Cascadia’s Story Is One Of Hubris, Mismanagement

From, June 18, 2008

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Mental health clients in the Portland are trying to figure out where they’ll be getting their care today.

Monday local government officials unveiled the blueprint for the area’s mental health care future.

The plan, on its face, shrinks the troubled nonprofit provider, Cascadia Behavioral Healthcare, by about a third. But since Cascadia is the largest mental health care provider in the state, the restructuring will have huge ripple effects.


Since late April, taxpayers have given Cascadia more than $3 million in loans and cash advances.

Everyone involved acknowledges that without the bailout, the regional mental health system would have failed.

No one knows exactly what that would have looked like.

But many clinically depressed and schizophrenic patients would have missed their treatments. Even more recovering drug addicts and alcoholics would have been without help.

Suzanne Nord: “The ultimate thing is to provide housing and keep people off the streets.”

Recently, Suzanne Nord rolled into the Benson High gym in her wheelchair. She was one of more than a-hundred people who came to meet with Cascadia and county officials about how the current crisis will affect her life. She lives in an apartment complex Cascadia runs for the mentally ill.

Suzanne Nord: “I don’t want to be on the streets. That will make me crazier than I am already. To keep people out from under cars, and out from behind dumpsters, you need a place to sleep, that you feel safe. And that’s the beginning of being a human being again.”

Caring for people like Nord is exactly why the state and county needed to bail out Cascadia, officials say.

But if you look at the nonprofit’s books, its financial mismanagement and misplaced priorities left the government with little choice.

Derald Walker took over as the chief executive at Cascadia this year.

He says today’s crisis isn’t unique to Oregon.

Derald Walker: “Increasingly, running nonprofit healthcare is demanding. If you look at the number of places similar to Cascadia across the country, the numbers that are folding is very high.”

For the mentally ill, it’s especially difficult. Their costs are dramatically higher than most for things like medication, therapy, and in-patient housing. And the mentally ill are far more likely to live below the poverty line and be without job-sponsored health care.

Which is where the financial mismanagement comes in.

Because so many of Cascadia’s clients are poor, Walker says, they rely on Medicaid to pay their bills.

Derald Walker: “And Congress, in 2001, passed a bill that increased the accountability for Medicaid funding considerably, that required more data.”

Walker says Cascadia had more than a little bit of trouble meeting those new requirements.

Derald Walker: “It’s not like doing an appendectomy where you have some specific tangible costs, like operating rooms or the cost for a pacemaker. People with chronic mental problems need more services that are difficult to document and they don’t involve direct face-to-face contact that you can always document.”

Already, Cascadia owes another $2 million to the state because it can’t prove it provided some services over the past three years.

Trisha Baxter is the administrator for the state’s Office of Payment Accuracy and Recovery.

Trisha Baxter: “At this point, Cascadia owes that to the state. If they can come up with additional documentation, then we’d be so happy. There is no doubt that those services were delivered, but we don’t have the documentation to back up the payment of those claims.”

Despite those challenges, most of the other health providers in the state, and in fact in the country, successfully switched over to the new system.

In fact, the county says it actually gave Cascadia a chunk of money to help with the transition.

But Cascadia didn’t just use the funding to try to transition to a new billing system.

The nonprofit used much of the money to help it take over a number of the region’s smaller nonprofits.

Cascadia was formed in 2001 from three local mental health providers – and it continued to grow over the next several years by merging with other operators.

Phil Broyles: “I think they got too large too fast.

Phil Broyles is a former clinician for Cascadia.

Phil Broyles: “They didn’t have the proper systems in place to handle the number of clients they have taken on and all that. I think it was poor planning, I don’t think they planned for this big of an organization.”

Many people inside and outside Cascadia agree.

They say the organization continued to rely on costly, and mistake-prone, paper billing for years.

Cascadia CEO Derald Walker says the idea behind the growth wasn’t entirely flawed.

Derald Walker: “In the world of nonprofit healthcare, size actually can be in your favor because you are not duplicating administrative costs. But with 20/20 hindsight probably they did grow too fast and at some point, they should have consolidated their gains and made sure their financial reporting and such was equal to the size of the organization.”

Walker says since he wasn’t around when those decisions were made he’s not in a position to defend them.

And now, Cascadia is left picking up the pieces.

The transition plan will reduce the number of contracts from Cascadia’s portfolio – meaning it will also reduce the county’s reliance on one dominant operator.

Cascadia employees are being asked to learn new accounting rules – and some say they are being pressured to work harder and bill more. When Cascadia was days away from collapse, many workers stopped showing up for work.

Here’s former clinician Phil Broyles again. He still works for Cascadia’s housing office as a landlord, but says he resigned as a clinician after seeing other employees get pressured to increase their billing.

Phil Broyles: “Nonprofits are supposed to be nonprofits. Their bottom line is to provide a service to the community. And when you operate it like a company that sells widgets, then people get hurt.”

And it’s those people who will be most affected by Cascadia’s troubles. Under the county’s new plan for Cascadia, half the children it serves must transfer to a new provider.

And some patients in Gresham and Portland will need to work with another health care operation.

Right now, the county is accepting input from the public about the plan.

Within a few weeks, officials hope to shrink the nonprofit, reduce the county’s reliance on one mental health provider, and most importantly, stabilize care for the mentally ill.