Milwaukee County Behavioral Health Division to contract with for-profit company for hospital care

In early 2021, for the first time in more than 100 years, Milwaukee County will no longer operate a hospital to provide care to people with severe mental illness.

The Milwaukee County Behavioral Health Division’s board on Wednesday voted to contract with a for-profit company to provide inpatient care in a new hospital that would open in 2021.

The pending contract with Universal Health Services, based in King of Prussia, Pennsylvania, will culminate a four-year search for an entity to provide care for patients now hospitalized at the Behavioral Health Division’s Mental Health Complex in Wauwatosa.

“We’ve really worked hard, and I think we’ve come up with a really solid contract,” said Mary Neubauer, a member of the Behavioral Health Division’s board and the public policy and advocacy coordinator for Mental Health America of Wisconsin.

The agreement with Universal Health Services would clear the way for the Mental Health Complex, an outdated and costly facility, to be torn down.

RELATED:County's Behavioral Health Division has only one option for replacing its Wauwatosa hospital

The Behavioral Health Division provides inpatient care to about 46 to 48 patients — including seven or eight children or adolescents — each day.

In all, it provided care to 518 adults and 517 children and adolescents who needed to be hospitalized last year. Its patients typically are in periods of psychiatric crisis from depressive or bipolar disorders, psychotic disorders or other behavioral health conditions.

Universal Health Services plans to build a 120-bed hospital at an undisclosed site in Milwaukee County.

The company operates 188 inpatient behavioral health hospitals and 20 outpatient behavioral health clinics in the U.S. It also has 108 behavioral health hospitals and two clinics in the United Kingdom, as well as four hospitals and one clinic in Puerto Rico and the U.S. Virgin Islands.

Universal Health Services, which also operates acute care hospitals, had net income of $752.3 million on revenue of $10.4 billion last year.

The company has experience running psychiatric hospitals that provide care to patients similar to those treated at the Behavioral Health Division’s hospital — those with severe behavioral health conditions.

Universal Health Services will bring a proven model to the area, said Mike Lappen, administrator of the Behavioral Health Division.

“We believe we can learn from them,” Lappen said.

The planned hospital also will increase the number of beds for inpatient behavioral health care in the Milwaukee area and will provide geriatric psychiatric care.

Another potential advantage is the hospital will provide care to patients with commercial health insurance, Lappen said, and will not have the stigma now associated with the Behavioral Health Division’s hospital, where almost all the patients are covered by Medicaid, Medicare or both.

Ongoing investigation

But Universal Health Services faces fraud investigations by the U.S. Department of Justice and state attorneys general at more than 30 of its behavioral health hospitals, according to its filings with the U.S. Securities and Exchange Commission. 

The investigations include criminal investigations at four of its hospitals as well as of Universal Health Services as a corporate entity.

The company has denied that any fraudulent billings were submitted to government agencies. 

The law firm that did the due diligence on the company for the Behavioral Health Division determined that the allegations are limited to the hospitals named in the filings, Lappen said.

“There was nothing that would preclude us from contracting with them,” he said.

Universal Health Services will be granted a seven-year contract with five five-year extensions. If the Behavioral Health Division ends the contract before 15 years, it will have to pay for the portion of the hospital built for the division that has not been depreciated.

Lappen estimates the contract will cost the Behavioral Health Division about $5 million a year to cover the cost of people who do not have insurance coverage.

That excludes legacy pension costs of an estimated $7.2 million and the cost of patients who will be treated at the state’s two behavioral health hospitals.

The Behavioral Health Division also projects that administrative costs will be much lower.

It budgeted $40 million, including $22.4 million coming from county taxpayers, to provide inpatient care at the Mental Health Complex this year.

Universal Health Services has not committed to hiring the nurses and other people who now staff the unit that provides inpatient care. The unit employs the equivalent of 124 full-time employees.

But Lappen said he expects most of the employees to be offered jobs with the company given the shortage of psychiatric nurses.

“UHS will need all the staff it can get,” he said.

Universal Health Services, which has wanted to enter the Milwaukee market, was the only entity that was willing to contract with the Behavioral Health Division.

The division had hoped that a health system in Milwaukee County would step forward.

Rogers Behavioral Health System, Ascension Wisconsin and Children’s Hospital of Wisconsin explored the possibility of jointly operating a hospital at Ascension Wisconsin’s St. Joseph hospital last year but decided not to pursue the contract.

Froedtert Health, which had $1.7 billion in reserves at the end of last year, never stepped forward.

Nor did Aurora Health Care, now part of Advocate Aurora Health, which plans to spend $250 million to build a hospital and medical office building in Mount Pleasant as well as clinics in Racine County.

Aurora does operate a psychiatric hospital in Wauwatosa that provides services to some of the Behavioral Health Division’s patients.

Universal Health Services’ planned hospital will not have an emergency department and observation wing, and who will provide those services when the new hospital opens hasn’t been determined.

RELATED:How should Milwaukee provide care when mental illness becomes an emergency?

The Wisconsin Policy Forum and a Massachusetts nonprofit consulting firm are completing a study on options for redesigning the system for providing emergency psychiatric care in Milwaukee County.

The options include shifting the responsibility to the nonprofit hospital systems.

The pending contract with Universal Health Services would mark another step in the Behavioral Health Division’s ongoing move to focus on providing services in the community.

The initiatives include opening two crisis resource centers, where patients can stay for up to five days, as well as creating mobile crisis teams. It also has put more emphasis on case management for people with serious persistent mental illnesses.

The Mental Health Complex’s unit that provided long-term care also was shut down in 2016 and its former patients now live in community settings.

“The agreement with UHS is a key step in the transformation that we’ve led at BHD in the past seven years, and I’m excited to continue to move forward,” Chris Abele, Milwaukee County executive, said in a statement.

Abele was instrumental in persuading the Legislature to pass Act 203, which created the Milwaukee County Mental Health Board to oversee the Behavioral Health Division.

The moves came after the Milwaukee Journal Sentinel published numerous stories that exposed problems at the mental health complex, from its outdated building to shortcomings in care, including the death of patients, and other flaws in the county's safety net for those with mental illness.

Lappen, the administrator of the Behavioral Health Division, acknowledged that the transition to Universal Health Services will be tricky.

The union factor

The Behavioral Health Division — which has struggled to recruit and retain staff — plans to seek approval for a retention package for employees for the last year that the Mental Health Complex remains open. 

The Wisconsin Federation of Nurses and Health Professionals represents about 140 nurses, music therapists and occupational therapists at the Mental Health Complex.

Jamie Lucas, executive director of the union, said recognizing the union would help ensure oversight of Universal Health Services. 

“Employee’s voice is the last line of defense,” Lucas said.

Unions represent workers at six of Universal Health Services’ hospitals, according to the company's financial filings.

Candice Owley, president of the Wisconsin union, who also expressed concern about oversight of the company, said she was disappointed that a local health care system did not step forward and that the Behavioral Health Division had to contract with an out-of-state, for-profit company.

The Behavioral Health Division will receive quarterly reports on an array of quality metrics, and those reports will be public, Lappen said. The contract also will give it complete access to patient and billing information.

The division also will get feedback from patients treated at the hospital.

Barbara Beckert, director of the Milwaukee office of Disability Rights Wisconsin, said she would have wanted the contract negotiations to be more public but is supportive of the Behavioral Health Division’s contracting for inpatient care.

Operating one hospital is costly, she said, and the Behavioral Health Division doesn’t have the economies of scale that health systems have.

She, too, is concerned about oversight of the hospital and Universal Health Services’ mixed record in providing care.

Neubauer, the member of the board that oversees the Behavioral Health Division, acknowledged the concerns about oversight but said safeguards are written into the contract.

She also noted that the Behavioral Health Division now contracts with other hospitals.

“We can’t expect more of UHS than we expect of the other hospitals,” Neubauer said.

She also was impressed by the Universal Health Services hospitals that she visited as part of the committee that oversaw the due diligence on the company.

“It had to be place where I would be willing to go myself for services,” Neubauer said.

The Behavioral Health Division has scheduled a meeting at 4:30 p.m. Thursday at Washington Park Senior Center that will be open for public comment.