Integrating Mental Health and Substance Use Services

Project Title

Reengineering the Business Model for Mental Health Clinics

Grant Amount


Priority Area

Integrating Mental Health and Substance Use Services

Date Awarded

April 1, 2010







It is estimated that one in four adults suffer from a diagnosable mental disorder in a given year, which translates to more than 2 million New York City residents.

The New York State Office of Mental Health-licensed behavioral health clinics (Article 31 clinics) are frequently the first intervention in the lives of New Yorkers with mental illness; however, the viability of Article 31 clinics is in jeopardy.

Historically, Article 31 clinics have received inadequate reimbursements from Medicaid, Medicare, and private insurers. Until recently, agencies that operate Article 31 clinics have subsidized their services with foundation grants and private donations, underwriting 10–20% of their operating budget, depending on their payer mix. These clinics are facing a radically different reimbursement methodology; the freezing and cutting of government contracts with concurrent mandates that require programmatic restructuring; declining private philanthropy; and more complex administrative functions, such as billing, IT systems, record keeping, and reporting. Service provision and access is being restricted for financial reasons at a time when the demand for mental health services is increasing.

The Coalition’s project reengineered the business model for the many small, community-based organizations that operate mental health clinics. During the initial grant year, the Coalition identified 15 agencies to participate in a strategic reengineering process, which resulted in the identification and implementation of outsourcing and collaboration options for administrative services. At the end of the first year, at least 10 of the participants initiated changes to their business models. The project examined and reengineered functions, such as claims and billing, appointment scheduling, documentation of services, and information technology. In addition, materials were developed to enable other similar cohorts of providers to reengineer their business models.