Jeffrey D. Allred, Deseret News
Former Valley Mental Health client and advocate Ginger Phillips presents a letter to Salt Lake County Mayor Ben McAdams protesting cuts from services in Salt Lake City Wednesday, July 10, 2013. An audit of Salt Lake County's behavioral health system notes an 'awkward' transition from a nonprofit agency as the sole service provider and overseer of the county's resources provider to awarding management services to a for-profit corporation.
The auditor mentioned that out of every mental health system she has ever audited, she has never seen a county system where people genuinely care about the people they serve. I believe that. I have felt that. Valley literally saved my life in the treatment I have received over the years. Optum has brought great programs to our county. —Ginger Phillips, peer support specialist and advocate

SALT LAKE CITY — The switch to a for-profit company to manage Salt Lake County's mental health resources starting in 2011 has produced benefits and challenges, a new audit reveals.

A larger number of provider networks is available for the more 16,500 Medicaid enrollees and uninsured people eligible to receive mental health and substance abuse treatment paid for by the county and federal government.

New programs such as the countywide crisis services provided by the University Neuropsychiatric Institute and Valley Behavioral Health's school-based programs and early intervention programs for families have further expanded the reach of the county's behavioral health resources, the audit said.

The audit also determined that Valley Behavioral Health "transitioned" 733 clients off its rolls due to financial constraints, far fewer than earlier estimates of up 2,250 individuals, auditors wrote.

Overall, the audit showed "the county is headed in the right direction with this" change, said Denise Callahan, with TAP International Inc., a Carmichael, California, firm hired by the county to conduct an independent audit.

The county spent $48,500 on the audit of the entire behavioral health system, including the county's division of behavioral health services.

Callahan was largely complimentary of the cooperation of the parties during the audit and their professionalism as they interacted on a regular basis.

"I’m not used to seeing that because I’m pretty much a West Coast-based consulting firm," she said.

Last summer, Salt Lake County Mayor Ben McAdams ordered an audit of the county's behavioral health services following Valley's initial announcement that it would no longer provide care to hundreds of mental health consumers. Valley officials said operating revenue was lost when the county awarded OptumHealth the contract to manage the county's mental health and substance abuse resources.

The audit was formally released Tuesday afternoon during a news conference outside McAdams' office, but it had been discussed by the Salt Lake County Council at its work session earlier in the day.

The nonprofit Valley Behavioral Health, formerly Valley Mental Health, had been the sole provider and manager of the county's behavioral health resources for 24 years prior to the change.

"(The) transition process was awkward, but no single entity bears full responsiblity for the issues," the auditors wrote.

McAdams said the audit confirmed that "the managing care model is working out."

"The providers are adapting to this new reality," he said.

The mayor called for the audit roughly a year ago amid great uncertainty regarding Valley's announcement that it was cutting clients due to financial issues and some advocates' perceptions that patients would not fare well if the county's resources were managed by a for-profit company.

As it turned out, the client reductions were not as deep as anticipated and the county had built safeguards into its contract with OptumHealth to ensure clients' care was not sacrificed, Callahan said.

McAdams said, given the events of last summer, elected officials "show leadership and not have uncertainty or finger-pointing rule the day."

That's why he sought the audit, he said.

"What's most encouraging to me about the audit is the conclusion that because of the transition, we are able to provide greater choice for consumers by doubling the number of providers in the network. We reduced the reliance on one primary provider to address the behavioral health needs of the community," McAdams said.

The audit noted that many of the challenges related to the transition were technological issues related to billing and information exchanges.

Valley's system was more than 20 years old, "and therefore, building an electronic interface to (Valley's) aged operation system to OptumHealth's newer system was difficult."

However, the auditors said OptumHealth "did not have enough time to effectively test and configure its system for the electronic processing of (Valley Behavioral Health's) claims prior to going live."

Lori Bays, Salt Lake County's Human Services director, in a letter responding to the audit, wrote that OptumHealth had several months to prepare for the transition. OptumHealth is the health and wellness business arm of United Health Group.

"Yes, we acknowledge that there were delays that led to the contract being formally signed six weeks before the July 2011 go-live date, but Optum was notified that they were awarded the contract over nine months before that in September of 2010," Bays wrote.

The transition also presented problems for Valley, which experienced a drop in the number of referrals because of a "perception among the community at large that Valley was at full capacity and could no longer accept clients," OptumHealth officials told auditors. The perception persists among the county's Medicaid consumers, OptumHealth officials said.

The audit confirmed some of Valley's previous statements regarding its financial constraints impacting its ability to serve consumers as it had in the past.

"Without new revenue, Valley was not in a position to absorb a new 4.9 percent Medicaid rate cut without adversely affecting service delivery. The rate cut hastened the implementation of (Valley's) plans to transfer consumers to other providers," auditors wrote.

Valley Behavioral Health has taken a number of steps to reduce its costs, including the sale of property, employee layoffs and reducing travel, consulting and other operational expenses, the audit stated.

Callahan said Valley instituted 37 initiatives to restructure its operations after OptumHealth took over as manager of the county's behavioral health resources.

"That led to about $17 million in cost savings. They have been trying to right this ship, so to speak," she said.

Valley's CEO Gary Larcenaire said the nonprofit organization was pleased with the audit's findings, "which clearly affirm our responsible management of client care, stewardship of finances and the responsible transfer of former clients to new service providers."

While there are now some 180 providers to serve mental health clients funded by the county and federal government — compared with 77 in the past — Valley remains the largest subcontractor overall and the primary provider for patients with severe and persistent mental illnesses.

Part of the reason is that OptumHealth has experienced some difficulty placing clients with serious and persistent mental illness and who also have violent histories with other providers, auditors wrote.

"While (Valley Behavioral Health) has the capability to treat these type of consumers, (it) does not have, to date, all of the security equipment and monitoring equipment to ensure the safety of its employees. The absence of fully secure facilities may be an emerging issue for Salt Lake County should the number of violent (serious and persistent mental illness) consumers increase," auditors wrote.

Despite the difficult transition, the auditors noted that all of the parties "considered the best interest of the consumers."

Ginger Phillips, a certified peer support specialist and advocate for people with mental illness, said the audit was thoughtful and well-done. She was among a number of mental health advocates who had urged the county to audit its mental health system.

"The auditor mentioned that out of every mental health system she has ever audited, she has never seen a county system where people genuinely care about the people they serve. I believe that. I have felt that. Valley literally saved my life in the treatment I have received over the years. Optum has brought great programs to our county," Phillips said.

The auditors recommended that while all of the parties — Salt Lake County, OptumHealth and Valley Behavioral Health — monitor a "robust set of outcome measures," all could benefit from expanded use of "evidence-based consumer outcomes."

"The most critical measurement for mental health services is whether a consumer receiving services is actually getting better," according to the audit.

One bright spot in the audit was the costs savings realized by the creation of new crisis services, which are available to all residents of Salt Lake County.

University Hospital, which administers the new services, reported net savings of more than $3.1 million for the first three months of 2014 "stemming from diverting consumers from hospital inpatient stays to new programs, the crisis center, mobile crisis teams, the Wellness Recovery Center and the Receiving Center," the audit stated.

The audit also took note of the county's contract with OptumHealth, which caps its operating and profit margins to 14 percent of available Medicaid revenues, "effectively preventing the managed care organization from sacrificing the quality of care to garner additional profits."

Callahan said the county "was very strategic how (it) structured the contract" to ensure maximum benefit to consumers.

The audit found that the provider network more than doubled between 2011 and 2013, "creating greater choice for county mental health and substance abuse consumers."

However, among uninsured consumers with substance abuse treatment needs, there is little choice in providers because OptumHealth contracts directly with Valley Behavioral Health for those services.

Phillips said she hopes that release of the audit will be a turning point.

"I just want us all to move forward in a positive manner to serve my peers the best way we can," she said.