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By Howard Shiffman, M.A.

In the last few years, the strategic shift for executive teams of provider organizations has been to create more community-based service delivery. The contributing factors are many: there are policy and legislative initiatives (see California Launching “Continuum Of Care” Reform Initiative For Foster Care, Pennsylvania Legislative Analysis Recommends Consolidating The Five Residential Centers For People With Intellectual Disabilities, and South Dakota To Revamp Juvenile Justice System To Reduce Residential Placements By 64% By 2020). There is payer preference (see Child Welfare’s Moving Target – Towards Community-Based Care and Connecticut Plans To Close Training School & Regional Centers & Move Residents To Private Community-Based Settings). And consumers are looking for community-based alternatives (see Making The “Community-Based” Concept Work). The result has been striking, with reductions in use of residential levels of care in health care, child welfare, and disability supports (see Number Of Juveniles In Residential Facilities Down 42% Over Past 15 Years).

This raises the question – is residential treatment a thing of the past? And, specifically for my work with children’s service provider organizations, is residential treatment for children with mental health disorders a thing of the past?

I don’t think we will see the elimination of residential treatment – there will always be a need for this level of care. But residential treatment in the current environment needs to address the specific needs of a population and be able to “integrate” into a continuum of care with a focus on moving to community-based levels of service as soon as appropriate.

A recent announcement from Rogers Behavioral Health about the opening of their eighth residential program leads me to believe that residential treatment is alive and well, and can once again become a part of a service continuum (see Rogers Behavioral Health Adds Teen Residential Program For Mood Disorders). Rogers Behavioral Health is a Wisconsin-based non-profit organization that characterizes their mental health program for children and adolescents as specialty care – including inpatient care for acute stabilization; residential care; partial hospitalization programs; and intensive outpatient programs. Their most recent residential program is an intensive treatment program for teens with severe depression and other mood disorders; this joins other specialty residential programs such as an intensive program for adolescents between the ages of 12 and 17 with obsessive compulsive disorder (OCD) and anxiety disorders, and a structured program specifically for adolescent girls dealing with attention-deficit/hyperactivity disorder (ADHD), depression, anxiety, or disordered eating. I think this type of specialty residential programming is geared toward children with insurance coverage by health plans (and perhaps some private pay).

My takeaway from the success of organizations like Rogers Behavioral Health is that an organization in today’s marketplace can diversify their payer base and their clinical programs by introducing a new type of specialty residential treatment. Many provider organizations are sitting on residential campuses with empty buildings or wings due to lack of demand for traditional residential program models. To be successful in the current market, those program models need to have a sharper focus. And, there is a new element in the design of programs for the current market – more “input” from consumers (in this case children and their families). Consumers now foot more of the bill for services and want to take their “business” to the program that delivers the best “value.” The more consumers spend, the more powerful their presence and their preferences (see The Challenges Of Rising Consumer Spending On Health Care).

As we see more health plan reimbursement (via Medicaid expansion, managed care initiatives for foster care, managed long-term service and support programs, etc.) and more direct consumer payment in the treatment field, there will be new opportunities with bigger margin potential. But succeeding in this new market is difficult. (For more on that, check out the work by my colleagues, Improving The ROI Of Your Payer Referral Marketing Program, Optimize Your Residential Referrals: Best Practices In Referral Marketing & Development, and Winning In The Private Pay Market.)

Armed with a strategic framework, good marketing data, a structured service line development plan, and capital, this is the approach needed to reformulate the residential level of care for the future. For more, join us on June 8 at The 2016 OPEN MINDS Strategy & Innovation Institute where Jamie Stewart, Chief Administrative Officer, Grafton Integrated Health Network; Amy Gallagher, Psy.D., Vice President, Whole Health, LLC, a subsidiary of Mind Springs Health; and Robert Q. Kreider, President & CEO, Devereux will discuss how to fund these new strategies in “Need Capital? A Non-Profit’s Guide To Financing New Services.”

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