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State in a rush to hand over mental health contracts to private sector

Some Florida regions are squabbling over how to allocate lucrative state contracts for mental health and substance abuse services as they rush to meet accelerated deadlines set by the state.

Hundreds of layoffs at the Department of Children and Families have increased the urgency of the handover to regional, private “managing entities” charged with assigning contracts to local providers, data collection and other administrative tasks.

“They can't monitor these existing contracts anymore, so they need these managing entities as fast as they can get them,” said Bob Sharpe, CEO of the Florida Council for Community Mental Health.

A 2008 law

authorized DCF to relinquish control of mental health and substance abuse services to non-profit organizations.

The handover could affect which services are available in each area and how those who need them can get access.

Three managing entities are already in place, handling $242 million in contracts for the areas surrounding Tampa, Miami and the Panhandle.

Potential bidders for the three remaining regions -- Palm Beach County and Central and North Florida -- were told July 15 that they must apply by Aug. 24, much sooner than expected. Instead of having the handovers complete by 2013 as originally planned, DCF now wants them done by Dec. 1. 

The change would reduce the 426 provider contracts once handled by the state to only six.

Broward health care consultant David Freedman said it's not enough time. “It's not realistic. You're talking about a large undertaking.”

In at least two cases, it's still unclear which counties will be grouped under the same managing entity, he said.

Broward County was originally slated to enter the bidding process with the Palm Beach/Treasure Coast region, but was rejected by its northern neighbor.

In response, the state announced that Broward would be annexed by the organization that serves Miami-Dade and Monroe counties, a decision that led to a public outcry at a Broward meeting DCF held on Monday.

“We're talking about $50 million in contracts, and all the allegiances started coming out of the woodwork,” said Mark Moening, a Broward mental health consumer who supports merging with Miami-Dade.

Broward mental health Judge Ginger Lerner-Wren, who opposes the merger, said she's concerned that the state is bypassing the bidding process, which is designed to avoid political bias and ensure fairness in allocating contracts.

“I think what Broward is saying is that we're large enough and sophisticated enough to do this on our own,” she said.

DCF spokesman Mark Riordan said the agency assured those at the meeting that the state would be lenient on the time-frame and allow consumers a voice.

Gradually, the state is moving toward privatizing all of its mental health services, raising concerns about safety, outcomes, access and cost, said Jay Wolfson, a professor of public health and medicine at the University of South Florida.

Adoption services are run by private non-profit groups, and a bill passed this legislative session authorized the privatization of Medicaid, which provides healthcare for the state's poorest and most vulnerable citizens.

Each privatization model is a little bit different, he said. Mental health managing entities, for example, will be capped at 5 percent for administrative costs to encourage maximum spending on services.

But the system is subject to loopholes, Wolfson said.

“How do you strictly define administrative costs?” he asked. “Is your CEO a part of the administrative costs? Are you subcontracting out some of the services, and are those considered administrative costs?”

Consumers and providers in the regions with existing managing entities are generally happy with the increased local input, flexibility and efficiency, said Riordan, DCF spokesman.

Those entities have saved $10.6 million in administrative costs that were redirected to services, according to an August 15 PowerPoint created by David Sofferin, DCF's assistant secretary for substance abuse and mental health.

Florida already ranks as 49th in the country in mental health spending, and some are concerned that privatizing will further shortchange an ailing system.

“The state is still learning how all of this privatization will pan out, and they may learn it at a cost,” Wolfson said.

(Disclosure: Jay Wolfson is a board member at Health News Florida.)

-Reporter Brittany Alana Davis can be reached at 954-495-6766 or by e-mail.