of "paying" patients go down and the reimbursers reduce, cap, or refuse to permit the distribution of costs for the uninsured, the cost of care for these uninsured patients becomes a weight that undermines the financial viability of the private hospitals. Losses mount — leading to business decisions to close services.

So, you say, so what. Well, we should all be concerned as this plays out. Will there be enough private psychiatric inpatient beds as care has shifted to an outpatient focus? The answer is maybe. But, and this is an important but, the availability of that care is being radically altered. The location(s) of the remaining private psychiatric inpatient beds will result in increased difficulties for families to access these services when needed as well as potentially reduce their active involvement with that care during the inpatient stay. The private hospital beds remaining may be more fully utilized but reach a point where waiting lists occur for admission. And, not the least of importance, choice will be significantly reduced as to the availability of service providers from which a person may select where he/she may receive the best, most appropriate care. Finally, while busier on the units, the financial pressures due to actual reimbursements received may continue to exist, meaning coverage staffing patterns may not adequately match the increased numbers of patients in the units, stressing the staff and negatively impacting the care provided.

And, then, there is still the matter of the uninsured. If these hospitals which have closed or are closing have, in fact, been serving a number of uninsured consumers (and they have), where do those uninsured now go? OOPS! They now have to go to the public "safety net" inpatient system. Right? The public "safety net" inpatient system can just absorb these cases. Just have them transferred to us. Right? Sorry! Big problem here – really, big problem!

One of the consequences of the TDMHMR budget "shortfall" for FY2000 was a reduction in state hospital budgets. Yes, funds were identified to cover the projected shortfall for the community services — but not to cover reductions to address the shortfall for the state hospital and central office operations. Thus, with the start of FY2000, the TDMHMR allocation of available state-funded bed days was reduced from 13 per day per 100,000 population to 12 beds per 100,000 population per day. This reduction was required to adjust to the actual revenues available, thereby addressing the budget reduction for FY2000. This translates for Harris County (with a population of approximately 3.25 million people) to a loss of some 32 psychiatric beds available to the public sector each day – a loss of 11,680 bed days per year. Thirty-two persons per day who might need inpatient psychiatric services could not access these if we use up our current allotment of beds. It is important to remember, that the patients served in our local community acute psychiatric hospital, Harris County Psychiatric Center (HCPC), count in the total and daily use of our state-funded bed days allocation.

Now — the other shoe drops. We are aware that the state hospitals in FY2000 are experiencing a major financial shortfall — earned revenues are being received substantially below expected levels. The Texas Legislature, under the method of financing for the state hospitals, included a significant amount of expected third-party reimbursements — primarily Medicaid collections. With the rollout of Medicaid Managed Care across the state and reduction of available psychiatric beds for the uninsured, two things have occurred. One, community centers have recognized that patients with third-party coverage could obtain their care locally while the uninsured could not. Thus, fewer and fewer patients who have insurance benefits covering their care have been sent to the state hospitals. And, the state hospitals have found for those that do have coverage, the plan managers only authorize limited lengths of stay even though the needed stay may, in fact, be much longer. The actual reimbursement, when it exists, thereby only covers a portion of the cost of that treatment episode.

The net result of these factors is a projected shortfall that must be addressed. TDMHMR has appointed a task force to reconsider the state hospital utilization and bed allocation issues. One of the products is anticipated to be a revised bed day allocation formula. This new formula, expected to go into effect for FY2001 (Sept. 1, 2000), will only allocate the bed days that may be funded through state general revenue. It is expected that this method of rebasing the state hospital inpatient "safety net" will result in a further reduction of two to three beds per day per 100,000 population. Translating this out, there will be 64 to 96 fewer beds available each day in the state hospitals for Harris County residents who may need that level of care — 23,360 to 35,040 fewer bed days per year. Additional bed days would be available for patients with third-party insurance that covers that care.

The private psychiatric hospitals look at the public system and say – you take the uninsured – expedite transfers from us to you where clinically appropriate. The uninsured is your job (the public sector). Your first priority should be the uninsured – not the insured. You know, they’re right. Our first priority should be the uninsured. We want to be appropriately responsive and accessible to the needs of the uninsured. However, as long as the Legislature does not provide adequate resources to cover the care of the uninsured and mandates that the public system serve patients with third-party coverage, the public system will not be able to respond in the way we would like and should. This is a business — the public mental health system must operate as a business. There is no one to provide resources to cover deficits, which occur when expenses exceed revenues.

Harris County is one of the fastest growing counties in the state — with one of the highest percentages of uninsured residents (over 30% we are told). As private hospitals close and the state realigns its state-funded psychiatric beds to available resources, the pressures to have available and timely access to clinically appropriate inpatient services for the uninsured will mount. The pressure may become enormous on the system, the individuals who need such care, and on the families trying to obtain these critically needed psychiatric services. The "safety net" is tragically eroding before our eyes during one of the most affluent times in the history of our country. We must work hard to maximize what our resources will provide as well as assist our policy makers to understand and, hopefully, reverse this trend. We must increase the focus of our attention on the truly uninsured of Texas and ensure the resources necessary to address their needs.