Sheppard Pratt wins Kaiser Permanente contract System moves into managed-care market

July 07, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

The Sheppard Pratt Health System yesterday entered the managed-care market by winning a three-year contract to manage and deliver mental health services for members of the Kaiser Permanente Medical Care Program.

The contract covers 33,000 members of Kaiser's Baltimore health maintenance organization for a pre-negotiated annual fee, which was not disclosed.

It is the first time Sheppard Pratt vied for managed-care business and comes as it seeks to broaden its historic mission of treating mental illnesses.

Sheppard Pratt competed with eight other mental health companies for the contract, including Glass Mental Health Centers, which has had the contract since 1985; Green Spring Health Services Inc., a former Maryland Blue Cross and Blue Shield subsidiary now owned by Blue Cross plans in Pennsylvania and Illinois; and Options Mental Health Inc., the Norfolk, Va., company that last year won the contract to provide mental health services to state workers.

Jeannette A. Duerr, director of media relations for Kaiser, said Sheppard Pratt was selected even though some of the other companies submitted lower bids because of the quality of care it provides, customer satisfaction and its reputation in the community.

"We were very impressed with their ability to measure the effectiveness of the treatment," she said. "In the long run, we think this provides a better value."

Steve S. Sharfstein, president and chief executive officer of Sheppard Pratt Health System, said the institution is in the midst of positioning itself to provide mental health services for managed-care companies in the metropolitan region. The system includes the Sheppard and Enoch Pratt Hospital in Towson, a 200-bed facility founded in 1853 for the mentally ill.

"We are very interested in being the primary care-giver to individuals who are enrolled in HMOs, and our focus is increasingly becoming short term. This contract provides the opportunity for us to show what we can do," Dr. Sharfstein said.

He said most private insurers have stopped paying for inpatient long-term hospitalization. In recognition of that development, hospitals that served psychiatric in-patients in the past decade began to shift to out-patient and short-term treatment.

The trend has had a profound impact on Sheppard Pratt, where only 20 patients beds are now occupied by long-term patients, Dr. Sharfstein said.

And in the past two years the hospital system has cut expenses, laid off employees and expanded outpatient services in response to operating losses. This year it expects a profit, Dr. Sharfstein said.

The contract is unusual for Kaiser Permanente, which pioneered the concept of health maintenance organizations in the 1930s, because it uses outside staff to provide health care services. Unlike many HMOs, Kaiser Permanente uses its own staff of doctors to provide care and select and manage care by hospitals and other health care services to members.

The company turned to an outside contractor for its Baltimore network because of the smaller size of the membership here and the cost of developing its own set of doctors. Kaiser uses its own staff for mental health services in its Washington offices.

With 6.6 million members -- 315,000 members in the mid-Atlantic region -- Kaiser is the largest HMO in the country.

Under the contract, Sheppard Pratt will provide a full range of services, from hourly family or marriage counseling to hospitalization for chemically dependent patients. It retains control of the care provided, although a clinical specialist at Kaiser will oversee the services. The contract is effective Sept. 1.

Last year about 1,400 people enrolled in Kaiser received some kind of mental health service, ranging from therapy or family counseling to chemical dependence treatment to inpatient care for detoxification, according to Ms. Duerr, the Kaiser spokeswoman.

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