Copyright 1999 The Atlanta Constitution
The Atlanta
Journal and Constitution
June 27, 1999, Sunday, Home Edition
SECTION: Business; Pg. 1D
LENGTH: 1655 words
HEADLINE:
Charter beset with problems after expose;
Fallout: After a "60 Minutes II"
report, the company's mental health care facilities are under scrutiny.
BYLINE: Andy Miller, Staff
SOURCE: AJC
BODY:
Two days
after the "60 Minutes II" report, surprise inspections began at Charter
hospitals.
A health care monitoring group, energized by the scathing CBS
News program on Charter Behavioral Health Systems, sent two-person teams on
unannounced visits to 18 of the company's psychiatric hospitals. The round of
inspections, over nine days, included two Atlanta hospitals: Charter Midtown and
Charter Peachford.
The ''60 Minutes II'' report in April alleged
widespread problems, including patient injuries and deaths, in Alpharetta-based
Charter's psychiatric hospital system. Other allegations included falsification
of medical records and lack of employee training at Charter facilities. The
inspectors from the Joint Commission on Accreditation of Healthcare
Organizations found some deficiencies in all 18 facilities. Three received
failing grades. The Midtown hospital got a "conditional" mark: Improve or be
denied accreditation, which serves as a Good Housekeeping Seal for a facility.
Peachford had lesser problems.
Inspections and news reports aren't the
only troubles arising for the privately held Charter, which operates 87
hospitals in 32 states. The company recently has faced:
Federal agencies
investigating company operations.
Billing disputes with government
programs.
Inquiries by state regulators in Georgia.
Some managed
care companies halting referrals of patients to Charter hospitals --- more
fallout from "60 Minutes II."
Charter has insisted that no systemwide
problems exist. Random inspections would find areas for improvement in any
hospital, not just Charter's, the company says.
Yet Michael French,
chief executive officer of Charter since October, acknowledges, "We have some
isolated problems in some facilities.'' French and other Charter officials met
with a Journal-Constitution reporter last week to discuss the turbulence that
has shaken the company --- and its response.
"We're going to be
aggressive,'' French said. "We're going to identify problems, fix them and move
on.''
Lingering concerns about Charter's image, though, may take some
time to heal. The company, like all mental health providers, must cope with the
financial pressure that's squeezing the industry.
In the weeks since "60
Minutes II," Charter has closed two of the hospitals that failed inspections.
One was a Charlotte facility where a social worker, with a hidden camera, filmed
activities that provided much of the footage for the CBS News program.
The company also closed, temporarily, a child and adolescent unit at its
New Hampshire facility, where a federal agency reported injuries to patients,
improper use of seclusion and inappropriate sexual activity by patients.
A billing dispute has been settled in Maryland --- Charter will pay $
2.8 million for inappropriately billing Medicaid.
The level of managed
care referrals gradually has returned to normal.
Charter also has
launched its own investigation of operations. It's sending clinical teams to
audit all facilities and has enlisted consulting firm Towers Perrin to review
procedures.
The company, the largest U.S. chain of private psychiatric
hospitals, remains under scrutiny from all sides --- government, managed care
and media. But French and other execs maintain the company will emerge stronger
and better.
The company's current attitude? "Like we tell our chemically
dependent patients: Take it one day at a time," says Dr. Gary Henschen,
Charter's chief medical officer.
The Charter storm comes at a time of
great ferment in mental health care. The "consumer movement" has chipped away at
the centuries-old stigma associated with mental illness. Tipper Gore, the wife
of the vice president, led a White House conference this month to improve
understanding of mental illness. Gore spoke of her own struggle with depression
10 years ago and her successful treatment.
Consumer advocates have
pushed legislation creating benefits "parity" --- providing
mental health coverage on equal footing as that for general
physical illnesses. President Clinton recently announced he will require parity
in the federal employee health plans, which cover 9 million people. Congress is
considering a proposal that would require employers to have equal deductibles
and co-payments --- and no limits on visits --- in treating severe mental
illnesses, such as schizophrenia.
Just as the consumer movement has
flourished, many organizations that provide mental health treatment have run
into sharp criticism. In Georgia, the system that delivers mental health
services to the poor and uninsured has been jolted by a state audit, which cited
a lack of accountability and oversight and reported many patients being
misdiagnosed. That system faces a $ 12 million budget cut and soon will face
competition from private companies.
The funding cut eventually will
reduce services, warns Cynthia Wainscott of the National Mental Health
Association of Georgia. "Patient care issues have been around for years,''
Wainscott adds. "People are now more concerned about it. The media are as well."
Nationally, consumer advocates have condemned the frequent use of
seclusion and of restraints --- the practice of locking a patient's ankles and
wrists into cuffs or straps. A series by the Hartford (Conn.) Courant recently
documented that 142 people have died in physical or mechanical restraints over
the past 10 years in U.S. psychiatric facilities. Legislation has been proposed
in Congress to curb restraint use.
The CBS News program, in fact, opened
with a discussion about a 16-year-old who died in restraints at Charter's
Greensboro, N.C., hospital.
Charter says a jury could not determine the
cause of death in that case and that its employee was acquitted. Still, the
company has committed to a three- year campaign to greatly reduce use of
seclusion and restraints in its hospitals.
"The death in Greensboro was
the first adolescent death in seclusion and restraints we ever had at Charter,''
French says. "During the last four years, we've had four (restraint) deaths of
adults. Three of those four had (significant) medical problems,'' says French,
though he adds: "One death is one death too many.''
Restraints have too
often been used for convenience or for punishment, says Robert Bernstein of the
Bazelon Center for Mental Health Law. He says of Charter's new restraint policy:
"It's unfortunate that it took some tragedies to get them to move toward that
goal.''
Bernstein says Charter's hospital closures don't solve patient
care problems. "Closing a hospital is irrelevant,'' he says. "It's not the
bricks and mortar. It's presumably the clinical operation that's the issue.''
Still, the National Mental Health Association and the National Alliance
for the Mentally Ill say patient care problems exist in psychiatric facilities
run by organizations besides Charter, including state-run hospitals.
Charter, meanwhile, appears to have moved away from its criticism of CBS
News' reporting tactics. The company sought a temporary restraining order to
prevent the program from being aired. Charter argued that the network, in its
undercover reporting, may have breached patient confidentiality laws.
Now French and Henschen focus more on specific allegations, including
the lack of staff training. "CBS gave the inference we don't hire competent
staff, '' French says. "That is absolutely not correct. We have good people."
Yet he admits that falsification of medical records is unacceptable and
that one Charlotte employee, shown on "60 Minutes II'' falsifying a document,
has been dismissed. French agrees that psychiatric hospitals should face more
requirements to report patient injuries and deaths.
No Georgia
facilities were cited by the CBS News program. State regulators, though, are
looking into complaints about Charter's Laurel Brook facility in Chamblee and at
Peachford, though officials emphasize the inquiries are routine in nature. The
Midtown and Peachford hospitals were selected at random for the Joint Commission
inspections.
The pressure from private insurance represents another
challenge. Mental health spending spiraled during the 1980s, when Charter and
other chains were hit by charges of billing fraud, unnecessary care and employee
incentives to reach hospital occupancy quotas. Employers then resorted to
managed care to shrink reimbursements to psychiatric hospitals.
"Managed
care has had a pronounced, sustained impact,'' says Christopher Kane of
consulting firm KPMG. "Much of the profit has been wrested out of mental
health.''
Lower reimbursements have created a funding crisis, says David
Dintenfass of consulting firm PricewaterhouseCoopers. "A small percentage of
people do unethical things in times of crisis,'' he adds.
So how will
Charter survive these financial and regulatory currents? The company says it
makes a profit from operations and that its $ 730 million annual revenue figure
is climbing. Because of insurers' squeeze on hospital reimbursements, Charter
wants to increase revenue from outpatient settings, such as group homes and
alternative programs.
Charter also is seeking to become a private
alternative to Georgia's beleaguered public mental health system. Overall, the
company isn't shrinking; it wants to expand, French says. Meanwhile, he
acknowledges, the company's part-owner, Magellan Health Services, is continuing
its attempt to sell its 50 percent stake in Charter.
It's clear that
Charter wants to break free of its current image problems. Good news is
trumpeted.
At Charter's Laurel Heights hospital on Atlanta's Briarcliff
Road, for example, a large banner hangs on a wall, proclaiming the facility's "
Accreditation with Commendation'' from the Joint Commission in February. That,
in report-card terms, represents an "A'' grade.
From the road, the
banner looms as large as the "Laurel Heights'' hospital sign.
GRAPHIC: Photo
Charter CEO Michael French
Photo
Charter's chief medical officer Dr. Gary Henschen
Graphic
CHARTER
BEHAVIORAL HEALTH SYSTEMS
Headquarters: Alpharetta
1998 revenue: $ 730
million
Operations: 87 hospitals in 32 states
Chief executive officer:
Michael French
Employees: 14,000
LOAD-DATE: June
27, 1999 
