From The Portland Business Journal, September 13, 1998

A California behavioral health company will debut in Portland by year-end as part of a national expansion plan targeting West Coast markets first.

The Laguna Niguel, Calif.-based OptimumCare Corp. plans to add 18 new, freestanding clinics within the next three years. Portland will be the 12th site for the for-profit OptimumCare, which is publicly traded on the Over The Counter Bulletin Board.

OptimumCare offers a type of behavioral health service known as partial hospitalization. That means patients will go and remain at the clinic site most of the day and receive intensive mental health therapy, but don’t stay overnight.

OptimumCare’s presence would add another competitor to Portland’s mental health services sector, which includes several outpatient clinics in addition to hospitalization, residential care and crisis triage services. Most existing offerings are nonprofit ventures.

Ed Johnson, OptimumCare chief executive officer and chairman, said the partial hospitalization service is a particular niche that won’t compete with the traditional mental health services offered in Portland on an outpatient basis. He described the service as a bridge for those with mental illness, allowing them to live unhospitalized, yet still receive needed help.

“We look at areas that don’t have too many services,” said Johnson. “We generally get referrals from other services.”

OptimumCare already has arranged a site for its program at 2040 S.W. Powell Blvd. and is in the process of hiring a handful of psychiatrists and counselors to staff the 5,000-square-foot center. Optimum’s program capacity will be about 40 patients at the Portland site, said Johnson. He said OptimumCare hasn’t yet contracted with local insurers, but didn’t anticipate difficulties since his company’s focus is intended to reduce more costly hospitalization.

OptimumCare went public in 1987. Last year it was the second fastest-growing publicly traded company in Orange County, Calif. It reported $12 million in revenue in 1997, up from $3.8 million in 1993 and $6 million in 1995. It has shown modest annual profits: $454,350 in 1997, or 6 cents per diluted share.

Optimum’s share price is just less than $1. Company officials recently repurchased 500,000 shares of its stock in open market transactions because they felt it was undervalued, said Johnson. Another 500,000 share repurchases have been authorized for the next year.

Although OptimumCare is offering only the partial hospitalization program in Portland, elsewhere its services are more extensive, including both inpatient and outpatient behavioral health services either offered through OptiumumCare facilities or its affiliated medical centers and community health centers.

It has sites in California, Arizona and Nevada, with plans to expand in Washington, Florida and Tennessee in addition to Oregon. OptimumCare’s most recent addition was a partial hospitalization program in Las Vegas, Nev.

Johnson predicted that company revenue would top $25 million to $30 million once expansion plans are completed in the next three years. Each site brings in about $1 million revenue. Eventually OptimumCare wants to have a presence in every major metropolitan market.

Johnson said OptimumCare is hoping to ride the wave of expanded mental health services in the wake of new federal legislation in 1998 that requires insurers to cover mental health services on parity with medical services. He acknowledged that parity won’t necessarily happen quickly, however, despite the controversial legislation.

“Everybody’s not going to have equal benefits overnight,” said Johnson. Nonetheless, OptimumCare officials say they’re going after a bite of what they claim is a $100 billion-and-growing annual behavioral health service market.

From the Portland Business Journal, September 6, 1998

Efficiency and expanded services are the goal of three private nonprofit mental health providers in Multnomah County that have come together to form Unity Inc.

The entities continue to do business under their old names–Mental Health Services West, Northeast Mental Health Services (Garlington Center) and Delaunay Family of Services.

The three agencies have a combined budget of about $15 million. That’s down from a year ago when the three independents together would have had a budget of about $19 million.

“The pressure behind the merger, the business reason is the pressure of funding reductions,” explained Kristin Angell, chief executive officer of Unity and former head of Mental Health Services West. Just about all financing for mental health have tightened up, she said, including the federal Housing and Urban Development, Medicare and Medicaid.

Even though Medicaid has expanded mental health service clientele in recent years, Angell said, the amount of services covered has shrank.

Unity provides adult and children’s mental health services, residential care and outreach. It serves about 3,000 clients monthly, and has about 312 full-time staffers at 35 sites.

Angell said the merger has reduced administrative duplications, and the entity can now look for ways to efficiently consolidate and expand services.

“Now that we have completed the legal and financial aspects of merging the agencies together, we’re really stepping out into what we can do service wise,” said Angell.

One advantage of the merger is broader geographic reach for the services. For example, Unity now can provide joint employment services through a mobile unit, rotating it more efficiently around various sites than it could have been operated before. It’s also working on creating a joint site for drop-in services, something neither of the trio could have afforded earlier.

Similarly the various operations had different specialty offerings that can now be offered to the group as a whole, such as services for so-called dual-diagnosis patients. Those are patients with both mental illness and chemical dependency issues–a particularly tough group to diagnose and treat.

The bulk of the corporate belt tightening has happened. Mental Health Services, the largest of the three, already laid off about 30 of its 250 staff prior to joining with the other nonprofits.

Mental Health in April absorbed the financially ailing Garlington, and then recently merged operations with Delaunay.

Delaunay’s former director, Dolores Morgan, is Unity’s chief operations officer.

Angell said Unity’s sites want to maintain as much individual character as possible, because each entity treats some unique populations with different needs. At the same time, however, she hopes the various services can benefit from the expanded expertise.

“The services don’t have to look the same and be delivered the same,” Angell said. “Obviously there has to be some standardization.