By Todd Cohen
WEST END, N.C. — In 1983, when Michael Watson became its director, the area mental health program in West End, near Pinehurst, spent $1 million a year providing services to roughly 200,000 people in Anson, Hoke, Moore, Montgomery and Richmond counties.
Today, the Sandhills Center spends $65 million year to serve 515,000 people in a service area that now also includes Lee, Harnett and Randolph counties.
And to comply with a 2001 state law designed to increase efficiency and accountability in the delivery of mental-health, substance-abuse and developmental-disabilities services, the center is changing its role from providing services to managing their delivery.
The center, for example, has signed a contract worth $4 million to $5 million a year with the Raleigh-based Mental Health Association in North Carolina to operate day and residential programs for adults with mental-health problems.
It also has signed a $2 million annual contract with the ARC of Stanly County to operate group home and day programs for adults with developmental disabilities.
But as it seeks to divest its services, the center faces challenges, Watson says.
In its predominantly rural eight-county region, for example, only Moore County is home to a private psychiatrist, he says, so the center employs roughly 20 psychiatrists to provide community-psychiatry services.
Privatization of mental-health services, designed to give consumers more choices, lower prices, higher quality and greater access to services, also has created big challenges for nonprofit providers and for the center, Watson says.
Massive pending changes in Medicaid rules, for example, would require “more comprehensive providers” to deliver services, he says.
“Smaller, private nonprofits are going to have a difficult time because of the economies of scale that are required to do this,” he says.
And while the state has raised the reimbursement rate for group homes, he says, it has not required the increase in group-home staffing that was the goal of the reimbursement increase.
“What we’re doing now is managing a very complex system, where you have to balance payments, regulations, how you manage a set of providers,” he says.
This year, the Sandhills Center plans to contract with providers to handle assessments and treatment for individuals charged with driving while impaired, and to handle its developmental-disabilities day-care program in Anson County.
But the center likely will continue to provide services for which finding outside providers would be difficult, including psychiatric services, night-and-weekend emergency services, and outpatient services such as therapy, emergency services, assessments and screenings, Watson says.
Jennifer Mahan, director of policy for the Mental Health Association in North Carolina, agrees that the shift to privatization of mental-health services has created challenges for nonprofits.
“There’s an opportunity for nonprofits that want to deliver services,” she says. “But there’s also a lot more risk involved in delivering services.”
With limited public funding, for example, nonprofits face growing pressure to raise money to deliver substance-abuse services, she says.
And because the array of mental-health services once delivered by single organizations now are being divvied up among various contractors, nonprofit providers no longer can count on economies of scale to subsidize the cost of some programs with funds from other programs, she says.
“Each of the individual services may be standing on its own,” she says. “I have a hard time as an advocate understanding how breaking the system into smaller parts makes it more efficient.”