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Pursuing a larger mission through a merger

June 1, 2008
by Douglas J. Edwards, Editor-in-Chief
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Three organizations see their merger as representing the future of community-based behavioral healthcare

Hatcher & fell photography (nashville)Last year two Indiana-based community behavioral healthcare organizations were exploring how they could further partner to improve services and operate more efficiently. Dennis P. Morrison, PhD, head of the Center for Behavioral Health, and Robert J. Williams, PhD, ABPS, at the top of Quinco Behavioral Health Systems, considered forming an administrative services organization. Before proceeding, they sought the advice of David C. Guth, Jr., CEO of Centerstone, a community behavioral healthcare organization in Tennessee. Guth, who had shepherded the consolidation of several behavioral healthcare organizations, liked their ideas—so much so that he wanted to be in on the action. Instead of a two-way partnership, he suggested that the three organizations merge.

Just nine months later, the three completed their merger in May, forming the nation's largest community behavioral healthcare organization. Adopting the name of the largest partner, the new Centerstone serves 69,000 individuals and families in more than 120 facilities and 150 partnership locations in Tennessee and Indiana. If the speed at which the merger was completed and the resulting organization's size aren't amazing enough, consider that all of the boards unanimously favored the merger from the beginning.

“Very early on these three organizations, their leadership teams, their boards, had very strong alignment on mission first and then the vision for how we can actually achieve the most effective implementation of the mission through this vision of a large, national, noncontiguous organization,” says Guth, CEO of the Centerstone parent organization.

Why Merge?

Each of the three organizations, all members of the Mental Health Corporations of America (MHCA), considered itself financially healthy and widely respected for high-quality care. Guth stresses that the new Centerstone was formed not to be the biggest community-based behavioral healthcare organization, but to create a more effective care environment that can capitalize on their shared strengths. Centerstone says its size will help it to advance research, build more resources to meet the needs of their communities, and shape mental health policy at the local, state, and national levels.

“It takes a certain size and infrastructure to be able to retool any service in any industry rapidly,” Guth explains. “When you are operating in an environment where the technology of care is changing as rapidly as it is in our field, you've got to have an infrastructure to support that.”

Nonetheless, Centerstone isn't shy about mentioning its status as the biggest player in the field. At $110 million in annual revenues, Centerstone ranks at the top of the list of community-based behavioral healthcare organizations, based on MHCA data. Some organizations have larger budgets, but they also provide hospitalization services and/or services to people with developmental disabilities. In addition, Centerstone says that it has the highest number of clinical FTEs (1,171), over 17% more than the next largest provider.

Guth envisions Centerstone expanding to have a four-state footprint with $250 million in revenues, essentially doubling in size. Dr. Morrison notes that this is not a “huge” organization but on par with a regional hospital.

“At that size we can have the infrastructure that community mental health really needs to have,” Guth says. “We are an undersized industry given today's treatment technologies and given the business environment in which we operate.” He adds, “Unlimited size is not the goal, but you have to be correctly configured. We will do everything we can to encourage our colleagues to do so similarly.”

“This is the next iteration of the community mental health movement,” Dr. Morrison says. “We can't continue to think of ourselves the way John Kennedy thought about community mental health in 1963.” He points out that although funding streams and technologies have changed, the mission and vision of community behavioral healthcare providers remain the same: to provide high-quality and effective services.

Despite Centerstone's size, much of the decision making remains at the state/local level. Robert N. Vero, EdD, leads Centerstone's Tennessee operations, while Dr. Williams heads up Centerstone's Indiana division (as well as a community health center and entrepreneurial operations acquired from the Center for Behavioral Health). “At the end of the day, healthcare is a local experience,” says Guth. “You can't make decisions about what a community's healthcare system needs to be from afar.

“The Centerstone America board knows that the service-delivery interface is being guided and overseen by the regional boards, and the regional boards know that the overall financial health of Centerstone and its ability to support these is all being overseen by the Centerstone America board,” he adds.

Focus on Research

Centerstone executives stress the vital role that research plays in meeting their clients' needs. Centerstone's existing research department received the National Council for Community Behavioral Healthcare's Excellence in Innovation Award last month, and it has secured $36 million in grant funding. Building upon that work, the Centerstone Research Institute has been reconstituted to bring together 70 staff members out of the gate to investigate best practices in clinical care—and translate those into meaningful changes in clinical practice and patient outcomes. The Institute aims to reduce the 17-year science-to-service gap that has plagued the advancement of behavioral healthcare.