Oregon has exactly the mental health system it paid for: anemic, underfunded, overcrowded and, until a recent infusion of new dollars, on the brink of collapse.
The state’s repeated failure to invest more money to build out its community-based mental health system is a fundamental cause of the crisis it faces today. Lawmakers who write the state budget have over many years tolerated an inadequate patchwork of services and treatment beds in communities across Oregon, despite clear signs the approach was failing Oregonians.
The resulting health care system is often unable to care for patients until they fall into severe mental health crises, when treatment is most costly, sucking up police and court resources and beds in emergency rooms and jails.
The cycle was predictable. And predicted. Repeatedly.
For the latest installment of The Oregonian/OregonLive’s examination of the state’s faltering mental health system, the newsroom analyzed state spending over the past 20 years, finding that lawmakers failed to heed persistent recommendations to devote more to community services and facilities.
Instead, time and again, legislators allocated money for only a fraction of the projected need.
That leaves Oregon digging out of a deep hole as it now looks to spend unprecedented sums to rebuild the system, raising questions about whether officials are up to the monumental task and if the state can retain and attract enough workers to make good on the opportunity.
Significant progress could take years.
“We’ve ended up in a terrible place because we didn’t make the necessary investments in community beds” and services, said Dr. Bruce Goldberg, director of the Oregon Department of Human Services and the Oregon Health Authority from 2005 to 2014. “It’s a real stain on our state that we’re in the place we’re in today. We knew we needed the capacity back then, and now we’re playing catch up.”
In 2005, Oregon created a roadmap for how to develop its mental health system by 2011, outlining needs at the decrepit state hospital in Salem and a complementary buildout of local outpatient and residential treatment facilities. Mental health advocates and the Oregon Health Authority appeared before the Legislature twice in subsequent years with comprehensive plans to increase community capacity.
The state ultimately plowed nearly $400 million into a controversial state hospital renovation but ignored recommendations for adding community beds. The Oregon Health Authority could identify only $35 million spent by the state to acquire, renovate or build community mental health beds between 1991 and 2018, although it said historical data may not capture all spending.
The net result: The number of psychiatric beds at the state hospital today, 703, is 5% lower than it was in 2005. And the number of licensed community mental health beds supporting the hospital system, 1,038 secure and otherwise as of last summer, appears to have increased by only 13% since 2005, according to a newsroom analysis of state and provider data.
That means overall capacity for the highest needs mental health patients has increased by only 5% over nearly 20 years, falling well short of even the needs predicted for Oregon for 2011.
The number is nowhere close to adequate for the unparalleled demand of today, fueled by the pandemic, a dearth of affordable housing, rising homelessness and the surge in more potent meth and fentanyl.
“We’re at a point where the imbalance between supply and demand and acuity have never felt more precarious,” said Andy Mendenhall, the chief executive of Central City Concern, which operates 29 healthcare programs in 13 facilities and more than 34 housing buildings in Multnomah and Clackamas counties.
“You can’t get a person in a bed right now to save your life. There are no beds,” said Chantay Jett, executive director of the Wallowa Valley Center for Wellness in northeastern Oregon. “We have folks who sit in the local ER for 14 days before we can find a bed, and that’s calling every single facility across the state.”
Oregon added to those challenges by keeping payment rates essentially flat for a decade or more for mental health services provided to low-income Oregonians eligible for Medicaid. That makes it difficult for community providers to cover their operating costs and ensure competitive wages to their employees, contributing to today’s bed scarcity and mental health workforce shortage.
Oregon’s funding logjam finally broke in 2021, as the visibility of the mental health crisis and lack of access to services made it one of voters’ – and therefore legislators’ – highest priority issues. Flush with healthy state budgets heavily subsidized by a federal injection of pandemic-recovery money and new dollars from Measure 110, lawmakers in three consecutive sessions earmarked a collective $1.35 billion for community-based mental health services.
“The Legislature has made important investments in rates, housing and workforce supports in recent years,” Ebony Clarke, the behavioral health director for the Oregon Health Authority, said in a statement. “But we need to keep taking a close look at the gaps in our system and bringing forward real-time, meaningful solutions to address the need, support the counselors, peers, and other staff who put people on the path to recovery.”
Learn more about mental health
For now, it’s unclear how many community beds and services Oregon needs and where exactly the gaps exist. State officials haven’t studied the issue in years, although a new report ordered by Gov. Tina Kotek is expected out early this year.
Going forward, advocates say, Oregon will need to earmark additional state general fund money to secure more matching Medicaid dollars to support the operation of new residential bed capacity and outpatient services. Perhaps most importantly, they say, that money will be needed to continue supporting the recruitment, training and retention of behavioral health specialists at all levels.
Those needs will compete financially in the Legislature with affordable housing, schools, public safety, the elderly, early childhood education and other state-funded programs, just as they did in years’ past when the Legislature didn’t allot nearly what was recommended.
Wholesale fixes will take time and deliberate action.
While Oregon’s overall mental health expenditures per capita tend to be on par with if not higher than many other states’, studies show, it also ranks among the worst nationally at meeting those mental health needs. Advocates say Oregon for too long has lacked a strategic plan to coordinate its spending to ensure it has a measurable impact.
Maggie Bennington-Davis is chief medical officer at Health Share of Oregon, the state’s largest coordinated care organization, which delivers health care of all types to people covered by the Medicaid-funded Oregon Health Plan.
She said she’s encouraged by the new funding and the unprecedented level of attention to the issue, and she is optimistic progress can be made. But she said Oregon is missing a big picture strategy at the state level.
“There’s no, ‘Here’s what we need and how can we fill that?’” she said. The funding will be helpful, she said, but the impact “will be really hard to measure until we understand what’s needed in such an underfunded and starved system.”
A history of underinvestment
Oregon called attention to its community mental health deficiencies 20 years ago but failed, as it had in the preceding decades, to follow through with action.
Congress in 1963 passed the Community Mental Health Act, which pushed states to move people out of massive state mental hospitals in favor of community-based mental health services, where patients would be near friends, families and social networks that can support them in daily life. But Oregon turned down federal grants to build those facilities for fear of the ongoing expense when the grants expired. Oregon in 1995 closed the Dammasch State Hospital in Wilsonville, a sister facility to the Oregon State Hospital, which at its peak had 600 beds.
Community-based mental health providers went on to take a major hit due to the 2001 recession and coverage limits placed on the Oregon Health Plan. Tens of thousands of low-income Oregonians lost coverage, leading to a loss of mental health providers and services across the state.
“It was a cliff,” said Heather Jefferis, executive director of the Oregon Council for Behavioral Health, who lost her own job as a clinician in Benton County at the time. “There were huge layoffs because of the restrictions in the OHP plan that caused the system to be undersized.”
By 2004, then-Gov. Ted Kulongoski convened a mental health task force to examine Oregon’s challenges.
“There are far too few community resources, particularly housing, for persons with mental illness,” the task force report said. “The failure to plan for, invest in, and maintain adequate community resources causes gridlock in the entire public mental health system.”
In response, the state proposed rebuilding the Oregon State Hospital, an institution so decrepit, overcrowded and mismanaged that it prompted federal investigations, litigation and court orders that continue to constrain it today.
Master plans released in 2005 and 2006 included detailed projections on the number of beds needed at not only the Oregon State Hospital but also in local communities. The adequacy of the hospital, the reports stressed, was predicated on a significant enhancement of the mental health system in communities across the state.
Crucially, Oregon had 921 licensed residential mental health beds spread throughout the state in 2005 and would need 1,123 by 2011, and nearly 1,300 by 2030, one report said.
“Without the enhanced community programming, demand for Oregon State Hospital beds will substantially exceed projections of size and cost,” the report warned.
In early 2007, a community services workgroup delivered to the Legislature a detailed report on local services to complement the new hospital and assure its success. The workgroup proposed $388 million in community spending over the following eight years.
It noted the plan would fill only half the unmet needs for outpatient services by 2015, and that funding projections had been sliced over worries Oregon wouldn’t have enough workers to deliver services.
Mental health advocates asked for $116 million for the first two years. The Legislature provided just $25 million in general funds for adult-focused community mental health services, according to analysis by the Legislative Fiscal Office.
The drive continued, but it did so in the face of the Great Recession, declining state budgets, and the financial cost and administrative burden of Oregon’s push to expand the number of people covered under the Oregon Health Plan.
“Funding must be sufficient to develop sustainable programs around the state, and not to be so small that there is no way to create and maintain the programs and services,” a 2008 workgroup report said, calling for the community system to be fully funded and functional by 2015.
Oregon ultimately failed to build out its system, but quantifying by how much is difficult. The Oregon Health Authority declined to create a count of today’s community mental health beds that could be compared to the state’s initial report documenting the 2005 inventory and future needs.
The newsroom used state licensing data provided by the health authority and capacity reports, shared among providers and paid for by the state, to tally how many community beds now exist.
The state’s licensing report included 1,343 beds. But, after subtracting beds already counted at the state hospital or at other facilities that aren’t part of the publicly funded system supporting the state hospital, the newsroom identified 1,038 community beds as of June – a figure that includes three key types of units, secure residential treatment facilities, residential treatment facilities and residential treatment homes.
Mental health providers and advocates say that lower tally is reflective of their daily reality and represents a major shortfall compared to the need.
“The vision of the master plan was not realized,” said Cherryl Ramirez, executive director of the Association of Oregon Community Mental Health Programs. “The funding needed for the community was simply not invested over the past decade-plus.”
A missed opportunity?
State lawmakers in 2007 moved ahead on costly plans to rebuild the state hospital in Salem and added funding for a new facility near Eugene. At the time, some advocates considered that a missed opportunity to expand community services instead, and they are even more critical now.
The $458 million plan called for construction of a replacement hospital in Salem with 620 beds and a 360-bed facility 60 miles south in Junction City.
The Oregon Residential Provider Association proposed scrapping Junction City in favor of five standalone acute units and 100 secure residential treatment beds in 16-bed facilities spread throughout the state. That approach, the group maintained in a March 2011 letter to the director of the Oregon Health Authority, would save the state approximately $40 million in operating costs each two-year budget cycle.
Kevin McChesney authored the proposal and is today the strategy and policy adviser for ColumbiaCare Services, one of the largest providers of residential treatment services in the state. He said the letter got him a five-minute meeting with then-Gov. John Kitzhaber, but little else, including from the Legislature.
Oregon moved forward on a significantly downsized 174-bed version of the Junction City hospital.
“The location wasn’t great, and building another state hospital versus investing in the community didn’t make any sense,” said Derald Walker, chief executive of Cascadia Behavioral Healthcare, the state’s largest provider of mental health and substance use treatment services.
“Peter Courtney really drove that forward,” Walker said of Oregon’s longtime Senate president. “He was very determined. He did a lot of good things for Oregon, but that was very controversial.”
Meanwhile, the state closed a 90-bed branch of the state hospital in Portland and a 60-bed facility in Pendleton and used the savings to help defray operating costs in Junction City.
Chris Bouneff, executive director of the Oregon chapter of the National Alliance on Mental Illness, said Junction City was always a project in search of a rationale, and that the machinations to justify it smacked of politics.
“We were beating our heads against a brick wall, saying we can do this better in the community. We can do it for cheaper,” he said. Junction City “took a tremendous amount of money. Once it got done everyone patted themselves on the back and everything else lost momentum. We’re still there.”
In 2013, Courtney called for a “game changing” increase in funding for community mental health services in Oregon. He asked lawmakers to make it a top priority, saying the state “should’ve done something about mental health 20 years ago, but the issue always gets pushed aside.”
Linda Hammond, then chief operating officer for the Oregon Health Authority, appeared before legislators that spring. She said that while the state had addressed the state hospital, it had fallen “woefully” short on the community-based piece and the legislation she was supporting, Senate Bill 823, created a “whole strategy” to be implemented over six years to address those shortfalls.
There is no analysis of the cost associated with that bill in the Legislature’s online information system. But Hammond, now retired, said it would have been a version of the $388 million plan, updated for inflation.
Lawmakers ended up approving nearly $60 million in new community-based health services. That was a historic commitment compared to prior years, but a small slice of the previous funding need identified. Ramirez, of the Association of Oregon Community Mental Health Programs, said the money was hardly game-changing.
When divided into several programs, the amounts were quite small, she said, and because they were funded through competitive grants, it created winners and losers. The state also sliced by half or more the funding for non-residential adult mental health services and acute care funding, records show.
The hope was the Affordable Care Act and the Medicaid expansion it funded would pick up the slack.
“The funding taken away was roughly proportional to the investment, as I recall,” Ramirez said. “It was pretty much a wash.”
Courtney, who retired from the Senate last year, said in a recent interview that both state hospital projects were necessary and securing funding was a “monumental achievement” despite the “battle royale” that ensued over Junction City.
But he acknowledged that the state didn’t follow through with a broader commitment to community-based services, something he described as one of the greatest regrets of his long legislative tenure.
“We had nice speeches,” he said. “We had nice public hearings about it. But our attitude on it didn’t change.”
The Junction City branch of the Oregon State Hospital, built at a cost of $83.5 million, opened in 2015. Nineteen months later, then-Gov. Kate Brown released her proposed budget. In it, she made a jaw-dropping recommendation: shutter the Junction City facility to save $34 million annually and help close a $1.7 billion state budget hole.
Patients, she said, could instead be transferred to community-based facilities.
The same community-based facilities the state had failed to fund.
Brown, who left office last year, said in a recent interview that the state needed to work with the money it had and budgets always involve hard choices. She said she firmly believes patients are better served in their communities and her proposal was “an attempt to force that conversation in the Legislature.”
Brown’s proposal flopped. Junction City remained open.
Low reimbursement rates
Oregon compounded its challenges by keeping flat a key set of reimbursement rates paid to providers who offer community mental health services. The state also adopted a payment scale for residential services that providers say is often economically unsustainable.
Providers have long maintained – and various studies back them up – that the rates are below cost, haven’t kept up with inflation, and that many of the administrative costs they bear simply aren’t reimbursed.
Advocates pushed the Legislature to create a task force to examine rates in 2015. But the idea went nowhere.
More recently, a 2022 study by OHSU researcher Jane Zhu found that low reimbursement rates were a significant factor in behavioral health provider shortages, with providers reporting “horrifically low rates” that weren’t commensurate with providers’ level of education, experience or skillsets.
The Oregon Health Authority waited until 2022 to significantly increase rates, pushing them up by an average of 30% — a mammoth jump.
“The system is incredibly fragile. Right now we’re at the cusp of losing our ability to provide essential care for people,” Steve Allen, then the state’s director of behavioral health, told lawmakers in June 2022 while defending the increases. “We need to be able to keep up with demand or we won’t have a behavioral health system to be able to transform.”
The state, with federal approval, has the discretion to set reimbursement rates, with the state general fund picking up roughly 22 cents of every dollar and the balance coming from the federal government through Medicaid funding for low-income Oregonians. Those rates also serve as a benchmark for what coordinated care organizations pay when contracting with providers.
The Oregonian/OregonLive examined the state’s Medicaid reimbursement rates for mental health and substance use services over the past decade, concentrating on what providers identified as some of their most common billing codes. Rates were generally stagnant across the board.
Take the outpatient rate for a mental health assessment, which includes a patient interview, an observation of their symptoms, and subsequent documentation of a diagnosis and a written treatment plan.
From 2013 until 2020, the rate didn’t budge from $95.43. Today, with the 2022 change, it’s $158.80.
Likewise a 30-minute psychotherapy session earned a provider $70.47 from 2013 until 2020. Today it’s $95.28.
Or consider the daily rate for substance abuse treatment for an adult living at a facility for less than a month: It remained flat at $100 a day from 2013 through 2016 before rising to $120 a year later.
Rick Treleaven, chief executive officer of BestCare Treatment Services, said that wouldn’t buy a decent hotel room in central Oregon. BestCare provides alcohol and substance abuse treatment services in four central and southern Oregon counties, including the only Latino-specific substance use disorder residential program of its kind in Oregon.
“You thin the soup,” he said of the strain on finances. “You keep wages low, so you can’t keep experienced clinicians who can deal with complex cases. During that time period, we were always checking the bank account to see whether we could make payroll.”
As a result of such low rates, Treleaven said, Oregon failed to add significant residential capacity for substance abuse services for two decades.
“Why would you?” he said. “You couldn’t afford to operate them.”
The day rate is now between $297.70 and $315.50, triple what it was a decade ago.
Amy Baker is still feeling the pinch of reimbursement rates, even after the state’s increases.
Baker is the executive director of Clatsop Behavioral Healthcare, which operates a 16-bed residential treatment facility in Warrenton near the Oregon coast. Unlike substance-use programs, reimbursement rates for residential mental health services vary dramatically based on the severity of individual residents’ mental illness and resulting needs, which is assessed by an outside consultant working for the state.
Baker, like other providers, said the state’s consultant pinches pennies by assigning lowball and seemingly arbitrary evaluation scores that cut the rates they receive and incentivizes them to discharge patients to a lower level of care.
State health officials acknowledged some problems in November, telling lawmakers the agency is working to find a new assessment tool for patients’ needs and establish a clear and transparent appeals process for care decisions.
Baker said her facility’s average daily reimbursement per patient has been cut by about two-thirds in recent years, most recently in 2020, even though none of her staffing needs or costs changed. The residential program lost $200,000 in 2022, she added.
“We keep hoping for a legislative solution to this problem as the idea of not having a residential program seems untenable for our community members who need that level of care,” Baker said.
Workforce challenges
Building out Oregon’s community mental health system not only with beds and services, but adequate staffing, will be key going forward. Warning signs are on the horizon.
Oregon expects to spend $300 million to, among other things, expand the number of licensed community beds by 366 by January 2026, a 35% increase. That funding also includes major expenditures for supportive housing and rental assistance for lower-needs patients. And the state earmarked more than $210 million to improve staff compensation, bolster workforce recruitment, pay hiring and retention bonuses, support housing and childcare incentives for workers, and help cover loan costs for workers, including in underserved or culturally specific areas.
But workers are hard to find.
Kimberly Lindsay, executive director of Community Counseling Solutions, based in Heppner, said her organization recently received $8.1 million to expand capacity by 68 beds – a “very impactful” infusion of money her eastern Oregon organization hadn’t seen in years.
Still, she has already delayed construction for a residential facility for kids that has been fully funded for two years. That will require 39 full-time-equivalent workers and she’s not sure how they’ll staff it. She had to delay the opening of another 15-bed acute-care facility in Hermiston by four months because of construction delays and staffing shortages.
“I ask myself two or three times a day if there’s more jobs available than there are people available to do the work,” she said.
Jett, of the Wallowa Valley Center for Wellness, said for the first time, her organization was able to offer signing bonuses, a 10% cost-of-living adjustment and extra time off to employees. It has helped, and after a flood of recent interviewing she’s reduced the number of vacancies from a high of 16 to five out of 105 total positions.
But turnover is still a constant problem, she said.
“It just feels like Band-Aids,” Jett said. “We’re throwing money at the situation instead of solving problems. Sometimes there’s no amount of money people will stay for if they’re not happy with the job they’re doing.”
Other programs have workers trained but face other barriers. Fernando Peña, executive director for the Northwest Instituto Latino, said his organization launched a certification program in 2017 that has since trained 500 Spanish-speaking recovery peers, only to see half of them not find related jobs remain unemployed because of a lack of culturally specific programs to hire them.
Building and staffing those programs, he said, will take a generational commitment, not only of money, but ongoing strategic planning to build a bench of managers and supervisors to run them.
He said the Legislature’s recent outlays were “immensely helpful, but it’s not nearly enough. It’s a Band-Aid on a bullet wound.”
McChesney, of ColumbiaCare Services, said his organization has been selective when considering expansion opportunities, in part over staffing concerns and the costs of running facilities.
Three months ago, ColumbiaCare closed a nine-bed residential program in The Dalles because it couldn’t hire and retain enough staff to keep operating it, he said.
“It’s going to take years,” he said, for state and federal “money to begin to have an impact on the number of individuals in the workforce.”
— Ted Sickinger; tsickinger@oregonian.com; 503-221-8505; @tedsickinger
