Profits of change

Privately run prisons have been harshly criticized as more concerned about profits than people. But at the state's Training School, Magellan Public Solutions may be the answer to a host of problems

by Bob Curley

Following the suicide of 18-year-old Danny Stewart, officials in Colorado began investigating the High Plains Youth Center, the privately run juvenile-justice facility where Stewart had been sent for mental-health treatment. Citing safety issues, the abuse of inmates, inadequate care, a high rate of staff turnover, and poor employee training, the Colorado Department of Human Services yanked the operating license of Rebound Corp., the private firm that ran the center, in April 1998.

In Louisiana, where the US Justice Department has charged the state with providing inadequate care at its juvenile-justice facilities, the worst of the worst was the Talullah Correctional Center for Youth. Boot-camp participants at Talullah claim they were routinely forced by guards to exercise until they vomited or fainted, in a ritual dubbed "Going to Vietnam." Justice Department investigators reported a high level of brutality at the facility, as well as a lack of educational programs and mental-health care. And the state subsequently took over control of the facility from the center's private administrator, Trans-American Development Associates, in November 1998.

In Rhode Island, the state-run Training School for Youth has had its share of problems as well, including a history of administrative turnover, overcrowding, suspended academic accreditation, and reports of drug use and unsanitary conditions. Observers agree that conditions at the Training School have improved over the last few years -- community-based alternative programs have helped ease overcrowding, for example. Still, the recent case of a suicidal youth left unattended while in state custody over the Christmas holiday highlights the fact that problems continue.

Indeed, state child's advocate Laureen D'Ambra can tick off a laundry list of areas where services for kids at the Training School fall short: addiction and mental-health care, domestic-abuse counseling, dispute-resolution training, and sexual-abuse counseling.

All are part of the formula that juvenile-justice experts say is essential to prevent young offenders from growing into adult criminals, returning time and again to places like the Training School and the ACI, costing taxpayers millions. And like their counterparts in other states, Rhode Island administrators have turned to the private sector for help in improving these services to prevent recidivism and to deal with a growing population of juvenile offenders.

The state Department of Children, Youth and Families (DCYF) recently began negotiations with a managed-care company, Magellan Public Solutions, to build and help operate a state-of-the-art, 200-bed Training School that would replace the dilapidated, eight-unit facility on New London Avenue in Cranston. And, despite the horror stories in Colorado and Louisiana, it's a plan that could work.

One reason why is that Magellan is not a prison-privatization company but a behavioral managed-care firm. As a result, it would not have complete control over the Training School; at least initially, it would handle only the facility's mental-health and addiction services (although preliminary discussions about fully privatizing the Training School's girls unit have taken place). More important, DCYF officials say their goal in bringing in Magellan is not to save money but lives.

And this means that DCYF and Magellan will have some serious selling to do to convince legislators that good prevention will require spending more up front, not less. Plus, they'll need to convince union workers at the Training School that their jobs will remain safe, and to assure parents and advocates that putting at-risk kids into the hands of a private company rather than the state is something more than a choice between the unknown and the devil they know.

So far, DCYF seems to be taking the right tack. While most states pitch privatization and managed care to legislators as a cost-saving measure, DCYF director Jay G. Lindgren, Jr. acknowledges that, in the short run, bringing in Magellan would cost the state more than the current $192 per youth per day the state now spends housing kids at the Training School. But in the long run, Lindgren argues, programs that address behavioral health disorders in prisons have been shown to cut recidivism significantly, as untreated addictions and mental-health problems have been strongly associated with crime.

"I am a big believer that kids can be rehabilitated," says Lindgren. "In the '70s people gave up on rehabilitation, saying, `It doesn't work.' We've learned since that that's not true. There's no question that we can impact kids with the right interventions."

And Magellan just may be the one to figure out what those initiatives should be. Magellan Health Services, Inc., the parent company of Magellan Public Solutions, is the nation's largest behavioral-health managed-care firm, specializing in managing addiction and mental-health services. The Public Solutions division specializes in managing services for public-sector clients, including Medicaid recipients, adult prisoners, youth in juvenile-justice settings, and families served by the child-welfare system.

Lindgren says that bringing in Magellan could solve many of the problems that have plagued the Training School over the last two decades, as well as create a system of care that would improve services for youths while they are in custody and after they pass out through the probation system and back to school.

Like others in the industry, Magellan has made a major push into public-sector programs like Medicaid, child welfare and juvenile justice. Partly as a result, the population of juvenile offenders in privately run residential facilities jumped 9.6 percent between 1991 and 1995, according to the federal Office of Juvenile Justice and Delinquency Prevention. And the trend has accelerated since.

Melissa Sickmund, a senior research associate at the National Center for Juvenile Justice, says that while private agencies have long played a role in juvenile justice (Boy's Town is one well-known example), states like Maryland and New York have looked more and more at private management of existing public facilities.

Magellan Public Solutions's track record in juvenile justice includes providing a full range of clinical services to adjudicated and incarcerated youth in Georgia, primarily through Magellan's Charter Medical Services hospital subsidiary. In Florida, Magellan also works with the state juvenile-justice department and local sheriff's departments in a number of counties to provide behavioral health services in locked residential treatment facilities. In South Carolina, Magellan provides evaluation and alternatives to locked settings for youths. All told, the Magellan Public Solutions division has programs in 38 states.

"Our approach is to organize and provide appropriate mental-health and addiction services," says Danna Mauch, head of Magellan Public Solutions and a former director of the Rhode Island Department of Mental Health, Retardation, and Hospitals (MHRH). "We don't see or sell ourselves as competing with prison-privatization companies."

Of course, Magellan has not escaped the criticism that has dogged the managed-care industry since its inception -- that firms cut costs at the expense of providing quality services. For example, Merit Behavioral Care Corp. -- one of the smaller behavioral health firms acquired to form Magellan Behavioral Health in the mid-1990s -- was involved in a disastrous Medicaid managed-care initiative in Montana.

What's more, Chris Siegfried, a senior consultant on managed-care issues with the National Mental Health Association (NMHA), says that experience has shown that populations with severe and complex needs are not well-suited to managed care. For example, she says, many youths in state custody suffer from "non-compliance" disorders, such as attention-deficit disorder, conduct disorder and oppositional-defiance disorder, that, in other settings, would cause managed-care firms to disenroll them.

NMHA experts also point out that the juvenile-justice population is largely poor and generally lacks support services and advocates who could intervene to stop managed-care abuses or gaps in services. Still, even critics of managed care say that lack of state funding, unrealistic expectations and naive contracting are as big a problem in public-sector managed care as abuses by managed-care firms themselves.

More important, a company is only as good as the people who run it, and probably the biggest argument for giving Magellan -- and privatization -- a chance in Rhode Island is Danna Mauch. During her tenure as Rhode Island's mental-health director, Mauch received high marks, especially for moving people with mental illness out of institutions and into community-based programs.

Jim McNulty, a board member of the Rhode Island chapter of the National Alliance for the Mentally Ill, says Mauch "has good values, is bright, and is committed to doing things right." Joe Bevilacqua, a former state MHRH commissioner and currently a consultant to the national Bazelon Center on Mental Health Law, says that while "managed care's track record hasn't been that good, the saving grace here may be that Danna Mauch is obviously very knowledgeable about Rhode Island, and probably the best [Magellan has], quite frankly."

While approximately 30 companies attended a May 1997 informational meeting on Rhode Island's privatization proposal, only three submitted bids for the contract Magellan eventually won -- perhaps out of concern that the union would resist their efforts. Choosing from a menu of options offered by DCYF (which included full privatization of the Training School), Magellan decided to submit a proposal to partially privatize the facility, focusing on improved behavioral health-care services, administrative oversight, training, and quality assurance.

The idea is for Magellan to build upon and improve the state's existing network of care for Training School youths, including instituting a computerized clinical information system to improve coordination and case-management between the corrections, mental-health and child-welfare systems. Magellan also has proposed to put up the estimated $30 million to $35 million in badly needed capital to construct a modern new facility through a lease/purchase arrangement with the state.

According to Lindgren, new construction would be preferable to spending the estimated $22 million to $25 million it would cost to renovate the existing facility. "What we have now is inefficient and hard to manage, and a lot of it is deplorable," he says. "It isn't just the cosmetics but the infrastructure that supports it, too." Plus, the cost of constructing a new Training School could be partly offset by selling the land where the existing facility now sits, says Lindgren.

At least initially, Magellan has been asked by the state to help in a planning initiative "to determine the needs of the [Training School] population, assess and map out a plan to best meet those needs . . . then lay out the extent to which they are met or not met in the current system," says Mauch. "In addition to that, we've been asked to meet immediate needs identified by the state and the courts, such as those of female juvenile detainees, almost immediately upon assuming the contract."

The state has yet to sign a contract with Magellan, however, and neither the money needed for the initial planning nor for the actual implementation of the privatization plan has been approved by the legislature. Lindgren says he hopes to wrap up negotiations with Magellan within the next month or two, and to bring a proposal to the governor and the legislature sometime during the 1999 session.

To smooth the way, state officials have taken pains to stress that bringing in Magellan won't affect union jobs at the Training School. Indeed, Lindgren insists that while Magellan would have some supervisory powers under the plan envisioned by the state, management of the Training School would remain in state hands, and none of the facility's current educational staff or juvenile program workers (JPWs) -- the Training School's guards -- would be displaced. Lindgren also claims that he does not foresee the state's giving Magellan complete control over the Training School.

"No state has totally given over its juvenile-justice system to a private company," he says. "It will always be the state's responsibility to run the `last stop' for kids." What's more, even if a new Training School were built under Magellan's supervision, the facility would be on state land, says Lindgren, and the state would "always have the option to pull it back."

On the other hand, Lindgren does not rule out expanding Magellan's role, including a possible risk-sharing arrangement in which Magellan would assume more responsibility for the costs of running the facility -- presumably in exchange for more control. Nor does Lindgren exclude the possibility of making staff cuts recommended by Magellan. "If it would improve services, we would look at that," he says.

And this is what has union officials and critics alike concerned. "If a private company gets in, it's really just the first step," says Rick Mulcahey, president of AFSCME Local 314, which represents most of the non-teaching staff at the Training School, including the JPWs. "They just want to get their foot in the door. It would be natural for them to . . . ultimately take over the whole Training School."

In fact, the state already has had several discussions with Magellan about fully privatizing at least one section of the Training School -- the girls unit. Child advocate Laureen D'Ambra says that the female prisoners are the most in need of improved services, and, according to Lindgren, privatization would give administrators more flexibility in hiring female staff and creating gender-specific services than the current union contracts allow. While Magellan would be responsible for hiring its own staff, state employees now working in the girls unit would be shifted to an expanded unit for males, approved under the current state budget, says Lindgren.

Union officials, though, remain concerned that privatization could threaten state workers' jobs, and Mulcahey questions Magellan's ability to manage a secure facility. "Having a better mental-health system can help, but I think that's a little different than having a private company come in and provide custody and control," says Mulcahey. "I don't think they're qualified to deal with the type of kids that we have."

Critics also worry that states often lack the savvy needed to negotiate contracts with managed-care firms, wrongly assuming that services will be fully covered. "Companies will not provide what is not specifically spelled out in the contract," says Siegfried. "Just because Magellan is in the health and mental-health business doesn't mean that they will be any better. No matter what company is contracted with, the state has to be actively involved and make sure that the contract is enforced."

But despite such concerns, Lindgren and Mauch so far seem to be saying the right things about creating a new juvenile-justice system for Rhode Island. Even union representative Mulcahey acknowledges that more should be done to help keep kids from returning to the Training School again and again. "We've had a tendency to only house these kids, not rehabilitate them," he says.

Mauch says that the proposed changes in the state's juvenile-justice system, rather than being revolutionary, have recent precedents. "In 1986 and 1987 Rhode Island developed the first comprehensive mental-health system in the nation," she recalls. "The state became a test site for inpatient care by identifying patients' needs, determining appropriate systems of care, and setting out to fill in gaps. What I see now is Rhode Island seeking to build on the successes in those areas and doing the same with adjudicated juveniles."

In short, Mauch and Magellan claim to be better than a choice of evils. The devil, it seems, will be in the details.