The Mental Health and Mental Retardation Authority of Harris County

Do you hear the clock ticking? Sure, you say! But is it the clock I’m thinking about? Probably, not! The clock I’m going to address — that is ticking ever so loudly is — the cost accounting methodology. The cost accounting what? The cost accounting methodology has been developed by the Texas Department of Mental Health and Mental Retardation (TDMHMR) in conjunction with representation and input from community centers. This methodology will permit the costs or expenses of services and supports provided by and through the community MHMR network to be assigned (accountingwise) in a more uniform and consistent fashion than ever before. In truth, in the past, the accounting systems across the centers were each substantially different. That meant that centers assigned their expenditures and may even have defined their services and supports differently. Because of this historic reality, there has been no way to realistically and accurately compare a service from one center with a supposed “same” service at the other centers.

Starting Sept. 1, 2001, this world changes. Starting September 1, the start of Fiscal Year 2002, TDMHMR will, through its Annual Performance Contract, require each Center to define its services and supports in the same fashion and to assign their expenditures in accordance with the Cost Accounting Methodology guidelines promulgated by the Department. For the first time, a unit of service, such as a medication check, a group counseling session, a rehab or service coordination unit, will be the “same” and the costs comparable.

Soooo what, you say? So, plenty! After the first quarter, TDMHMR will have data that it has never had before — it will be able to compare what it costs to deliver a service or support in Centers “X”, “Y”, and “Z” with the same service and support at MHMRA — line them up — side by side. And, then begin a process to understand the “outlyers” — those at the extremes, on either end. Such analyses begin to create a “baseline” as to costs for each type of service or support which, then, could be translated into a standard or “reasonable” range of costs for like services. Sub-groupings could, indeed, be expected — looking at like services or supports within the group of urban centers versus rural centers.

What will it mean to be an “outlyer” — say, above two standard deviations (using the bell-shaped curve) above or below the mean (state average for that service)? It will mean that all concerned, the State Authority, the governing board and administration of the Local Authority, the local consumers and family members, the advocates — and, ultimately, the policy makers at the local (Commissioners Court) and state (Legislative Delegates) levels will want to know why? Why does it cost so much more or less to deliver a specific service or support in one area than the majority of the other Authority areas? How does one justify expending funds at that level — too much or too little — to ensure the quality and effectiveness of these services or supports? Is quality positively/negatively impacted? At either end of the bell curve, either extreme, the level of scrutiny will, by necessity, intensify, the questions and concerns increase, and the demands for explanation or justification escalate. The public behavioral healthcare system will and should be held accountable. Accountability will have as one of its basic “legs” (although, hopefully, not sole “leg”) — the cost of a service or support.

Such analyses on the statewide basis will get packaged and compared with local baseline cost data. We will ask, what would the local market place charge MHMRA to provide a like service/support with the necessary documentation meeting the payor requirements, and how does this compare to what it costs us to deliver this service through our direct paid staff or current contract providers? And, if the disparity is significant, the next question is why? What value, benefit, qualitative difference, etc., is there to justify this cost differential? And, if the answer is none, there is then no reasonable way to justify this level of expense and one would expect that the Authority would seek to shift its provider system to an alternate model. We have a Board of Trustees which takes its fiscal and governmental responsibilities most seriously and they, without prompting, will expect changes in the system to ensure the “best value” with the resources received each fiscal year. And, you know my position and that of our Executive Staff around these issues is absolutely compatible with our Board’s expectations. If we didn’t have this Board/Executive leadership commitment, the next line of scrutiny would and obviously, will come from the newly reconstituted Network Advisory County (NAC). The NAC, an essential component of the Local Authority functions under TDMHMR’s expectations for Local Authorities (and built into the annual Performance Contract), will be looking closely at such cost data with the expectations of helping the Local Authority ensure they are meeting “best value” criteria. These, knowledgeable, informed, and committed consumers, family members, business leaders, and professionals will not be shy about expressing concerns regarding the use of our funds — working with us to get the best quality, highest impact, most favorable satisfaction, at the right cost for each of our services and supports.

Why? Because at each level, we recognize that we, in the State of Texas, have a woefully underfunded system — on both the mental health and mental retardation sides of the house. We have a fundamental responsibility on behalf of our consumers and their families to maximize the impact that our limited, rationed resources may have: serve the greatest number of people, reduce waiting lists, ensure high quality, increase positive outcomes as well as consumer satisfaction, all within the resources available. It is the right thing to do. And, by the by, the Texas Legislature and our Harris County Commissioners will insist on it. If the system doesn’t reflect clear, thoughtful action with regards to the cost accounting data, the policy makers will step in and take over the process.

As many of you know, MHMRA has been pushing forward with the implementation of the cost accounting methodology this fiscal year. We wanted to come in fast and early, well before the data must be transmitted to TDMHMR next year. We have wanted to see where we are and begin to understand what our costs are (as being currently reflected within the information system — coupled with our expenditures) — now — and identify the problems and weaknesses reflected therein. The initial, draft reports have been generated for the first part of this fiscal year. The results are “not pretty” (no surprise here). A work group under Ms. Betty Taylor, Deputy Executive Director, has been instituted to meet weekly, identify the problems/issues reflected through these initial reports, and develop the appropriate strategies to address those identified. That work group will provide a definitive report on or before June 1, 2001, and, it is anticipated, their proposed action plan will be implemented shortly thereafter to ensure adjustments are in place well before Sept. 1, 2001 — when we start reporting to TDMHMR.

This mid year budget review process for FY2001 was different from those held in the past years, as the Executive and Management staff knows. We spent a substantial amount of time looking at data reflecting the productive impact of our staff as to billable and non-billable units of service, looking at real revenue generated, compared with actual costs, deficits/averages identified, and basic costs for our services and supports. I listened to a variety of explanations as to why the actual work or activities of our staff wasn’t reflected in the data. Sorry, it doesn’t matter. At day’s end, it is what’s in the “system” that “counts.” As the old saying goes, “if it isn’t documented, it didn’t exist.” (Are you tired of hearing this?) But, it’s true, if it’s not there in the “system”, no expense can be tracked to it (whatever that “it” is). That means that all the expenses are “loaded” only into the services reflected. Those missing, “don’t exist,” but increase the cost of everything else that is documented.

Now, this doesn’t mean that we should be “documenting” every two or three minute activity — overwhelming our staff who already have more than enough “paper” to fill out. It does mean that we must, as a system, figure out simple, efficient “tools” to let our staff better document the full scope of what they do, as they do it on behalf of our consumers. And, most importantly, it is not whether our staff is working hard — I truly believe so many of our staff are working very hard and are dedicated, caring clinical providers. A few, and we now can readily identify them, are functioning at a level of productivity that will necessitate administrative involvement to understand what is behind this and develop action steps to correct/improve it. Are we providing the “right stuff” that the payers “count” — pay for? Sometimes, sadly but true, the payers don’t cover the full array of services or types of services needed by our consumers. Sorry, we don’t have either the luxury or the latitude to provide what is not paid for. Nowhere is this experienced more profoundly than with our uninsured consumers. The State General Revenues available are grossly inadequate to cover even the “barest bones” of service and supports — particularly on the MH side of the house that our consumers need and should have to more fully realize their potential as participating, contributing members of our community. We can’t make up this absence of coverage!! No way, no how. We can’t deliver more than what the Legislature, through TDMHMR, provides. However, we can ensure we get the “best bang for the buck” — that’s our job.

With the extent of our current deficit — with expenses exceeding revenues on the mental health side of the house, we must make budgetary adjustments — now. Our losses to date this fiscal year are more than $2 million and growing each month. We have closed the second floor Crisis Stabilization Unit of NeuroPsychiatric Center (NPC) (one of the hardest and saddest steps I have had to take as a public administrator) to curtail losses at NPC — not because the program wasn’t working (it was providing great service for our consumers). Thanks to Commissioners Court, we received a significant increase starting March 1st in revenue to help with the revenue available to cover the first floor of the psychiatric emergency services of NPC. And, we have started adjusting major NPC contracts to realign the expense profile and more closely balance their budget. But, let me be clear, NPC is not closing. Its value to the Harris County community is enormous. We will balance their budget, one way or another.

The mental health divisions, adult and child, are having to look closely and carefully at every aspect and position to ensure the value of that expenditure. If not justified, it will have to be eliminated. At day’s end, we have 4 choices to balance this budget: 1) increase earned revenue, 2) decrease expenses, 3) supplement the revenue streams with some continuing reserve funds this fiscal year, or 4) some combination of the 3. Our preference should be a combination of #1 and #2. Our reserves are really limited and critically necessary for cash flow purposes. I don’t believe, with the data to date, that we can justify additional reserve fund expenditures until we have truly addressed the efficiency and productivity issues reflected in the data system at this time. Midyear review follow-ups will be occurring over the next few weeks with each division presenting their findings, recommendations, and actions. We will go from there.

The clock is ticking. The pressures for us to adjust are intensifying. The need for us to act is now, not later, but in measured, appropriate ways that supports our Agency mission and values while accomplishing our goals and objectives on behalf of our consumers and their families. It will take all of us — each of us — to do this right. Balance our budget. Deliver the right services as funds permit with appropriate documentation — at a level of “production” that ensures the costs are appropriate to the Harris County and state market place. Thanks to each of you for helping — for making this transition process work.