Mental health care provider returns to profitability and starts building a cash reserve

Cascadia Behavioral Health recovers from near collapse
Mental health care provider returns to profitability and starts building a cash reserve

Portland Business Journal – by Courtney Sherwood Business Journal staff writer
Cathy Cheney | Portland Business Journal
Under Derald Walker’s leadership, Cascadia Behavioral Healthcare quietly turned itself around.

Two years after a financial meltdown nearly destroyed Multnomah County’s safety net for the mentally ill, the nonprofit at the center of the crisis has rebounded.

Cascadia Behavioral Healthcare Inc. is a shadow of its former self, and will bear the burden of its April 2008 near collapse for many years. Even at half its former size, however, the Portland nonprofit remains a key component of the county’s safety net.

It returned to profitability in March. CEO Derald Walker, appointed in the midst of the crisis to turn Cascadia around, hopes to build a $500,000 cash reserve by early 2011.

Two years ago, these results seemed inconceivable.

Cascadia Behavioral Healthcare runs clinics for people struggling with addiction, offered counseling to people with severe mental illness and housed poor people with mental illnesses.

But in spring 2008, poor bookkeeping put all that at risk.

State Medicaid officials had ordered Cascadia to repay $2.7 million when the nonprofit could not provide documents backing previous years’ claims. Capital Pacific Bank had demanded repayment of a $2 million loan.

Leslie Ford, who had been CEO since Cascadia Behavioral Healthcare was founded through the 2002 merger of several smaller nonprofits, had been forced out. Two consecutive chief financial officers hired to turn Cascadia around had quit, after declaring the company’s books a mess and uncovering still more liabilities.

By summer 2008, it appeared as though Cascadia Behavioral Healthcare’s programs would be dismantled and farmed out to other nonprofits.
Instead, the nonprofit is paying down its debt

“They still have to watch their pennies,” said Kathy Tinkle, business services director for Multnomah County Human Services. “But they’ve made significant progress.”

Under Walker’s leadership, Cascadia obtained a $2.2 million loan from Multnomah County and the state. It negotiated its Medicaid assessment down to $1.2 million, payable over five years.

It also relinquished its role as Multnomah County’s pre-eminent mental health care provider by transferring several of its programs to other area nonprofits in order to cut expenses.

In August 2008, Lifeworks Northwest took over Cascadia’s Gresham clinic and Central City Concern took control of a downtown clinic at Southwest 12th and Stark streets. Luke-Dorf took control of Bridgeview, a residential treatment center.

Surrendering these programs cut Cascadia’s expenses, and the nonprofit cut costs still further by consolidating office space and leaving administrative jobs unfilled.

By drawing down the county-state loan, Cascadia invested in a $250,000 medical billing system aimed at further improving the nonprofit’s finances. The system prohibits Cascadia from submitting incomplete Medicaid claims, so that it can never again be reimbursed without adequate documentation, Walker said.

These cuts are paying off for the organization, but they have also left Cascadia much smaller.

It lost $2.1 million on revenues of $55.9 million in the year ending June 30, 2008, and lost $514,000 on revenues of $42.5 million the following year. Walker expects to end this fiscal year with a surplus of at least $200,000 from a budget of $38 million.

In 2008, Cascadia provided about 80 percent of Multnomah County’s mental health services. Now it provides only 32 percent of these services.

Meanwhile, county mental health officials have undergone their own transformation aimed at avoiding more surprises like the April 2008 Cascadia meltdown.

“We have realized that we can not be in a situation where we are so dependent on a single agency,” Tinkle said.

County mental health leaders now meet quarterly with their largest nonprofit contractors, and monthly with Cascadia, to track the performance health of the nonprofits that they fund.

Jason Renaud, volunteer and secretary of the board of the Mental Health Association of Portland, applauded Cascadia Behavioral Healthcare’s turnaround, and the county’s renewed oversight.

But he also lamented a mental health system that faces stagnant funding and growing demand.

Cascadia’s front-line workers, in particular, have borne a difficult burden through this transformation.

They have not received pay hikes since 2008. With a recent increase in the portion that many pay for health insurance, a number are now taking home less than they did two years ago.

Walker also cut vacation days.

A new program that manages counselor productivity can allow some employees to boost take-home pay if they increase billings as a share of total hours worked. Though many workers have embraced the program, others grumble on the growing emphasis on money in a caring profession.

Since the nonprofit’s fiscal crisis, employees have had to accept paper checks because Cascadia does not have enough of a cash buffer to implement a direct deposit system.

But unlike the crisis of two years ago, these are challenges that observers expect Cascadia Behavioral Healthcare to survive.

“Unfortunately, any nonprofit with the county is in this boat,” Tinkle said. “Our dollars aren’t growing as fast as our personnel and expenses.”


Controversy over Connell House comes to a close Facility will house 12 people with mental disorders

Controversy over Connell House comes to a close
Facility will house 12 people with mental disorders

By Christian Gaston

Chase Allgood / News-Times

Luke-Dorf Executive Director Howard Spanbock (left) consults his lawyer Tuesday.

The year-long battle over Connell House, the residential treatment facility in Cornelius, came to a quiet end last Tuesday as city planning commissioners signed off on a brokered deal to turn the facility into an unlocked group home housing individuals thought to require less supervision than those who previously lived there.

The deal, which first surfaced last October, reduces the security and staffing at the facility, more or less addressing the issues Cornelius officials had with the site since it opened in 2007.

But beyond clearing the air in Cornelius, state officials say last week’s 2-to-1 vote opens up eight critically important beds for the treatment of people with serious mental disorders on conditional release from the Oregon State Hospital in Salem.

“The importance of these types of facilities can’t be overstated,” said Marie Claire Buckley, director of the Psychiatric Security Review Board, the state agency that oversees patients with criminal backgrounds who get released from the state hospital.

Buckley said that at any given time, there are 25 to 30 individuals her board has cleared for release but are waiting to find a place to stay.

The troubles at Connell House haven’t helped matters. Last June, state officials removed the residents from the facility following the escape of a man who was put there because of a civil commitment.

Buckley and her colleagues spent the last year negotiating opposition in Milwaukie over a secure residential treatment facility, as well as other similar homes throughout the state.

“It’s become more difficult to site these homes in various areas around the state,” Buckley said.

Initially, Connell House will only house eight residents. The first two residents of the new facility moved in last week, and Buckley expects two more to move in soon. Eventually, the home will be able to accommodate 12 patients who are deemed ready to start reintegrating with the community.

At the planning commission hearing last week, Howard Spanbock, executive director of Luke-Dorf, the non-profit that operates Connell House, said the new group home has a “lower impact” than the locked facility.

The lower impacts range from traffic, to parking, to security concerns.

Those concerns led city officials to revoke Connell House’s conditional use permit last January, asserting that Luke-Dorf hadn’t made it clear during the permit approval process what kind of facility they were constructing.

Luke-Dorf officials appealed the city’s decision to revoke the permit and the issue wound up back at the planning commission, with a brokered deal to reopen the facility with a new conditional use permit that describes a facility much more like the one city officials said they thought they were originally approving in 2007.

“Changing the use to a residential treatment facility will lessen the impact on the community,” said Dick Reynolds, Cornelius senior planner.

The facility will have fewer staff members on site – three to five employees – which should calm concerns about cars overflowing into on-street parking.

Residents at Connell House will also be encouraged to use public transit to reach medical appointments in Hillsboro or be transported in a Luke-Dorf bus.

The planning commission approved the deal in a 2-to-1 vote, with Commissioner Catherine Sidman voting against the plan.

“There’s a credibility issue that I’m having a difficult time with,” Sidman said. “Essentially what’s being requested is what was requested last time, which I never felt was what happened on the site.”

Planning Commission Chair Vicki Cordell made it clear that any substantial changes in operations needed to come before the planning commission.

“I’d like to keep it in the residential treatment facility niche,” Cordell said.

Nick Sherwood was the only Cornelius resident to speak, voicing concerns that poor notification of the meeting hurt turnout.

The sparse crowd was a big change from last year, when notices distributed by Washington County Sheriff Rob Gordon about the sexual nature of the crimes a trio of Connell House residents had committed drew more than 200 angry residents to a public meeting on the topic.

Time may have lessened the fervor, but also, education may have calmed some nerves.

“We’ve learned a lot about residential care facilities in this process,” said Reynolds.

Cornelius neighbors air concerns with group home operator

Posted by sfriesen November 13, 2008 14:56PM

CORNELIUS — Skeptical neighbors met this week with Luke-Dorf staff for the first time since the mental health care nonprofit changed its plans for what used to be a secure residential treatment facility.

They gathered in the now-empty Connell House, which the state closed in June after a resident escaped by climbing over the tall fence.

That fence is now gone, as are the original plans for the home, which Luke-Dorf is changing to an unlocked treatment facility for lower-risk residents.

After nearly two hours of presentations and sometimes tense discussion between the two sides, Cornelius resident Jim Claeys said he felt more comfortable with Luke-Dorf’s plans.

But he wondered why such a community discussion didn’t happen the first time.

In 2007, Luke-Dorf got a conditional use permit from the city to develop and operate a secure residential treatment facility.

But it wasn’t until December that neighbors — and the planning commissioners who approved the permit — discovered most of the home’s residents were people who had been found “guilty except for insanity” of crimes such as arson, attempted murder and rape.

The clients had been conditionally released from the Oregon State Hospital by the state’s Psychiatric Security Review Board.

City officials revoked the permit in January, leaving room for Luke-Dorf to reapply if it scaled down its plans. That’s what Luke-Dorf is doing now, with a public hearing before the Planning Commission expected in early 2009.

But the initial neighborhood uproar led to harsh feelings about Luke-Dorf that hadn’t faded Wednesday.

“You’re not trusted,” said Larry Gehrke, one of a dozen neighbors who showed up. “This is not a pro-Luke-Dorf crowd.”

Still, the meeting reassured some. Officials said they were working closely with the Washington County sheriff, who alerted neighbors to the home in December. “I trust Rob Gordon,” Claeys said.

And Ashleigh Brenton, who left Review Board jurisdiction in February, spoke movingly of her own path through the mental health system after being found “guilty except for insanity” of robbery and assault.

Brenton, a poised, friendly 52-year-old with no other criminal history, described the psychotic episode eight years ago that culminated when she sped away from a gas station with the attendant clinging to her car.

Neighbors applauded her honesty. But Claeys called Brenton’s behavior a “one-time thing” and said, “It’s the repeat offender we’re worried about.”

Mary Claire Buckley, the Review Board’s executive director, said the board considers patients’ criminal histories when deciding on releases. She cited confidentiality protections and said client profiles would be shared with Gordon and Cornelius Police Chief Paul Rubenstein but not the public.

Neighbors toured the 12-bed home and heard about the clients’ structured days: meals, medication management, community meetings, office visits, therapy and recreation.

The goal is to have clients ready to be on their own when the board’s jurisdiction ends and they go into the community.

At Connell House, residents could leave on their own but would still be closely monitored. Violations — skipping medication or returning late — could send them back to the state hospital — which none of them want, Luke-Dorf officials said.

— Jill Rehkopf Smith;

Cornelius treatment facility agrees to cut resident risk levels

Cornelius treatment facility agrees to cut resident risk levels
“Guilty except for insanity” clients will have to show they are making progress before they can move in

Wednesday, October 08, 2008
The Oregonian Staff

CORNELIUS — The 10-month controversy between the city and Connell House — a secure residential treatment facility for people found “guilty except for insanity” of serious crimes — may be nearing an end.

Owner-operator Luke-Dorf Inc. agreed Monday to change the nature of the facility and operate it as a regular residential treatment facility, a step down from the “secure” status that caused neighborhood concern.

Under the new arrangement, Connell House would still accept people who had committed crimes and were found “guilty except for insanity,” said Len Ray, a state mental health administrator.

But these residents would be considered lower risk, Ray said, because they would have met treatment requirements for a long enough time in a higher-security setting — requirements such as obeying house rules, consistently taking medications and following conditions set by the state’s Psychiatric Security Review Board.

“They really are progressing toward recovery,” Ray said.

The state closed Connell House in June after a resident escaped by climbing the fence.

Before that, neighbors were up in arms after learning that some in the home had committed serious crimes, including rape and arson, and were newly released from the Oregon State Hospital.

And the city revoked Luke-Dorf’s conditional-use permit, claiming that the Planning Commission had approved a different kind of facility, based on an incomplete picture presented to the commission by Luke-Dorf.

Nobody had anticipated the lack of adequate parking, staff said, which has led to cars parking illegally in bike lanes and on unapproved lots.

Luke-Dorf appealed the permit revocation, first to the Planning Commission and then to the City Council, where Mayor Bill Bash disclosed Monday that he had worked as Luke-Dorf’s chief executive officer for a year or two in the late 1980s.

Recently, state and city officials have been discussing how to handle Connell House, said Micky Logan of the Department of Justice.

“The state of Oregon needs to have more group homes,” she said Monday. “We want to work in partnership with the city and Luke-Dorf to take what has been a bad year and move forward.”

Luke-Dorf attorney Ed Sullivan said Luke-Dorf had agreed to accept the new arrangement and would hold a public meeting, as required, to discuss the change with neighbors. The meeting won’t occur for at least three weeks.

The City Council voted to send the matter back to the Planning Commission, where Luke-Dorf would have 60 days to modify or reapply for the conditional-use permit.

Cornelius City Manager Dave Waffle said he feels good about the agreement: “It honors our local land-use rules, protects the community and perhaps avoids any litigation, and is really part of the evolving practice of mental health care in Oregon. We’re happy to be part of that.”

Jill Rehkopf Smith: 503-294-5908;