Profit strategy: Psychiatric facilities prioritize out-of-state children | Lifestyle

South Carolina children in need of immediate 24-hour psychiatric care are at risk of being stranded for days, even weeks, waiting for help, only to be sent hundreds of miles from home for treatment.

When there are no open psychiatric residential treatment beds in South Carolina, some children must travel across the Southeast to facilities in Florida, Georgia, North Carolina, Virginia, Tennessee, Alabama or Kentucky, anywhere a bed is available.

The problem in South Carolina is not a shortage of psychiatric residential treatment beds, state agency leaders say, but rather that many of the state’s 518 licensed children’s beds are occupied by out-of-state patients. At last count, according to the state Department of Health and Human Services, about half of the children assigned to a psychiatric residential treatment bed in South Carolina were non-South Carolinians.

The reason boils down to the bottom line of the facilities, which are governed by states’ reimbursement rates, since Medicaid often covers the care of such patients. South Carolina’s rate has been about $330 a day, one of the lowest for these services in the country, said Deborah McKelvey, executive director of Windwood Family Services in rural Charleston County. North Carolina’s Medicaid rate is closer to $500 a day, she said, with other states paying up to $800.

“It’s like any business,” said McKelvey, whose psychiatric residential treatment center is a nonprofit organization with a mission to serve South Carolina patients specifically. His facility operates at a loss and partially bridges the gap through fundraising.

The other seven child psychiatric residential treatment facilities in the state operate as for-profit businesses. Three are owned by Broadstep, a holding company of private equity firm Bain Capital. Some health care researchers said such ownership deals may prioritize profits over patient care.

“More than any other part of the health care services industry, private equity is pouring money into behavioral health,” said Eileen O’Grady, a researcher at the watchdog group the Private Equity Stakeholder Project. “We don’t really have a clear window of how much money they’re making. They are not required to reveal basically anything to the public.”

The group released a report in February called “Kids Aren’t Well” that outlines some steps behavioral health facilities owned by private equity firms have taken to boost their profit margins in recent years, including downsizing and the postponement of building maintenance.

“Despite dire conditions at some youth behavioral health companies, their private equity owners have in some cases reaped massive profits,” O’Grady wrote.

Officials from Bain Capital and Broadstep did not agree to speak on the record and did not respond to written questions.

The influx of such investments has helped create something of an arms race. South Carolina Medicaid raised its reimbursement rate on April 1 to $500 per child per day in a bid to entice for-profit facilities to admit more of the state’s children. The adjustment is expected to cost the Medicaid agency an additional $14 million each year, on top of the $20 million it already spends on child psychiatric residential treatment. The money should free up some bed space, said Robbie Kerr, director of South Carolina Health and Human Services. But it may not be enough in the long run.

“We already know that our neighboring states are prepared to raise their rates as soon as I do,” Kerr told a panel of lawmakers in January. “It’s going to be an inflationary spiral.”

It is not uncommon for American children in need of intensive psychiatric care to travel to another state for treatment. KHN recently reported that about 90 Montana children covered by Medicaid are spread across 10 states in psychiatric facilities. Similar trends have occurred in Arizona, Minnesota, and Oregon. Many states have a shortage of psychiatric beds.

However, many psychologists and child welfare experts suggest that children who receive this care closer to home will be more likely to succeed. This is primarily because patients can more easily maintain contact with their parents, caregivers, and communities during stays that can average several weeks or months.

Medicaid documents show that some of the companies in South Carolina have admitted children from as far away as Alaska and Vermont. Meanwhile, South Carolina ranks 50th among all states and DC, with only North Carolina at the bottom, for the proportion of children who have major depression and are not receiving treatment, according to advocacy group Mental Health. America.

Some children, if left untreated, become violent and suicidal, ultimately requiring care in a psychiatric hospital or residential treatment facility. They may be experiencing anxiety, depression, or post-traumatic stress, or have a substance use disorder. In many cases, the pandemic has made their mental illness worse. It has also made psychiatric bed space more scarce.

At New Hope Carolinas, a for-profit facility for patients ages 12 to 21 in Rock Hill, South Carolina, 133 of 150 psychiatric beds were filled with patients covered by out-of-state Medicaid plans last summer, according to a report submitted by the facility to the South Carolina Department of Health and Human Services. At Springbrook Behavioral Health in Greenville, a psychiatric residential facility that specializes in children with severe autism, only one of the 40 Medicaid patients was from South Carolina. At a facility in Simpsonville called Excalibur-Venice, 41 Medicaid patients came from North Carolina and just 10 from South Carolina.

Excalibur-Venice is one of three facilities in South Carolina that fall under the umbrella of Broadstep, a Raleigh, North Carolina-based company backed by private equity firm Bain Capital’s Double Impact Fund. Broadstep’s footprint encompasses dozens of similar psychiatric facilities in seven states, according to its website, and Bain Capital is far from the only private equity player making investments in behavioral health.

In its 2022 “Global Healthcare Private Equity and M&A Report,” Bain & Company, a consulting firm separate from the private equity company but founded by the same entrepreneur, reported that the pandemic has presented opportunities to invest. in behavioral health care.

“With reduced stigma for mental health services, combined with increased commitments from employers and payers,” the report noted, “the addressable mental health market looks poised to expand in the coming years.”

Still, in the Carolinas, the need for psychiatric beds remains particularly acute. In mid-March, Bailey Pennington, a spokesperson for the North Carolina Department of Health and Human Services, confirmed that 21 North Carolina children were on hold, waiting for a bed to become available at a facility in North Carolina or another state. . Nearly 250 North Carolina children covered by Medicaid were sent to an out-of-state psychiatric facility between mid-2019 and mid-2021, she said. And North Carolina, despite having twice as many residents and much higher Medicaid enrollment, has fewer child psychiatric treatment beds than South Carolina.

“I have probably five to 10 young people right now who could benefit from this level of care that jump from one location to another,” said Michael Leach, director of the South Carolina Department of Social Services.

In some cases, parents have abandoned their children because they can no longer handle their mental health needs, she said. Sometimes the police get involved, but the parents refuse to take their children back. Children sleep in county offices or hospital emergency departments, she said, when psychiatric beds aren’t available.

Beds in South Carolina are often technically available, but psychiatric facilities cannot retain staff to care for more patients. That’s when children can be sent out of state, Leach said. Nineteen South Carolina children in state custody were receiving out-of-state psychiatric treatment, Leach said in mid-March.

“I need more [beds] right now than I have access to,” Leach said. “It’s a real thing.”


(KHN (Kaiser Health News) is a national newsroom that produces detailed journalism on health issues. Along with Policy Analysis and Polling, KHN is one of the three main operating programs of KFF (Kaiser Family Foundation). KFF is an organization non-profit endowed organization that provides information on health issues to the nation).

©2022 Kaiser Health News. Distributed by Tribune Content Agency, LLC.

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