Restructuring the Business Model for Mental Health Clinics

Grantee Name

The Coalition of Behavioral Health Agencies

Funding Area

Special Projects Fund

Publication Date

March 2015

Grant Amount

$350,456

Grant Date:

June 2010–October 2013

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New York State Office of Mental Health-licensed behavioral health clinics (Article 31 clinics) are frequently the first intervention for New Yorkers with mental illness.

Trained and licensed mental health professionals provide outreach and treatment at these clinics to hundreds of thousands of children and adults, many of them from our most vulnerable populations. Article 31 clinics traditionally have been supported through reimbursements from Medicaid, private insurers, and Comprehensive Outpatient Payment Services (COPS) payments, a Medicaid supplemental program, as well as through subsidies from foundation grants and private donations. However, changes in reimbursement streams have left Article 31 clinics with inadequate funding, including the expiration of COPS in 2013, cutbacks of certain government contracts, and a decline in private philanthropy. Additionally, complex administrative functions, such as billing, IT systems, record keeping, and reporting, also have contributed to a financial strain.

In 2010, New York Health Foundation awarded The Coalition of Behavioral Health Agencies (The Coalition) a grant to provide Article 31 clinics with technical assistance to develop and implement sustainable business models to ensure their future viability.

Outcomes and Lessons Learned

Assisted 13 agencies in developing a new business plan. For some agencies this led to having boards become more involved in deciding whether to close clinics that jeopardized their agencies; entering into merger discussions; expanding other nonclinical programs that increased overall agency revenue; terminating certain lines of business (CFO, Human Resources, etc.); or outsourcing certain job functions;
Provided skilled consultants to assist agencies that closed clinics in completing a reverse Priority Application Report, which is required by New York State Office of Mental Health to ensure that clients are properly discharged to other programs;
Supported more than 15 agencies in restructuring their administrative operations through learning collaborations or third-party vendor contracts;
Offered financial technical assistance programs—of the participating clinics, 50% experienced increases in Medicaid and 75% experienced increases in revenues; and
Made project materials and resources available to participating agencies and the public through the Coalition’s website and produced a final report on the project.

From the onset of the project The Coalition asserted, based on an in-depth study of Article 31 clinics, that the reimbursement base rate was too low. With data captured from this project and other detailed analyses conducted by The Coalition, New York State Office of Mental Health and New York State Department of Health will re-examine the clinic reimbursement rates to determine the appropriate future steps for Article 31 clinics.

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