The five private Psychiatric Hospitals in Maryland--Taylor Manor, Sheppard Pratt, Chestnut Lodge, Brooklane, and Potomac Ridge-- have been experiencing a financial crisis. If current reimbursement methods do not change rapidly, patients across the State may have fewer options for psychiatric care. As a group, the hospitals lost almost $4 million in 1999, and they project losses exceeding $7 million for 2001. Three hospitals have recently filed for bankruptcy. Gundry Glass closed and Chestnut Lodge or CPC is currently under bankruptcy organization. Charter’s Potomac Ridge could have closed had it not been bought by the Adventist Hospital next door. The administrators at Sheppard Pratt, Brook Lane, and Taylor Manor Hospital are no less concerned. As a group, the remaining five hospitals recently had roughly 40% of their patient days funded by Medical Assistance and 20% of their patient days funded by Medicare. These state and federally funded programs pay the private hospitals about $100 per day less than the actual cost of caring for patients. The general hospitals in Maryland are reimbursed for Medicare and Medical Assistance at 94% of the Health Services Cost Review Commission (HSCRC) rates because they are under a federal Medicare waiver. The private psychiatric hospitals have been historically excluded from the waiver in part due to their patients’ longer stays. However, the lengths of stay are now much closer to those of general hospital patients, and if the small number of long stay patients are not able to be admitted to the private hospitals, they will be admitted to the general hospitals where they will have the same negative impact on the waiver test.

Through the Maryland Hospital Association, the five private psychiatric hospitals have gotten together to examine their future and to assess solutions to prevent further loss of services. Letters and discussions with key public and administrative officials have left the hospitals cautiously optimistic that a new prospective reimbursement system, for at least Medical Assistance patients, can be put into place. Under this system, the private hospitals have requested to be paid at 94% of their Cost Review Commission rates like the general hospitals. This would restore fairness to the system as well as financial stability to the private hospitals. Projections indicate that in 2001 this will cost an additional $9 million, with half of this coming from a federal match of state dollars. In 1999 this system would have cost approximately $8.5 million more than the State spent caring for these patients in the private hospitals-- but this would have been about $3 million less than it would have cost to treat these patients in general hospitals at general hospital rates.

The next step, probably in 2002, will be to bring the Medicare patients under the same type of reimbursement system, or perhaps to bring the private hospitals under the same general hospital Medicare waiver. This will require the cooperation of the state, general hospitals, and the federal Government to recognize that it is in the best interest of the entire health care system for all payers to be on the same footing. Otherwise, economic pressures are too great and programs that have been successful in serving important needs in the community will disappear. Patients will have difficulty finding appropriate services.

As a group, the private hospitals employ over 2,340 individuals and provide treatment to over 28,500 admissions per year in a variety of settings including inpatient, partial-hospitalization, intensive outpatient, crisis, respite, residential treatment, therapeutic schools and group homes. The private psychiatric hospitals of Maryland appreciate the support of the MPS and hope to continue to be able to serve all sectors of the state’s population.