N.C. mental health officials “should have anticipated” the problems that led to more than $400 million in wasted spending on community support services, the director of the General Assembly’s year-old Program Evaluation Division says.
“In this case, I don’t think the department was keen enough on estimating what would happen,” John Turcotte told the Joint Legislative Program Evaluation Oversight Committee on Wednesday. “When you turn off front-end controls, word gets out. And in this case, it behaved pretty much how it should have been anticipated.”
Legislators at the meeting called the waste “absurd” and “almost criminal.” They reacted to a story that first came to light in February, when The News and Observer of Raleigh reported on an “ill-conceived and poorly executed plan” to move as much government-funded mental health treatment as possible into communities and out of the state’s psychiatric hospitals.
Lawmakers adopted their mental health reform plan in 2001. It involved a program called “community support” that relied on new services from private, for-profit providers. That program eventually cost $50 million a month, a level 10 times higher than the state had expected, according to the newspaper report. Bills included charges of $61 per hour for providers who took clients to movies and on shopping trips.
“Never underestimate the dynamic of entrepreneurs,” Turcotte said. “When you turn loose what had formerly been a government-run, institutionally based program and you tell the world, ‘Please come forward with services, and here’s some money for that,’ that demand will be met. And there will be no delay in meeting that demand.”
“I’m not trying to be hypercritical of the department here, but that should have been anticipated,” Turcotte said. “If you’re going to have a government-operated program where you involve the private sector, you’ve got to take extraordinary measures on the front end to keep things from getting out of hand.”
The N.C. Department of Health and Human Services did not take those types of measures, Turcotte said. “One of the fundamental things you need to know about economics is that if there’s money to be made, people are going to find ways to make that money,” he said. “I don’t want to use the words ‘game the system’ because the system exactly allowed this. The rates were not set precisely enough, and the controls on authorization of service … were turned off. So this surge occurred, and — trying to be polite — the department should have anticipated this.”
Detailed evaluation
Turcotte’s comments followed a 25-minute presentation to legislators detailing problems linked to the community support programs. The Program Evaluation Division team made five official findings. First, the “pace and scope of implementation” of community support services contributed to the spending problems. Second, a delay in determining who would provide authorization for services “led to a lack of front-end controls.”
Third, the department did not forecast “costs, capacity, or utilization” of community services while putting the program in place. Fourth, “data-transfer” problems stopped officials from keeping close track of the programs’ use. Fifth, the department did not communicate information about the program “clearly and effectively.”
State administrators have made changes since the community support problems first hit the headlines, but the Program Evaluation Division offered two recommendations for future changes.
“Our first recommendation suggests that the Division of Mental Health — in collaboration possibly with the Joint Legislative Oversight Committee on Mental Health and other stakeholders — review what information is collected, what information needs to be collected, how that information is put together, so that those responsible for oversight have easy access and a concise and clear understanding of how this system is performing,” said Yana Samberg, senior program evaluator. “This also needs to be balanced, however, with an ability to drill down to a finer level of details so that you’re not just glossing over the high points.”
The second recommendation focuses on a reorganization of duties within the Health and Human Services Department. The department’s structure offers a “fragmented approach to data management” in different divisions, Samberg said. “Our second recommendation suggests that analytic efforts and data-collection efforts be focused within one office within the Division of Mental Health.”
Lawmakers’ reaction
Lawmakers shared their own concerns about the community support overspending. “What has always frustrated me is the inability of us as members of the General Assembly to receive any information about how the program is going,” said Rep. Paul Luebke, D-Durham. “Why in the heck was the department not reporting that [overspending] to our oversight committee?”
Luebke pointed to one month in particular, February 2007, when the community support bill topped $93 million. “It’s really absurd that so many millions of dollars were being spent, and the department didn’t know about it.”
Others shared Luebke’s concerns. “It appears to me that some of these decisions almost rise to the level of being criminal,” said Rep. Drew Saunders, D-Mecklenburg. “Looking at this report is almost like looking at crime-scene photos. I mean it’s gory.”
Officials overseeing state mental health services “really have appreciated working with the Program Evaluation Division,” said Leza Wainwright, codirector of the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services. Wainwright told lawmakers her colleagues are eager to work with the legislature to improve the process of reporting the program’s performance.
The state also has made changes to fix community support problems, Wainwright said. “At this point, our expenditures for community support are more than 30 percent less than they were this same time last year,” she said. “So the changes that we and the General Assembly have made have certainly shown fruit. The expenditures are much reduced.”
Future studies
The report on mental health services represents the most highly publicized effort from the Program Evaluation Division. Approved unanimously in the Assembly last year, the division already has completed reports on consolidating the state’s agricultural research facilities and determining the most effective governance and state-funding structure for seven regional economic development commissions.
The group has at least eight other projects on its radar screen before the full Assembly returns to work next year. Topics for review include water infrastructure funding, use of information technology in the state court system, the vehicle safety and emissions inspection program, and governance of the state’s K-12 public education system.
A project called the N.C. Accountability Report initiative will start with a pilot project involving the N.C. Department of Transportation, Turcotte said. “We are going to test out the accountability report system,” he said. “It will probably be a Web-based accountability report system where members, the general public — anybody — could go to that and fight out how accountable a department and the programs within the departments are. Can you determine what they’re doing? How much is it costing? And to what result?”
While lawmakers endorsed each of the subject areas for further study, Sen. Charlie Albertson, D-Duplin, offered a warning about the likely outcomes. “I guess as I think about doing these studies — and it does seem to me like they can be valuable — but the question that I have to ask myself and maybe all of us as members of the legislature is, ‘Once we get the study, will we have the political will and courage to follow through based on the recommendations?'”
The earlier $130,000 study on consolidating ag research stations generated little support among lawmakers, Albertson said. “I would just hope that we would look at all these results and look hard at having the courage and will to do what is recommended so in fact we can save money for the people of this state and provide better services as well.”
Mitch Kokai is an associate editor of Carolina Journal.