When the Louisiana Department of Health and Hospitals (DHH), along with St. Tammany Parish government, announced earlier this month that they had found a company to keep 58 patient beds — 42 juvenile and 16 adult acute — at Southeast Louisiana Hospital (SELH) open and operating, it was a relief to those who feared the Mandeville facility would shut down its mental health services entirely.
But few took a close look at Meridian Behavioral Health Systems, the Florida-based company chosen to operate SELH. Media reports at first had it confused with Meridian Behavioral Healthcare, a 16-year-old Gainesville, Fla.-based nonprofit organization. Meridian Behavioral Health Systems (http://meridianbhealth.com) is a for-profit private company formed less than a year ago.
Running SELH is a major undertaking. Even though the state plans to lay off more than 300 employees as part of the hospital's privatization, Meridian CEO Wes Mason told WWL-TV last week that he plans to employ about 150 on the campus.
Formed earlier this year, Meridian has never handled a facility the size of SELH, as Mason admitted during a Dec. 3 news conference. Moreover, in its application to the state, the nascent company listed no facilities — not one — it had ever run.
In September, DHH issued an open-ended request for information (RFI) seeking contractors to provide services for patients either on the SELH campus or elsewhere in the metro New Orleans area.
"We happened to see that Southeast was closing, and people were looking to keep the hospital open," Mason said. "We approached the state, as well as some providers, about how we might be able to help solve the problem with Southeast closing."
Asked why DHH picked a new company to run the hospital, departmental spokesman Ken Pastorick said no other responding company was interested in running such a large operation. Two other companies — MMO Behavioral and River Oaks Hospital — offered to open beds in other locations. Another, City Medical Management, didn't offer to run any juvenile beds on the SELH campus.
"The state reviewed Meridian's RFI and Meridian was the only company that met all of DHH's requirements and expectations regarding operations on the campus of Southeast and was also the only provider interested in working with the adolescent population and keeping the Developmental Neuropsych Unit open," DHH spokesman Ken Pastorick wrote in an email to Gambit.
The state's first instruction in the RFI was that applicants should "demonstrate comprehensive experience in working with adult, adolescent and child/youth patients with serious mental illness... ."
Meridian's response to the RFI did not indicate what, if any, facilities the company has run. Its website shows locations in seven states, but it doesn't name them or provide addresses.
"This is the only agreement DHH has with Meridian," Pastorick wrote in response to Gambit's query about the company's relevant experience. "DHH believes Meridian would have more detailed information regarding its own facilities and therefore we would suggest this question is better answered by Meridian. DHH recommends Meridian be contacted directly for this detailed information."
Mason said Meridian is opening a residential treatment facility called Kenbridge Youth Academy in Virginia next year and has handled another property in South Carolina, which he declined to name, citing a confidentiality agreement. The company also is working with the University of Kentucky on a proposed facility in Lexington, he said. Other locations listed on the website indicate either administrative offices or individual staff members working in facilities run by Meridian Senior Living, an affiliated company.
"But I will add our [individual] experience as operators," Mason said. "I have over 12 years experience at the executive level. As a company, we have combined experience of over 100 years running facilities much, much larger than this."
Prior to founding Meridian, Mason worked for a number of for-profit behavioral health management companies, including the country's largest, Universal Health Services. According to his bio, Mason's relevant experience includes "opening a 20-bed inpatient psychiatric unit for adults in Winston-Salem, N.C., in a private/public partnership."
His bio does not identify the unit, but Mason confirmed it refers to Old Vineyard Behavioral Health Services, then Old Vineyard Youth Services, a Universal property in Winston-Salem. In 2007, Mason, then Old Vineyard's CEO, helped arrange a deal with Centerpoint Human Services — a state-mandated regional mental health provider similar to Louisiana's Human Services Districts — to operate a number of adult emergency beds at the facility, following steep reductions in state Medicaid payments for mental health services, according to media reports.
In 2008, Mason was hired by Psychiatric Solutions Inc. (PSI), a controversial Tennessee-based company that was the subject of a highly critical investigation by ProPublica and the Los Angeles Times in 2008. PSI was then one of the largest private providers in the country. PSI placed Mason in charge of what Meridian's response to DHH describes as "a 400-bed adolescent psychiatric residential facility (PRTF) in Virginia that was struggling, not only financially, but with its poor clinical reputation." Within 18 months, PSI boasts, Mason "built a strong team," nearly doubled its patient census and increased its earnings.
Mason confirmed that the facility referenced above is the Pines Residential Treatment Center, where he served as CEO from 2008 to 2010. The Pines operated three child and adolescent campuses, two in Portsouth, Va., and one in Norfolk, Va., totaling about 400 beds. In mid-2010, when Mason had been there for nearly two years, Norfolk's Virginian-Pilot Iand Richmond's Times-Dispatch began publishing articles about one of the campuses, detailing a long list of problems, including serious injuries allegedly resulting from neglect, inadequate staff training, mishandling of medication — including incorrect instructions to give one child lithium and staff giving inaccurate information about emergencies, the Virginian-Pilot reported.
Earlier in 2009, the Virginia Department of Behavioral Health and Developmental Services licensing office recommended downgrading the Pines' license to provisional status, "the most serious sanction short of shutting down the facility," the Times-Dispatch wrote. However, according to the report (which also noted that PSI was a major gubernatorial campaign contributor with politically connected staff members), the state mental health commissioner at the time, James Reinhard, rejected the recommendation. Instead, state officials drafted a memorandum of agreement with the company to improve conditions, which didn't require public disclosure.
Reinhard was listed as a professional reference in Meridian's application to take over SELH.
Both newspapers reported that the Pines failed to live up to the agreement and was issued a provisional license later in the year. Mason denies that.
"Our licensure was never downgraded. I never operated under a provisional license while at the Pines," he said. "It was clear we took a lot of the toughest kids in that facility. It was a very large organization. ... We're proud of the work we did. We made a lot of strides to actually improve the treatment while we were there."
According to a 2010 Virginia inspector general report, the state issued an extensive corrective plan for the Pines in November 2009 — when its previous year's license expired — and the facility operated under heavy state supervision until, in March 2010, it was found to have made enough progress for a full license renewal. Its licensure status from November 2009 to March 2010 was retroactively designated "provisional."
Mason left the Pines after Universal bought out PSI in late 2010. He followed outgoing PSI CEO Joey Jacobs to Atlanta-based Acadia Healthcare, another large operator.
According to his bio, Mason no longer is interested in corporate chains.
"Having worked primarily for publicly traded corporations, Wes has seen the erosion of values and decreasing emphasis on safety and quality of care to satisfy the need for increasing revenue/profits to continuously keep 'Wall Street' happy," the bio reads.
The address Meridian lists on its website is a 14th-floor condo unit in Ft. Lauderdale, Fla. At least six other business entities — mostly investment LLCs — also are registered there, according to the Florida Secretary of State's online business registry. Most are owned or operated by Dawn Steinberg, Meridian's chief legal officer.
"We have offices in Silver Springs [Md.] and North Carolina," Mason said. "The office in Ft. Lauderdale is just an office where we run some of our corporate communication out of."
Meridian's application to DHH does provide a bit more insight into the company. It's described as a "behavioral health offshoot of Meridian Senior Living LLC." Meridian Senior Living is a large senior care operator based in North Carolina. The company manages homes in 12 states.
"They are sister companies. Neither one wholly owns the other," said Allen Osborne, an independent risk management consultant and business development employee for the company.
Meridian Senior Living was founded by Hickory, N.C., attorney Charles Trefzger, who, before creating the company in 2010, managed dozens of assisted care facilities in that state for decades under a number of other company names.
Trefzger has encountered problems at some of those facilities as well, according to state records and media reports. A home managed by Trefzger was hit with $10,000 in state fines after a man with Alzheimer's wandered out onto the street where he was hit by a car and killed in 2004. According to a 2009 article in the Raleigh News & Observer, state officials cited another facility he managed for a monthslong bed-bug infestation and heard complaints about errors in medicine dispensation.
"Trefzger's homes have accumulated fines of close to $100,000 for 20 top-level or second-rank violations since 2003," the News & Observer article says.
Of the company's current North Carolina portfolio of 48 facilities, state records posted online show that 12 have been cited for state violations since 2006.
But Osborne, the company's risk management consultant, says that in many cases problems existed in those facilities before the company took them over from another operator — which it often did at state regulators' insistence.
"In a great many cases, part of the company's role came from either, No. 1, being asked by the state, or in some cases by investors, to manage problem facilities and, for lack of a better term, to turn them around," Osborne said. "Of the facilities that Meridian manages in North Carolina, that's probably about a third of the facilities they manage. They were facilities that had problems, and Meridian solved the problems."
Regarding the bedbug infestation, Osborne said bedbugs are an extremely common problem in congregant living situations. The company eradicated the infestation quickly and safely, he said, and found other accommodations for residents while it was exterminating.
Meridian Senior Living is currently in a dispute with the state of North Carolina over fines for failure to order and distribute medicine to Alzheimer's patients at another facility in New Hanover County, N.C. County inspectors originally recommended that the home cease admissions because of the alleged violations.
"We made the recommendation to suspend admissions," Wanda Marino, assistant director of the New Hanover County Department of Social Services, said in a phone interview. "The state is not on the same page as the counties."
That the facility — an assisted care center — has one of a number of relatively new units called "memory care" for Alzheimer's patients, including services once only available in nursing homes, said Osborne, who declined comment on specifics in this case, citing privacy laws.
"I'm not trying to blame any problems on the state, but I can tell you that when you open up a memory care facility, it's still new enough that you always have procedural issues that come up," Osborne said. "That's exactly what happened in the most recent situation. ... I can tell you that none of the citations involve a Type A penalty [the most serious classification] or anything that would be a danger to a resident."
Gambit provided various media reports about The Pines residential treatment center in Virginia and Meridian Senior Living facilities to Pastorick, who responded with a written statement attributed to DHH.
"The Louisiana Department of Health and Hospitals takes very seriously the health and welfare of residents and patients who receive treatment in all licensed facilities around the state. Ensuring this means being meticulous when reviewing potential providers before licensing these entities," it reads, adding that the state checked the company and its principals against a federal database of providers excluded from providing Medicare/Medicaid services in any state, as well as lists of companies ruled ineligible to receive federal contracts. "The Cooperative Endeavor Agreement (CEA) that gives Meridian the ability to provide services at Southeast also gives DHH strong oversight of the company's activities, ensuring that Meridian is providing the required level of care agreed upon in the CEA."
Meridian appears to be on a fast track to take over SELH. Mason signed agreements with the state and St. Tammany Parish on Dec. 5. Last week, the state Civil Service Commission approved DHH's layoff plan in a 4-3 vote, over the objections of members of the Committee to Save Southeast Louisiana Hospital, which includes a number of hospital staff.
Current SELH employees have had to wait since July, when the state first announced the hospital's closure, to find out if they might be able to stay on under new management. Not all have been able to stay. Dr. Avery Buras, a child psychologist for SELH, said he couldn't afford to wait for the state. He's been looking for work since last summer and has decided to take a job in Biloxi, Miss.
"We were granted a 15-minute interview two weeks ago," Buras said. "I think that fulfills their promise to look at us first. I was open to staying, but no one ever got to us or told us what the plans were."
Mason says he plans to give preferential treatment to current employees in hiring decisions.
"We have made offers. Several key leaders have been identified and have already accepted offers," he says, adding that 90 percent of the hospital's staff will comprise current employees.