Charlie Baker walked in unannounced to tour Danvers State Hospital, and his face grew ashen as he witnessed patients jammed in rooms with little space, worn bedding, and most everything in disarray.
It was early 1991, Baker was Massachusetts’ new undersecretary for health, and the 34-year-old Harvard grad was having his first look at the state’s decrepit mental hospitals.
“It was almost like he was thinking, ‘My God, I have never seen anything like this,’ ” said Bernie Carey, executive director of the Massachusetts Association for Mental Health, who joined Baker for that tour.
Soon after, a special state commission recommended closing nine of the state’s most antiquated institutions, including Danvers and two other hospitals for mentally ill patients, and moving much of that care to the community. It was Baker’s job to get it done. His strategy involved a first-in-the-nation use of a for-profit company with power to approve or deny treatments for low-income mental health patients.
Baker’s blueprint saved Massachusetts millions of dollars at a time when the state was staring at a nearly $2 billion deficit, but it left thousands of mental health patients often waiting weeks for treatments. The controversial approach became his template for rescuing financially ailing Harvard Pilgrim Health Care a decade later.
The aftershocks of both initiatives are still being felt as the now 57-year-old Republican runs for governor, and those experiences, say Baker supporters and critics, provide a window into how he might handle similarly fraught and costly issues if elected.
Republican William Weld was elected governor in 1990 with promises of shrinking the state’s growing deficit, and health care costs were a large part of that crisis.
Mental health services, with their burgeoning budgets, were a ripe target for Baker’s team. And unlike other health services, mental health treatment lacks easy measures, such as X-rays or blood tests, to pinpoint problems and gauge effectiveness.
The for-profit company brought in to manage mental health would make money only if it saved Massachusetts money in the process.
At the same time, Baker’s team seized on a loophole in federal rules that allowed Massachusetts to collect more Medicaid money from the federal government if patients were moved from hospitals to local treatment programs.
So Massachusetts got millions of dollars by closing state psychiatric hospitals and treating patients in community settings. A quirk in the Medicaid law also made it possible for low-income patients in Massachusetts to gain short-term psychiatric treatment in prestigious private hospitals that had been beyond their reach.
“It was a huge win for consumers because they got greater choice,” said David Matteodo, executive director of the Massachusetts Association of Behavioral Health Systems, the trade group for psychiatric hospitals.
But the separate move to privatize mental health care, with a for-profit company controlling treatment and costs, meant 800 state mental health workers were laid off and their work farmed out to private clinics that received less state money. Long waiting lists ensued for community services.
“It was a disaster,” said Dr. Matthew Dumont, former director of the Chelsea Community Counseling Center, where the number of psychiatrists and other caregivers, including Dumont, was cut from 23 to six. Dumont said the clinic was no longer able to provide a critical service he believes was a lifeline for mental health patients — home visits.
Over the next several years, suicide rates among mental health patients who had received state services soared. That prompted a blistering 1997 report from a legislative panel that criticized the Weld administration for lax monitoring of patients and failing to investigate their deaths in a timely way.
Two years later, a Brandeis University study gave the state high marks for innovative community-based mental health programs launched during the 1990s, but found too many patients waiting for services. The researchers also found that claims were paid more quickly, the state reaped savings, and some health care providers felt that Massachusetts’ long-fragmented mental health services were better coordinated.
Yet the state sorely lacked data to measure the impact of its new system on patients, the Brandeis report concluded. And it said many patients were being discharged too quickly from psychiatric hospitals, only to end up back again within a month.
“It’s still a revolving door,” said Dumont, the former director of the Chelsea counseling center who lives with the legacy of privatizing mental health services when he evaluates patients for the state’s public defender agency. He said he has to scrounge to find places that will take indigent defendants who have been in and out of mental health facilities.
Matteodo, the director of the psychiatric hospitals’ trade group, said more than 70 patients are typically on a waiting list for admission to state-subsidized, long-term psychiatric care. After two decades of working with the mental health insurance system that Baker’s team put in place, health providers have learned to adjust, he said.
“We have been able to come to a lot of détentes with them,” Matteodo said. “But sometimes, they get out of whack and start denying too much.”
Baker, whose push for more efficiency in state government is a hallmark of his campaign for governor, notably does not include mental health services when he talks about potential cuts and consolidations.
Instead, he would put more money into home-based services and community support for mental health patients in state care, he said in a recent interview.
“That is one of the big missing pieces here,” Baker said. He would also appoint a task force to evaluate the supply of psychiatric hospital beds and community services.
“There are clearly issues and gaps in the system that need to be addressed and dealt with,” he said.
He defends his decision to bring in a for-profit company to manage mental health services in state government, noting in an interview, “If it was such a bad idea, how come the Commonwealth is still running the same model 20 years later?”
After Baker left state government and became chief executive at Harvard Pilgrim Health Care in 1999, he continued to champion privatizing mental health services. With Harvard Pilgrim teetering on bankruptcy in 2000, Baker clamped down on mental health costs by bringing in ValueOptions — the same for-profit company that managed those services in the state’s Medicaid program.
Within months, a number of mental health specialists dropped Harvard Pilgrim patients because of low reimbursements for services. That exacerbated a phenomenon known as “stuck kids,” children who were deemed well enough to leave psychiatric hospital units but had nowhere to go because of a lack of community-based services.
Baker made other controversial changes throughout the company, but by the time he left in 2009, Harvard Pilgrim was consistently voted the top-ranked health plan in the country by a major standards-setting organization.
There is one thing Baker said he would do differently if elected governor. He would use an independent task force to track the progress of initiatives, whether that would be changes he believes necessary to the state’s troubled Department of Children and Families, Health Connector, or medical marijuana program.
“We didn’t have that,” Baker said. “Having some sort of independent group that can actually provide feedback and guidance about how it’s going with respect to pursuing what it is you are choosing to do . . . would be a good idea.”