Quick Fix

After years of financial neglect, the state is hoping a shot of privatization will cure Dallas County's addicted and mentally ill population

Under the old system, the state used to "buy" health care for its Medicaid population directly from agencies like the Dallas County Department of Mental Health and Mental Retardation (MHMR), which worked with a sprawling network of community-based mental-health clinics and separately funded drug treatment centers. Together these agencies created a public safety net that cared for uninsured patients whose illnesses would otherwise land them in public emergency rooms, on the streets, or in jail.

There is no question that the old system erected huge bureaucratic barriers to treatment and was often riddled with mismanagement. Yet mental-health advocates say its biggest flaw was its unconscionable lack of funding -- a decades-old problem state lawmakers failed to correct when they unleashed Northstar.

Under Northstar, the mental-health clinics and drug treatment centers that used to contract with the state will still treat the same patients, only now they will do so under contracts they've signed with Magellan and Value Options. In turn, these two managed-care companies will mix traditional providers with private ones and create a new, and supposedly improved, network of doctors, counselors, and nurses who will be available to treat the poor.

Value Options' Carole Matyas says she thinks her company can make Northstar work financially, but there's no question that the attempt to bring managed care to the public-health system is risky business.
Mark Graham
Value Options' Carole Matyas says she thinks her company can make Northstar work financially, but there's no question that the attempt to bring managed care to the public-health system is risky business.
Douglas Denton, the executive director of Homeward Bound drug treatment center, say he believes Northstar will fail because the public-health system is underfunded, a historical problem that state lawmakers failed to correct before rolling the program out in Dallas in July.
Mark Graham
Douglas Denton, the executive director of Homeward Bound drug treatment center, say he believes Northstar will fail because the public-health system is underfunded, a historical problem that state lawmakers failed to correct before rolling the program out in Dallas in July.

The state hopes that two private companies, each with its own administrative overhead, can take the same dollar the state has always spent on public health care and use it to increase the number of people treated, improve the quality of that treatment, and make a profit at the same time.

There is growing concern, however, that when money gets tight, the managed-care companies will start cutting services and reducing reimbursements to traditional providers, who will then be forced out of business. This concern, which is still being played out in Montana, is already a reality in Dallas.

When New Place shut its doors this month, it became the first of what may soon become a series of closings among the county's drug treatment centers. Counselors at these centers say they can no longer get authorization for the amount of care they need to treat addicts because the managed-care companies under Northstar view their recovery programs as too expensive.

Rather than deny treatment, the centers are covering costs by laying off counselors, taking out loans, and begging private donors for new contributions. Perhaps some of these facilities were grossly inefficient to begin with and Northstar is just a wake-up call for them to become better money managers. Yet one thing's for sure -- the centers must shore up their treatment programs if they hope to survive in the new, bottom-line world of managed care.

A growing number of doctors, led by the Texas Medical Association, fear that the county's drug treatment centers are drowning in the first wave of a financial storm that's heading straight for the county's mental-health providers. Earlier this year, the association formally asked state officials to delay the Northstar rollout amid concerns that doctors and their patients weren't ready for the transition.

"While we believe [the project] can ultimately succeed, we feel strongly that if the concerns raised below are not quickly addressed, the health-care safety net for Dallas' low-income patients will quickly unravel, jeopardizing not only the stability of Medicaid managed care but also Dallas' indigent-health-care system," the doctors wrote. "Like the foundation of a new house, it is imperative that the foundation of a new health-care delivery system be stable and unbroken. Otherwise, the entire system is likely to collapse."

Despite the TMA's request, problems with enrollment, and early medication costs that have skyrocketed above what was projected, Northstar rolled out as scheduled on July 1. Doctors did, however, persuade state lawmakers to put a temporary moratorium on all new managed-care projects. The time-out will give the state a chance to see whether this trend toward privatization will truly revolutionize the lives of poor Texans or lead them to the brink of disaster.


Dave Wanser is the state's point man on Northstar, and the burden of making the project work falls on him. Wanser is the director of behavioral health services for the Texas Department of Mental Health and Mental Retardation in Austin, but a more appropriate title might be negotiator or, perhaps, miracle worker.

Nowadays, Wanser is consumed with the unending task of ironing out glitches in the project and, increasingly, negotiating disputes between the shrewd representatives of Value Options and Magellan on the one side, and fuming traditional health-care providers on the other.

"There are some burnt bridges out there that need to be rebuilt," says Wanser, who has spent nearly three years preparing for Northstar but is still struck by the size of the task before him. "If I had any capacity to appreciate how much complaining there has been," he says, "I would have just walked away."

At least Wanser still has a sense of humor, which gives him the ability to discuss what is an astonishingly complex project in relatively simple terms. Basically, he says, the state is becoming a wiser consumer of health-care services.

"The fact is, mental illness makes you poor, and these people cost taxpayers a lot of money. It doesn't matter who pays the bill; the idea of Northstar is to reduce confusion in the system," Wanser says. "We're looking at a population of people who can't afford health care because they're poor, and we are helping them purchase health care."

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