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Mental health spas; how money intended for homeless psychotics went to suburban neurotics.

Mental Health Spas

Remember the dozen or so homeless people you saw sleeping in the park or scrounging for food on your way to work this morning? Had the nation's Community Mental Health Centers (CMHCs) been doing their job providing basic care and treatment for the mentally ill, one-third of them--the homeless afflicted with schizophrenia and other forms of psychosis--would have been off the streets. Instead, more than twice as many Americans with serious mental illnesses are living in public shelters and on the streets than in CMHCs. And not only are the mentally ill being cheated, so are the rest of us: After all, the federal government is still spending $20 billion a year for this "care."

This isn't what the initial proponents of deinstitutionalization had in mind. Deinstitutionalization--the transfer of the nation's mentally ill from large state mental hospitals to local CMHCs that would provide more specialized care and treatment--was supposed to represent, as President Kennedy said in a special address to Congress in February 1963, a "bold new approach" to caring for the mentally ill. Proposing the establishment of a national network of CMHCs, Kennedy proclaimed that "reliance on the cold mercy of custodial isolation will be supplanted by the open warmth of community concern and capability."

This initial vision has been perverted by so many CMHC directors and officials at the National Institute of Mental Health (NIMH), that care for those with chronic mental illnesses is, according to a recent report by the Public Citizen Health Research Group and the National Alliance for the Mentally Ill, "a disaster by any measure used."

Compounding this disaster are the nation's psychiatrists, the vast majority of whom have been trained at least in part with federal funds (over $2 billion) and who've repaid their debt to society by abandoning the public sector in droves for lucrative private practices, where instead of ministering to the miserable, they cater to the comfortable. Also culpable are guilt-ridden liberals, advocates for the homeless, and ACLU lawyers, whose generosity in defending the "right" of the mentally ill homeless not to be hospitalized or to be given medication against their will has enabled these unfortunates to keep those rights, but little else.

Outraged? You should be--especially once you learn what many of our federally funded CMHCs are being used for. Take the Park Center in Fort Wayne, Indiana, for example. Its 1989 advertising brochure points out that "counseling services" are available for those afflicted with such severe mental disorders as "unhappy relationships," "anxiety," "procrastination," "an inability to communicate effectively," and "poor job performance."

What the advertising conveniently fails to mention, however, is that taxpayers spent $12.7 million on Park Center (originally known as the Fort Wayne CMHC) so that it could provide basic services for the region's mentally ill, not high-priced psychotherapy for its anxiety-ridden elite. Instead of complying with its federal mandate to serve the mentally ill, Park Center is--quite literally--leaving them out in the cold.

Then there's the Battle Creek Adventist Hospital in Michigan, which received more than $700,000 in federal funds to construct a new building and become a CMHC. Since the 37-bed unit was completed in 1971, this taxpayer-subsidized facility has operated exclusively as a private psychiatric hospital; space designated solely for CMHC use has been given instead to the hospital for its X-ray department, laboratory, and storage needs, none of which benefit the mentally ill. An independent inspector's report following a 1987 visit to the site puts it plainly: The Battle Creek CMHC "as originally conceived never materialized." Meanwhile, nearly 7,000 mentally ill homeless, many of them the intended patients of Battle Creek who were never treated there, are now wandering the streets of Detroit.

Club Mad

What's occurring at Park Center and Battle Creek is symptomatic of the larger tragedy that has befallen the nation's mentally ill: While federal funds are being used to support private care for the worried well, those with serious mental illnesses are finding it increasingly difficult to get proper psychiatric care at the CMHCs obligated to serve them. "It is likely that thousands of mentally ill people were not able to find treatment because federal funds in their communities were spent on [facilities] that did not provide services they could afford," says Rep. Ted Weiss. "Some of these people became homeless. Others had their lives shattered by untreated mental illness."

What happened? After receiving millions in federal construction and staffing grants, many community centers followed the Park Center/Battle Creek strategy and converted into private psychiatric hospitals--for-profit corporations providing virtually no public care to the seriously mentally ill they were intended to serve. In fact, a 1988 report by NIMH revealed that only 9 percent of those being treated by the nation's CMHCs suffered from schizophrenia or "other psychotic disorders," while 20 percent were found to be suffering from "social maladjustment" or "no mental disorder." Dr. Jerry Dincin, executive director of the Chicago-based Thresholds clinic, one of the nation's leading psychiatric rehabilitation programs, puts it bluntly: "The leadership of the CMHCs decided that they like psychotherapy and that they don't like mentally ill people."

Some other examples of this disgraceful trend:

* The Thalians/Cedars-Sinai CMHC in Los Angeles has abandoned treating the seriously mentally ill in favor of providing services like "Teen Line," where insecure adolescents can get advice on dating techniques. Meanwhile, roughly 3,500 persons suffering from schizophrenia and manic-depressive psychosis are languishing in the nearby L.A. County jail. Thousands more are living in the streets.

* Since 1973, the DePaul Hospital CMHC in New Orleans, which had received $475,484 in NIMH construction funds, has been run illegally as part of a private psychiatric hospital by the Hospital Corporation of America, a company which recently posted an annual profit of about $63 million. Another CMHC in the city has been operating exclusively as a private psychotherapy clinic for over a decade. Meanwhile, public services for the mentally ill in New Orleans are abysmal: A 1986 report by a city task force estimated that 44 percent of the city's 7,000-10,000 homeless were mentally ill, while according to an independent investigator's report, for a number of years "as many as 60 patients per night slept on the floor adjacent to the psychiatric ward at [nearby] Charity Hospital waiting to be seen."

* While Sacramento, California is suffering from an acute shortage of inpatient hospital beds for the mentally ill, space in the Sutter Hospital there--specifically designated for CMHC use--has been dedicated instead to a computer room, a chaplain's office, and a hair salon.

* While tens of thousands of severely mentally ill patients in Florida have been forced onto the streets since deinstitutionalization began, the Orlando Regional Medical Center CMHC has used federal construction funds to build a hospital swimming pool and tennis courts. With the $2.1 million it received in federal CMHC staffing funds, the Orlando Center hired a cosmetics and fashion counselor, a beautician/hairdresser, six maids, six porters, a pool lifeguard, and a swimming instructor.

* A 1987 visit by an independent investigator found that inpatient services at the Hazard Appalachian Regional Hospital in Hazard, Kentucky had been closed for roughly five years, that emergency services at the hospital were closed, and that there was no sign on the building suggesting that any mental health services were available. A state report issued that same year estimated that 40 percent of the 28,572 homeless in Kentucky were mentally ill.

The money that's been wasted this way by NIMH--as much as $100 million--may be pocket change to the federal government, but those who share the goals of the Great Society should be particularly outraged by such government breakdowns. Not only is the program failing those who need it, but in doing so it is fueling the conservative argument that government can never deal efficiently with poverty and public health.


The root of the CMHC failure is NIMH's dismal oversight. Under the terms of each grant, the recipient is obligated to provide five basic services--inpatient services, partial hospitalization, outpatient services, 24-hour emergency services, and consultation and education services--which are to be made available to all residents in its area for 20 years. Failure to abide by these provisions is supposed to subject the out-of-compliance CMHC to NIMH recovery proceedings, designed to allow the government to retrieve the misused money. Unfortunately, NIMH has never taken a real interest in seeing whether grantees are complying.

The case of the Community Health Counseling Services (CHCS) in Bangor, Maine shows that. The Bangor medical group had hoped to provide basic services and treatment for the mentally ill of Hancock County, a region about halfway up the Maine coast, which had been designated a federal poverty area. So in 1976, CHCS and the Hancock County Mental Health Association applied for a federal construction grant from NIMH to build a single-story mental health facility for county residents.

But in fact, the Hancock mental health association clearly had other plans for the facility all along, and more or less evicted CHCS from the federally subsidized building. The association then started renting out space to private psychiatrists involved in for-profit therapy services. At that point, the federally-funded Hancock County Community Mental Health Center ceased to exist. An August 1988 report by an independent monitoring agency stated that "none of the five essential services is being provided by the grantee either in the federally-constructed space or in any other location.... The grantee is out of compliance."

Although it had known about this violation since a June 1983 visit by its own regional official, NIMH failed to initiate recovery proceedings until 1989, when it referred the case to the Office of the General Counsel at the Department of Health and Human Services. From there, the matter went to the U.S. Attorney's office in Bangor. Finally, in August 1990, a settlement was reached under which the Hancock mental health association was forced to pay back $107,043 to the federal government. But this settlement was absurd, since it assumed that the center had been out of compliance only since 1988--even though NIMH had known about the violations since 1983. Five years of noncompliance went unpunished.

Even the head of the Hancock Community Mental Health Association wonders why NIMH failed to act. In an interview with the Bangor Daily News, Robert Keteyian acknowledged that his agency had failed to comply with federal regulations but said that it had notified NIMH officials of the fact in writing several times. "We wondered why they never responded," he remarked.

NIMH's failure to move against Hancock was no shock to Dr. Paul Curtis. Curtis's job at NIMH was to monitor health centers that had received construction grants to ensure that they were delivering the five services mandated under federal law. Despite, in his own words, "having virtually no administrative help or secretarial support," Curtis was able to implement a checklist system through which he could track down and verify CMHC compliance. His persistence enabled the federal government to recover nearly $3.8 million in funds from 10 CMHCs he caught abusing the system.

One would assume that Curtis's efforts were at least encouraged by his superiors at NIMH. But one would be wrong. "I met," he says, "with very determined resistance from within NIMH. In fact, I was actively discouraged from seeking recoveries."

After Curtis retired in 1986, NIMH, under pressure from the General Accounting Office, established a three-year, $460,000 contract with Continuing Medical Education, Inc. (CME) to conduct visits to a number of mental health centers. CME carried out investigations at 158 sites and found only 72 CMHCs (45.6 percent) playing by the federal rules. Despite this evidence, NIMH has recovered only the $107,043 in federal funds from the Hancock facility since Curtis's retirement more than four years ago. That's out of a total of noncompliant grants worth somewhere between $40 million and $100 million--a recovery rate of no better than one-fifth of 1 percent. The theory behind the lax policy, as enunciated by NIMH Deputy Director Alan I. Leshner, is that "if you push for recovery of the money immediately, [the CMHCs] will stop providing services. The philosophy was to do everything you have to do to get them back into compliance rather than shutting them down." Given that the centers are already not doing what they're supposed to, that's a red herring.

NIMH officials have known all along that serious abuses were taking place in the CMHC program. Yet, to this day, they insist that the violations are few and far between. "I'm confident that 70 percent of [the CMHCs] are doing an outstanding job," says James Pittman, an associate director at NIMH for program operations, which includes oversight for construction grants. Those who have investigated are far less sanguine. "My guess is that not more than five percent of the grantees are in compliance with federal regulations," says Howard Fishman, CME's vice president, who estimates that 25 percent of the community centers "are seriously, blatantly, out of compliance. And NIMH knows that." The "heart of the problem," a deeply critical, internal NIMH memorandum pointed out in 1972, is that if a CMHC "is not doing what it said it would, NIMH is not really interested in knowing."


Given NIMH's laxity, it should come as no surprise that the possibilities for fraud and abuse know no bounds. One CMHC located in rural Minnesota received five construction grants. The reason? The head of the CMHC was a close friend of James Stockdill, then director of NIMH's Division of Education and Service Systems Liaison. Even worse, from 1987 to 1989, Stockdill and other NIMH officials issued unauthorized waivers to 37 construction grant recipients that allow them to use their federally funded facility for purposes other than care of the mentally ill. Under federal guidelines, only the secretary of HHS and the director of NIMH have the authority to approve such waivers. Yet earlier this year, NIMH Director Lewis Judd protected his wayward subordinates by retroactively approving all 37 waivers.

Alerted by CME's and Public Citizen's charges of abuse, the inspector general's office of HHS and the GAO have begun separate investigations into the NIMH grant programs. Now that it is under investigation, of course, NIMH is promising that improvements will be made in its oversight procedures. The problem is that under its "reorganization" plan, guess who will conduct the initial site visits? You got it: senior NIMH staff members, many of whom have already proven their dedication through their effective, timely monitoring of such grantees as Hancock. Can you say "conflict of interest"? Obviously, the crisis demands reviewers from outside NIMH.

NIMH's version of reform hardly surprises Fishman. The day before signing the contract with CME, NIMH officials told him he had to hire former NIMH staff members. Only after Fishman threatened to quit did NIMH allow him to use a team of outside experts instead. That episode convinced Fishman that NIMH "essentially didn't give a damn" about ensuring that tax dollars were well spent. NIMH authorities "didn't know how to handle such oversight," Paul Curtis adds. "They were used to sending money out, not bringing money in."

Andrew Bates is an intern at The Washington Monthly.
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Author:Bates, Andrew
Publication:Washington Monthly
Date:Dec 1, 1990
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