July 1st, 2010

Vermont’s Challenges for Change seeks reductions via efficiencies

Last November, the Vermont Department of Mental Health faced budget cuts in excess of $20 million for the 2011 fiscal year. When the legislature adjourned its session in the wee hours May 13, the cut had been trimmed to about $3 million. Credit a slightly improved economy, a few more federal dollars and a state budget approach called Challenges for Change.

Challenges for Change is legislation designed to fund desirable outcomes by focusing on efficiencies rather than eliminating services and hiking taxes. On paper, it saved nearly $38 million of a $150 million budget deficit in a total state budget of $4.7 billion.

“This process just opened up huge opportunities for a lot of the changes people felt would have been useful for the system over the years that have never gotten on the table,” says Mental Health Commissioner Michael Hartman, M.S.W.

For example, merging adult services into a continuum of care, similar to the way children’s services are handled, rather than the silos they reside in now, would allow clients to retain their eligibility even as they improve into a lower level of care. Savings in acute care or hospitalizations could be reinvested where needed along the continuum, for example, shorter wait times for outpatient services.

Another example is to consolidate the crisis service telephone lines maintained by each of Vermont’s “designated agencies,” non-profit community mental health centers that have long-term contracts with the state.

Hartman is also looking at ways to streamline administration and the duplicative paperwork required by various federal and state-funded programs.

A related initiative in the Department of Corrections is to not incarcerate non-violent offenders in favor of community-based services, including treatment for mental health and substance abuse, supportive employment and transitional housing, Hartman says.

He doesn’t rule out layoffs at the designated agencies but says it will be hard to know until about a quarter into the fiscal year.

“We recognize we don’t have as much money as we’d prefer, but by doing some of these steps and by introducing new money from, say, corrections, we may be able to actually make some long-term improvements,” Hartman says. “Even when the financial picture gets more stable, these are not things we would stop doing.”

Ken Libertoff, Ph.D., executive director of the Vermont Association for Mental Health, is skeptical. Despite news reports that say the budget was balanced, he thinks it will be revisited over the summer with the risk of significant rescissions. The governor’s administration is allowed to make funding reductions up to five percent without legislative oversight.

He says Challenges for Change might have been a good approach if it hadn’t been so rushed or if so many untested ideas hadn’t been “thrown into the hopper.”

“How could you not be in favor of efficiencies in state government? But the first report had ideas just thrown into it, like they made it up. It left only five weeks to figure out what it all meant,” says Libertoff, who is retiring at the end of the year. “It’s difficult to make substantial changes in a short period of time without unintended consequences. It raises the question, can we sustain the system, which has been a national model.”

State Rep. Michael Fisher, M.S.W. (D-Lincoln), co-chairman of the Mental Health Oversight Committee, is convinced there are efficiencies waiting to be harvested in the designated agency system in insurance, data collection, quality assurance and information technology. But he’s concerned about how the proposed efficiencies will play out and worried about fiscal 2012 in which another batch of savings are expected.

“I know that investments in the community system have saved us a boatload of money,” Fisher says. “But if we’re talking about another $8 million for 2012, it may well result in a reduction of services that will end up costing more in the long run.”

A challenge to the Challenges is that the designated agencies are independent entities. Eric Grims, B.A., CEO of Northeast Kingdom Human Services and president of the Vermont Council of Mental Health and Developmental Disability Services says the agencies are committed to doing whatever they can to find savings and improve services.

“Our position is that as the legislation goes forward and tries to target those identified savings, we’ll work together to make sure those savings are realized. Most industries, even ours, are looking for efficiencies in how people flow through your system and how to control costs,” Grims says. “But I think there’s some concern that those savings are guaranteed.”

For example, the agencies would like nothing more than to standardize their back-office systems and facilitate electronic health records, Grims says. But it would be neither simple nor cheap.

He does like the ideas of seamless entry into all levels of the behavioral health care system, empowering psychiatric nurse practitioners to minimize dependence on psychiatrists and implementing a robust, centralized crisis line with skilled telephone interventions to reduce house calls.

“There are good kernels of good ideas in the Challenges,” Grims says. “Whether we see those dollars come out the other end is still a big question as far as we’re concerned.”

By Nan Shnitzler

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