While considerable attention has been placed on Milwaukee County's efforts to transform its adult mental health care system in recent years, far less attention has been devoted to the financial elements of mental health redesign.  

 

For example, how much is being saved on an annual basis from the County's efforts to vastly reduce its adult inpatient and long-term care beds at the Milwaukee County Mental Health Complex? And, perhaps more important, can continued bed reductions generate the property tax levy savings that are likely to be required to achieve desired levels of community-based care? 

 

The Forum attempted to answer those questions in a report released in late March.  Our Fiscal Analysis of Mental Health Redesign in Milwaukee County - commissioned by Milwaukee County at the urging of its Mental Health Redesign Task Force - first assesses the fiscal impacts of the County's mental health redesign activities that have occurred to date. Then, we use that knowledge to consider how the implementation of a fully redesigned system of care will impact the Behavioral Health Division's (BHD) financial situation in the next two years.

 

"Our analysis shows that while the financial benefits associated with the closure of the County's two long-term care facilities and reductions in adult inpatient beds are substantial, those benefits are not as great as would be expected because certain facility and indirect costs must be re-absorbed by remaining Mental Health Complex functions," says Forum President Rob Henken. "This paradigm impedes the County's overriding goal of using bed reductions to fund desired levels of spending on community-based services."

 

The mental health care system in Milwaukee County has undergone dramatic change in recent years, as County and community leaders have sought to ease reliance on emergency and inpatient care while enhancing the range and scope of community-based mental health services. Between 2010 and 2013, adult inpatient capacity at the Mental Health Complex decreased by 31%, while admissions at the Psychiatric Crisis Service (PCS) dropped by 15%. In addition, BHD recently closed its Hilltop long-term care facility and plans to complete the closure of its Rehab Central facility by the end of 2015. On the community side, meanwhile, an array of new treatment and recovery-oriented services has been added.

 

The report begins by examining financial trends from the 2010-2013 timeframe, which was the period of time in which BHD initiated various mental health redesign strategies. The trend analysis revealed, among other things, that while direct hospital-related expenditures at the Mental Health Complex decreased by $5.5 million (11%), indirect costs unexpectedly increased by $2.5 million. To some degree, this was caused by factors beyond BHD's control, such as the central budget office's determination of BHD's legacy costs from retired employees, facility expenses, and charges from other departments. 

 

"Overall, the trend analysis found that a key objective of mental health redesign - to use inpatient and long-term care downsizing as a means of freeing up property tax resources to invest in community-based services - had not been achieved as of the end of 2013," says the report. 

 

Then, after conducting further analysis on the 2014 and 2015 budgets,  the report models the fiscal impacts of 60-, 32-, and 16-bed adult inpatient scenarios for 2017. 

 

"Our modeling projects that when compared to the 2015 budget, and taking into account the anticipated closure of Rehab Central, there would be about $1.2 million available for community reinvestment under the 60-bed scenario in 2017," says Henken. "We also estimate that BHD could generate $5 million for reinvestment by downsizing to 32 adult inpatient beds, and $8.8 million by downsizing to 16 adult inpatient beds."

 

The report notes that a key question is whether an investment in community-based services of the projected savings from the 32- and 16-bed scenarios would be sufficient to appropriately offset the increased need for such services in light of reduced inpatient bed capacity.

 

The report also makes note of a projected $9 million surplus in BHD's budget for 2014, but explains that most of the surplus is attributed to one-time savings in community services and that it does not alter the report's findings with regard to Mental Health Complex services.    

 

The report concludes with five observations derived from its modeling and trend analysis:

• Milwaukee County leaders should contemplate a new financial structure for the Mental Health Complex that sets it apart from the rest of Milwaukee County government.
• Milwaukee County and State of Wisconsin leaders need to work jointly to address BHD's facility needs and questions.
• The future size, mission, and location of PCS will be central to any decision-making regarding adult inpatient bed capacity and a potential new facility.
• BHD should develop effective and transparent ways to measure the impacts of its community investments on inpatient and PCS demand and to track and project community-based service costs.
• BHD needs more detailed analysis of its revenue structure and revenue opportunities to guide bed capacity decisions.