Steward Health Care System is spending millions to open new psychiatric units in its Massachusetts hospitals, filling a gap in mental health care and marking a reversal from the recent years in which hospitals had little interest in expanding these services.
Psychiatric care has long been considered a drain on hospital finances, but Steward executives said sweeping changes in the way health care is paid for are shifting that calculation. The for-profit company, which owns 10 hospitals in Massachusetts, has added 40 beds for adults with mental illness or substance abuse disorders in the past nine months, and plans to expand by another 30 beds this year — a total increase of 21 percent.
Suddenly, enhancing mental health services is not only good for patients but makes financial sense, too. Under new payment models, if large providers such as Steward can better coordinate care and keep patients healthier, reducing their long-term use of medical services, the hospitals may also see their bottom lines improve.
“A significant number of the patients we serve need behavioral health care, and that’s why we are making this investment,’’ said Dr. Mark Girard, president of Steward Hospitals. Many patients arrive in emergency rooms in crisis, he said, “and can’t get out because there are no beds available’’ in hospital behavioral-health units.
Steward’s strategy is part of a broader enhancement of mental health services across the state.
Partners HealthCare, one of the largest providers of psychiatric care in Massachusetts, is embarking on a significant expansion that includes adding 53 beds, mostly at McLean Hospital, a psychiatric hospital in Belmont, and at a planned mental health facility in Lynn. MetroWest Medical Center has asked regulators for permission to open a 14-bed psychiatric unit at its Natick campus.
Partners and MetroWest said their expansion plans are not motivated by the new payment models. But they are among the growing number of providers realizing that it will be difficult to improve the health of large numbers of patients, a goal of the federal Affordable Care Act, also known as Obamacare, without addressing mental health and addiction problems.
‘We looked at the people who need behavioral health care, and saw a lot of claims going outside our network.’
About 18 percent of children and adults — more than 1 million people in Massachusetts — suffer from behavior problems, depression, bipolar disorder, schizophrenia, or other psychiatric illnesses, and about 9 percent have substance abuse disorders, according to a report last month from the state Department of Public Health.
For reasons that are unclear, more than half of those with mental illness do not get treatment, the data show. Nearly 90 percent of people with substance abuse disorders do not get help, most because they do not feel they need it.
The number of beds in psychiatric specialty hospitals grew 5 percent since 2010. But at general medical hospitals, there was a slight decrease in beds reserved for treating mentally ill patients, some of whom may also have serious medical conditions. The health department’s analysis found the state has a total of 2,431 psychiatric beds for acutely ill patients, which puts Massachusetts at the top of states for inpatient mental health services, given its population, said Dr. Madeleine Biondolillo, the agency’s associate commissioner. The number still may not be adequate, however, for specific regions, within individual health care networks, or for certain types of patients.
Inpatient beds can be especially hard to find for children and teenagers, dropping from 310 to 250 over the last five years, according to the Massachusetts Association of Behavioral Health Systems, and just a handful of the new psychiatric beds are for kids.
Dr. Robert Master, chief executive of Commonwealth Care Alliance, a nonprofit organization that oversees health care for 16,000 disabled adults, said the state desperately needs more mental health services, but inpatient hospital beds probably should not be the top priority.
About 2,300 Commonwealth Care clients have serious mental illnesses, he said, and “on any day, we have 60 to 65 people in psychiatric hospitals all over the state.’’ Where they are sent “is highly random — it is the next available bed,” he added. “It’s irrational.’’
Still, more than 60 percent of those clients do not need to be in a hospital at all, Master said, and would do better in a less-costly and less-restrictive crisis-stabilization program, usually in a residence with around-the-clock staffing by psychiatrists and social workers.
Some patients wait for days in emergency rooms, even when hospital beds are available, because they are aggressive or have other behavioral problems that hospitals do not want to manage, he said. Community-based programs would add more options.
“We are paying for the care in the wrong places,’’ Master said.
Executives at Partners and Steward agree that an array of services are needed, and say they are boosting nonhospital care too.
Partners, which says it annually spends about $50 million generated from other, more-profitable services to subsidize money-losing psychiatric care, is adding residential beds and embedding social workers into primary care practices, said Dr. Scott Rauch, president of McLean and chairman of psychiatry and mental health for Partners. It is also shifting some inpatient substance-abuse treatment to outpatient settings.
Since Steward purchased the Caritas Christi provider network in 2010, it has spent $25 million to expand behavioral health services, including adding beds at Holy Family Hospital at Merrimack Valley in Haverhill, Nashoba Valley Medical Center in Ayer, Carney Hospital in Dorchester, and New England Sinai Hospital in Stoughton.
At the same time, Steward has embraced new payment methods. Traditionally, insurers and government programs paid providers a separate fee for every office visit, surgery, and test — a system believed to encourage heavy use of medical services.
Now, more than half of Steward’s 1.2 million patients are covered under “global fee’’ arrangements, in which Steward is paid a flat, budgeted amount to care for a group of patients. Many other providers are moving toward a similar system. If they meet quality measures and stay within the budget, they earn a profit; if they exceed the budget, they lose money.
These payment models are increasingly including psychiatric care. Blue Cross Blue Shield of Massachusetts in January started putting Steward on a budget for its members’ psychiatric care as well as their other medical care. Steward said it is pushing the state Medicaid program to adopt similar arrangements.
Global payments give providers an incentive to “get a complete picture of the needs of a population and figure out what you need to do to keep them well,” Girard said. “We looked at the people who need behavioral health care, and saw a lot of claims going outside our network.’’
When Steward patients get care outside the Steward system, it makes it more difficult for doctors to coordinate care for those patients — and to control costs. Opening more psychiatric beds is part of the solution, though some patients may still require care outside the system.
“Historically, it has not been the most profitable thing for hospitals to try to increase behavioral health services,’’ Biondolillo said. “Steward has been very clear they are trying to work on a strategy for these community hospitals to really take care of people in the community. To do that, they have to have the capacity to take care of anyone who comes into the ER.’’